For the week 1/25-1/29

The State of the Union…including Wall Street

I got a little depressed watching President Obama Wednesday night. I gave him a fair shot for about the first six months of his initial year in office and, let’s face it, we were on the verge of a depression and we aren’t today. Seeing as we avoided Armageddon (thus far) and we did so under his watch, Obama gets some credit on this front. And the president deserves credit for not caving when it comes to Afghanistan, as well as letting the CIA do its thing when it comes to all the drone attacks against al-Qaeda and the Taliban, and for this last bit in particular he deserves a lot of credit, far more than he is receiving. A few years ago the president wrote a piece for Foreign Affairs that is on my Hot Spots link and I noted at the time that parts of it sounded almost Kennedyesque, President Kennedy having a foreign policy that was largely to be admired for the time in which he was serving.

But as for the rest, Obama’s agenda, and his persona, I grow weary. I just get the sense he really doesn’t like us. Or rather it’s almost a certain disdain that shines through, as if he’s disappointed he has to share his orbit, thinking it beneath him. I mean take the State of the Union and his appearances afterward where he keeps saying that if he was interested in the poll numbers and just running for reelection, as he chastened both parties, then he wouldn’t be taking the unpopular stands he is today because, you see, only he knows what’s best and only he is truly acting in our nation’s best interests.

If you had been in a coma for two years and hadn’t heard the campaign rhetoric, let alone his 6,000 speeches since taking office, you could have listened to much of the State of the Union and nodded your head in agreement.

Yet the facts speak otherwise, and I’m going to be fixated on one single issue the rest of his days in office unless there’s a change in how he conducts himself, that being the way he handled health care.

How can our president say that if he was interested in the polls or winning elections, he wouldn’t have been focused on health care the way he has been when as George Will nailed it a few weeks ago, the whole process to date has been nothing less than “serial corruption”?! I can’t help but repeat myself from the past two weeks but for me, and millions of others, the final straw was the backroom deal for the unions and their “Cadillac plans,” let alone the dirty deals for Louisiana Sen. Mary Landrieu and Nebraska’s Ben Nelson. How can Obama possibly stand before us, with a straight face, and act as if the process was pure?

So I’m sorry. The president has lost me. I do, however, promise to be as fair as possible in this ongoing history of the 21st century that I’m compiling.

But here’s another issue that is of rather major importance …President Obama’s handling of Iran and its nuclear weapons program. First, Obama set a deadline of last September for Tehran to cease enriching uranium, per three prior UN Security Council resolutions. Then the deadline was reset to December. Now the United States, a few days removed from February, is frantically trying to line up Russia and China for further sanctions that do nothing more than target Iran’s financial institutions and some Revolutionary Guard higher-ups, hardly the stuff that will keep Iran from plowing ahead. Admittedly, Russian Foreign Minister Sergey Lavrov said the other day Moscow’s patience with Iran was running out, and maybe China will abstain rather than issue a veto in the Security Council, but the bottom line is Iran’s brilliant stall game continues apace.

So President Obama, on an issue that threatens the security of the entire free world, said this of both Iran and North Korea on Wednesday.

Speaking about getting the world to secure “all vulnerable nuclear materials…in four years, so that they never fall into the hands of terrorists…

“These diplomatic efforts have also strengthened our hand in dealing with those nations that insist on violating international agreements in pursuit of these weapons. That is why North Korea now faces increased isolation, and stronger sanctions – sanctions that are vigorously enforced. That is why the international community is more united, and the Islamic Republic of Iran is more isolated. And as Iran’s leaders continue to ignore their obligations, there should be no doubt: they, too, will face growing consequences.”

“From the text of the speech itself, it was difficult to discern an ideology – not because of its moderation but because of its contradictions. The president took credit for the stimulus package, demanded another one – and called for budget restraint. After a year of delaying other legislative priorities in his single-minded pursuit of health reform, Obama challenged Congress on fiscal reform and other matters: ‘How long should we wait?’ Obama attributed the hated bank bailout to his predecessor – then insisted it had saved the economy, which he chalked up to his own everlasting credit. There were policy proposals along the whole ideological rainbow: tax increases and tax cuts, new spending and a budget freeze, cap-and-trade and oil exploration.

“These tensions were reflected in the president’s tone. He showed Reagan-like optimism about America’s future, and Carter-like worry about America’s ‘deficit of trust’ and ‘deep and corrosive doubts.’ He urged our politics to get beyond ‘the same tired battles,’ while repeatedly turning to those battles in his self-excusing blame of the past. He ‘will not give up on trying to change the tone of our politics,’ while making liberal use of partisan sarcasm.

“There was only one theme that united all these various arguments and attitudes – the president’s unshakable self-regard. He admits miscalculations, but he is never wrong. He changes his strategy, but not his mind. On health reform: ‘I take my share of the blame for not explaining it more clearly to the American people.’ If only Obama had made a few more speeches, Americans would have been delivered from their misconceptions. Even Obama’s apologies are unapologetic. He is like the job candidate discussing his flaws during an interview: ‘I have to admit, I work too hard. I’m too detail-oriented.’….

“(The speech also) raises concerns about Obama’s capacity to be a unifying national leader. An effective leader usually shares the passions and purposes of his countrymen. Rhetorically, Obama attempts to stand above the political process, above his own party, even above the country. He seems isolated in the tower of his own wisdom and purity. He judges. He lectures. We must strive to be worthy of him, not he of us.

“Americans, no doubt, deserve some of Principal Obama’s reprimands. But once scolded, will they follow him?”

“Not until the 33rd minute of Wednesday’s 70-minute address did Obama mention health care. The weirdness of what he said made it worth the wait.

“Acknowledging that the longer the public has looked at the legislation the less the public has liked it, he blamed himself for not ‘explaining it more clearly.’ But his faux contrition actually blames the public: The problem is not the legislation’s substance but the presentation of it to slow learners. He urged them to take ‘another look at the plan we’ve proposed.’ The plan? The differences between the House and Senate plans are not trivial; they concern how to pay for the enormous new entitlement….

“Last Feb. 24, he said he had an activist agenda because of the recession, ‘not because I believe in bigger government – I don’t.’ Ninety-seven days later, he bought General Motors.

“Wednesday night’s debut of Obama as avenging angel of populism featured one of those opaque phrases – the ‘weight of our politics’ – that third-rate speechwriters slip past drowsy editors. Obama seems to regret the existence in Washington of…everyone else. He seems to feel entitled to have his way without tiresome interventions in the political process by the many interests affected by his agenda for radical expansion of the regulatory state….

“Obama’s leitmotif is: Washington is disappointing, Washington is annoying, Washington is dysfunctional, Washington is corrupt, verily Washington is toxic – yet Washington should conscript a substantially larger share of GDP, and Washington should exercise vast new controls over health care, energy, K-12 education, etc.”

Turning to Wall Street, you can ignore the 5.7% flash GDP estimate for the fourth quarter that was released on Friday, the fastest pace since 2003. While there was some encouraging data on exports, consider that we learned wages and benefits for all of 2009 rose a meager 1.5%, the lowest such figure since records were kept in 1982. It’s about labor, the consumer and housing going forward and I’m focused on what happens after the first quarter (which will be another positive showing), specifically from late spring on into 2011. I’ve told you that my main concern is we will be overwhelmed by geopolitical events and nothing has happened thus far in 2010 to change that stance one iota.

But I’ve also said the fundamentals do not look good and economist Nouriel Roubini, who is to be ignored when it comes to equity forecasts but says some prescient things otherwise, nailed it when he said in Davos, Switzerland this week that “the outlook for advanced economies is weak,” and that there would be a shortage of demand in the world because “the overspending countries are cutting back on consumption and the over-producing countries cannot rely on the over-consuming countries to spend.” 

We are far from being out of the woods and the massive debts that governments in Europe, the United States and parts of Latin America have been accumulating are finally coming home to roost. Such as in the case of Greece, or Spain (Roubini’s prime flashpoint), or Portugal, or Italy, or Ireland [the preceding nations representing the PIIGS.] I’ve been writing the past few months that the problem in the case of Greece, for example, is that the European Union doesn’t have a mechanism in place for bailing out a corrupt, profligate nation, yet that is exactly what the EU will have to do or they’re all going to hell and Roubini’s forecast that the eurozone nations will abandon the euro in two or three years could be moved up some.

PIMCO’s Mohamed El-Erian wrote in an op-ed for the Financial Times the following regarding Greece and the whole sovereign debt story.

“Most still think of Greece as an isolated case, just as they did Dubai a few months ago.

“With time, they will see Greece as part of a much larger investment theme that is a direct outcome of the global financial crisis: the 2008-09 ballooning of sovereign balance sheets in advanced economies is consequential and is becoming an important influence on valuations in many markets around the world….

“At the simplest level, think of Greece as Europe’s big game of chicken, with the operational question for markets being two-fold: who will blink first, the Greek authorities, donors or both; and will they blink in time to avoid truly disorderly debt and market dynamics that also entail significant contagion risk….

“Over the next few days, we are likely to get some combination of Greek and European donor announcements aimed at calming markets, reducing volatility, and reducing contagion risk. But the impact on markets is unlikely to be sustained as both sides face multi-round, protracted challenges which contain all the elements of complex game dynamics.

“No matter how you view it, markets in Greece will remain volatile and more global investors will be paying attention. In the process, this will accelerate the more general recognition that sovereign balance sheets in many advanced economies are now in play when it comes to broad portfolio positioning consideration.”

Meanwhile, except for the GDP and Chicago Purchasing Managers data (61.5 in Jan. vs. an expectation of 57.4), I thought the economic numbers, particularly on housing, were so-so at best. Both existing and new home sales for December were far below projections, though I’ll grant you the lousy weather is a legitimate excuse for some of the underperformance, and December durable goods orders, while up, were far less than expected, but, two readings on consumer sentiment for January were indeed pretty good.

Corporate earnings from the likes of Apple, Texas Instruments, Corning, Johnson & Johnson, DuPont, Boeing, Caterpillar, Microsoft, Procter & Gamble, Ford, 3M and Amazon all beat. That’s good. Some of the accompanying statements were also pretty decent regarding future guidance, though CAT was symptomatic of the larger multi-nationals in stressing that prospects in Europe are tepid at best compared to those in Asia.

So why did the stock market fall for a third straight week? The sovereign debt issue, uncertainty over Ben Bernanke gaining approval for a second term at the Federal Reserve, concerns over a potential slowdown in China (unwarranted in my opinion), and, most importantly, a general feeling of uncertainty as to the Obama administration’s economic policies and could they kill the recovery.

Two final notes. As stated above the news on existing and new home sales for December was not good, though the median home price on existing homes continued to tick up from the April lows, but I repeat this is all just part of my extended bottoming process. As I said way back in 2008, there will be no V-shaped recovery in housing. The November Case-Shiller housing index of 20 major metropolitan areas showed only a 0.2% rise in prices from October, with Las Vegas hitting another new low, now 55% off its peak. Unbelievable.

The figures on foreclosures these days are all over the board, with improvement in some regions and a sickening decline in others that heretofore had escaped the worst. Take Boise, Idaho, where foreclosure filings increased 103% in November. Roanoke, Va., reported a jump of 352%. Economist Robert Shiller says housing is bound to stumble anew, especially when the government ends its support for the mortgage market (see below). The tax credit for first-time homebuyers is also ending April 30, unless extended yet again as I suspect it may.

And a word about China. Some, such as short-seller Jim Chanos, say that China’s figures on the economy are nothing but smoke and mirrors…not to be believed. To which I say that while I wouldn’t be in the least bit surprised if China’s reported 10.7% GDP growth rate for the fourth quarter was really more like 9%, at the same time that’s still pretty strong. I’d also add that when the government reports that January power demand hit an all-time high, up 30%, what good does it do them to fudge something like this in a big way.

More importantly, when Japan reports, as it did this week, that its exports of chemicals to China increased 99% from year ago levels in December, that’s something real. Let alone all the Aussie resource company figures we’ve seen over the past few years concerning soaring shipments to the mainland.

What gets me is Chanos has been to China, as I have. I could dig up my reports from my first time there when I visited Shanghai and my comments on the excessive building years ago on the residential side. Sure, it looked like a bubble then.

But I’ve also been to some of the lesser-developed parts of China, like where my stock holding is, and, trust me, there is far more room for development and improvement of the infrastructure.

So China will have its booms and busts in the Shanghai stock market, no doubt. But the overall growth is not only real, it’s warranted.

Now if the global economy goes through a double-dip, as I increasingly fear, that’s a different story. My stock will go back down with everything else, a setback, but I can now afford to be very patient.

Street Bytes

–Stocks slid a third straight week to finish the month of January on a solid down note with all the major averages off over 3% since the first of the year. Because the world has changed and geopolitical events can influence the market at a moment’s notice, I no longer believe in the old saw that as January goes, so goes the market. There are too many variables, compared to the old days, but the other week I posted the figures in my “Wall Street History” column if you are still interested.

Rates were unchanged despite the volatility and uncertainty, including some anxiety over Bernanke’s status with his term expiring Jan. 31. In the end he was reapproved but only by a 70-30 margin, unheard of for a Fed chairman. Supporters pointed to him as saving the day and avoiding depression; opponents said it was all his fault in the first place…and both sides are right. But the affirmative vote still didn’t prevent stocks from sliding.

Meanwhile, Bernanke chaired another Federal Open Market Committee confab as the governors opted to hold the line on interest rates at 0.00-0.25 percent for, once again, “an extended period,” while noting the U.S. economy was in “recovery” and that inflation would rename “subdued” because of substantial slack in resource utilization.

The Fed also reaffirmed it would end the programs backstopping liquidity, including one that has been buying up $1.25 trillion in mortgage-backed securities to help keep rates low and the housing market from totally drying up. But while some warn that the end of the buying of both mortgages and Treasuries (a separate program) guarantees that interest rates will rise, killing the housing recovery, others (the optimists) say that’s not necessarily how it will work because the Fed will still have this massive portfolio which means that a lot of supply is off the market at a time when mortgage origination is meager, ergo, prices may not slide much (nor rates rise as expected). Plus you have Fannie Mae and Freddie Mac’s massive mortgage holdings and with their new authority and government backing, they could enter the market to buy up paper should spreads get too wide.

[As of this week, a 30-year fixed mortgage for those who qualify stands at 4.98%, up from the December low of 4.71%. 6% is viewed as the trouble level.]

–After issuing recalls on nearly 8 million cars and trucks in the U.S. in the last few months, the suspension of sales of eight popular models because of the risk of sticking gas pedals, a design flaw, is reverberating around the world for Toyota Motor, including in Japan, where as the Los Angeles Times put it the news “has had a sickening effect on the national psyche.” Toyota, after all, following Sony’s stumbles, was the symbol of Japan’s manufacturing and design greatness. It’s as if the entire nation is deeply embarrassed. Others say Toyota is a victim of its own hubris as goal number one seemed to be to surpass General Motors as the world’s top-selling automaker, at the expense of the quality and reliability that made Toyota so popular in the first place.

Still others say it’s not necessarily a Toyota problem, but rather a supplier issue; specifically CTS Corp. out of Elkhart, Ind., which manufactured the accelerator pedals involved in the latest recall. Japan being Japan, no one should be surprised to learn of a few suicides there over the coming weeks and months as the blame game intensifies. “Who made the decision to go with CTS?! Speak up!!”

Back to the specifics, some Camry models are impacted, this after Toyota sold 34,000 of them in the U.S. in December, making it the best-selling car in America. The Corolla and Matrix, also part of the recall, were among the other top sellers. Toyota was forced to extend the move to Europe.

–Just a note on Japan’s overall economy. S&P put its debt on credit watch as there are fears it could slide back into recession as deflation persists. New housing starts here, for example, tumbled because of the pricing situation. You aren’t about to build a home for $200,000 if you think it will fetch $180,000 when it’s complete. [Slight exaggeration.] At the same time unemployment ticked down to 5.1% here in December so the government’s stimulus efforts haven’t been totally without merit…and another $80 billion is being spent to ensure a recovery takes hold.

–How good is Ford Motor’s CEO Alan Mulally? Pretty darn good, I think you’d agree, as the automaker reported a profit of $2.7 billion for 2009, and without government help. Ford had lost $14 billion in ’08. Its hourly workers will be issued profit-sharing checks of $450 each, which isn’t Goldman Sachs money but, first, folks should be happy they have jobs, and, second, it gives them all hope there is more of it in the future, especially when the economy recovers in earnest. Ford, of course, can also profit handsomely from Toyota’s problems.

[Incidentally, the bonus checks are the first for the industry since 2006. A decade ago, though, Ford was handing out $8,000 payments.]

–One of my prouder conclusions in this space is my refusal to join the bear camp when it came to the U.S. dollar. I have been steadfast in telling you for years now it’s not that big an issue and there was zero reason to panic. Sage advice. The dollar this week hit its best level against the euro since last July. Why? Because we’re a better bet, as sick as we might be in our own right, than Europe, that’s why. The U.S. will continue to be the safe haven for the foreseeable future.

–Great chart in the Wall Street Journal last weekend on the size of the biggest U.S. commercial banks. To wit:

Banks with more than $10 billion in assets now control 80% of the total pie, as of Sept. 30, 2009, vs. 67% on Dec. 31, 1999. The total liabilities are also in the exact same ratios. [Source: FDIC]

–Editorial in the South China Morning Post [Hong Kong]:

“There needs to be an end to the Anglo-American bumper bonus culture. It is not only distasteful and morally reprehensible; it is socially corrosive, because it undermines the social contract under capitalism. A fundamental capitalist principle is that while you get to enjoy the fruits of your labor, enterprise and ingenuity, you must suffer for the mistakes you make. But the bonus culture has turned that upside down. Its tie to performance has always been tenuous, if not a charade. The bonuses stayed high on Wall Street and in London even when Western financial systems were on the brink of collapse. It is questionable whether, even during the preceding bullish decade, the phenomenal rise in the return on equity of big banks was due to skill or performance. A recent Bank of England study finds a complete – complete! – correlation between British banks’ higher leverage and rising return on equity in the past decade. Any profits most of these banks have made since proved illusory.

“So, high leverage before the crisis, government support after it – bankers in New York and London make it look like they are just there to game the system. They can afford to do so because banks and other financial institutions are at the heart of the Western capitalist system, which in turn underpins the global economy. They have bet, correctly, that they can make fatal mistakes and taxpayers will still have to bail them out collectively as an industry – and in many cases, individually. That is why they need to be reined in and controlled in a worldwide effort coordinated by governments and regulators. We need to save capitalism from itself.”

I couldn’t agree more. Regulate the financial industry to the hilt. Capitalism will more than survive. It performed spectacularly well before we went off the tracks.

–Apple unveiled its latest gizmo, the iPad, which is a cross between an iPhone and a Mac. Some say it’s nothing more than an oversized iPod Touch, and there’s no camera. Steve Jobs said in presenting the device that the iPad “is so much more intimate than a laptop, and it’s so much more capable than a smartphone with its gorgeous screen.” [A bit too precious, Stevie.]

We’ll learn over the next six months just how successful it will be and whether the iPad truly becomes another must have, but there is a bigger issue, sports fans; that being how the heck can our existing networks deal with the spectacularly growing demand for increased bandwidth?! As the New York Times quoted one analyst, “Carrier networks aren’t set to handle five million tablets sucking down 5 gigabytes of data each month,” let alone the demand for Internet radio stations, YouTube videos, live sporting events or concerts, etc. My big point has always been that when the next national emergency hits, particularly if it’s in the New York City area, the system will totally crash. You can kiss off being able to reach a loved one. You’ll have more success with tin cans and string.

Meanwhile, for the archives (and future research), I do have to note that the iPad name itself is attracting some disparaging remarks, such as from females who wonder that with the selection of “iTampon” for a name if there are any women who work at Apple?

–Microsoft reported net income for its second quarter of $6.66 billion on revenue of $19 billion, both figures handily beating estimates as consumers stepped up purchases of personal computers and thus the new version of Windows. The Windows 7 upgrade cycle could be a powerful one over the coming year, seeing as Windows still runs more than 90 percent of the world’s PCs. And the Bing search engine is now capturing 10.7 percent of the U.S. market, compared with 65.7 percent for Google and 17.3 percent for Yahoo, according to ComScore.

–Amazon reported stellar results for the December quarter as well with net income rising to $384 million on revenue of $9.52 billion; both beating estimates just as in the case of Microsoft. But both Amazon and Microsoft finished the week off their after-earnings release highs of Thursday as they were swept up in the general market malaise.

–Samsung should pass Hewlett-Packard as the world’s biggest technology company by sales in 2010 as its revenues are forecast to hit $127 billion this year vs. an estimated $120 billion for HP. [Actually, Samsung may already be ahead of HP based on its just-released report of $118 billion for ’09.] On a net income basis the South Korean juggernaut is expected to earn more than the leading 15 Japanese tech companies combined. 

[Speaking of South Korea, note to President Obama. You mentioned the importance of trade with this critical ally in your State of the Union, and then repeated this in your Friday meeting with Republicans. You mentioned yesterday that the European Union was on the verge of signing a deal with Seoul and that we could lose out. So get off your butt and whip the Democrats into shape on this one, as well as for deals involving Panama and Colombia. Cut the talk…act!]

–In light of Toyota’s problems, if you plan on renting a car in the U.S. over the coming months you better get in your reservation now. Some rental agencies, such as Hertz, are warning of shortages as they eliminate Toyotas from their fleets until the problem has been fixed. Hertz stands to lose the most as 20% of its vehicles could be impacted.

–China is forecasting an oil price of $80 on average for 2010, which speaks volumes about their own growth and demand outlook despite concerns over the government’s recent moves to tighten credit. The International Energy Agency projects China’s oil demand this year will average 8.82 million barrels a day, up 4.3% from 2009. [Goldman Sachs is forecasting oil will average $90 a barrel in 2010 owing to both increased demand from China and India.]

–At a weekly policy lunch on Thursday for Senate Democrats, health care wasn’t discussed, nor did House Majority Leader Steny Hoyer even mention the topic in an email laying out the Democrats’ 2010 agenda. Remarkable how quickly it is dying. It didn’t have to be that way. A couple times I laid out former Treasury Secretary Paul O’Neill’s prescription for health care reform; critical items such as tackling infections in hospitals that claim 100,000 lives a year, but the president and his followers blew it…and we all continue to pay a price. We should have gone down O’Neill’s list and tackled the issues one at a time. Some would have met with heavy bipartisan support, others would have faced strong resistance, particularly when it came to the Democrats and their trial lawyer supporters, but Obama would have ended up with a real success.

–Property sales in the Hamptons actually surged 59% in the fourth quarter of last year, some 409 transactions. The median sales price was up 4.9% to $917,900. Then again, in the most exclusive section, median prices dropped 30% as higher end homes failed to find buyers. So we’re far from an official all clear among the rich and famous who summer there.

[Separately, foreclosures in the wealthiest parts of the Hamptons are also skyrocketing, a chief example of the issue facing the prime mortgage market now that the subprime crisis has for the most part stabilized. Once again it’s all about jobs, and loss of same.]

–Property sales in Sydney, Australia’s suburbs are leaping; the Aussies having avoided the worst of the global meltdown due largely to its minerals based economy that has benefited from heavy demand in China. Hard to believe but the median price in some ritzier areas is up 30% to 50% over just the past year. The median home price in Sydney overall rose 12% in 2009.

–The trustee for Bernard Madoff’s investors was able to successfully reach a $220 million settlement with the children of the late real-estate tycoon Norman Levy, who had withdrawn some $305 million from his Madoff investment accounts during the six years prior to Madoff’s December 2008 arrest.

–Saudi Prince Alwaleed bin Talal, Citigroup’s largest shareholder, on President Obama’s plan to impose a tax on banks (as told to Charlie Rose).

“I’m against that. The banks, with a few exceptions, have gone through major crises. So while these banks are just coming out of the ICU, you bang them with another tax? I believe it’s premature and unwarranted…and more of a vendetta against those banks that are still giving extravagant bonuses to their management.”

–According to the Houston Chronicle, 70% of Mexico’s children are obese. 

–Since I wrote of this man when he had all his problems, it’s only fair I note that Broadcom co-founder Henry Nicholas III had his felony drug charges thrown out by the federal government. It was alleged Nicholas was dealing ecstasy, cocaine and marijuana, but a U.S. District Court judge blasted prosecutors for their presentation and then apologized to Nicholas, though, at the same time told him, “From the evidence, as well as what’s been attained from the pretrial services, it does seem that you had a serious drug problem.” Duh. It was said he smoked so much pot in his private jet that the pilot had to don an oxygen mask. Now Nicholas, who earlier was cleared in a stock option backdating case, wants to return to Broadcom. Oh brother.

–Back at the height of the bubble, real estate giant Tishman Speyer Properties and BlackRock Realty acquired the massive Stuyvesant Town and Peter Cooper Village housing complexes in Manhattan for $5.4 billion from Metropolitan Life. The 80-acre complex of 110 buildings and 11,227 apartments, built after World War II to address a severe housing shortage in the city, was said to be primed for an upgrade. Expensive improvements were made and as apartments came off rent control it was felt the owners could then charge market rates. But the real estate crash, coupled with court rulings that favored tenants and their below market rents, left the buyers scrambling and the partnership headed by Tishman Speyer defaulted on $3 billion in debt.

Among those left holding the bag are the likes of Singapore, Fortress Investment Group, California pension giant Calpers, and the state of Florida. Tishman and BlackRock, though, will each only lose their original investment of $112 million apiece. [Lots and lots of leverage was employed, you see.]

But now there is a scramble to run the complex, including bids by Donald Trump, Wilbur Ross and Richard LeFrak.

–Royal Dutch Shell is looking to drastically reduce its future investment in Canada’s controversial tar sands after expanding its Athabasca Oil Sands Project later this year. Shell is citing soaring costs in the Alberta region, while environmentalists have been raising hell. I only bring it up because after spending a week last summer in Calgary, I can appreciate how this area is constantly going through a boom/bust cycle…which can be measured to a certain extent by the level of homeless in this fine city.

–Applications to elite schools, such as Harvard and Princeton, have been soaring as prospective students believe attending such institutions boosts their job prospects. Princeton’s applications for freshman admission increased by 19%, while Harvard’s rose 5%. Brown University’s soared 20%. [Bloomberg]

[Separately, Princeton hiked tuition, room and board and other fees 3.3% to $48,580 from $47,020. Including books and supplies the total cost is about $50,600.]

–In the midst of my recent move, and all the scraps of paper with news items on them that I’m still going through, I need to note for the archives that one of the barometers of holiday sales that I rely on, the National Retail Federation, did report two weeks ago that sales rose 1.1% when I was on record as saying they would be flat at best. So I was wrong. For 2010, the NRF is forecasting sales will rise 2.5%. For all of 2009, sales did fall 2.5% (1.6% on an inflation-adjusted basis).

–According to the International Air Transport Association, 2009 was the worst year ever for the industry as passenger traffic declined 3.5% and freight traffic fell 10.1%. However, December saw a rise of 1.6% from year ago levels.

But while Asia-Pacific, North American and European demand fell by 5% to 6%, Middle Eastern carriers saw traffic climb 11.3%, while Latin American airlines experienced a 0.3% increase. Airlines collectively lost $11 billion in ’09 and stand to lose $5.6 billion this year.

–Organized labor lost 10% of its members in 2009, on par with the overall drop in employment but union membership is now down to 7.2% of the private-sector work force. In the early 1980s, unions represented 20% of workers. Labor experts say that as the economy recovers, though, unions won’t necessarily regain members because, as is happening in the auto industry, new jobs will be created at nonunion plants or employers.

But, among government workers, union membership grew last year to 37.4% from 36.8%.

–I forgot to pass along a telling tidbit on my home state of New Jersey and the condition of the overall economy here, courtesy of my friend Steve D. and the N.J. Dept. of Labor and Workforce Development.

Total Private Sector Employment: -94,300 [minus]
Government Employment: +68,200

Total Private Sector Employment: +242,800
Government Employment: +11,200

Yes, many of us are leaving in droves and those that are left have to pay for a growing state labor force and their outrageous pensions.

–Follow-up to my item on the Cleveland Orchestra and an agreement on compensation after a brief strike; now the Philadelphia Orchestra may be filing for bankruptcy owing to sharply lower ticket sales.

–I got a kick out of a commercial that recently aired for Tabasco Sauce, the product long being my dream to own because I just felt it could be marketed better. The commercial, which aired during the football playoffs, is terrific and had the appropriate tagline. “So much more than hot.”

—Avatar became the highest-grossing movie of all time on Monday, $1.859 billion globally vs. Titanic’s $1.843 billion.

–And now a word from the Pork Council. According to Argentine President Cristina Kirchner, “Pork consumption improves sexual activity. This is not a small detail,” she informed a surprised gathering of business people at the presidential palace. “Besides, some nicely grilled pork is much more gratifying than taking Viagra.”

But wait…there’s more! Kirchner said she ate some roasted pork over the weekend with her husband, former president Nestor Kirchner, and met with “impressive” results. “We were in high spirits the whole weekend,” she said.

According to Agence France-Presse, the head of the association of pork producers backed up Kirchner’s claims, citing people in Denmark and Japan, where pork consumption is high. Argentines are the world’s biggest beef eaters.

Meanwhile, Ms. Kirchner really should focus on the mess her country is in under her leadership as she faces an ongoing crisis after seeking to remove the head of the Central Bank. Martin Redrado wants the government to control runaway spending. Kirchner wants to spend, spend, spend to keep the people happy, as well as eat pork and sleep with her husband.

But if you want to take a break from reading the column to go out and get some pork yourself, I’ll understand.

Foreign Affairs

Afghanistan: A London conference pledged $500 million to “buy off” insurgents who are not committed to destroying the West, i.e., the plan is to cut deals with the Taliban. The other day a leading Pashtun tribe said it would join the U.S. and fight the Taliban in exchange for $1 million, which means they haven’t learned the art of senate Democrats; to wait until the last moment and get $300 million. But for those who take heart in such deals, and while I recognize they worked to a large extent in those first few months of the Afghan war, it might also behoove our leaders to replay “Lawrence of Arabia” before committing themselves too far. I also just read as I go to post that NATO and Afghan Army forces fired at each other on Saturday and it was necessary to call in air strikes.

Separately, Osama bin-Laden’s latest audio message was viewed by some experts as a possible indicator of an upcoming attack by al-Qaeda, though perhaps not for up to 12 months. The key is the phrase “Peace be upon those who follow guidance,” which appears at the beginning and end of messages released in advance of previous attacks.

Retired Lt.-Col. Ralph Peters, who opines for the New York Post and others, notes that America is failing to capitalize on a prime fact, that being that al-Qaeda kills Muslims. Citing a recent West Point initiated report titled “Deadly Vanguards: A Study of al-Qaeda’s Violence Against Muslims,” some facts emerge.

Between 2006 and 2008, only 2 percent of the terror multinational’s victims were Westerners.

Between 2006 and 2008, a non-Westerner was 54 times likelier to die in an al-Qaeda attack than a Westerner.

“Outside of the war zones of Afghanistan and Iraq, 99% of al-Qaeda’s victims were non-Western in 2007 and 96% were non-Western in 2008.”

“The propaganda skills of our enemies eclipse our timid, lawyer-ridden information operations. In the Muslim world, we get blamed even for al-Qaeda’s proudest massacres of Muslims – while Pakistanis blame us for Taliban suicide bombings.

“As this report documents, we possess facts that could be wielded as weapons. But we’re no more willing to fight an aggressive information war than we are to wage a serious ground war against our enemies.”

Iran: Supreme Leader Ayatollah Ali Khamenei, as reported by the Tehran Times:

“On certain occasions, the enemy plotted to pressure the Islamic system, but the late Imam Khomeini never gave in to the pressure, said the Ayatollah….

“ ‘The Iranian nation wants to be an independent, vibrant, progressive…and powerful nation in order to defend their rights and beliefs….

“ ‘The Americans say they have allocated a 45-million dollar budget to defeat the Islamic Republic by means of the Internet, which shows they are extremely desperate….everyone should feel responsible to defend the Islamic system,’ he said.”

That’s actually pretty mild by Revolution standards, but then the Ayatollah said:

“One day regional nations will definitely witness the destruction of the Zionist regime.”

In light of my opening remarks on President Obama’s failure to publicly pressure Iran and by doing so support the opposition, two of the opposition’s leaders, Mohammed Khatami and Mehdi Karroubi, have dropped their demand for a new presidential election, thus accepting Mahmoud Ahmadinejad as the head of state. Earlier, defeated candidate Mir Hussein Moussavi offered a prescription for solving the political crisis that did not include holding a new vote either.

However, then you had a story that Karroubi predicted Ahmadinejad wouldn’t survive his four-year term, though, again, he wasn’t questioning the legitimacy of the government. Confused? We probably shouldn’t be because two protesters were executed this week and another nine sentenced to death for participating in ‘counterrevolutionary’ protests.

Here’s the next key date…Feb. 11, the 31st anniversary of the Islamic Republic, with the opposition gearing up for another round of demonstrations even though they have no permits to rally. Thus there will be a confrontation when the opposition attempts to take over the state-sponsored rally, with Karroubi saying he would join his supporters at that time. “Without exaggeration, I can say I have no fears.” What will the White House say, if anything?

Strategist Robert Kagan wrote in the Washington Post:

“Does Obama recognize (the opportunity he has to encourage regime change)? So far, the administration has been slow to shift in response to events in Iran. It has proceeded as if the political upheaval had only marginal significance, and the real prize remains some deal with Tehran. The president has been cautious to a fault. Even as Iranian opposition leaders ask him to take their side, and Iran experts such as Karim Sadjadpour and Ray Takeyh call for more active efforts on behalf of Iran’s reformists, Obama has said and done little.

“The president needs to realize that this is his ‘tear down the wall’ moment. And that it is fleeting.  Iran’s leaders are rushing to obtain a nuclear weapon in part because they believe that possessing the bomb will strengthen their hand domestically as well as internationally. They’re probably right. Moreover, Israel’s patience will not be infinite. If too much time passes without change in Iran, Israel may feel compelled to attack, no matter how questionable the likelihood of success and how grave the fallout.

“Were the Iranian regime to fall on Obama’s watch, however, and were he to play some visible role in helping, his place in history as a transformational world leader would be secure. Thirty years ago, the Iranian Revolution triumphed, aided by the incompetence of top Carter administration officials, some of whom, to this day, call for normalization with the Ayatollah Khomeini’s brutal successors. Obama has a chance to reverse their strategic and ideological debacle. But he cannot wait too long.”

I’d say, again, Feb. 11 could be his last opportunity before Israel decides it must act.

Israel / Lebanon / Syria: Israeli government officials have been very harsh on Syria the past week, expressing growing concerns over Damascus’ aid to Hizbullah in Lebanon. Deputy Foreign Minister Danny Ayalon said Hizbullah has been training on surface-to-surface missile systems in Syria, with Syria having sent Hizbullah advanced M-600 missiles that Jane’s Defense Weekly said are copies of an Iranian system with a range of 150 miles and capable of carrying a heavy warhead, thus bringing all of central Israel within Hizbullah’s range. On Tuesday, Defense Minister Ehud Barak noted in a speech that if Israel was forced to fight Syria, “we won’t fear and we’ll defeat them.”   As an analyst, Jonathan Spyer, wrote in the Jerusalem Post, Syria appears to have made a strategic decision not to allow Israel to defeat the resistance movements.

In Lebanon itself, Prime Minister Saad Hariri stressed Thursday that Arab states would take a united stance concerning Israeli threats against his country.

“Any threat against Lebanese territories, whether in the south, Bekaa, Dahiyeh or any other region in Lebanon is a threat against all of Lebanon and the Lebanese Government.”

[On a separate note, the plane crash of the Ethiopian Airlines plane, killing all 90 on board shortly after takeoff from Beirut airport amid violent storms, is an aviation mystery from the standpoint that air traffic controllers claim the pilot flew in the opposite direction from the path recommended by the control tower. According to one story I saw, the Boeing 737 is “equipped with its own onboard weather radar which the pilot may have used to avoid flying into thunderheads.” Sabotage has been ruled out.]

Iraq: The war continues with a series of bombings Monday and Tuesday in Baghdad that killed at least 55, including an attack on three hotels favored by Western journalists, while another targeted the forensics headquarters; all this ahead of the March 7 parliamentary elections. The first blasts appear to have been timed to go off shortly before the announcement that “Chemical Ali” had been hanged.

North / South Korea: Pyongyang has asserted that Seoul declared war when it recently warned it would launch a first strike if it felt a nuclear assault was imminent. 

“Our revolutionary armed forces will regard the scenario for ‘pre-emptive strike’ which the South Korean puppet authorities adopted as a ‘state policy’ and an open declaration of war,” the official Korean Central News Agency said on Sunday.

The two sides then traded artillery fire over a disputed western sea border though no one was hurt. Meanwhile, the North has stepped up the level of executions of those attempting to flee the country.

China: I posted Secretary of State Hillary Clinton’s important speech on Internet freedom on my “Hot Spots” link. This week China continued to criticize the U.S. response to curbs on the likes of Google. The danger in the war of words is that the two countries already face a testy period over trade, a probable Obama-Dalai Lama meeting, and arms sales to Taiwan. [Regarding the latter, as I go to post China is railing about the Taiwan deal, has formally cut off military exchanges between our two countries, and no doubt won’t feel compelled to cooperate on Iran.]

A spokesperson for China’s State Council Information Office said the nation “bans using the Internet to subvert state power and wreck national unity, to incite ethnic hatred and division, to promote cults and to distribute content that is pornographic, salacious, violent or terrorist.”

“China has an ample legal basis for punishing such harmful content, and there is no room for doubting this.”

It’s time for quiet diplomacy on this one, and Google needs to shut up for the time being, as it appears to be doing. Hillary Clinton’s speech was needed but now is the time for closed door meetings where China understands the United States will not allow cyberattacks on not just Google, but more importantly on the military and other government agencies, as well as some of our leading corporations.

But the U.S. shouldn’t be acting alone. China, and Russia, need to be confronted by the entire West, or as Carl Bildt, Sweden’s minister of foreign affairs put it in an op-ed for the Washington Post, “a new transatlantic partnership for protecting and promoting the freedoms of cyberspace. Together, we should call for all these walls to be torn down.”

Despite all the above, though, China and Taiwan held initial talks on a major trade pact this week and Beijing said they had gotten off to a “good start.” A Chinese spokesman said, “Both sides agreed to…accelerate the process of negotiating and signing” an agreement on a number of fronts, including commodities and service trade. With my specialty chemical/biodiesel plant sitting on the coast across from Taipei, I am more than dreaming of real progress.

Haiti: Let’s face it; relief operations have been a total mess, befitting this hellhole. It’s also increasingly apparent that as much as we love our military, they weren’t prepared to handle the crush in those critical initial days and the coordination with aid groups long already on the ground was virtually non-existent. It’s not the soldiers’ fault but rather the failure to have a defined mission, as well as a totally dysfunctional Haitian government to help lead the effort. There is zero reason to be optimistic here. And is it me or do the only Americans adopting Haitian children appear to be white?

[Separately, not one Arab or Muslim country is among the top 20 donor nations and organizations to Haiti, according to Britain’s Guardian newspaper. For example you have Iran, the victim of the 2003 catastrophic quake in Bam, in which more than 26,000 were killed. They have contributed zippo…or some token amount. Also wait until you see the pictures of doctors from Puerto Rico drinking and hamming it up for the cameras while holding weapons. It’s caused an uproar back home.]

Britain: Former Prime Minister Tony Blair was grilled as part of the government’s war inquiry and said that 9/11 dramatically changed Britain’s attitude towards the risks posed by Saddam Hussein.

“I would fairly describe our policy up to September 11 as doing our best, hoping for the best but with a different calculus of risk assessment….The point about those acts in New York is that, had they been able to kill more people than the 3,000, they would have. My view was you can’t take risks with this issue.” Iraq, after “10 years of defiance,” had to be brought “back into compliance.”

In a previous interview, though, Blair asserted he would have backed the invasion even if he had known beforehand that Iraq had no weapons of mass destruction. But in the lead up to the war, Blair had been “unambiguous,” according to a former cabinet official, that disarming Saddam of WMD was his primary objective. None of this helps Gordon Brown’s bid to win reelection this spring.

Turkey: The head of Turkey’s armed forces was furious over a newspaper report accusing the military of plotting to overthrow the government, which happens to be one of my predictions this year (I said it would fail). General Ilker Basbug delivered a television address in which he warned the military’s patience was running thin over a stream of allegations; asserting that the era of coups was long over and that change should only occur by democratic means.

As the BBC reported, Gen. Basbug, in denying some of the charges, responded with an angry statement.

“Our soldiers charge into battle crying out, ‘Allah, Allah,’” he said, banging his fist on the table. “How could such an army bomb a mosque? [An allegation that such an attack was in the works.] I curse these claims.”

Separately, last October’s deal between Turkey and Armenia to open their border and establish diplomatic relations after generations of dispute is at risk because, according to Azerbaijan, Armenia has yet to return Azeri territory that it occupies, which was supposed to be part of the deal.

Russia: The number of children under 18 has fallen to 26.5 million from 38 million in 1995, according to a new report by UNICEF. Russia’s overall population has declined by 6 million since the collapse of the Soviet Union in 1991.

Nigeria: Sec. of State Clinton blamed Nigerian leaders for the increasing “radicalization” among young Nigerians, pointing to poor living standards and “unbelievable” corruption. Clinton noted that Christmas Day bombing suspect Abdulmutallab was “disturbed by his father’s wealth….and living conditions that he viewed as being not Islamic enough.” Gutty comment for Hillary to make, and true.

Malaysia: Religious and racial strife continues to simmer here with the latest incident being the placement of severed wild boar heads at two mosques. It all started a number of weeks ago over whether Christians can use the term “Allah” as a translation for “God.”

Northern Ireland: This bears watching. The power-sharing administration is at risk of falling apart as negotiations over policing and justice powers reached an impasse. Sinn Fein, which is Catholic and wants a united Ireland, shares power with the Democratic Unionist Party (DUP), a pro-British, Protestant group. It was DUP leader Peter Robinson who stepped down temporarily amid a sex and money scandal involving his politician wife. Both British Prime Minister Gordon Brown and Irish Prime Minister Brian Cowen said the two parties must reach agreement on the key issues or the two countries will decide for them. Look for an upsurge in violence here unless the DUP and Sinn Fein have a meeting of the minds, which it now appears is highly unlikely.

Colombia: The former operations chief of the U.S. Drug Enforcement Administration, Michael Braun, told Bloomberg BusinessWeek (the new official title for this publication after Bloomberg purchased it) that FARC, the largest guerrilla army in Colombia, “derives somewhere between $1 billion and $2 billion a year” from the drug trade as FARC has eliminated the middle man in dealing directly with the Mexican drug cartels. Braun added he believes the figure is “woefully underestimated.”

But while the article I read doesn’t address it, let me for the 89th time state the obvious. It would be nice if Americans, for just one day, or preferably one week, laid off the drugs. It also bears repeating that while she was ridiculed at the time, Nancy Reagan’s “Just Say No” public service campaign worked. So why the heck don’t we have such a PSA campaign today? One that specifically addresses an issue like the one I just cited. Show graphics. Show victims of the war with FARC, and/or the drug wars in Mexico and in our cities. It’s a simple message.

“We can break the back of the drug cartels. We can help alleviate the suffering in Colombia and Mexico. Get off drugs. You’ll not only help yourself, your employer, and your family; you’ll help our friends and allies who don’t deserve to be threatened with such violence.”

Romania: Finally, on a lighter note, perhaps, you have the situation involving the loser of the recent presidential race here, Mircea Geoana. The result was incredibly tight with all kinds of charges of fraud following President Basescu’s Dec. 6 run-off victory.

But now Geoana is saying he was the victim of a “negative energy attack” by a shadowy parapsychologist enlisted by his rival during the debate. As reported by the Irish Independent:

“At first Romanians mocked their ex-foreign minister saying he was a bad loser. Basescu himself jokingly dismissed the allegations. But the recent publication of photos showing well-known parapsychologist Aliodor Manolea close to Basescu during the campaign has caused Romanians to ask whether the president really did put a hex on his rival.

“The photos show Manolea, a slightly built, bearded man with a round face and cropped receding hair, walking just meters behind Basescu before the debate. Manolea’s specialties include ‘deep mind control,’ clairvoyance and hypnotic trance, according to the Romanian Association of Transpersonal Psychology.

“Manolea’s alleged role in the elections evokes age-old Balkan rituals where the evil eye, witch doctors and other mysterious forces were used to launch mystic energy attacks on opponents and sap hapless victims of their vital strength.”

But photos also show Manolea amid Geoana’s entourage during a 2007 electoral campaign, “suggesting the parapsychologist may be inclined to offer his services to anyone willing to pay the fee.”

Frankly, as a Mets fan, I’m thinking of enlisting Manolea’s help the next time New York plays Philadelphia. Maybe have him sidle up to Ryan Howard beforehand.

Random Musings

–It’s a surly public, that’s for sure. 58% of Americans believe the country is on the wrong track, according to an NBC News/Wall Street Journal survey, but the same poll also had 48% blaming Republicans in Congress for our predicament vs. 41% blaming Democrats. Only 27% say President Obama gets a “great deal/quite a bit” of the blame. 

Nonetheless the fallout from the Scott Brown election to Ted Kennedy’s seat in Massachusetts obviously continued to reverberate. Some opinion.

“Just as Dorothy and Toto exposed the ordinary man behind the curtain in ‘The Wizard of Oz,’ the voters in Massachusetts revealed that, in this White House, there is no there there.

“It’s all smoke and mirrors, bells and whistles, held together with glib talk, Chicago politics and an audacious sense of entitlement.

“At the center is a young and talented celebrity whose worldview, we now know, is an incoherent jumble of poses and big-government instincts. His self-aggrandizing ambition exceeds his ability by so much that he is making a mess of everything he touches.

“He never advances a practical idea. Every proposal overreaches and comes wrapped in ideology and a claim of moral superiority. He doesn’t listen to anybody who doesn’t agree with him.

“After his first year on the job, America is sliding backwards, into grave danger at home and around the world. So much so that I now believe either of his rivals, Hillary Clinton or John McCain, would have made a better, more reliable and more trustworthy president.

“Yes, we’re stuck with him, but we’re no longer stuck with his suffocating conformity. The second Boston Tea Party opened the door to new ideas and new people of both parties.

“Obama’s reactions were predictable. More self-pity, blaming George W. Bush, and claiming that the voter revolt is due to ignorance about the health-care plan they hate. Blah blah blah. Hasn’t he heard? The magic is gone….

“He pledged transparency, then retreated to secret deal-making that corruptly rewarded unions and fleeced everybody else. The result was a national scandal that would have done tremendous damage if it became law….

“Obama’s crisis is personal. The inner hollowness and facile talent that propelled his rise gave him none of the grit necessary to meet the challenges. Where would he begin?

“America has survived bad presidents before and we will survive this one. Fortunately, we’re no longer waiting for him to grow into the job. Massachusetts proved the nation is ready to move forward.”

As a post-election Massachusetts survey conducted by the Washington Post, the Henry J. Kaiser Family Foundation and Harvard University’s School of Public Health found, only 43% of voters there say they support the health-care proposals advanced by Obama and congressional Democrats; 48% oppose them. Among Brown’s supporters, eight in 10 said they were opposed to the measures, 66% of them strongly so. And as I noted last time, Brown earned the support of independents by nearly 2 to 1, whereas Obama carried the state’s independents by 17 points in 2008.

But 6 in 10 who voted in Massachusetts still approve of Obama’s job performance, and the majority of Americans continue to like him personally. Plus 58% of Massachusetts voters say they are dissatisfied or angry about what Republicans in Congress are offering. So the elephants can’t get too cocky.

–Yet in another blow to the Democrats’ efforts to control their losses in November, Delaware Attorney General Beau Biden, Papa Joe’s boy, announced he would not run for the Senate after a year ago it was assumed Beau would slide right into the Vice President’s former seat. The younger Biden said he had to focus on a high-profile pedophile case where a pediatrician has been accused of sexually assaulting 100 or more children over the past decade, but as Univ. of Virginia political analyst Larry Sabato told the Associated Press, “As always, they tell part of the truth, but not the whole truth.” Biden was facing a tough race against longtime state fixture Republican Rep. Mike Castle, a two-term governor who has never lost in the state, if I recall correctly. So you can book it. Castle’s the victor. Now if New York could only find the right candidate to run against Democratic Senator Kirsten Gillibrand, who has proved not exactly up for the job. [She’s barely ready for a city council position.]

–What is it about South Carolina? First Gov. Mark Sanford can’t remember if he’s hiking the Appalachian Trail or scaling some peaks in Argentina, and now we have the state’s lieutenant government, Andre Bauer. As reports have noted, Bauer has been Sanford’s best insurance policy. When it seemed a certainty the governor was going to be impeached, lawmakers realized that if they booted him they’d be elevating the Republican Bauer. You see, folks…Andre Bauer is a basically an idiot.

“At a town hall meeting Thursday, Bauer, who is running for governor in his own right now that Sanford is term-limited, said: ‘My grandmother was not a highly educated woman, but she told me as a small child to quit feeding stray animals. You know why? Because they breed! You’re facilitating the problem if you give an animal or a person ample food supply. They will reproduce, especially ones that don’t think too much further than that.’”

Goodness gracious. Said a Democratic candidate for governor, state Sen. Vincent Sheheen, “I am disgusted by these comments. They show an unbelievable lack of compassion toward the unemployed workers in our state who are hurting during these hard times.”

Bauer apologized but said government should expect welfare recipients to try to better themselves. “I didn’t intend to offend anyone.”

–Yes, it’s time to formally entomb John Edwards in the StocksandNews “Dirtball Hall of Fame” after reports of a sex tape have surfaced along with the allegation Edwards bedded Rielle where he used to sleep with Elizabeth. He really should be strapped onto the outside of the last space shuttle mission.

“T-minus five seconds for separation of the rocket boosters…and there goes former senator and presidential candidate John Edwards…a fitting ending for one of America’s true sleazebags…”

–Speaking of space, on Monday we’ll learn the details of President Obama’s plan for NASA but the early word is not good; as in the moon mission is being scrapped (I didn’t care about this one), while private companies will take over launching astronauts into space in the future, leaving NASA with an as yet defined mission and the probable loss of at least 4,500 jobs at the Kennedy Space Center, with equal pain felt at the Johnson Space Center. But I want to see the president’s comments on a potential Mars mission before opining further.

–You know…it’s really time for FBI Director Robert Mueller to retire. Not only have we learned that Christmas Day bomber Abdulmutallab was Mirandized after only 50 minutes of interrogation, when he should have been for 50 hours, but the government failed to invoke the new High-Value Detainee Interrogation Group (HIG) to question the guy.

It was in August that President Obama announced the intention to create a multiagency HIG that transferred lead responsibility for interrogations to the FBI and away from the CIA. So guess what? Mueller, in an appearance before Congress the other day, admitted the HIG hasn’t been put together yet. Just hand the director his walking papers. I’ve been a supporter of his over the years…no longer. [Others, incidentally, are blaming Dennis Blair. Fire them both.]

–According to the congressionally mandated Commission on the Prevention of Weapons of Mass Destruction Proliferation and Terrorism, the White House and Congress receive an “F” grade “for not building a rapid-response capability for dealing with disease outbreaks from bioterrorism, or providing adequate oversight of security and intelligence agencies.” Heck, combine this with the Abdulmutallab/HIG debacle and is there any reason for any of us to be confident our government can handle such an attack? 

As the Washington Post reported, “The WMD panel cited the government’s faltering response to the swine flu epidemic as evidence of a lack of preparedness for a large-scale crisis, adding that the blame for the failures is shared by various administrations and branches of government.”

Former senator Bob Graham (D-Fla.) said, “Each of the last three administrations has been slow to recognize and respond to the biothreat. But we no longer have the luxury of a slow learning curve when we know al-Qaeda is interested in bioweapons.”

The panel did give “A” grades for government programs that secured dangerous viruses and bacteria. Then again, after we’ve seen how easy it is to crash a White House dinner, one wonders just how hard it would be to gain access to the ‘secure’ facility handling most of mankind’s worst viruses down in Atlanta. [Or maybe I have to stop watching “24.”]

–According to Michael Goodwin of the New York Post, neither Police Commissioner Ray Kelly nor Mayor Bloomberg was asked their opinions before Washington decided to hold the trial of Khalid Sheik Mohammed. But now, with even Bloomberg railing about holding the trial in New York, including a potential cost to the Big Apple of $1 billion, including tons of lost business, and with many of the city’s corporate titans complaining directly to Obama, there is no way the administration can go through with this, which is indeed the word as I write.

Commissioner Kelly said, in looking back to the Nov. 13 announcement, “We were informed it would happen and an announcement would be made that day. There was no consultation and no checks to see what our thoughts were.”

It’s no surprise both Kelly and Bloomberg in the immediate aftermath played the role of good soldiers until they had a time to reflect and calculate just what was involved in what is bound to be a multi-year trial. 

“Instead of putting national security first, (the White House and Attorney General Eric Holder’s Justice Department) satisfied their ideological fixation for giving mass murderers full constitutional rights, including the presumption of innocence.

“If that meant subjecting millions of people in New York to increased risk of a terror attack, well, so be it.

“And if it meant turning a courtroom just blocks from Ground Zero into a circus tent for Islamic fanatics to threaten jurors, witnesses, the judge, and gloat over their 9/11 slaughter, well, so be it.”

But on Friday, as the New York Post editorialized, it appears the White House listened to what the paper labels “a real senator,” California Democrat Dianne Feinstein, who on Thursday came out against the administration’s decision to try KSM in lower Manhattan.

“I think the situation has changed with the Christmas attack,” she said, citing briefings she’d received as chair of the Senate Intelligence Committee. “I think [Obama] should listen to [Mayor Bloomberg]…and, candidly, make a change.”

“Kudos to Mayor Mike, who made a case strong enough to get the White House off its duff – and to Sen. Feinstein, the California solon who may well have pulled New York’s chestnuts out of the fire.”

–“Tea Party” activists are holding a convention in Nashville this coming week but two who were to speak, Republican Reps. Michele Bachmann (Minn.) and Marsha Blackburn (Tenn.) said they will pull out, citing potential conflicts with House ethics rules. But they are also concerned how the money raised for the event is being spent. For example, tickets are $550. $550?! Give me a freakin’ break. This is grass roots politics? No wonder I’m not a tea partier. [I’m also too busy to go to their functions, not that I don’t agree with some of the positions.]

I mean consider this. Why is the ticket price so high? Because they are shelling out $100,000 to Sarah Palin for the keynote address! You can have it. I’ll form my own party. We’ll drink domestic and listen to 60s music. Bring your own beer. I’ll supply the world’s best ‘45 collection.

–Editorial / Wall Street Journal…for those who watched the State of the Union…

“In the case of Barack Obama v. Supreme Court of the United States, that was some oral argument on Wednesday night. With the justices arrayed a few feet in front of him in the House chamber, President Obama blistered their recent decision defending free political speech for corporations and unions. As Democrats in Congress and Cabinet members rose and applauded around them, the Justices sat stern-faced, save for Samuel Alito, who was seen shaking his head and mouthing the words ‘Not true.’

Actually, I just think both of them should have kept their mouths shut. There is no place for an attack of that kind in that setting. Obama disgraced himself. Alito forgot there would be a camera on him.

–The other day a pedestrian in a neighboring town was struck and killed crossing an intersection. Only one reason to bring this up, though. “Union police said Parikh was talking on a cellphone as she crossed.” So forgive me if I’m not losing sleep over this one. But what absolutely drives me crazy is when I see a woman (or guy these days) pushing a stroller across a busy intersection while blabbing away, totally oblivious to all around them. 

–Currently, 19 states ban texting while driving as another 23 debate legislation to do the same. I don’t understand why there is even a need for debate. 

–Toyota advises that if you experience sudden acceleration in one of their vehicles you should step on the brake pedal firmly with both feet and shift the transmission into neutral to bring the vehicle to a stop. If you can’t shift the vehicle into neutral, turn the engine off. You’ll have to use more effort, though, to steer and brake because those mechanisms will be lost with the engine off. [With a traditional key ignition, turn the engine off but don’t remove the key since that would lock the steering wheel.]

–California’s latest multi-year drought has a good chance of ending due to all the El Nino related storms that are piling up the snow in the Sierras. Reservoirs across the state are beginning to fill up nicely. But some say this El Nino is a weak one and it’s too early to give the all clear.

–A study in the journal Science attempts to explain that the reason global average temperatures have stayed roughly flat in the past decade is the result of lower levels of water vapor in the stratosphere. As in the level of water vapor has dropped 10%, “triggered by unexplained cooler temperatures at certain high altitudes above the tropics,” as reported by the Wall Street Journal. “The study concludes that in the last decade the decline in water vapor slowed the rate of rising temperatures by about 25%, thus partly negating the heat-trapping effect of increasing greenhouse gases such as carbon dioxide and methane.” [My head hurts.]

So add this to the solar activity explanation and changes in ocean currents.

–I forgot where I read this, but as part of the interview process at Goldman Sachs they take you out to eat and if you can order within 30 seconds you have a major leg up. I can order in 4 seconds so perhaps I still have a shot at their mailroom if my current gig doesn’t pan out.

–Finally, according to Britain’s leading astronomer, Lord Rees, the president of the Royal Society, the chance of discovering life on other worlds is greater than ever. Needless to say, Lord Rees adds such a discovery would be a moment that would change humanity.

“Technology has advanced so that for the very first time we can actually have the realistic hope of detecting planets no bigger than the earth orbiting other stars….

“I suspect there could be life and intelligence out there in forms that we can’t conceive.

“And there could, of course, be forms of intelligence beyond human capacity, beyond as much as we are beyond a chimpanzee,” he added. [BBC News]

I bet they don’t cross busy intersections while on their cellphones. But it would be kind of neat to have the president introduce said alien during the State of the Union Address.

“And seated next to Michelle is Urkwert Faardvark of iPadrius. We welcome all your people. Just don’t destroy us.”

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

Gold closed at $1081
Oil, $72.64

Returns for the week 1/25-1/29

Dow Jones -1.0% [10067]
S&P 500 -1.6% [1073]
S&P MidCap -2.6%
Russell 2000 -2.4%
Nasdaq -2.6% [2147]

Returns for the period 1/1/10-1/29/10

Dow Jones -3.5%
S&P 500 -3.7%
S&P MidCap -3.3%
Russell 2000 -3.7%
Nasdaq -5.4%

Bulls  40.0
Bears 23.3 [Source: Chartcraft / Investors Intelligence…huge drop in bulls, over 12 points, with a big increase in bears…multi-decade low in bears did indeed act as a contrarian signal, at least in the short term.]