Wall Street
What a week; yet another chaotic and possibly historic one because the debt issue, worldwide, came into focus as a combination of concerns over the likes of Greece, Spain and Portugal, combined with the release of President Obama’s fiscal 2011 budget and the massive deficits contained therein, caused many to wonder if we’ve finally crossed the point of no return. It was this, along with some unsettling developments on the China front, that had the stock market gasping for air with the Dow Jones falling below 10000 before recovering a bit late Friday (in a pure bout of blatant market manipulation).
What was striking in the discussion is that while the United States’ economy is in no way Greece, we share a certain kinship in that our projected budget deficits are essentially the same. Ours could be close to 11% of GDP in 2011 and Greece’s is in the 12% neighborhood, similar to Spain and Portugal as well, while the other PIIGS, Italy and Ireland, aren’t exactly role models in their own right.
For years I’ve written that the deficits in this country did not matter, in the short- and medium-term, when it came to the performance of the stock market (which is the bottom line for StocksandNews). I always said there would come a time when we would pay the piper, but there was zero reason to lose sleep over it today. We’ve had far more pressing issues, from the collapse of the tech bubble, 9/11, Iraq, the housing bubble, the financial crisis, Iran, etc.
I’ve also been adamant that more time was wasted ringing one’s hands over the plight of the U.S. dollar than was warranted, and on both topics I have been bang on. Regarding the latter, in particular this past year, as one commentator after another foretold the collapse of the greenback, I stood firm. You’ve all noticed what’s happened the past few weeks no doubt. The dollar bears, and their commodity brethren, have been crushed because like it or not, the United States is still the safest bet in town, even with our massive debts. It’s really a pretty simple story. I can’t believe how many missed it.
But with this week’s change in sentiment concerning the twin deficits, both fiscal and national, we are indeed closer to the day when all hell could break loose…when capital will flee the greenback and return home, like to Japan and China. [Not all of it, of course, but enough to make a difference.] However, I’m still not going to lose much sleep over it. The more important issue for today is just where the global recovery is headed, and that’s where the situation in the eurozone in particular is important. Problems there, while benefiting the dollar, can lead to a big drop in confidence. While you will never hear the White House say this, a rising stock market is critical to sustaining our recovery. If out of nowhere the Dow Jones were to drop from 10000 to 8000, for instance, for whatever reason (possibly geopolitical), a true depression, not just a double-dip, would be a virtual guarantee. For starters it would foretell a second collapse in housing.
One other item. This week saw the return of the credit-default swap market with a vengeance, where speculators, pure and simple, can roil markets much as they did in the fall of 2008. Why these “insurance policies” are even in existence has long been a mystery to me. There is zero economic reason for them. Let the market reprice risks in corporate bonds and sovereign debt through increases in yields. It worked for over a hundred years until the introduction of this crap…where in many a case you have no idea who is on the other side of the trade and whether you’d get paid, even if you’re right! It’s insane. It’s what killed AIG and you all now know how a bunch of so-called geniuses in a small department there almost brought down our entire financial system. For a while this week it looked like it was happening all over again. Moving along…
Editorial / Washington Post [on the just concluded Davos gathering]
“Harvard economist Kenneth Rogoff kicked off the discussion with a simple, depressing argument: The banking collapse is morphing into a long-term crisis of government debt. Instead of financial panic, we now face an ‘illusion of normalcy,’ with governments stepping in to guarantee everything. They’ve succeeded in fending off another Great Depression – great! – but at the cost of skyrocketing debt. And if history is any guide, he said, financial crises are often followed precisely by a wave of sovereign debt crises a few years later. ‘In countries like the United States and Britain, I’m not talking about default, but we certainly may have to see very painful political crises,’ Rogoff predicted, ‘belt tightening, higher taxes, slower growth.’”
So let’s take one example of where we’re headed. The fiscal 2011 budget submitted by President Obama this week, what the Wall Street Journal described as “one of the greatest spend-while-you-can documents in American history.” $3.8 trillion in spending in 2011, or 25.4% as a share of the U.S. economy, a post-World War II record. The 40-year average is 20.7%.
“If this budget is Mr. Obama’s first clear demonstration of his long-term governing priorities, then it’s hard not to conclude that this spending boom is deliberate. It is an effort to put in place programs and spending commitments that will require vast new tax increases and give the political class a claim on far more private American wealth.
“Despite talk of ‘tough choices’ in yesterday’s document, the Administration wants $25 billion in new spending for states for Medicaid, $100 billion for yet another jobs ‘stimulus,’ big boosts in spending for low-income family programs, for health research, heating assistance and education. If Mr. Obama’s priorities become law, federal outlays will have grown an astonishing 29% since 2008.”
Hardly the stuff of Kenneth Rogoff’s belt tightening. But we will have higher taxes…and slower growth.
The Obama budget contains about $2 trillion in tax increases over the coming decade, $1 trillion of this coming by reinstating 10-year-old income tax rates of 36 percent and 39.6 percent (from 33 and 36) for single Americans earning more than $200,000 and joint filers who make more than $250,000. In addition the top capital gains rate will revert back to 20 percent from 15 today, all to take effect next Jan. 1.
Obama cut taxes some for those earning under $200,000 and talks of tax reductions for small business but the latter actually receives a tax increase. Even with projected increased revenues in other areas, the accumulated deficits over the decade are forecast to add up to $8.5 trillion.
Of course Congress still gets a chance to work its magic and you can be sure spending will be even higher than the administration wants, it being an election year and all, and there could be another tax or two thrown in for good measure, see Big Oil and the banks, and that’s hardly a job creator. In fact with all the uncertainty these days, between Washington, the sovereign debt issue, and a rambunctious China (more below), if you’re a CEO why would you take a chance and do a lot of hiring? Oh, I’ll get to Cisco’s John Chambers in a bit…the news wasn’t all bad this week…but in a survey by PricewaterhouseCoopers for the Davos conference, one in four CEOs worldwide said they planned on cutting their payrolls further in 2010. A rousing global recovery? I think not, once we get beyond the current inventory readjustment.
Gerald Seib / Wall Street Journal…on the threat posed by rising deficits:
“The federal budget deficit has long since graduated from nuisance to headache to pressing national concern. Now, however, it has become so large and persistent that it is time to start thinking of it as something else entirely: a national-security threat….
“The U.S. government this year will borrow one of every three dollars it spends, with many of those funds coming from foreign countries. That weakens America’s standing and its freedom to act; strengthens China and other world powers; puts long-term defense spending at risk; undermines the power of the American system as a model for developing countries; and reduces the aura of power that has been a great intangible asset for presidents for more than a century.
“ ‘We’ve reached a point now where there’s an intimate link between our solvency and our national security,’ says Richard Haass, president of the Council on Foreign Relations and a senior national-security adviser in both the first and second Bush presidencies. ‘What’s so discouraging is that our domestic politics don’t seem to be up to the challenge.’”
Bingo. Not a lot of profiles in courage these days, sports fans.
“Consider just four of the ways that budget deficits also threaten America’s national security:
“They make America vulnerable to foreign pressures. [emphasis mine]
“The U.S. has about $7.5 trillion in accumulated debt held by the public, about half of that in the hands of investors abroad.
“That means America’s government is dependent on the largesse of foreign creditors and subject to the whims of international financial markets….
“Chinese power is growing as a result. A lot of the deficit is being financed by China…
“Just this weekend, for example, the U.S. angered China by agreeing to sell Taiwan $6.4 billion in arms. At some point, will the U.S. face economic servitude to China that would make such a policy decision impossible?
“Long-term national-security budgets are put at risk.
“(The) U.S. will spend a once-unthinkable $688 billion on defense (this year, owing to Iraq and Afghanistan). Before Sept. 11, 2001…the figure was closer to $300 billion….
“The American model is being undermined before the rest of the world.
“This is the great intangible impact of yawning budget deficits. The image of an invincible America had two large effects over the last century or so. First, it made other countries listen when Washington talked. And second, it often – not always, of course, but often – made other peoples and leaders yearn to be like America.
“Sometimes that produced jealousy and resentment among leaders, but often it drew to the top of foreign lands leaders who admired the U.S. and wanted their countries to emulate it. Such leaders are good allies.”
Cisco Systems, for one, didn’t just beat the street with its quarterly earnings, but CEO John Chambers said his company was hiring 2,000-3,000 over the coming year because of “one of the most robust turnarounds I’ve seen in my career.” Cisco saw growth across all product lines. Coupled with a solid report from Intel the other week, is business spending returning, or is it just a one-off in the case of a few tech heavyweights? The news on earnings overall has been excellent, with 75% of the S&P 500 reporting thus far exceeding on the bottom line, and 70% beating on the top line, revenues. Not bad…not bad at all.
But with few exceptions we’re hardly getting the “all clear,” and how can we with all the uncertainty around? Yes, cap-ex is growing at its fastest rate since 2006, but that’s mostly in tech land, and we’re nowhere near old peaks in production, plus it’s the consumer that still drives things. What is he concerned with? Jobs and housing.
Regarding the labor market, the January employment data released on Friday showed another job loss for the month, 20,000, but a big upward revision (more jobs lost) for December, along with an annual revision in the labor figures that, bottom line, means we’ve lost 8.4 million jobs in total since the start of the recession.
But…the headline will be that the unemployment rate ticked down to 9.7%. The real rate remains closer to 17% and the 9.7 is like a Russian judge awarding his countryman when the guy actually fell off the parallel bars and broke his neck. Total B.S. Why? Because after seeing solid progress late last year in terms of the weekly jobless claims figures, a more accurate data point, it’s stalled. Now if we get more news like that distributed by Cisco, I’ll change my tune a bit on this front.
I do have to note that the January ISM figure on manufacturing came in at a far better than expected 58.4, and there were similarly strong figures around the world…China 55.8 (or 57.4, depending on your favored benchmark), India 57.7, UK 56.7, Taiwan 61.7…so this is good. I’m just curious what the figures will be in April and May, which will go a long ways in telling us how the second half of the year will shape up.
But back in the States, there’s housing. My mantra, going back to 2008, was we’d bottom in terms of median home prices in April-May ’09 and that indeed was the case…then I said we’d sit there “for an extended period.”
So what I found mildly amusing, given the topic, was how every major publication the past two weeks has had a story on homeowners walking away from their mortgage. To wit:
The threshold seems to be when the home’s value falls below 75% of the amount owed; the point at which the homeowner has to think about walking away. By the third quarter of 2009, an estimated 4.5 million homeowners had reached this mark, and now this figure is slated to peak at 5.1 million by June, or about 10 percent of all Americans with mortgages. [25% overall are underwater.] Bottom line…anyone calling for a rebound in home prices anytime soon is absolutely nuts, not that I’ve seen a single ‘expert’ say this recently. The shills of 2005-06 learned a hard lesson and, in many a case, have been reduced to shoveling snow in the Mid-Atlantic this weekend.
The above is all about the wealth effect so with a labor market that in no way is close to turning around in earnest, and housing still a huge issue, and obviously not a source of cash, those calling for solid growth in the U.S. economy in the second half of 2010 simply aren’t being honest. If I see things really improve, which means I have to also see a resolution to my geopolitical concerns, then I’ll change my forecast. It would help for starters if President Obama would recognize the opportunity he has to bring about change in Iran, as I discuss below, but it’s doubtful.
Street Bytes
–Stocks finished lower a fourth consecutive week, the worst such streak since last March’s lows, with the Dow Jones closing at 10012, and needing a last-hour rally to get there, down 0.6%, while the S&P 500 lost 0.7% and Nasdaq just 0.3%, recovering from heavy losses even after Cisco’s terrific report.
Despite all the dollar volatility, the Treasury market was virtually unchanged.
–In remarks at his swearing in ceremony for a second four-year term as Fed chairman, Ben Bernanke said he was all for even more transparency when it came to Fed operations, but at the same time it must be able to conduct its policy independently.
–Treasury Secretary Timothy Geithner said the government could recoup “outrageous” bonuses for AIG employees through a new bank fee in President Obama’s proposed budget; AIG once again in the headlines for shelling out $100 billion in a fresh round of bonuses. [New York City Mayor Michael Bloomberg blasted the administration’s proposals to go after the banks, seeing as how the Big Apple is heavily dependent on the Street for its tax revenues.]
–Senate Banking Committee Chairman Christopher Dodd said the White House’s unveiling of a proposal to restrict large commercial banks from engaging in significant proprietary trading and owning hedge funds was “transparently political” at a time he’s trying to get a bill through the Senate. Dodd needs bipartisan support with the Scott Brown win in Massachusetts and he also slammed the White House for not having details on their proposal, the “Volcker Rule.”
–Toyota’s recall was extended to the Prius hybrid for brake issues as over 5.5 million vehicles were impacted in the U.S., 2 million in Europe, and hundreds of thousands in Japan when combined with the earlier accelerator pedal problems on eight other models. Transportation Secretary Ray Lahood said, “My advice is…stop driving (impacted Toyotas). Take it to the dealer.” Lahood backed off a bit an hour later. Friday, Toyota’s new president, Akio Toyoda, grandson of the founder, finally stepped forward to issue an apology and assure buyers his company would get to the bottom of this “crisis.”
Yes, the defects are rare, but cause for concern is more than warranted, especially when it came to light that Toyota was aware it had problems in some Lexus vehicles and sudden acceleration going back to 2007. It was not a small issue then…3 in every 100 ES 350s had signs of a problem but it was kept quiet. Toyota also didn’t learn anything from the probe then.
So what is the problem? Is the solution as simple as Toyota claimed, or is it the electronics? For the next year or so, why would you even think of buying a Toyota until you knew? I’ve been driving Hondas for the past 20 years and if they had a similar problem I’d switch to someone else.
–Toyota’s January U.S. sales fell 16% owing to all the controversy, while General Motors’ rose 14% from what had been a 26-year low for the industry in Jan. ’08, Ford’s increased 25%, and Nissan’s climbed 16%. Chrysler’s were down 8% and Honda’s fell 5%.
“ ‘There’s some stray cats and dogs that got in there,’ Mr. Obama said at the House GOP retreat, while in his State of the Union he faulted ‘all of the lobbying and horse trading.’ Strays? These were all White House pets.
“The President did not evince any qualms about ‘the process’ when the Democratic National Committee gave (Nebraska Sen. Ben) Nelson $459,766 to run TV ads defending himself, nor when Mr. Obama himself presided over West Wing negotiations that resulted in $60 billion in tax breaks exclusively for union members.
“It’s true that voters revolted over such corruption and bribery – but it’s also true that these methods were the only way Democrats could move the bill given that voters had so roundly rejected ObamaCare’s core policies….
“All the mea culpas might have at least a shred of credibility if Democrats acknowledged this principled opposition. Instead, Mr. Obama flogs himself for not ‘explaining it more clearly.’ He said in Nashua, ‘We just have to make sure that we move methodically and that the American people understand exactly what’s in the bill.’
“In other words, they’ll come around on the basis of an Al Gore-style slide show or another homily from the ubiquitous President who has been explaining his plan to all and sundry for nearly a year. Mr. Obama’s real problem is that the American people already understand what’s in the bill, and all too well.
“Or at least they understand how destructive it would be if Congress imposed a new edifice of taxes, subsidies, mandates and central planning that is so complex the Members themselves don’t begin to understand it.”
“By 2020, 1 of every 5 dollars spent in the U.S. is expected to go to healthcare.
“Some economists believe that this is not necessarily a problem, as the healthcare industry can provide good jobs and improve both health and productivity.
“But there is growing concern that as much as a third of the medical care delivered in this country does not help patients….
“Len Nichols, health policy director at the centrist New America Foundation. ‘If you believe that so much medical care is unnecessary, as I do, then it is criminal that we are spending so much.’”
“By now, it ought to be obvious why President Obama has wanted his healthcare overhaul passed quickly. It would be (and now will be) inconvenient to promote expanded government health spending while simultaneously pledging to rein in future budget deficits – when unrestrained health spending is a major cause. It’s like promising to go on a diet but first treating yourself to one last binge.
“The Congressional Budget Office confirms the dire fiscal outlook. From 2011 to 2020, the CBO projects cumulative deficits of $6 trillion. By 2020, the debt-to-economy (GDP) ratio increases to 67 percent, up from 40 percent in 2008. Unfortunately, these projections incorporate assumptions, required by law, that are optimistic. Many tax cuts, backed by both parties, are assumed to expire. Adjusting for this and other dubious assumptions could increase deficits by another $6 trillion or more over the decade. By 2020, the debt-to-GDP ratio could approach 100 percent, near its peak in 1946….
“Could big deficits one day trigger much higher interest rates or a run on the dollar? How to reconcile today’s need for deficits – to promote economic recovery – with the long-term dangers? Good questions without easy answers.
“But we do know that health spending drives budget prospects. Already, health care represents one-quarter of federal outlays. In 2008, Medicare and Medicaid, the two biggest programs, cost $657 billion, or 22 percent of the budget. By 2020, the CBO puts their spending at $1.5 trillion, about 28 percent. And these estimates don’t include the costs of Obama’s proposals.”
–Bank of America former CEO Ken Lewis, as well as the former CFO, were charged by the New York Attorney General’s office with misleading investors during the acquisition of Merrill Lynch late 2008/early 2009. The SEC, though, settled with BofA over the same issues. There is no doubt that the bank failed to properly disclose growing losses at Merrill, as well as huge bonuses being paid them, prior to the final shareholder vote to approve the deal. While this was happening, BofA received $20 billion in bailout money. Lewis had testified he was forced by the government to finalize it despite his misgivings. But shareholders were deceived before voting.
–With all the focus on compensation on Wall Street, JPMorgan Chase & Co. CEO Jamie Dimon received $17 million in restricted stock and options, but no cash, though since being issued the award the value has fallen about 10%. Seems fair. And at 5:00 pm on Friday, Goldman CEO Lloyd Blankfein’s comp was released. He received $9 million in restricted stock, no cash, with similar amounts going to his two lieutenants. Anyone giving Goldman, and Blankfein, grief at this figure doesn’t know what they’re talking about. The spouses, though, undoubtedly confronted the three at the door that evening. “What? No cash?! Whose great idea was that?!” [Lotta shouting going on in these households these days; makeovers to pay for and such.]
–Ireland’s jobless rate is now 12.7% and headed to 13.5% by most estimates. Tax revenues have cratered by a huge 18%. And there was a story out that the restaurant industry is warning one-third will have to close without government action (folks are spoiled here…they don’t call it the “dole” for nothing) as 80% are losing money. But consider that Ireland has a minimum wage in the “catering trade” of about $13 an hour compared to less than $3 in Spain. That’s crazy! And get this…restaurants have to pay time-and-a-third for Sunday work. I never knew this. It explains why in my beloved Lahinch, so few restaurants are open that day.
–In a further sign of the issues still facing the banking industry, Ireland’s two largest institutions will need to raise a combined $8.5 billion to leave their capital ratios at minimum acceptable levels, while writing down at least $33 billion in bad loans.
–OPEC told the BBC that compliance with production targets has plummeted from 80% a year ago to 55% last month, with its secretary general calling this “worrying.” “The risk is you see a lot of oil in the market and no one is buying it. Then the price will come down.” Mr. El-Badri added, “Anything below $70 will not permit us to invest.” The only thing holding up the price of oil these days remains strong demand from China and India.
[On the other hand, the Wall Street Journal had a report this week that the global supply glut is showing some signs of shrinking as the volume of oil being stored at sea has been halved compared to last April.]
–ExxonMobil’s net income for 2009, $19.3 billion, was the smallest in seven years as higher oil prices squeezed profit margins in its refining business. Back in the third quarter of 2008 alone, as oil hit $147, Exxon earned $14.83 billion (and $45.2 billion for the year).
–In a story that is typical of the times, First Data, the world’s largest processor of credit card payments, is having trouble servicing its own debts as credit card transactions fall for the first time in history. How much debt? Try $22 billion taken on when Kohlberg Kravis Roberts took the company private in 2007…one of those destructive LBOs that served absolutely no purpose other than to line the pockets of KKR. Now KKR has to restructure the debt enough to be able to bring the company public, using proceeds from that offering to pay down the debt. It’s sickening. But KKR’s principals no doubt continue to eat caviar.
“The federal government, with its 2.8 million civilian employees, has become a self-perpetuating machine, insulated from the problems of ordinary Americans by ever-greater disparities in job security, pay, and benefits. The average government salary is north of $70,000, and a fifth of all federal employees make more than $100,000, in a country where the per capita income is just over 44,000.
“Since federal employees are not smarter or more virtuous than other Americans, we should bring federal salaries and benefits back into line with those of the private sector.”
–The number of homes priced at $1 million or more in California tumbled for a fourth consecutive year in 2009. Ah, but a nine-bedroom, 10-bathroom, 22,721-square foot home in Bel-Air that was built in 2008 sold for $26.5 million in July. Hope the plumbing works.
[By the way, I love my new 2 BR / 2 BA downsize job. Couldn’t be happier, plus I’ve got the Dunkin’ Donuts in my building. Dunkin’ is celebrating 60 years. Did you know they make a fresh pot of coffee every 18 minutes?]
–Office rents in midtown Manhattan are at their lowest levels since 2002, with a vacancy rate of 13.7%. Single-family home values in the Big Apple aren’t expected to bottom until late 2011, 35% below the high; New York City having been the last major metro area to crack due to the high bonuses being paid on Wall Street. Lastly, as Greg David of Crain’s New York reports, there are 530 stalled construction projects in Gotham.
–President Obama stupidly blasted Las Vegas again, saying in his Nashua, New Hampshire, town hall meeting that, “When times are tough, you tighten your belts. You don’t go buying a boat when you can barely pay your mortgage. You don’t blow a bunch of cash on Vegas when you’re trying to save for college. You prioritize. You make tough choices.”
Las Vegas Mayor Oscar Goodman immediately fired back. “I’ll do everything I can to give him the boot,” adding he would no longer welcome the president here if he visits. “This president is a real slow learner.” Goodman is not affiliated with a political party.
Democratic Congresswoman Shelley Berkley said in a statement, “President Obama needs to stop picking on Las Vegas and he needs to let Americans decide for themselves how and where to spend their hard earned vacation dollars.”
And Senate Majority Leader Harry Reid, in the midst of a titanic struggle to keep his seat, said, “The President needs to lay off Las Vegas and stop making it the poster child for where people shouldn’t be spending their money….I would much rather tourists and business travelers spend their money in Las Vegas than spend it overseas.”
–Dick Brass, a former VP at Microsoft from 1997-2004, had some interesting thoughts in an op-ed for the New York Times.
“Microsoft has become a clumsy, uncompetitive innovator. Its products are lampooned, often unfairly but sometimes with good reason. Its image has never recovered from the antitrust prosecution of the 1990s. Its marketing has been inept for years: remember the 2008 ad in which Bill Gates was somehow persuaded to literally wiggle his behind at the camera?
“While Apple continues to gain market share in many products, Microsoft has lost share in Web browser [Ed. Bing, however, has potential], high-end laptops and smartphones. Despite billions in investment, its Xbox line is still at best an equal contender in the game console business. It first ignored and then stumbled in personal music players until that business was locked up by Apple.
“Microsoft’s huge profits – $6.7 billion for the past quarter – come almost entirely from Windows and Office programs first developed decades ago. Like G.M. with its trucks and S.U.V.’s, Microsoft can’t count on these venerable products to sustain it forever. Perhaps worst of all, Microsoft is no longer considered the cool or cutting-edge place to work. There has been a steady exit of its best and brightest.”
Brass adds the company “never developed a true system for innovation.”
“As a result, while the company has had a truly amazing past and an enviably prosperous present, unless it regains its creative spark, it’s an open question whether it has much of a future.”
By comparison, Steve Lohr of the Times had a piece about Apple and Steve Jobs.
“From computers to smartphones, Apple products are known for being stylish, powerful and pleasing to use. They are edited products that cut through complexity, by consciously leaving things out – not cramming every feature that came into an engineer’s head, an affliction known as ‘featuritis’ that burdens so many technology products.
“ ‘A defining quality of Apple has been design restraint,’ says Paul Saffo, a technology forecaster and consultant in Silicon Valley.”
“In choosing key members of his team, he looks for the multiplier factor of excellence. Truly outstanding designers, engineers and managers, he says, are not just 10 percent, 20 percent or 30 percent better than merely very good ones, but 10 times better….
“Mr. Jobs is undeniably a gifted marketer and showman, but he is also a skilled listener to the technology. He calls this ‘tracking vectors in technology over time,’ to judge when an intriguing innovation is ready for the marketplace. Technical progress, affordable pricing and consumer demand all must jell to produce a blockbuster product.
“Indeed, Apple designers and engineers have been working on the iPad for years, presenting Mr. Jobs with prototypes periodically. None passed muster, until recently.”
–Casino revenue in Macau rose 63% in January from a year earlier, in yet another economic indicator of import when looking at China’s recovery and seemingly irrational growth rate. There are some ‘real’ barometers behind what some see as fluff in China’s numbers.
–Attendance at New York’s Metropolitan Museum of Art rose 4% last year to 4.7 million visitors. But donations dropped by 46% to $43 million. The reason is foundations have seen a big drop in their investment portfolios and thus can’t dole out as much.
–According to Paul Tharp of the New York Post, one of the reasons why the SEC missed the Madoff Ponzi scheme is because “its employees were too busy trying to access porn at their desks.” Get this:
“About two dozen employees over the past two years have been caught using SEC computers to try to access porn Web sites, including one regional supervisor who made 1,800 attempts over a 17-day period but was denied access by monitoring software.”
That particular pervert was only given a reprimand for wasting time and agency assets.
–In a study on wealth in New Jersey by Boston College, more than $70 billion left the state between 2004 and 2008 as the affluent moved elsewhere. In the five preceding years, New Jersey saw an inflow of $98 billion. There is little doubt the exodus since has been due to all the tax hikes, including increases in income, sales, property and ‘millionaire’ taxes. For example, the top 1 percent of taxpayers pay more than 40 percent of the state’s income tax.
–CBS News anchor Katie Couric has a contract paying her $15 million a year that expires in May 2011. So imagine her relations with the staff (said to be awful), and how if the network wants to keep her (and it seems as if it does) that she must take a huge pay cut, because as one in the news division said, $15 million is 200 reporters at $75,000 per. That’s staggering when you put it in those terms as further job cuts are in the offing there.
–In record speed the National Transportation Safety Board issued its final report on the Colgan Air crash in Buffalo last February that killed 50 and it was a series of horrendous mistakes by the pilots that brought it down, not the weather. Bottom line, the two were both so distracted by a personal conversation the entire flight that they didn’t recognize the dangers they were in until the last minute and then when they finally realized it, captain Marvin Renslow performed the exact opposite action that was called for, causing the plane to lose lift and dive into the ground.
While you mourn the passengers, imagine the parents and families of the two pilots. The name has been disgraced…forever.
–According to a report by Harvard’s Center for Internet and Society, only 8 percent of online teens have embraced Twitter, rather interesting given the generation’s passion for technology. The difference is that teens want to socialize with their friends and peers instead of broadcasting to the world, as noted by Donna St. George of the Washington Post. The other thing is teenagers like to talk and Twitter limits you to 140 characters.
Foreign Affairs
Iran: Germany’s foreign minister summed it up on Friday. “For the past two years Iran has repeatedly bluffed and played tricks” and its latest proposal from President Ahmadinejad simply fits the mold, the little terrorist saying his country was ready to send low-enriched uranium abroad to be converted into fuel for use in medical research. China said this represented a shift in Iran’s position, which meant it was worth continuing negotiations rather than levying harsher sanctions, in case you wondered where China stood these days. But two things. Iran didn’t really convey any change in its stance and, second, Ahmadinejad’s offer hasn’t even been approved by hardliners (worse than Mahmoud) in his own government.
This week the United States said it was accelerating deployment of missile defenses in the UAE, Bahrain, Kuwait and Qatar (Israel and Saudi Arabia already having them), but the official word out of our intelligence agencies is that Iran has “slowed” its enrichment of uranium. Of course these are the same folks who have totally miscalculated Iran’s progress in the past. Others, such as in Germany and Israel, believe Iran has the capacity for a bomb by year end, and then it becomes a matter of the delivery of same; Iran this week testing another new rocket.
Back to Ahmadinejad’s supposed openness to a bulk transfer of his nation’s uranium stockpile, Sec. of State Hillary Clinton said, “If Iran wishes to accept (the IAEA’s original proposal), we look forward to hearing about it from the IAEA, because that’s the appropriate venue for them to file an official response.”
[Friday night we learned that Iran indeed would be presenting a proposal to the IAEA but that Iran wanted the exchange of uranium to take place on its soil, in batches (not all at once), and that Iran would determine the amounts involved. All of this has been a non-starter in the past.]
Israeli Vice Prime Minister Moshe Yaalon said, “In essence, the Iranian regime must be given the choice: either a bomb or survival. It is important to continue to make clear to the extremist Iranian regime that all options are still on the table and that ignoring the international demands can end in the worst way.”
What’s needed is regime change. Nine more Iranian dissidents are to be executed soon as the leadership tries to prevent a huge opposition rally planned for Feb. 11, the anniversary of the 1979 Islamic revolution. Mir Hossein Mousavi and Mehdi Karoubi, the two main opposition leaders, have showed little sign of backing down and have urged their supporters to take to the streets next Thursday. It is also time for the Obama administration to support the opposition. It’s been insane we haven’t, and as the Wall Street Journal’s Bret Stephens put it this week, regarding the myth that by supporting the demonstrators we hurt their cause:
“This was the administration’s view after the June 12 election, as it walked on tiptoes to avoid the perception of ‘meddling.’ The regime accused the U.S. of meddling all the same.
“But protest movements like Iran’s (or Poland’s, or South Africa’s) are sustained by a sense of moral legitimacy that global support uniquely conveys. When will American liberals get behind Iranian rights, as they have, say, Tibetan ones? Maybe when President Obama tells them to.”
Stephens also agrees with my long-held thesis that there’s nothing wrong with bombing Iran’s facilities, be it us or Israel, even if it only sets back the program a year or two. “What’s wrong with buying time?”
And as the Washington Post editorialized this week, the danger in Obama’s strategy is that by insisting on negotiating with the current regime, we are undermining the Green movement.
Frankly, I had the idea, years ago, that President George W. Bush should have accepted an invitation to speak at Tehran University. He didn’t…because he was incapable of thinking outside the box. Sure, Iran’s leadership would not have allowed him to address the students but that was the point. [This was back in 2003-04 when there were student-led protests.] Iran is ready to fall, today, but it needs a push. Obama and his people need to ‘create an opportunity.’
Israel: In hoping Palestinian leader Mahmoud Abbas returns to the negotiating table, Secretary of State Clinton said in a news conference on the Middle East peace process that “Of course, we believe that the 1967 borders, with swaps, should be the focus of the negotiations over borders.” This isn’t new, just not said in public like that. “Agreed swaps” refers to Jewish settlements in the West Bank, which means some would have to be dismantled in return for land that would form the basis of a Palestinian state, which means the Israeli settlers would start a civil war…. just taking it to its realistic conclusion, you understand.
But of more immediate import were the words used by Israel’s foreign minister, Avigdor Lieberman, the loose cannon, who said of Syria, “We must bring (them) to realize that just as it gave up on the dream of greater Syria and control of Lebanon – so it will have to give up on its ultimate demand for the Golan Heights.” Lieberman added that when it came to Syrian President Bashar Assad, “in the next war [with Israel], not only will you lose, but you and your family will lose the regime.”
Not exactly smart for two reasons. Israel has been trying to reach out to Assad, even as he arms Hizbullah and Hamas, but the Golan Heights would undoubtedly be returned to Syria in any final peace agreement between the two. Prime Minister Netanyahu was forced to issue a clarification that his government will “pursue peace and negotiations with Syria, without preconditions.”
Now to be fair, Assad himself had said earlier, “Israel is driving the region towards war, not peace,” with the Syrian foreign minister adding “you (Israel) know that war at this time will reach your cities.”
On a different matter, it now appears Israel killed a top Hamas commander in his Dubai hotel room back on January 20 by injecting him with a drug that induced a heart attack. The body was discovered by staff and there had been no suspicious signs, with local doctors diagnosing heart failure. But nine days later, a sample of the blood showed signs of poison.
Finally, Target was forced to remove thousands of little toy globes when it was discovered they replaced the spot where Israel is with the printed word “Palestine.” A New Jersey company had imported “tens of thousands” of the globes from China. But as the New York Post’s Andrea Peyser notes, this is no small thing and is in keeping with Arabic textbooks that deny Israel’s right to exist and a movement in Europe to boycott Israeli products, let alone Iran’s pronouncements.
Lebanon: Another date to watch around the world is Feb. 14, the fifth anniversary of the assassination of Rafik Hariri in Beirut. The two main political factions have differing agendas, one of which is Hizbullah.
China: As noted above, don’t count on China’s support when it comes to increased sanctions on Iran, especially following the announcement of U.S. arms sales to Taiwan, as the United States is obligated to do under the Taiwan Relations Act. China is using the occasion of our sale of 60 Black Hawk helicopters, Patriot missiles, and other weapons systems (but not, importantly,
F-16s that Taiwan has long sought), $6.4 billion worth in all, to go off on all manner of issues, including pushing back on complaints about the currency, the Dalai Lama, and cyber attacks. This is when China is at its worst.
Beijing has threatened trade sanctions against U.S. arms companies, including the likes of Boeing and Lockheed Martin, and it’s doing something I said years ago would be the case; playing the Taiwan card to stir up nationalism. Government run newspapers, for example, encouraged the people to sign an online petition calling for a boycott of U.S. goods and are running bitter denunciations of Washington. It’s time for Obama to pick up the phone and tell President Hu, “Chill out.” Privately, not publicly. Obama should also tell Hu, “Listen, you know what we’ve sold them does zero to defend the country, especially when you have 1,400 missiles of your own targeting the island. If you insist on being a jerk about it, though, then we’ll sell them the F-16.”
Even China lover Thomas Friedman of the New York Times wrote this week on a related issue:
“Memo to China: You are playing with fire. Sure, the U.S. also has its hackers, but industrial espionage on this scale is not coming out of the U.S. If this continues, China will see more than Google pull up stakes. And how many U.S. companies in the future will ever want to buy Chinese-made software or computer systems, which might only make it easier for Beijing to penetrate their businesses? This hacking story is huge and brewing. If it explodes, at a time of rising tensions over U.S. arms sales to Taiwan, fasten your seat belts.”
“The Chinese government is in a confident mood at the moment. But by threatening to impose sanctions on U.S. businesses that are involved in a $6.4 billion arms deal with Taiwan, China is in danger of making a serious and counter-productive mistake.
“Relations between the U.S. and China are at a very delicate stage. The good feelings generated by U.S. President Barack Obama’s visit to China last November have quickly dissipated. In their place have come a series of disputes: about Google and cybersecurity, about climate change, about currency regimes, about Iran – and now about Taiwan.
“Both sides are wearily familiar with each other’s position on Taiwan. But China’s decision to threaten sanctions over the arms-sales package represents an escalation of Beijing’s normal fierce verbal condemnation.
“If China presses ahead with sanctions on big U.S. exporters, such as Boeing, it risks unleashing a tit-for-tat round of trade sanctions that would damage China much more than the U.S.”
Protectionist sentiment in the U.S. is on the rise, and complaints about China’s currency manipulation are growing as well. So, again, chill out my Chinese friends. You’re on a roll, and by one estimate from Robert Fogel of the American Enterprise Institute, China’s economy could be $123,000,000,000,000 by 2040, or three times the entire world’s economic output in 2000, and almost triple that of the United States by then. [This last tidbit from George Will’s column in the Washington Post and a recent article by Fogel]
“A commentary in the China Daily said: ‘From now on, the U.S. shall not expect cooperation from China on a wide range of major regional and international issues. If you don’t care about our interests, why should we care about yours?’
“After all, what are the issues that the U.S. is seeking China’s cooperation on? They are to curb the proliferation of nuclear weapons in such places as North Korea and Iran, and countering the threat of terrorism, as well as dealing with the ongoing financial crisis and global warming.
“Surely, these are not simply American issues, but Chinese ones, as well. China, after all, does not want to see North Korea transformed into a nuclear power. Nor does China want to see Iran armed with nuclear weapons….
“Behaving irresponsibly out of frustration, without regard to the consequences, will not enhance China’s image in the world.”
Lastly, and back to the cyber espionage situation, Britain’s MI5 accused China of bugging UK business executives and setting up “honeytraps” in a bid to blackmail them into betraying sensitive commercial secrets. As a number of papers reported this week, a leaked document shows that undercover intelligence officers from the People’s Liberation Army have approached UK businessmen at trade fairs and exhibitions with offers of ‘gifts’ and ‘lavish hospitality.’
The gifts – cameras and memory sticks – were found to contain electronic Trojan bugs providing remote access to the users’ computers.
And you have sexual entrapment, as in the case a few years ago where an aide to Gordon Brown had his BlackBerry stolen after being taken by a Chinese woman who had approached him in a Shanghai hotel disco.
North Korea: This one was easy to predict. Last year authorities revalued the currency, dropping two zeroes from the notes, which was aimed at wiping out cash holdings of a burgeoning merchant class. As I wrote at the time it caused immediate chaos as those with holdings of, say, dollars or euros, were forced to turn them into state banks in exchange for a drastically reduced number of North Korean currency. Now there is mass starvation, according to new reports. For instance the country has spiraling inflation (fewer goods available, after all). $1 fetched 98 won at the beginning of the revaluation whereas today it is now worth between 300 and 500 won. [BBC News]
The move was supposed to allow leader Kim Jong-il to assert control over the economy, but instead he’s been forced to sack those most immediately responsible and in one respect it could drive him back to the negotiating table over his nukes.
Russia: Moscow and Washington have agreed in principle on a deal to replace the Strategic Arms Reduction Treaty (Start) that expired in December. The deal, which could be signed in two months, would cut each side’s nuclear arsenal to between 1,500 and 1,675 operationally deployed warheads – down from 2,200 on the American side and 2,800 in Russia. Both sides would also reduce the number of launch vehicles to between 700 and 800.
But, when it comes to the Reagan adage “trust but verify,” according to former Treasury Secretary Henry Paulson’s new book, Russia attempted to talk China into waging financial war on the U.S. in 2008 by dumping bonds of Fannie Mae and Freddie Mac. Just another little window into who we’re dealing with. [In this particular instance, Paulson said the Chinese were helpful. The Russians, on the other hand, wanted the U.S. to be forced to spend $tens of billions on bailing out the two mortgage giants, which proved to be the case anyway.]
Ukraine: The runoff between Prime Minister Tymoshenko and Viktor Yanukovych is Sunday. I’ll discuss it in full next time. As of the weekend it was too close to call.
Britain: Former Prime Minister Tony Blair was grilled by a parliamentary commission looking into the origins of the Iraq War, an inquiry largely forced by the families of Britain’s 179 war dead, and Blair refused to apologize for his decision to take the nation to war alongside his allies in Washington. Blair added that today there was a similar “2010 question” regarding Iran and its attempts to build a nuclear weapon. He said Iran was a greater threat to Britain than Iraq was in 2003. Some in the gallery called Blair a “liar” and “murderer.” Personally, my admiration for him increased.
Daniel Finkelstein wrote in an op-ed for the London Times:
“Just as the specter of Munich hung over postwar foreign policy, just as the outcome of the Vietnam War scarred a generation, so now our experience in Iraq shapes our attitudes. It becomes impossible to consider any action against Iran without thinking about what has happened and is happening in Iraq. Even the assertion that Iran’s nuclear ambitions are dangerous reminds people of exactly the same claims about Saddam’s weaponry. The mad, bad, murderous leadership of Iran denies aggressive intent, Western leaders sound warnings and many people, at the least, think the competing claims equally credible.
“It is impossible to have a sensible Iranian policy unless we contemplate not only the potential consequences of acting – hard diplomacy, sanctions, even a military strike – but also the potential consequences of not acting. Can we sleep at night when a regime that executes dissidents is building a nuclear bomb? We have to measure the sin of omission as well as that of commission.”
South Africa: I called President Jacob Zuma a crackpot and “idiot” when he was elected but some actually praised the guy in his first year in office. Well, in light of what we learned this past week, hopefully everyone is in agreement with me…Zuma is mad, and an idiot.
You see, in case you haven’t heard, Zuma not only married his third wife a few weeks ago, but he has been forced to admit he fathered his 20th child by the divorced daughter of the chairman of the country’s 2010 World Cup Organizing Committee. A leading cleric in the country called his marriage to wife number three “a giant step back into the dark ages.”
But Zuma, who dismisses claims that polygamy is unfair to women, said he treated his wives equally, and by gosh, he is slated to marry again later this year! Zuma says it depends on what culture you are from. Of course this is the same guy who was once accused of rape (he was acquitted) but not before he acknowledged having sex without a condom with the HIV-infected daughter of a close family friend.
Northern Ireland: Good news. The Protestant majority party and the Catholic minority in the
2 ½-year-old power-sharing coalition have agreed on transferring police and justice powers to Belfast from London, thus averting what could have been a return to violence over the coming months.
Mexico: This is happening right on our border.
“More than a dozen gunmen sealed off a street in the violent border city of Ciudad Juarez and opened fire on a house where high school students were having a party, killing 16 people.” [Elisabeth Malkin / New York Times]
One neighbor said the teenagers must have been attacked by mistake. The mayor called it random. There are 1.3 million people in the city and 2,600 were killed last year. By comparison, New York is a city of about 8 million and less than 500 died in violence in ’09. More than 15,000 have died in Mexico’s drug war since 2006.
Random Musings
“There is nothing surprising about where Mr. Obama finds himself today. He had been made by charisma, and political magic, and has been felled by it. If his rise had been spectacular, so, too, has been his fall. The speed with which some of his devotees have turned on him – and their unwillingness to own up to what their infatuation had wrought – is nothing short of astounding. But this is the bargain Mr. Obama had made with political fortune….
“There was no internal coherence to the coalition that swept him to power. There was cultural ‘cool’ and radical absolution for the white professional classes who were the first to embrace him. There was understandable racial pride on the part of the African-American community that came around to his banners after it ditched the Clinton dynasty.
“The white working class had been slow to be convinced. The technocracy and elitism of Mr. Obama’s campaign – indeed of his whole persona – troubled that big constituency, much more, I believe, than did his race and name. The promise of economic help, of an interventionist state that would salvage ailing industries and provide a safety net for the working poor, reconciled these voters to a candidate they viewed with a healthy measure of suspicion. He had been caught denigrating them as people ‘clinging to their guns and religion,’ but they had forgiven him….
“Mr. Obama’s self regard, and his reading of his mandate, overwhelmed all restraint. The age-old American balance between a relatively small government and a larger role for the agencies of civil society was suddenly turned on its head. Speed was of the essence to the Obama team and its allies, the powerful barons in Congress. Better ram down sweeping social programs – a big liberal agenda before the people stirred to life again….
“And then there was the hubris of the man at the helm: He was everywhere, and pronounced on matters large and small. This was political death by the teleprompter.
“Americans don’t deify their leaders or hang on their utterances, but Mr. Obama succumbed to what the devotees said of him: He was the Awaited One. A measure of reticence could have served him. But the flight had been heady, and in the manner of Icarus, Mr. Obama flew too close to the sun….
“A historical hallmark of ‘isms’ and charismatic movements is to dig deeper when they falter – to insist that the ‘thing’ itself, whether it be Peronism, or socialism, etc., had not been tried but that the leader had been undone by forces that hemmed him in.
“It is true to this history that countless voices on the left now want Obama to be Obama. The economic stimulus, the true believers say, had not gone astray, it only needed to be larger; the popular revolt against ObamaCare would subside if and when a new system was put in place.
“There had been that magical moment – the campaign of 2008 – and the true believers want to return to it. But reality is merciless. The spell is broken.”
–Thoughts from native Chicagoans, as reported by Christina Lamb of the London Times.
“With its chess set, slot machine, gobstopper dispenser and constant banter, Gordy’s is the gathering place in this rundown, mainly black district. The chief topic of conversation is President Barack Obama, who started his political career as a community organizer in the area and whose wife, Michelle, grew up nearby….
“ ‘Our customers talk politics all the time because they’re frightened – frightened of losing their homes and jobs,’ said Cee Cee (the proprietor), wielding his razor…. ‘I think Obama makes promises like all the other presidents but don’t really follow through. Maybe he has good intentions but he’s in the pigsty realm of Washington so his boots have got a little muddy.’
“His colleague Sam is less understanding. ‘I don’t think he done nothing, the situation’s got worse and worse for me,’ he complained. ‘His slogan was change but now he’s saying change is not just up to me. Well, that wasn’t what he said in the elections.’”
“In his response to the economic crisis, (Obama) steered a clear middle course, refusing to accept the left’s cries for bank nationalization but also adopting a far more vigorous and Keynesian approach than the right could accept. In foreign policy, he reset America’s image in the world in a manner that earned him kudos from the likes of James Baker and Brent Scowcroft. But that broader, presidential approach was partly set aside in passing the fiscal stimulus and then abandoned altogether in the drive to change the American healthcare system.
“Over the past six months – which had correlated with his dramatic drop in the polls – Obama has behaved less like a president and more like a prime minister. He has not outlined a broad vision for the country. He has not embraced the best solutions – from left and right – for the nation’s problems. Instead he has behaved as the head of the Democratic Party in Congress, working almost entirely with and through that caucus, slicing and dicing policy proposals to cobble together legislative majorities. He has allowed the great policy program of his presidency to be written and defined by a collection of congressional Democrats, accepting the lopsided bills that emerged and the corruption inherent in the process.
“If he represents all the people, Obama should remember that for 85 percent of Americans, the great healthcare crisis is about cost. For about 15 percent, it is about extending coverage. Yet his plan does little about the first and focuses mostly on the second. It promotes too little of the real discipline that would force costs down, and instead throws in a few ideas, experiments, and pilot programs that could, over time and if rigorously expanded, do so. It is a bill written by legislators to ensure that they never have to do anything unpopular.
“Watching the legislative process, Bismarck allegedly observed, is like watching the making of sausages. You see and smell a lot of crap that makes you wince. The Senate healthcare bill is particularly sausage-like. It has special exemptions on future costs for five states, exemptions for unions, concessions of various kinds to almost every special interest in the industry, and of course no reform at all of the crazy legal system because the trial-lawyers bar remains untouchable for the Democratic Party….
“(The) result is one that few can honestly call ‘reform,’ and one that has steadily lost support as it has moved through Congress….
“On healthcare, energy, taxes, immigration, deficits, and everything else, Obama should get away from the politics of legislating and go back to being president….He promised that he would reach out to all sections of the country, listen to the best ideas, and appeal to the nation as a whole. ‘I don’t see a blue America and a red America, I see only the United States of America,’ he said. Obama needs to shift course and govern as the president he promised to become. That’s change I could believe in.”
–The nation’s top defense officials said it was time to repeal the military’s ‘don’t ask, don’t tell’ policy and allow gay troops to serve openly for the first time in history, though both Defense Secretary Robert Gates and Joint Chiefs Chairman Adm. Mike Mullen asked for a year to study the impact before Congress would lift the policy.
But there is no real deadline for ending it, even as President Obama said he would, and some senators had to remind Obama, and Gates and Co., that repealing the ban would take an act of Congress, which is nowhere near being passed. In fact Republican senators ripped Gates and Mullen, startling both. The two insist change is inevitable, while John McCain expressed the views of many in his caucus. “Has this policy been ideal? No, it has not. But it has been effective.” Mullen gets the last word.
“No matter how I look at this issue, I cannot escape being troubled by the fact that we have in place a policy which forces young men and women to lie about who they are in order to defend their fellow citizens….For me, it comes down to integrity – theirs as individuals and ours as an institution.”
–According to a study by Feeding America, a network of 203 food banks nationwide, one in eight Americans received emergency food help last year, up 46% from 2005.
–Jenny Sanford told Barbara Walters that South Carolina Gov. Mark Sanford insisted on striking the promise to be faithful from their wedding vows – and that marrying him was a “leap of faith.” What an a-hole. Then again, Jenny, as bright as she is purported to be, should have walked away at that point. “It bothered me to some extent but…we were very young, we were in love. I questioned it, but I got past it…along with other doubts I had.”
And get this. Gov. Sanford was so cheap, according to Jenny, for one birthday “he drew me a picture of half a bike, and then for the next birthday or Christmas I got the picture of the other half a bike, and then he delivered a $25 used bike.” Another year he gave her a diamond necklace, but later took it back. As Dick Vitale would say, “Are you kidding me?!”
–Sarah Palin wrote a big, long, boring essay on the Tea Party movement for USA TODAY and of course didn’t mention that she was being paid $100,000 to speak to the Nashville group. I caught a little of Jon Stewart’s interview with Bill O’Reilly and I have to agree with him when it comes to Palin. The part of her pitch about “everyday Americans.” She writes in her op-ed:
“The soul of the Tea Party is the people who belong to it – everyday Americans who grow our food, run our small businesses, teach our children how to read, serve the less fortunate and fight our wars.”
Look, I’m sick of the party in control of the White House and Congress these days, but what the heck is an everyday American? I don’t seem to fit into Sarah’s description. All I do is try to learn as much as I can about the world around me and then pass along my knowledge. Anyway, Sarah looks “forward to meeting some of these great Americans this weekend.”
“I thought long and hard about my participation in this weekend’s event. At the end of the day, my decision came down to this: It’s important to keep faith…blah blah blah.”
But last week when I mentioned that the ticket price was $550 for the event in Nashville, until reading a piece by Tim Reid in the London Times, I didn’t know there was also an additional $349 to attend a steak and lobster banquet while Palin speaks.
“The most offensive part about the convention, the Tea Party boycotters say, is that the group organizing it, Tea Party Nation Inc., is a for-profit business run by two Tennessee lawyers, a husband and wife called Judson and Sherry Phillips. One right-wing blogger, Dan Riehl, accused Mr. Phillips of wanting to become a Tea Party millionaire.
“Philip Glass, the head of the National Precinct Alliance, which has pulled out of the convention, said: ‘There’s just a tremendous amount of anger about the ticket price.’”
The $100,000? Don’t need to think too long and hard about that, do ya Sarah? [Palin later said it is all going back to the cause, which means they didn’t have to charge the sky high ticket prices…and/or the Phillips’ are making out like bandits.] Ask these tea partiers if they’re willing to give up any of their entitlements and then we’ll talk because that’s what needs to be done in this country before we officially break the bank.
–The Bill and Melinda Gates Foundation has now committed over $25 billion to various health projects. “We must make this the decade of vaccines,” Bill Gates said in Davos. “Increased investment in vaccines by governments and the private sector could help developing countries dramatically reduce child mortality by the end of the decade.”
–Vladimir Potanin, a Russian with an estimated fortune of $2.1 billion, according to Forbes, has pledged to leave almost all of his fortune to charity within a decade.
“Children must come out of their parents’ shadow, live independently and realize themselves as citizens,” Potanin told Bloomberg in an emailed question. “An inherited million allows one to get a good education, take one’s time in finding a job, and to realize your goals. An inherited billion kills a person, depriving him of meaning in life.”
To which Potanin’s children replied, “Oh, c’mon, Dad. Can’t we at least have $10 million?”
–A British climate scientist at the center of the email controversy, Phil Jones, has been accused of trying to hide flaws in Chinese weather data that formed the basis of a key 1990 paper, later cited in the 2007 report by the Intergovernmental Panel on Climate Change (IPCC) as evidence that urbanization only made a small contribution to rising temperatures.
For example, Jones and his research partner, said they had taken data from “84 Chinese weather stations…to argue that rising temperatures in China were due to climate change, not expanding cities. When Professor Jones released the information, no location was given for the stations that were supposed to be in the countryside.” [Deborah Smith / London Times]
–Separately, we also learned that the chairman of the IPCC, Indian researcher Rajendra Pachauri, was told that the assessment the Himalayas’ glaciers would disappear by 2035 was wrong prior to the Copenhagen summit, but waited two months to correct the record. The IPCC’s report underpins the entire raison d’etre for Copenhagen in the first place. Pachauri denies he knew about it beforehand, but the evidence seems clear he did. Now India’s prime minister has felt compelled to rush to his countryman’s defense, even though India isn’t likely to cooperate in any agreements reached.
–Uh oh…the 2012 London Olympic Games could be severely disrupted by a peak in solar activity due to occur around the time they are being held. NASA is slated to launch a probe today, Saturday, that will spend five years in orbit around the Earth, investigating the causes of extreme solar activity, including sun spots, solar winds and violent eruptions. The concern is not just the Olympics, of course, though the Games do rely extensively on satellite transmissions, but threats to the overall power grid (as well as exposing any astronauts in orbit to deadly particle doses).
It was back in March 1989, that millions of people in Canada and the U.S. were left without electricity for more than nine hours after a magnetic storm sent shockwaves through the Hydro-Quebec power grid. And on September 1, 1859, a solar storm, the most powerful in recorded history, caused the failure of telegraph systems in Europe and North America. Auroras, normally visible only near the poles, were seen in Mexico and Italy.
–As I noted last week, President Obama killed NASA’s $100 billion program to return to the moon, $9 billion having already been spent, but I wanted to see all the details which weren’t unveiled until Monday. I have no problem with not going back to the moon. Instead, the president wants new rocket technology research, or as White House science adviser John Holdren said, “We’re putting the science back into the rocket science at NASA.”
Buzz Aldrin strongly endorses the new game plan and budget. This is what I was waiting to hear. Aldrin said investing now in better technologies could accelerate goals such as sending people to Mars. “I applaud the president for working to make these dreams a reality.”
Critics, however, said NASA will become “an agency of pipe dreams and fairy tales” under Obama’s proposals. Alabama Rep. Sen. Richard Shelby said, “The president’s proposed NASA budget begins the death march for the future of U.S. human space flight….The U.S. will still be working on launching people on rockets that do not exist while Russia, China, and India are actually doing it.”
The thing is, Senator, NASA is broken. The space shuttle was to have been retired long ago. We haven’t gone anywhere for 30 years! Sure, thanks to Hubble and some unmanned missions we’ve learned a ton, but only manned flight, far beyond the moon, will really get the juices (and imaginations of our young people) flowing. The return to the Moon was for the purpose of building a base for longer-haul trips as it would supposedly take up less fuel.
But whoopty-damn-do. Been there, done that. According to Major-General Charles Bolden, the head of NASA, work will now be focused on developing fresh technologies for future missions beyond low-Earth orbit:
“Imagine trips to Mars that take weeks instead of nearly a year; people fanning out across the inner solar system, exploring the Moon, asteroids and Mars nearly simultaneously in a steady stream of ‘firsts’ and imagine all of this being done collaboratively with nations around the world.”
“The exploration of space is the grandest adventure challenging the human race. As a filmmaker I have celebrated this greatest of dreams in my movies and documentaries, and I remain as passionate about the discoveries ahead as I was when I was a kid. So it was with some trepidation that I waited for the NASA budget to be unveiled this week. I was concerned that amid the nation’s fiscal crises, space exploration would fall off the priority list. But the NASA budget reveals a pathway to a bright future of exploration. It simply reflects the deep changes and hard decisions necessary to accomplish that goal….
“The president and NASA have crafted a bold plan that truly makes possible this nation’s dreams for space. Their plan calls for the full embrace of commercial solutions for transporting astronauts to low Earth orbit after the space shuttle is retired this year. This frees NASA to do what it does best: deep space exploration, both robotic and human. By selecting commercial solutions for transportation to the international space station, NASA is empowering American free enterprise to do what it does best: develop technology quickly and efficiently in a competitive environment….
“This is the path that can make our dreams in space a reality.”
I’m willing to wait a year or two to see how the new vision is shaping up. President Bush’s program was a dead-ender, as the Augustine commission found.
But I also wish President Obama had mentioned something in the State of the Union. Oh, I know. It’s too risky to bring up some expensive space initiative in these times, but that’s what leadership is all about. He keeps talking about new efforts in the field of science, and not falling behind the rest of the world; why avoid talking about the paramount science project of the 21st century? I guarantee only 5% of Americans (“everyday Americans”) have a clue what was announced this week. The more people know about it, the better the debate, and probably the more support, Congress still having to sign off on it.
We need more stories on all the private efforts taking place these days. For every Richard Branson and Burt Rutan, there are countless others whose names should be up there with our famous athletes. There was a story in the Los Angeles Times where Peter H. Diamandis, chief executive of the X Prize Foundaion, which is sponsoring a $10 million competition to develop a private manned rocket, reminded me that the Spirit of St. Louis came about as a result of a contest. Charles Lindbergh’s feat in flying nonstop from New York to France won him $25,000. “That’s what we needed in our industry.”
We need monthly charts on the progress these guys are making in our newspapers. Live shots of the test efforts, some of which admittedly could be gruesome, but it would be a helluva lot more exciting than watching the NBA.
Pray for the men and women of our armed forces, and all the fallen.
Gold closed at $1052
Oil, $71.19
Returns for the week 2/1-2/5
Dow Jones -0.6% [10012]
S&P 500 -0.7% [1066]
S&P MidCap -0.8%
Russell 2000 -1.5%
Nasdaq -0.3% [2141]
Returns for the period 1/1/10-2/5/10
Dow Jones -4.0%
S&P 500 -4.4%
S&P MidCap -4.1%
Russell 2000 -5.2%
Nasdaq -5.6%
Bulls 38.9
Bears 22.2 [Source: Chartcraft / Investors Intelligence]
