For the week 7/5-7/9

[Posted 7:00 AM ET…Orange Beach, Alabama]

 

 

Redneck Riviera is the affectionate term for the gulf coast, as the locals themselves describe it. So as a northerner, a Yankee, let me give my impression.

 

I flew to New Orleans on Wednesday morning and drove the four hours to Orange Beach. Arriving around 2:00, I was greeted by the sign at the registration desk, “No swimming,” by order of the health department. So I hit the beach in next door Gulf Shores and was immediately struck by the sheer beauty of the white sands. But then I also saw the work crews, picking at the sand and tar balls like you did as a kid when poking at your broccoli. It was kind of pathetic, to say the least, but at the same time when you see the stories of how hot it is and how it’s difficult to work in these conditions, believe it. If the breeze is down, I don’t see how anyone can stay on the beach for more than 30 minutes once the sun is fully up, and here I’m talking about sunbathers, not workers in hazmat gear. My hotel is on the beach and I’ve walked out at 6:30 or so the past two mornings and already you can work up a sweat. I also saw a big patch of oil, washed up by the overnight tide on Thursday, which was evidently cleaned up that day as Friday morning the pancake-sized globs were gone.

 

Or they were buried under a new layer of sand…and therein lies one of the basic problems with the cleanup effort. First off, thank god there is some cleanup at all. But to what effect? By now everyone knows that the most contaminated beaches have oil deep below the surface at this point. You can try deep-cleaning the sand, but that’s at enormous cost. You can’t pump new sand from the gulf floor because it is contaminated. But to fully replenish a beach can cost $9 million, which is what it cost Orange Beach following Hurricane Ivan in 2004. These days, what small community has that kind of spare cash, and who knows when BP would reimburse for something like that?

 

I have talked to a ton of merchants thus far (I’ve been in just about every souvenir store, buying up t-shirts) and they all say business is down about 50%. Pensacola, less impacted by the oil, is down about 30%-40%, according to various reports I’ve seen. You go into places and people are around, like at dinnertime, but it’s like you’d picture it in October. Just like at the Jersey Shore, these folks make their money in the summer, period. The bartender here at the Hilton described in full what the pool scene should look like in mid-July. We are at 30% of that, he said.

 

Here are some random tidbits concerning the spill:

 

–“As we feared, the oil spill has clobbered the beach real estate market, just when Realtors hoped 2010 would continue an upswing from the recession.

 

“A prime example: Perdido Key [Ed. next to Orange Beach], where six homes sold last month, compared to 24 in June 2009. Sales of properties on the barrier island had been climbing upward, with projections of as many as 30 sales in June 2010….

 

“The sharp plunge in sales is undeniable proof that the BP disaster derailed the normal rise in sales during summer tourist season, said Realtor Peter King.”

 

–As of Friday, according to Adm. Thad Allen, there were 563 government and privately operated skimmers working in waters from Texas to Florida, of at least 2,500 boats hired though the Vessels of Opportunity program. That still means a lot are being paid to sit around, $1,200 to $3,000 a day, depending on the size, with crew earning $200 per day.

 

–From the Press-Register: “An afternoon aerial survey of Baldwin County’s beaches noted plumes of oil making landfall on beaches in Gulf Shores and Orange Beach.” [You can easily identify these on the horizon by where the workers are set up.]

 

–Here’s another example of the economic impact. Dean Blanchard Seafood on Grand Isle, La. As reported in USA TODAY, Friday, Mr. Blanchard estimates his losses from the spill to be $3,750,000. He has received $165,000 from BP. Difference: $3,585,000.

 

–As of Thursday, BP had paid out $158 million in claims, with $78 million for Louisiana, $31 million for Alabama, $27 million Florida, and $16 million Mississippi. A pittance.

 

–The sea turtles, as you’ve all seen by now, are getting some much-needed assistance but it will take years to know if the efforts were in time. There’s a hatching location up the beach from where I am but I would hope I wouldn’t be able to get close because if I could, then you just know some idiots could and trample all over it, much as some workers did in Louisiana in the early days of the cleanup operation.

 

–I have some good pictures of the workers laying the boom by Gulf State Park Pier, one of the cooler locations I’ve been to in the country. It is a spectacular place where you can walk way out on the gulf, with many fishing off the pier. 

 

So here’s what I saw in taking a break from writing on Friday. Fishermen caught five sharks…sharks…in about five minutes. What cracked me up is that not one fisherman I asked identified them. “These are threshers, right?” “In all honesty, sir, I couldn’t tell you.” [They were about 30 inches long and would easily take a chunk out of your arm or leg, whereupon you’d bleed to death, thus attracting other sharks, which would then dispose of you entirely….at least that’s why I don’t go in the water, sports fans.]

 

But there were a few lessons here. Despite the considerable oil that has washed up on Gulf Shores, the water obviously isn’t contaminated enough, yet, close to shore to kill off a lot of fish. You shouldn’t swim in it, but the fish thus far are surviving.

 

And in this little tail lies another truth. In many parts of the gulf the fish should recover rapidly. The shrimp, for example, are pretty hardy and it helps that they aren’t being hauled in right now.  If BP can finally stop the oil, the gulf will survive. But some of the beaches, and marshes, are hopelessly fouled.

 

Jay Reeves of the Associated Press wrote a story that was in a ton of papers on Thursday, titled “BP oil hidden under the sand,” as discussed above. There is an accompanying picture, with the caption, “Beach chairs covered with oily sand sit idle Wednesday on the beach in Orange Beach. The oil washed ashore with the tide overnight, leaving a stain that brought out hundreds of BP workers to clean.”

 

Well, I didn’t see that on Wednesday, but I saw exactly the same thing Thursday morning. It was disgusting…sickening…made you want to cry.

 

I stood there, staring at one of the pools of muck and oil, and then those majestic pelicans swooped across the water, inches above it, six in a row…what a sight, especially early in the morning with no one else around except two surf casters. But it breaks your heart…and pisses you off.

 

But I wouldn’t be intellectually honest without going back to the shark story, which I think is unique in terms of the coverage you all are seeing.

 

Understand, of the five I saw hooked, two sharks managed to bite off the line, one line appeared to just snap, and two of the fishermen cut the line themselves. That means there were five sharks now swimming with hooks in their mouths. You aren’t allowed to haul in sharks off this pier. It wasn’t done on purpose, but man once again screwed up. 

 

Of course I have no problem with sport fishing. I wish I had been out with Ted Williams and Curt Gowdy during filming of “The American Sportsman.”

 

But man has been incredibly reckless, especially the Asians and their damn drift trawlers, in overfishing the waters. I don’t have time to go back through my site for the specifics, but one of the great things President George W. Bush did was make that vast territory in the Pacific off limits to commercial fishing. I also have tremendous respect for the people of Palau these days, little Palau, that recently stood up to the Japanese and their insane whale hunts.

 

Sorry to get off on a tangent, but when you’re down here, staring out at the magnificent gulf, while avoiding stepping in a puddle of oil or walking on a tar ball, you get upset. You get upset about a lot of things. You get upset at an incredibly careless, and corrupt (read below on BP and Lockerbie), corporate giant. You get upset at the Obama administration, which did a TERRIBLE job from the outset. This oil should have been skimmed at the source…realistically by the end of week one! I’m sick of the administration and its application of the Jones Act, which prevented foreign vessels from helping out because the friggin’ White House doesn’t want to lose union votes! But I’m also sick of an administration that is killing another sizable part of the regional economy by continuing with the deepwater drilling moratorium. It’s been 80 days! You’ve had more than enough time to check the rigs in question. Either ban ‘em, permanently, and face the voters, or get on with it and end the moratorium.

 

But lastly, I’m sick of how our debate over global warming has been so misplaced, and how as I’ve said since day one of this column it should be about global pollution. It should be about preserving our resources. It should be about getting the Japanese around a table and knocking heads over an issue like whaling. I’m sick of people not knowing the issues. But I do have hope the gulf will survive. 

 

In Friday’s Pensacola News Journal, there is a full-page ad from the Diocese of Pensacola-Tallahassee… “Novena Prayer for the Protection and Health of the Gulf of Mexico.” At the risk of offending some of you, in part it reads:

 

“A reading from the Book of Genesis (Genesis 1: 1-10). In the beginning, when God created the universe the earth was formless and desolate.  The raging ocean that covered everything was engulfed in total darkness, and the spirit of God was moving over the water. Then God commanded, ‘Let there be light’ – and light appeared. God was pleased with what he saw. Then he separated the light from the darkness, and he named the light ‘Day’ and the darkness ‘Night.’ Evening passed and morning came – that was the first day. Then God commanded, ‘Let there be a dome to divide the water and to keep it in two separate places’ – and it was done. So God made a dome, and it separated the water under it from the water above it. He named the dome ‘Sky.’ Evening passed and morning came – that was the second day. Then God commanded, ‘Let the water below the sky come together in one place, so that the land will appear’ – and it was done. He named the land ‘Earth,’ and the water which had come together he named ‘Sea.’ And God was pleased with what he saw….

 

“(Loving God)…We ask that you help us to find the ways to repair that which is wounded and restore it to its health and beauty. Look over the fishes and other animals which have the sea as their home…Make us better stewards of the bounty which is the sea.”

 

We’re running out of time, friends, on so many issues, from the environment to nuclear proliferation. It’s not too late, but my prayer to God is send us some leaders.

 

—

 

This is an abbreviated recap of the past week, but I laid out my latest feelings on the first half of the year, and the second half, last time and even the stock market’s best performance in a year did absolutely nothing to change my mind for the pretty simple fact there was no good reason, either from an economic or corporate standpoint, for the S&P 500 to advance 5.4%, with the Dow Jones adding 5.3% and Nasdaq 5.0% in this holiday-shortened week, unless you pin the entire advance on the IMF’s note that it was raising its global growth forecast to 4.6% from 4.1% in April, even though “risks have risen sharply,” in its words.

 

Instead, it was just an absence of bad news, and that’s how sentiment plays into the casino that is Wall Street. But next week begins earnings season and this one is truly important as we wait for guidance on future quarters as well.

 

Just a few items of note, aside from my normal Street Bytes.

 

The IMF did raise its 2010 outlook on China from 10.0% to 10.5%, even as Goldman Sachs was cutting its own view to 10.1%, not that a few tenths either way is significant, beyond a day or two’s market reaction. For the archives, the IMF also raised the outlook for the U.S. from 2.7% to 3.3% this year.

 

Chain store sales for June, such as from the likes of Target and Macy’s, were decidedly mixed.

 

The European Central Bank left its key lending rate unchanged at 1.00% for a 14th consecutive month.

 

The national office vacancy rate is at 17.4%, the highest since 1993, though in most parts of the country it appears to be stabilizing.

 

Back to China, economist Kenneth Rogoff reiterated that he viewed China’s property bubble as being on the verge of collapse. In Shanghai, the average home price fell 14% in June, year over year. New home sales in the megalopolis fell 34% in the first half to the lowest level in five years.

 

China’s auto sales rose 10.9% in June vs. a 25% increase in May, so this is seen as another sign of a slowdown, though I’d say up 10% is still darn good. 

 

Australia and Canada continue to do much better than the rest of the developed world, with unemployment rates falling in the two to 5.1% and 7.9%, respectively.

 

And bulls can also hang their hat on the fact European manufacturing numbers have been showing improvement, but the euro crisis is far from over.

 

–U.S. Treasury Yields

 

6-mo. 0.19% 2-yr. 0.62% 10-yr. 3.05% 30-yr. 4.04%

 

–The Treasury Department finally issued its report on the global currency situation and said no one is manipulating its currency, including China. Of course this is all part of a game, one that I don’t disagree with, wherein the U.S. and China understand just how badly they need to cooperate. By not labeling China a currency manipulator, the U.S. is hoping for expanded export opportunities as an act of good faith. 

 

–China’s foreign-exchange regulator reiterated that it was merely diversifying, not dumping the euro, in buying $6 billion of Japanese government bonds in the first four months of the year. While this particular purchase appears significant, foreigners hold less than 3% of all Japanese paper.

 

–Esteemed analyst Meredith Whitney drastically reduced her outlook for Goldman Sachs’ earnings this quarter from $4.75 to $1.70, while cutting Morgan Stanley’s eps forecast as well.

 

–Bret Stephens / Wall Street Journal

 

“What Barack Obama taketh away, Moammar Gadhafi giveth. That must be the fond hope these days at BP, as it seeks to recoup in Libya’s Gulf of Sidra what it is losing in the Gulf of Mexico. And if it takes a wretched lobbying effort to make that happen, so be it.”

 

You see, Libya’s National Oil Co. is urging the nation’s sovereign wealth fund to take a stake in BP, at the same time it is allowing BP to begin deepwater drilling next month off Libya’s coast, as part of a 2007 exploration deal.

 

But Sunday’s London Times reported “that a doctor who last year diagnosed Lockerbie bomber Abdel Baset al-Megrahi with metastatic prostate cancer and gave him three months to live now thinks the former Libyan intelligence agent ‘could survive for 10 years or more.’”

 

As Stephens writes:

 

“Megrahi’s not-so-surprising longevity is the latest sordid twist in a tale in which BP is no bystander. It begins in 2004, with efforts by then-British Prime Minister Tony Blair to rehabilitate Col. Gadhafi and open Libya to British commercial interests. BP inked its exploration deal with Libya following a second visit by Mr. Blair in 2007. But the deal nearly ran aground after the U.K. took its time finalizing a prisoner transfer agreement between the two countries.”

 

It was last September that the Journal reported that in 2007, BP admits it “told the U.K. government…it was concerned that a delay in concluding a prisoner transfer agreement with the Libyan government might hurt” the deal it had just signed….

 

Stephens:

 

“BP has now spent the past 11 weeks promising to make things right for everyone affected by the Gulf spill. But for the families of Pan Am Flight 103’s 270 victims, things can never be made right. Nor, following Megrahi’s release, will justice ever be served. The question that BP could usefully answer – and answer fully – is whether, in that denial of justice, their interests were served. It won’t restore the company to honor, but it might do something to restore a measure of trust.”

 

–China sold $19.2 billion in stock of the Agricultural Bank of China in an offering that could grow to $22.1 billion – the largest in history. Agricultural Bank, China’s biggest lender, is being valued at more than Citigroup or Goldman Sachs, with 320 million retail customers, 2.7 million corporate clients, 24,000 branches and $1 trillion in deposits.

 

But the bank has had major problems in the past, requiring at least three significant bailouts, including in 2008 when the government pumped $19 billion into Agricultural Bank, and then assumed $120 billion in bad loans.

 

–Samsung announced it would post operating income of $4.1 billion in the second quarter as sales at Asia’s biggest maker of semiconductors, flat screens and mobile phones rose 14%. It’s the second straight quarter of record profits for the South-Korean based company.

 

–The European Parliament agreed to severely restrict bankers’ bonuses, limiting upfront cash to 30% of a banker’s total bonus and to 20% in the case of very large bonuses. Between 40% and 60% will have to be deferred for at least three years and it can be clawed back depending on the performance of the recipients’ investments.

 

–The New York Times reported that 1 in 7 homeowners with loans in excess of one million dollars is severely delinquent.

 

–China suddenly approved Google’s Web license in accepting Google’s new arrangement to have traffic redirected, one of the side benefits, one can assume, of the administration’s report not listing China as a currency manipulator.

 

–For the month of June, Russia produced 10.13 million barrels of oil per day, a record, as it maintains its spot as the world’s top producer. Saudi Arabia is second, having produced 8.28 million for the month. But the Saudis, by most accounts, have a lot of spare capacity (which is a big reason why I’m not in the least bit concerned about an attack on Iran’s nuclear facilities having a long-term adverse impact on the price of crude), whereas Russia’s mature fields are being depleted and there is little in the way of new deposits coming down the road.

 

–Thanks to the threat of new fines, the number of planes stuck on airport tarmacs more than three hours fell to five in May vs. 34 in May of last year. [Actually, generally good weather has had more to do with this.]

 

–So who wants a diamond? Girls? Tom Zoellner had a piece in the Washington Post titled “Five myths about diamonds.” For example, myth No. 1… “Diamonds are rare.”

 

“Although you won’t stumble across a diamond while digging in your tomato garden, they are far more common than their cost suggests. The big gem companies aggressively control the supply that arrives at market, creating artificial scarcity and high prices. 

 

“This practice was born in the diamond fields of South Africa in the 1880s, when Cecil Rhodes, the chairman of De Beers Consolidated Mines, discovered that he could inflate prices at will simply by locking up the rights to every diamond mine he could find. His successor, Ernest Oppenheimer, developed a complex network of wholesalers that gave De Beers effective control of up to 90 percent of the world’s rough-diamond trade through most of the 20th century, as the company hoarded stones in basement vaults and doled them out strategically.”

 

Well, the Oppenheimer’s lost their grip and De Beers’ share of the trade is now 40 percent and falling.

 

“Interestingly, though, the end of the De Beers monopoly has not led to aggressive underbidding: Everyone involved seems to recognize that price wars could kill the diamond goose. And stockpiling still happens.”

 

And the problem of “blood diamonds” has not been solved. Diamonds are still moved across a border and then relabeled.

 

–The postal service is asking for another 2 cent increase, effective Jan. 2. Congress needs to approve the requests, along with elimination of thousands of offices and Saturday delivery, but no one expects Congress to do anything but allow the increase because no Congressman wants to face the supposed wrath of their constituents for reducing service.

 

Note to Congress: We Americans will live without Saturday delivery. And I’m one of the postal service’s good customers, having 30 periodicals delivered weekly/monthly. Show some spine, Congress. [Since the first quarter of 2007, mail volume is down 20%.]

 

–Sirius XM Radio added 583,000 net new subscribers in the second quarter, leaving it with a record 19.5 million customers at the end of June. Sirius is benefiting from improved new car sales. The company also said its turnover rate fell to 1.8%.

 

–Over the years I’ve read horror stories on being a Quiznos franchisee, as in there is just no way you can turn a profit, from what I know. Some readers, such as Leah K., have made similar observations. So I’m driving through a community north of Orange Beach the other day and there is a Quiznos, closed, with a sign “Thanks for the memories.”

 

Subway, on the other hand, rocks! The Trumbore Family lives on this product. [Rather it’s the meal of choice when I’m visiting Mom and Dad. Not sure if franchise owners make money on these either.]

 

–In the New York area, WCBS-AM, an all-news station, is constantly playing commercials for Freedom18.com, a work at home scam.  And how can I say that? Because CBS has been allowing this Web operation to run the same commercial for at least 10 years! “I had to get out of Corporate America…now I make $10,000 a month!”

 

How does WCBS get away with running this B.S.? The same commercial, all these years, and no one at the station is checking the veracity of it?!

 

Sorry…but frauds like this must be taken down and I’m going to nail WCBS. Get your act together. You’ve been warned.

 

–I forgot to note last time a piece Charles K. passed along, recognizing my past problems with Dell computers. The New York Times article specifically mentioned a $300 million fund Dell had set up awhile back to deal with repairs and replace troubled PCs, particularly the Optiflex models. I had at least two defective Optiflex PCs, but Charles, I forgot to mention that a brand new system I installed in my new place had a problem two weeks into it. [Not being home now, I can’t remember the model, but another Dell…supposedly top of the line.] I called the guys who installed it and for the life of them they couldn’t figure out what was wrong…but the computer just stopped operating as a, you know, computer! No viruses, just didn’t work. Luckily, they were able to reprogram the whole thing, but from here on I’m once again concerned with backup should my Dell stop operating as a computer and instead, act like a, you know, Dell.

 

–Jay Leno may be back in his 11:30 time slot, and he’s still leading archrival David Letterman, but both late-night hosts are seeing their ratings slide and the reason is clear…the DVR. The networks, losing advertising revenue, have another reason to sweat.

 

Afghanistan: Gen. David Petraeus formally took over for Gen. Stanley McChrystal, saying, “We are in this to win…We have arrived at a critical moment.” Petraeus conceded, though, that “refinements might be needed” when looking at the existing rules of engagement, which some in the military believe have hamstrung operations. 

 

But the Afghan war is also still about how to tackle the massive corruption inside the government of President Hamid Karzai. Congress blocked $billions in new aid until Karzai can prove it is not simply being stolen and secreted out of the country, as the Wall Street Journal first reported. Karzai called the allegations “baseless.” As one analyst told the Sydney Morning Herald, “The biggest challenge for David Petraeus is the Afghan government and president Karzai himself.”

 

Petraeus also faces the prospects of three key allies in the coalition – Canada, Poland and Holland – leaving in the next two years, while the French and Germans want to follow.

 

[In neighboringPakistan, there were further signs the nation is on the verge of imploding as at least 100 were killed on Friday during a meeting of tribal elders who have been aiding the people on how to resist the Taliban. It is said that moderates make up about 80% of Muslims in Pakistan and they are beginning to fight back, but this will in itself lead to more violence. The issue thus becomes, which way does it go?]

 

Iraq: It was a horrible week in Baghdad as at least 70 Shiite pilgrims were killed in a series of bomb attacks; a major indictment of the Iraqi military and security forces’ ability to protect the people. And well over four months since the March 7 parliamentary elections, Iraqi leaders are showing no signs of coming together for the purpose of forming a government, even as Vice President Biden made a trip there urging the two main sides in the debate to get their act together. All Iraqis see, in turn, is a United States in retreat.

 

Editorial / Daily Star

 

“It’s almost insulting that U.S. Vice President Joe Biden chose the 4th of July to visit one of Saddam Hussein’s old palaces in Iraq and later press Iraqi leaders to end a power struggle that has gripped the country since its general elections four months ago….

 

“But perhaps Biden’s only saving grace is that these days it is the occupied – and not the occupiers – who are becoming the bigger troublemakers in Iraq. All of the nation’s multiple woes have been put on the back burner while two of the top Iraqi leaders, Nouri al-Maliki and Iyad Allawi, engage in a protracted tussle over the premiership.

 

“Biden, while addressing U.S. troops at Saddam’s old home, remarked that he found it ‘delicious’ that ‘we are in the middle of this marble palace, making a lie of everything that he [Saddam] stood for.’ But the current showdown between Maliki and Allawi in fact belies Biden’s glowing assessment: Iraqi leaders appear nostalgic for the kind of endless and unchallenged power that Saddam was able to wield….

 

“What neither [Maliki nor Allawi] seems to recognize is that either one of them would in all probability fail to effectively govern the country if he sought to exclude the other from power. The age of dictatorship in Iraq has passed and the only way forward is representative governance….

 

“At this rate, it could take years before Iraqis are celebrating their own independence.”

 

Meanwhile, the PKK, the Kurdish guerrilla force, attacked a Turkish military outpost, killing 3 (10 militants were killed), in the latest example of a conflict that still threatens to spill over into Iraq proper, seeing as the PKK uses Kurdistan as its safe haven. The PKK said “guerrilla units across Turkey have been activated.” So far this year, 80 Turkish soldiers have been killed fighting the Kurds.

 

Israel: President Obama and Prime Minister Netanyahu met at the White House on Tuesday and, as opposed to their last get together in April, which was downright frosty, the atmosphere this time was far different. 

 

“The United States is committed to Israel’s security,” said Obama. “We are committed to that special bond. And we are going to do what’s required to back that up, not just with words, but with actions.”

 

Netanyahu said he was committed to peace with the Palestinians, and that he was looking to move the process forward in “weeks,” as Netanyahu also stated recently he would accept a Palestinian state and that there is no reason why the other side, namely Palestinian President Abbas, shouldn’t be holding direct talks. Netanyahu added later in a speech, “I’m prepared to take risks.”

 

But at the same time, the prime minister has to deal with those on the right in Israel, including within his own Likud party, and he does not want to extend the moratorium on West Bank settlement construction beyond the current Sept. 26 deadline.

 

As for Iran, President Obama said, “The U.S. will never ask Israel to take steps to undermine its security interests. We are committed to Israel’s security.” It would also appear Netanyahu is sincerely pleased with the sanctions put in place on top of the weak UN Security Council ones. Iran itself is admitting they have some bite on the energy front. Western oil companies have been cutting back. And the United Arab Emirates has been taking moves of its own against the entities mentioned in the Security Council sanctions. So with Iran increasingly backed into a corner, what will they do?

 

That’s where its proxy, Lebanon, comes into play. In recent weeks there have been some rumblings in southern Lebanon and clashes between UN Interim Forces in Lebanon (UNIFIL) and some inhabitants, read Hizbullah supporters.

 

Editorial / Beirut’s Daily Star

 

“Absent a clear provocation, it appears that Israel and Hizbullah’s Iranian patrons could indeed be ratcheting up tensions in south Lebanon. As we have said repeatedly in this space, this must concern all Lebanese gravely, because the confrontation between the U.S. and Iran – and between all their various allies – is coming to a climax, and Lebanon could well become their battlefield.

 

“Sadly, this rising disquiet in south Lebanon – and the looming U.S.-Iran showdown – look much like just the result of mistakes on all sides. With Benjamin Netanyahu meeting Barack Obama Tuesday, we want to emphasize to them that their tactic of simultaneously pursuing sanctions against Iran and settlement building in Palestine represents one of the worst mistakes. Following these policies at the same time only paves the way to further escalation, from which Lebanon will likely feel the pain.”

 

I don’t necessarily agree with all the above, but it’s important to know what leading opinion is in the region.

 

[Separately, Shiite Cleric Mohammed Hussein Fadlallah died.  He was 74 and the leader of Lebanon’s Shia, as well as a Hizbullah mentor. Fadlallah was accused in the deadly 1983 attack on the U.S. Marine barracks in Beirut and he was always virulently anti-American. In recent years he had become more moderate, championing women’s rights, and he spoke out against Iranian policies, but he never changed his stance towards the U.S.]

 

North Korea: China finally allowed the UN Security Council to issue a statement condemning Pyongyang’s attack on a South Korean naval vessel, though the statement avoids directly naming North Korea, noting the North “has stated that it had nothing to do with the incident.” So the North is declaring victory! Goodness gracious. And now Kim wants to resume nuclear arms talks, which we know will go nowhere.

 

Christian Oliver of the Financial Times wrote the following earlier in the week:

 

“There are two divergent schools of thought on Pyongyang’s sudden return to the brutal tactics of the cold war. Either theory, if it proves correct, bodes ill for regional stability.

 

“One school says Kim Jong-il is losing his grip and, perhaps, his mind. This has triggered a power struggle, with rogue commanders and officials exceeding their authority or vying for influence by engineering a crisis…disappearing officials reflect Kim Jong-il’s attempts to restore order.

 

“The second school sees the dynasty as secure but reckons it will resort to an escalation of conflict to distract from or justify economic failure. This brinkmanship will be used to push for talks with the U.S., and the resumption of aid, which has dried up from everywhere except China. A new politburo must bloody South Korea and give the Young General early victories.

 

“The musical chairs should conclude in September when North Korea holds its first party congress for 30 years, to appoint new leaders. The 1980 congress gave Kim Jong-il powers that in effect confirmed him as successor to his father, Kim Il-sung.”

 

It could be an interesting fall.

Russia: What has become clear is that the ten Russians that were swapped for four imprisoned in Russia as spies for the U.S. and other western intelligence services, were to be taken more seriously than initial reports led us to believe. The Russian spy network is indeed all over the place and we can’t forget the instances of Aldrich Ames and Robert Hanssen. The Russians are very patient; whether it was trying to identify another potential Ames down the road, or, as in one instance we’ve learned, digging up personal data on CIA applicants to use against them later for potential blackmail.

 

As for those who are complaining that the swap was 10-for-4, it would appear the 4 being repatriated to the West are of very high value, while the 10 being sent home may not have been now, but could have become so in the future.

 

Today, though, Presidents Obama and Medvedev can claim they defused a crisis, which I did not think was very serious, or better put, unusual, to begin with…unless you are hopelessly naïve to the ways of the spy game these days…the U.S., Russia, China, Israel, Britain, France, you name the country. Everyone is involved, particularly when it comes to stealing commercial secrets.

 

France: President Sarkozy is enmeshed in a nasty campaign contribution scandal as France’s richest woman, Liliane Bettencourt, L’Oreal heiress, reportedly made an illegal cash contribution of $180,000 to Sarkozy’s 2007 presidential campaign. Sarkozy’s people called the charges slanderous.

 

Mexico: Last Sunday’s elections in 14 states were marked by violence and the ever-present influence of drug traffickers. The Institutional Revolutionary Party, or PRI, which dominated Mexican politics for 70 years until 2000, made gains and is ready to issue a strong challenge to President Felipe Calderon’s ruling party when his term expires in two years.

 

But as to the violence, in the state of Chihuahua, four bodies were hung, each from a bridge, in an ominous message from the drug cartels. According to the Los Angeles Times, one was a prison warden, this after PRI gubernatorial candidate Rodolfo Torre was killed prior to the vote. 

–LeBron James is one idiot. Every sports fan, outside Miami, is thinking the same thing today. Why on earth would he throw away his reputation and legacy, forever, like he did in taking the easy way out by joining his friends in Miami? Ah, but for some of us this is really going to be fun. He is now public enemy #1.  Bottom line, this whole fiasco was a giant step backwards for the NBA and its incredibly conceited commissioner, David Stern.

 

–A Gallup survey contained bad news for the Democrats. A year ago, 56% of independents approved of the job President Obama was doing. But today that number has plummeted to 38%. It’s too late to win back many of this critical bloc before the November elections, and of course it bodes ill for 2012, assuming Republicans get their heads out of their butts before then.

 

–Such as…there’s a reason why I said years ago I would never give another dollar to the Republican National Committee; idiots like Michael Steele. Steele said “he ain’t going anywhere,” despite calls for his resignation following his pronouncement that Afghanistan “was a war of Obama’s choosing” and not something that the U.S. had actively prosecuted. Forget John McCain’s comments that Steele should consider stepping down; instead, focus on Sen. Lindsey Graham’s.

 

“It was an uninformed, unnecessary, unwise, untimely comment,” adding the Republican Party needs to support President Obama’s commitment to winning the Afghan conflict and that a victory over the Taliban is “imperative.”

 

Steele apologized, saying, “The stakes are too high for us to accept anything but success in Afghanistan.”

 

Graham then said, “The good news is Michael Steele is backtracking so fast he’s going to be in Kabul fighting here pretty soon.”

 

–So the above is just another example of why my party sucks these days. But walking the beach (head firmly down, looking for tar bills), I allowed myself to dream of a 2012 ticket of Indiana Gov. Mitch Daniels and Texas Gov. Rick Perry (Perry being Veep). Granted, the odds of this happening are zero, but imagine the campaign. Indiana and Texas are as well run in these tough economic times as any in the country, and particularly in the case of Daniels, you could just hammer away at the competence, management experience issues, neither of which Obama has exhibited, at least on the domestic front. 

 

–Another Gallup poll has half of Americans not supporting the administration’s filing of the lawsuit against Arizona’s immigration law, with only 1/3 supporting the move.

 

–Charles Krauthammer / Washington Post…on Obama and his seeming denigration of American exceptionalism.

 

“In his major addresses, Obama’s modesty about his own country has been repeatedly on display as he has gratuitously confessed America’s alleged failing – from disrespecting foreigners to having lost its way morally after 9/11.

 

“It’s fine to be non-chauvinistic about one’s country. But Obama’s modesty is curiously selective. When it comes to himself, modesty is in short supply.

 

“It began with the almost comical self-inflation of his presidential campaign, from the still inexplicable mass rally in Berlin in front of a Prussian victory column to the Greek columns framing him at the Democratic convention. And it carried into his presidency, from his posture of philosopher-king adjudicating between America’s sins and the world’s to his speeches marked by a spectacularly promiscuous use of the first-person pronoun – I.

 

“Obama is not the first president with a large streak of narcissism. But the others had equally expansive feelings about their country.

 

“What is odd is to have a president so convinced of his own magnificence – yet not of his own country’s.”

 

–Lots of developments on the terror front, as a senior al-Qaeda leader was charged with helping mastermind last year’s attempted New York subway bombings, with federal prosecutors alleging Adnan el Shukrijumah was in charge of recruiting and directing not just U.S. citizens, but also of directing a failed terror attempt in the U.K. And out of nowhere, Norway arrested three suspected of being with al-Qaeda and for having possible links to the British and U.S. plots.

 

–The Washington Post’s Fred Hiatt, on how freedom is in peril around the world.

 

“Three assertive powers – China, Russia and Iran – not only resist democratization but actively seek to disseminate their model of authoritarian rule in their spheres of influence. Europe, the engine of democratization of the 1990s, looks inward, more interested in appeasing Russia than reforming it. Newer or less wealthy democracies such as South Africa, Turkey, Brazil and India seem stuck in anti-colonial mind-sets that discourage cooperation to promote democracy. And the Obama administration remains skittish about adopting a ‘freedom agenda’ that its predecessor had tarnished in the minds of many Democrats.

 

“Fortunately, there is one factor stronger than all of these: people’s desire to be free. Despite new methods of oppression, despite the fecklessness and disunity of democratic governments, despite everything, the impulse for dignity and self-rule emerges again and again. In Lebanon in 2005, in Burma in 2007, in Tibet in 2008, in Iran last year, ordinary people assumed unimaginable risks and confronted mortal danger because they do not want to live as captives.

 

“Each of those movements has failed, for now, but in each of those countries the yearning for freedom has been banked, not extinguished. Over the weekend, democracy activists and democratic officials, including Secretary of State Hillary Clinton, gathered in Poland at a conference aimed at helping democracies fashion a reply to the ferocious authoritarian response of recent years. The Iron Curtain has fallen, Clinton noted. ‘But we must be wary of the steel vise in which many governments around the world are slowly crushing civil society and the human spirit.’ Recognizing the challenge is a good start.”

 

–As noted above, the debate over the ultimate damage from the Deepwater Horizon disaster is a difficult one. The Washington Post’s David A. Fahrenthold highlighted some of the issues.

 

“The official toll of dead birds [article was written July 5] is about 1,200, a fraction of the 35,000 discovered after the Exxon Valdez spill in 1989. But this, too, has been called into question. Officials can only count the birds they can find, and many think a number of oily birds have sought refuge in the marshes.

 

“ ‘It’s an instinctive response: They’re hiding from predators while they recover,’ said Kerry St. Pe, head of a government program that oversees Louisiana’s Barataria Bay marshes. ‘They plan to recover, of course, and they don’t. They just die.’

 

“Other scientists have focused on more subjective measures of the gulf’s health – not counting the dead, but studying the behavior of wildlife, the movements of oil and the state of larger ecosystems. For them, solid answers are even more elusive.

 

“For example: Is the oil killing off Louisiana’s coastal marshes? State officials have said in interviews that they’ve seen it coating the grasses and mangroves that hold the region’s land in place.

 

“ ‘The marsh grasses, the canes, the mangrove are dying. They’re stressed and dying now,’ said Robert Barham, secretary of the state’s Department of Wildlife and Fisheries. ‘There’s very visible evidence that the ecosystem is changed.’

 

“But Paul Kemp of the National Audubon Society said he flew over the same area and saw a different picture: The oil’s damage was relatively small, at least in comparison with the marsh’s existing problems.

 

“ ‘Here, we have a patient that’s dying of cancer, you know, and now they have a sunburn, too,’ Kemp said. ‘What will kill coastal Louisiana is not this oil spill. What will kill coastal Louisiana is what was killing it before this oil spill,’ including erosion and river-control projects that have reduced the buildup of new land.”

 

The other big debate is over the underwater plumes and their impact. The EPA said it has not seen “large scale” problems with low dissolved oxygen around the submerged oil in the gulf. Other experts, including a Texas A&M University scientist said he’s seen pockets of water “with very low dissolved oxygen” where the water is suffocating other sea life.

 

Others point to the behavior of sharks, some species of which have been sighted off Sarasota, outside their normal environmental range. But federal scientists say they’ve seen evidence plankton – the most sensitive creature in the gulf – is living in the area around the leaking well.

 

–Newly released documents from the Nixon Presidential Library show that 40 years ago, adviser Daniel Patrick Moynihan, a Democrat in the administration, as well as U.S. ambassador to the United Nations before being elected to the Senate in New York, said in a September 1969 memo that if carbon dioxide content rose 25% by 2000, as many felt then, “This could increase the average temperature at the earth’s surface by 7 degrees Fahrenheit. This in turn could raise the level of the sea by 10 feet. Goodbye New York. Goodbye Washington, for that matter.”

 

Well, not quite, as we’ve since seen. Moynihan received a response, though, the following January, 1970, from Hubert Heffner, deputy director of the administration’s Office of Science and Technology.

 

“The more I get into this, the more I find two classes of doom-sayers, with, of course, the silent majority in between. One group says we will turn into snow-tripping mastodons because of the atmospheric dust and the other says we will have to grow gills to survive the increased ocean level due to the temperature rise.”

 

–2004 and 2005 were the big recent hurricane seasons in the Gulf so as a point of reference, in 2005, Katrina was Aug 23-Aug 31; Rita was Sept 18-Sept 26. In 2004, the season got off to a late start, with the first hurricane, Alex, not in play until July 31-Aug 6. But then between Aug 9 and Sept 29, you had Charley (the all-time sleeper, at least in my recent memory), Frances, Ivan, and Jeanne; all memorable, unfortunately.

 

–Sign of the Apocalypse…as reported by Sean Gardiner of the Wall Street Journal.

 

“Israeli Prime Minister Benjamin Netanyahu’s security detail lost four high-powered semi-automatic guns over the weekend when its luggage was rerouted across the U.S., only to resurface without the weapons….

 

“The security officers arrived in Washington Sunday evening, but the case with the four guns didn’t, the officials said.”

 

This is unbelievable.

 

“American Airlines personnel found the case, with its Washington destination tag still on it, at a Los Angeles Airport terminal at around 4 pm on Tuesday in L.A., about two hours after Messrs. Obama and Netanyahu met at the White House to discuss U.S.-Israeli relations.

 

“The locked case – which wasn’t checked by the American personnel who found it in L.A. to see if it still had the weapons – was put on an American flight to Chicago and then to Washington, the officials said. When the security officers opened the case, they discovered that the four Glocks were missing, the officials said.”

 

A review of security videotape appears to absolve TSA agents who first processed the cases and the investigation is focusing on American.

 

–Alabama is an interesting state. The people I’ve had to deal with have been exceedingly friendly, including at rest stops on the interstate. But in driving from Mississippi on Wednesday, about ten miles into ‘Bama you see a huge Confederate flag flapping in the breeze, placed there, I’m assuming, by workers at a nearby quarry. And with a primary July 13, there are some interesting campaign commercials on the air. Such as one from the “Conservative Coalition,” talking of a candidate who “is promoting evolution…he’s too dangerous for Alabama.”

 

[Now discuss amongst yourselves. I’m in enough trouble as it is to comment on this.]

 

–To you old-timers out there, Sotheby’s is auctioning off the remains of Trigger, Roy Rogers’ beloved horse who had an appointment with the taxidermist back in 1965, for an estimated $100,000 to $200,000.

 

–London’s Mirror reported that sex kitten agent Anna Chapman (who no doubt will receive a private audience with Vladimir Putin, now that she’s back home…I’m just sayin’), was trying to woo Princes William and Harry at the “naughty nightclub Boujis in London.” [Haven’t been there…never been naughty in London.] My brother has heard that Anna will of course be starring in “Dancing with the Czars.”

 

–Bad career move. Octavia Nasr, a CNN senior editor for Middle Eastern affairs, was fired after Twittering:

 

“Sad to hear of the passing of Sayyed Mohammed Hussein Fadlallah…One of Hizbullah’s giants I respect a lot.”

 

As noted above, Fadlallah routinely denounced the U.S. and called for attacks on Israel.

 

–According to a new Marist College poll, 26% of adults surveyed could not identify Great Britain as the country the U.S. colonies fought to gain its independence.

 

–Editorial / Army Times

 

“For all the bravery our troops have shown under fire in the wars in Iraq and Afghanistan, a Medal of Honor has been awarded to only six – all of whom were killed in combat.

 

“Now, at last, one living soldier may be on the verge of getting one – for the first time since Vietnam….

 

“Staff Sgt. Sal Giunta (Cedar Rapids, Iowa), who sources say is the soldier whose MOH is pending at the White House, performed under fire in Afghanistan with the valor that will forever set him apart from even extraordinary fighting men.

 

“Then a specialist, he was on patrol in 2007 with B Company, 2nd Battalion, 503rd Infantry Regiment, when an overwhelming enemy force ambushed them with volleys of machine-gun fire, small-arms fire and rocket-propelled grenades. Casualties were quick and heavy. Giunta took rounds in his front plate and assault pack but still rushed toward the gunfire to help his fellow soldiers. Spotting enemy forces trying to carry off his wounded point man, he chased them down, emptying and reloading his M4, until one was dead and the other let the American go and ran for cover.

 

“ ‘I did what anyone would have done,’ Giunta told Sebastian Junger; who chronicles the battle in his new book, ‘War.’

 

“Giunta deserves the Medal of Honor. More than likely, other living heroes do, too.”

 

The six Medal of Honor winners thus far:

 

Marine Cpl. Jason Dunham…Iraq

Master-at-Arms 2nd Class Michael A. Monsoor…Iraq

Navy Lt. Michael P. Murphy…Afghanistan

Spc. Ross A. McGinnis…Iraq

Sgt. 1st Class Jared C. Monti…Afghanistan

Sgt. 1st Class Paul Ray Smith…Iraq 

 

God love ‘em and embrace their families, as well as those of the other nearly 5,500 killed in both wars.

 

God bless America.

 

—

 

Gold closed at $1209

Oil, $76.09

                

 

Dow Jones +5.3% [10198]

S&P 500 +5.4% [1077]

S&P MidCap +5.4%

Russell 2000 +5.1%

Nasdaq +5.0% [2196]

 

Dow Jones -2.2%

S&P 500 -3.3%

S&P MidCap +1.8%

Russell 2000 +0.6%

Nasdaq -3.2%

 

Bulls 37.0

Bears 34.8 [Chartcraft / Investors Intelligence]

 

Have a great week. I appreciate your support.

 

Brian Trumbore

 

*Forgot to note last time that Dr. Bortrum has posted a new column. Also, the 82-year-old defeated yours truly, 33-35, at the local par-3. A rematch is in order.