[Posted 7:00 AM ET]
Foreign Affairs
Iraq: Ibrahim al-Jaafari remains the front runner for prime
minister, though current officeholder Iyad Allawi is attempting to
put together a coalition in opposition. While Jaafari has a
checkered past (who doesn’t in these parts?), there should be no
concern that a government under his control will become a
strictly Islamist one.
As for the ongoing training of an Iraqi army and security force,
President Bush obtained NATO’s commitment to help in this
regard though support remains minimal. Nonetheless, the
symbolism is important.
Syria: I noted last week that Presidents Bush and Chirac should
be able to find common ground on Syria and that proved to be
the case, with their joint statement demanding the government in
Damascus comply with UN Security Council Resolution 1559
and pull its 14-15,000 troops out of Lebanon. What is needed
now is real action.
Early in the week Syria said it would honor the resolution and
withdraw its forces but later on it altered the language to say it
would “redeploy” the troops closer to its border, and in neither
case did it issue a timetable.
President Bush should insist Chirac use his clout in Lebanon,
while Bush himself must be more public in denouncing the
Assad government. Momentum in both Lebanon and the region
is on our side and it’s time to press the advantage. Strong talk
can be just as effective as military action. See Ronald Reagan
and “Mr. Gorbachev, tear down this wall.”
Iran: There was an absurd statement as part of a Newsweek
article in the latest issue. “Tehran is at least five years away
from a weapon, according to intelligence analysts.” Who could
possibly say that? Try 6-12 months, max. [More in my Russia
segment.]
North Korea: Kim Jong il himself issued a rare statement on the
nuclear issue this week, saying North Korea would return to the
six-party gabfest, but only if Washington dropped its hostile talk.
But today I want to focus on a statement made by a leading
foreign policy analyst who for various reasons I’ll leave
nameless. In an article for Barron’s, he said the West would
“turn (the North) into glass should it lob a missile at somebody.”
It’s been awhile since I brought this topic up but as the only one
who cares to mention it, I couldn’t disagree more. In fact this
kind of comment is amazingly careless, yet is made all the time.
For starters, do you think we’d risk contaminating Seoul, a city
of about 10 million, in nuking North Korea? Look at a map.
Pyongyang and Seoul are about the same distance apart as New
York and Philadelphia. You don’t just go around nuking an
enemy for the sport of it. Tehran, on the other hand, is
geographically vulnerable should they ever be so foolish as to
cross the line once they have the bomb. [There, now discuss
amongst yourselves as I’m sure our military planners are.
Generals, you are discussing this, aren’t you? Kim Jong il
probably believes we can’t just nuke his country.]
Russia: Your basic smokescreen was thrown up following the
“constructive dialogue” between Presidents Bush and Putin in
Bratislava. [I have relatives who hailed from here, incidentally.]
I give President Bush credit for raising the democracy topic with
his dear friend Vladimir, though it’s a few years late. When
Bush first addressed the topic before an audience in Brussels,
Putin responded “(Democracy had to be) adapted to the realities
of Russian life today, to our traditions and our history.” Then,
during the press conference following his meeting with Bush,
Putin said “Russia has made its choice in favor of democracy.
This is our final choice and there is no way back.”
The press immediately latched onto the latter statement and said
Bush had won a commitment from Putin. Give me a break.
Every single move of Putin’s in the last few years speaks
otherwise.
And then there was the ‘consensus’ between the two leaders that
neither North Korea nor Iran should have nuclear weapons.
While I see little evidence Russia has aided Pyongyang’s
ambitions to any great extent, certainly when it comes to Iran
Thursday’s talk was laughable. Putin has done nothing but
impede the West’s non-proliferation efforts here and it may be
already too late.
This, of course, is also the same Russia that is selling missiles to
Syria that directly threaten Israel, so is it any wonder that
Senators McCain and Lieberman are spearheading an effort to
exclude Russia from the G-8?
Just look at Moscow’s actions the past 18 months. The forced
destruction of oil giant Yukos, support for Iran, the attempt to
manipulate elections and harass democracy forces in Ukraine,
Georgia and now Moldova. Russia still has troops in many of
the former Soviet republics, even though it promised to withdraw
them over five years ago.
No doubt, Russia is reeling, in no small measure due to its
bungling of a domestic reform plan, and its pride was hurt with
the election in Ukraine while it’s also dealing with NATO and
its continuing encroachment on its borders. It wasn’t supposed
to be this way, and on the issue of NATO they actually have a
point. [Years ago, I wrote I was against accepting many of the
Eastern European nations into NATO because I saw no reason to
stick it to Russia. Time will tell if in the long run my instincts
were right.]
Putin is feeling increasing pressure politically, another surprising
development. While the communists did not pull off a major
show of force on Wednesday as rumored (my bad), two leading
youth groups announced they are forming a democratic alliance
to combat Putin’s authoritarian policies. Nothing scares the
Kremlin more than the prospects of a Ukrainian-type movement.
But, as I’ve written ad nauseum, there is no more worrisome item
than the security of Russia’s weapons-usable nuclear, chemical
and biological material. Bush and Putin reached an agreement to
secure it but the fact is most experts believe, today, only half of it
is secure and by now all of it should have been. In other words, I
still maintain it’s already too late on this front as well. Some
group has enough of it to create mischief. You know, author Ian
Fleming was well ahead of his time. What we need are some
James Bond types to track the stuff down.
Lastly, and on a far lighter note, I have to mention Moscow
Mayor Yuri Luzhkov, a weather buff who gets quite irate when
his official forecasters blow it. In fact, following a series of
snowstorms that were more severe than predicted, Luzhkov
promised the Moscow weather service would be punished.
Luzhkov addressed a meeting of city government the other day.
“Let us switch to contractual relations,” he said with regards to
the weather bureau. “We are paying and would like to receive a
quality product. Instead of that you are giving us ‘tufta,’” asking
to be forgiven for using the harsh expression that loosely
translated means b—s—. [Moscow Times] Gosh darnit, I think a
lot of us would like to be able to punish our own weathermen, for
crying out loud. Go Yuri!
Israel: President Bush, in a speech to European leaders, called for
the creation of a contiguous Palestinian state, but Israeli Prime
Minister Sharon believes Bush had blessed his plan for disparate
West Bank settlements.
The Israeli cabinet did approve the withdrawal from Gaza and
the four West Bank enclaves, the first time an Israeli
government decided to dismantle Jewish settlements on land
claimed by the Palestinians for a future state. Then at week’s
end, Israel announced it would speed up the process in an
attempt to prevent extremists from carrying on better organized
protests. Regardless, it’s going to get dicey and on issues like
this, Friday night’s terror attack in Tel Aviv only further inflames
passions on the right.
Earlier, as a goodwill gesture to the Palestinians, Israel released
500 prisoners, the largest such action in ten years, while
President Abbas and Prime Minister Qurei were able to
successfully shape a new Palestinian cabinet that has few Arafat
holdovers.
Back to the bombing, I wrote in my year end review and outlook
for 2005 (12/31/04) that the Israeli – Palestinian crisis was one
where I was optimistic. Also, as I’ve written, inevitably there
will continue to be one-off attacks of this kind but I remain
convinced Abbas and Sharon won’t let these derail the peace
process. As in the case of the continuing attacks in Iraq, I am not
going to harp on those that take place here. The bigger picture is
what deserves the attention.
Egypt: The Washington Post had the following in an editorial on
the brutal treatment of opposition leader Ayman Nour, whose
party is seeking just small constitutional reforms in the existing
autocracy.
“(President Mubarak’s) answer to Mr. Bush’s appeal for steps
toward reform has been to order a new wave of anti-American
incitement in the state-run press and to have his goons rough up a
man who proposes exactly the moderate, step-by-step change
that Mr. Bush advocates – and that Egypt desperately needs. Mr.
Mubarak is no longer testing Mr. Bush; he is spitting in his face.
It’s a daring, maybe desperate act for a 76-year-old despot who
would not survive without billions in U.S. subsidies. Egypt’s
future – and Ayman Nour’s life – may depend on Mr. Bush’s
response.”
But as I go to post, just hours ago President Mubarak addressed
his people and told them he was willing to review the
constitution and possibly allow for multiple candidates in the
coming presidential election. The winds of change are blowing.
Some of us neocons are smiling. Again, I urge President Bush to
press the advantage.
China: Beijing is super miffed at the joint U.S. / Japanese
statement declaring a peaceful Taiwan Strait a “common
objective.” No doubt, this will impact China’s cooperation on
the North Korean front but it was the right thing to do.
But the big issue of the week was the status of the arms embargo
that the U.S. and Europe have maintained since 1989 and
Tiananmen Square. Despite President Bush’s entreaties, it will
be lifted by the Europeans. I found the following op-ed by David
Shambaugh, director of the China Policy Program at George
Washington University, to be on the mark.
“At the end of the day, Europe must have a very clear answer to
a simple question: Why is it in Europe’s strategic interest to
accelerate the modernization of China’s military? Answer: It is
not.
“Moreover, one does not hear China’s Asian neighbors
clamoring for the lifting of the embargo. Far from it. A China
possessing real power projection capabilities would radically
change and destabilize the East Asian security environment.
This is also of deep concern to the United States.
“From the American perspective, none of these arguments touch
the real issues: maintaining the security of Taiwan and
preventing China from possessing European arms that might be
used against American forces….
“Lifting the arms embargo on China is ill-advised. If anything, it
needs to be strengthened. Both Europe and America can
continue to enjoy robust relations with Beijing while maintaining
their respective arms embargoes. China will just have to lie with
it until it comes to terms with Tiananmen and stops putting
military pressure on Taiwan.” [International Herald Tribune]
Ukraine: The new government of President Yushchenko is
pulling its 1,650 troops out of Iraq by year end. Yushchenko
campaigned on this issue so it’s no surprise, though the Bush
administration can’t like it after its support of him. Separately,
the government is going to be reviewing about 300
privatizations, a potential worry for investors. Most of the
businesses are run by tycoons initially opposed to Yushchenko.
Australia: But while Ukraine pulls back from Iraq, Prime
Minister John Howard is sending an additional 450 infantrymen
there despite immense criticism at home.
Northern Ireland: Skipping around the globe, the British and
Irish governments continue to pile on Sinn Fein and this week
the Irish Justice minister, who had named Sinn Fein leaders
Gerry Adams and Martin McGuinness as members of the IRA’s
“Army Council,” had his house fired on, while the Irish foreign
and defense ministers said Sinn Fein and the IRA are indivisible.
The IRA has been backed into a corner and a cornered rat is most
dangerous. If I lived in a major city in both the UK and the Irish
Republic, I’d be careful these next few months. While I
wouldn’t expect Adams or McGuinness to order anything
directly, it could be beyond their control.
Canada: Prime Minister Paul Martin, who told President Bush
Canada would sign on to the missile defense system, is now
reportedly backing down because of political pressure. I’ll bite
my tongue for now. At least the Pentagon conducted a successful
NMD test this week.
Portugal: The socialists (more moderate here than the title infers)
won a landslide in national elections amidst the nation’s
economic troubles. Per capita GDP is around 70% of the E.U.
average. [Personally, I am maintaining my minimal equity
holding here and it held up well this week.]
Zimbabwe: South African President Thabo Mbeki told the
Financial Times that the U.S. is wrong to pressure President
Robert Mugabe and label it one of the six “outposts of tyranny.”
Thanks for the support, Thabo. Of course Mbeki is the same
man who for years denied South Africa had an AIDS epidemic.
Meanwhile, Mugabe holds another sham election on March 31.
Wall Street
Ever wonder why my favorite expression is “wait 24 hours”?
You saw a good example of it on Wall Street this week.
Tuesday, the first trading day owing to Monday’s holiday, saw
the worst losses in at least six months, including 170 points off
the Dow Jones, as the market was roiled by a spike back above
$51 in oil and, more importantly, a teeny, tiny little comment by
the Bank of Korea that it was going to be increasing its non-
dollar reserves.
Well, you would have thought somebody yelled “fire!” The
dollar collapsed, relatively speaking, and stocks plummeted with
it. Then the next day, the South Korean government put on its
best Emily Litella impersonation and said ‘never mind.’ It didn’t
mean to imply it was selling its “current dollar holdings.”
Whatever, I mused.
For the rest of the week the market relaxed and treated itself to
an old-fashioned relief rally as all the broad indices finished up
for the four days despite the horrible start.
No, Virginia, there will be no dollar crisis, at least not yet. But
one day there will be (2006). It’s inevitable as our nation piles
on $billions and $billions of debt of all kinds. And as I’ve
written, it may just come about because Russia and / or China are
out to make a political point, as opposed to a fundamental one.
Sure, right now the U.S. remains the best game in town when it
comes to foreigners looking for a home for their own currency
reserves, but our pre-eminence in this arena is not guaranteed, a
case where the slogan ‘the last best hope of man on earth’ may
not necessarily always apply.
But I need to take a moment to reiterate why I believe ‘deflation’
will be the watchword by end of this year. Many of you no
doubt are wondering how I can possibly say this when the
economy is chugging along at a solid pace, oil is soaring with
other commodities (the CRB hit its highest level since 1981 on
Friday) and strategists are talking ‘inflation’ instead.
It’s pretty simple. I think the global economy can flip in a nano-
second and it all has to do with the tremendous amounts of
leverage being employed, leverage that as PIMCO’s Bill Gross
says is especially sensitive to changes in interest rates, even as
little as another 50-100 basis points.
But the flip could also come about because of the bursting of the
China or global real estate bubbles. Or $50+ oil that sticks and
not only does a number on the emerging markets but also finally
forces the American consumer to throw away the plastic. Or it
could be a geopolitical issue, heaven forbid. Or maybe it’s just
an old-fashioned financial accident, i.e., Fannie Mae and its
gigantic derivatives portfolio that it still can’t seem to get a
handle on. [Ah, Joe? Just what the heck do we own?]
Regardless, I believe something is going to happen, if not this
year then ’06, and because we’re now all so interconnected,
especially the U.S. and China, the result could be a little hairy.
Turning to energy, significantly, Saudi Arabia’s oil minister said
$40-$50 is the new reality. What spooked the markets here is the
fact the Saudis have always played the role of moderates in
OPEC and now it’s suddenly become a hawk, much to the
chagrin of the consuming nations. Also disconcerting when it
comes to supply is the fact Russian oil production continues to
slip, owing in large part to the disastrous handling of the Yukos
affair. Russia’s oil fields are in horrible shape and the country
desperately needs foreign investment. The question thus
becomes, will the Kremlin be willing to make it profitable for
outsiders to play? If not, the Exxon Mobils of the world don’t
need the headaches.
But the above also fits into my ‘flip’ scenario. Clearly, the
world’s oil producers are struggling to meet demand and at some
point the rising price may tip the economy. That didn’t prove to
be the case last fall because the $50 level didn’t stick. If it does
this time, it’s bound to have a negative impact.
Finally, longer-term, the UN is now projecting that India’s
population will outnumber China’s by 2030, five years earlier
than first projected. So guess who continues to lobby the
Kremlin for oil access? India has offered Russia $25 billion for a
share of the giant Yugansk field (Yukos’ top asset) that is
responsible for a full 12% of Russia’s overall oil production.
Street Bytes
–The past three weeks have seen virtually zero movement in the
major market averages, but in advancing this time the markets
have essentially wiped out the year’s losses, with the exception
of Nasdaq which remains down 5% thus far in 2005. For its part,
the Dow Jones is at its high water mark for the first two months
at 10841.
–U.S. Treasury Yields
6-mo. 2.94% 2-yr. 3.52% 10-yr. 4.27% 30-yr. 4.63%
Rates on the short end of the yield curve continued to rise while
the long end was essentially flat. Durable goods orders for
January were down, but the reading on capital goods was
encouraging. The Federal Reserve next meets on March 22 and
this will be a critical one as market players are clearly
anticipating a change in language accompanying the next rate
hike, as well as a better idea on how much further the Fed is
prepared to go. Before then, next Friday’s employment report
along with the February inflation numbers will weigh heavily on
the future direction of the bond market.
But I thought it was interesting this week that France became the
first government to float a 50-year bond issue and with a skimpy
yield of only 4%. You know, with rates as low as they are this
was a brilliant move, especially since there were a lot of suckers
to scarf it up. As CNBC’s Rick Santelli so aptly pointed out,
why would you buy a 50-year French government bond for 4%
when you can have a 2-year U.S. Treasury for 3.5%? [For the
record, pension funds are the big buyers of the longer-term
paper.]
–Program trading accounted for 53% of all volume on the New
York Stock Exchange during the week of 2/14. Every now and
then I feel obligated to remind you the market is really little more
than a casino. Don’t expect these guys to act rationally.
–China: According to the Earth Policy Institute and Bloomberg
News, China is now the world’s largest consumer of grain, meat,
coal and steel. In the case of the first two items, China consumed
382mm tons of grain in 2004 while U.S. consumption was 278mm
tons, and China devoured 63mm tons of meat vs. a mere 37mm
tons for the US of A. Yes, it’s been a great run for America’s
farmers and ranchers, I think you’d agree.
–Hong Kong recently stopped a skid of seven years of falling
prices, but last month prices dropped anew; though no one is
saying the territory is entering a new deflationary cycle. But I’ll
certainly be watching the numbers.
–Singapore’s proposed budget slashes all non-defense categories
3%. It can be done, sports fans.
–Dublin-based Ryanair just ordered 70 Boeing 737s with an
option to buy an additional 70 as the discount-carrier continues
to change the face of flying in Europe. It’s amazing the impact
this airline has had on society, continent wide. It’s easy for
Americans to forget that just a 1-2 hour flight for most
Europeans lie exotic locales once out of the reach of the average
citizen because of exorbitant airfares. Now, when I go to
Ireland, for example, I constantly hear of kids jetting to Spain for
a 3-day weekend, and for less than $100 roundtrip. It’s terrific.
But….here’s a thought you won’t find anywhere else. Ryanair
and its new competitors are rushing to expand even as Europe’s
population is seemingly in freefall. But that’s an issue for further
down the road. In the meantime, let the airlines have their fun
while they can. If I live long enough, maybe I’ll remember to
‘short’ them at the appropriate time.
–According to the Wall Street Journal, CEO bonuses rose 46%
in 2004 for 100 major U.S. corporations; 5% for the average
clerical type position at same.
–The Argentine government expects up to 75% of bondholders
to accept its final offer on the 2001, $82 billion government bond
default; a mere 25 cents on the dollar and an exchange into new
bonds. Other holders, though, have not given up their quest to
receive more; arguing the economy has turned around and
Argentina can afford it.
–A U.S. judge dismissed Yukos’ bankruptcy claim saying the
company didn’t have enough of an American presence for the
court to establish jurisdiction over a Russian company. I can’t
argue with the logic.
–Qwest is still fighting for MCI, attempting to outbid Verizon.
These stories grow old, fast, unless you’re an employee.
–Inflation Update: Mark R. swears his favorite Girl Scout
Cookies, thin mints, are up 16% in just the last two years. This is
outrageous!
–Deflation Watch: General Motors is lowering its sticker price
up to $2,000 on some SUVs. [OK, so they were overpriced to
begin with…it’s still technically deflation.]
–Viacom took an $18 billion, with a ‘b,’ charge against earnings
in revaluing its radio and outdoor-advertising businesses. In
other words, since they acquired the bulk of these operations in
2000, it hasn’t worked out real well, know what I’m sayin’?
–Shares in Yahoo and Google were hit after an analyst
downgraded the pair on the belief that paid search revenues have
peaked and were heading down. I couldn’t agree more. In fact, I
pulled one of my own two search deals for StocksandNews last
quarter because, frankly, I didn’t trust the company I was dealing
with. I continue to do business with Overture, however, and
have found them reliable.
But I guarantee that those of you using paid search at your
company will sharply curtail spending down the road. Ironically,
in light of the Viacom news, I’m contemplating going back to
radio advertising, something I haven’t done in three years. I
should be able to get a deal.
[Some of you misconstrued my closing comments from last week
to mean I was about to pack it in. I greatly appreciated your
concern and hopefully the preceding remark on my advertising
plans helps clear it up. You guys are the best.]
–Whenever I receive a formal notice from my credit card
company I just toss it without reading the fine print. But
something told me to read one from Citibank that hit me this
week. Transaction fees for purchases made in a foreign currency
are about to be levied, to the tune of 3% in the amount of the
purchase after its conversion to U.S. dollars. As one who travels
overseas frequently, I’m certainly not going to use my Citi card
next time…and I’ll check the others. You’re always told, for
example, that you receive the best exchange rates when you use a
credit card (as opposed to exchanging money at a bank and using
cash), but 3% is a hefty add-on. Actually, it’s a total rip-off.
–Speaking of travel, America’s airlines spend $1.6 billion a year
trying to track down lost luggage, with the average cost per bag
being $87. Having lost mine four times in 2004 (two being
overseas experiences), that’s a lot of money. But, somehow they
always show up. To me it’s a miracle.
–Spending on national healthcare will reach 19% of GDP by
2014, or $11,050 for every man, woman and child. [Centers for
Medicare & Medicaid Services / USA Today]
–Looks like we have two “Corporate Dirtball of the Year”
candidates; former Ogilvy & Mather executives Shona Seifert
and Thomas Early. The two were found guilty of conspiracy to
falsify time sheets and defraud the federal government on its
White House anti-drug office advertising. Both now face up to
five years in prison. I hope all of you are as steamed as I am in
reading something like this.
–Toyota will be building two new plants in the U.S. by the end
of the decade. With GM and Ford’s huge pension and healthcare
costs, does Toyota’s move help spell the death knell for two of
Detroit’s Big Three? It’s down the road, but I think so.
–Novartis is acquiring controlling interests in Hexel AG
(Germany) and Eon Labs of the U.S., thus becoming the biggest
producer of generic drugs in the world.
–Gardiner Harris and Alex Berenson of the New York Times
had a piece on Friday concerning the FDA advisory panel and
the recent decision to allow the makers of painkillers Celebrex,
Bextra and Vioxx to continue to market the products, though
with severe restrictions.
Harris and Berenson reported that 10 of the 32 panel members
had past relationships with drug makers Pfizer and Merck and
knowing that one of the panelists was a fellow from Wake Forest
(that being my alma mater) I was hoping he wasn’t one of them.
In fact, he not only wasn’t but Dr. Curt Furberg, an
epidemiologist, said he was “uncomfortable with the Pfizer-
friendly undertone” at the meeting. Then there was this.
“Dr. Furberg said clinicians often wanted access to therapies
without understanding the devastating public health
consequences of their prescribing decisions. Celebrex, Bextra
and Vioxx have never been proved in clinical trials to cure pain
any better than ibuprofen or more than a dozen other, older pain
pills.
“ ‘Fifty patients a day probably die from those drugs, and who is
speaking for them?’ Dr. Furberg said.”
Wow…that’s powerful stuff. [Pssst…Go Deacs!]
–My portfolio: If I was Japanese I would have committed hari-
kari for jettisoning most of my energy holdings last spring.
Congratulations to those of you who held on for the ride. As I
noted recently, at this point there is no way I can chase these
stocks and at least my final position in the sector is participating
along with the others. I also appreciate your concern that I am
unable to treat myself to premium lager. This is my cross to
bear, I guess. Meanwhile, the lone energy holding is now 7% of
my portfolio, carbon fiber is about 6% (remember, kids, always
eat your carbon fiber for breakfast…just kidding!) and then I
have a bunch of, err, garbage (except for Portugal) that makes up
the balance. I’m roughly 20% (closer to 20 than 25) stocks, 80%
cash though I’m beginning to get an itchy trigger finger, and not
necessarily from the ‘long’ side. As Drudge would say…….
DEVELOPING!
Random Musings
–Far be it for me to give a damn about Paris Hilton, but this
episode where a hacker got into her cellphone and stole her
numbers as well as photos is another wake-up call for all of us,
especially government. This high-profile incident comes on the
heels of the ChoicePoint identity theft debacle and the FBI’s
admission that one of its own e-mail networks was hacked into
with serious ramifications. You’ve also seen the stories over the
years that our defense computer systems have frequently been
invaded and you can’t help but muse, it’s just a matter of time
before the Big One, the Big Attack, cripples our information
infrastructure. My guess is the North Koreans could be the
perpetrators as they’ve had a special unit working on such a
move for years now.
[As I go to post, there is a sketchy story of another large database
invasion, this one at Bank of America.]
–Historian Victor Davis Hanson in the Wall Street Journal.
“If Europeans are ever going to enter into a full partnership with
America, then we better let them move out, encourage them to
rearm – or hope they find that the world works according to the
refined protocols of The Hague. America must have the
confidence that the European pandemocratic continent has
evolved beyond warring against itself – and us as well. For all
the diplomacy of Secretary Rice and President Bush, it is the
Europeans’ choice, not our call.
“Such a rapprochement can only work with a candid United
States willing to drop both the obsequious praise of Europe’s
vaunted Third Way and the bluster of euro-trashing….Do the
Europeans really wish to return to the old Rome / Athens model
and disingenuousness when in all the key decisions – Pershing
missile deployment, German unification, recognition of Soviet
Republics, NATO expansion, the removal of Milosevic, and the
liberation of Afghanistan – the U.S. took the lead in near
unilateral fashion under the cover of acting soberly under
paternal European guidance? Dishonest, yes; sustainable, hardly.
“So we are in a dilemma. Until postmodern Europe rightly
assumes a role commensurate with its moral rhetoric, population,
and economic strength, out of envy or pride it will often seek to
undercut and occasionally embarrass the U.S….
“The United States should ignore all this ankle-biting, praise the
EU to the skies, but not take very seriously their views on the
world until we learn exactly what is going on inside Europe
during these years of its uncertainty. America is watching
enormous historical forces being unleashed on the continent from
its own depopulation, new anti-Semitism, and rising Islamicism,
to Turkish demands for EU membership and further expansion of
the Union into the backwaters of Eastern Europe that will bring it
to the doorstep of Russia….What is certain is that the U.S.
cannot remain a true ally of a militarily weak but shrill Europe
should its politics grow even more resentful and neutralist,
always nursing old wounds and new conspiracies, amoral in its
inability to act, quite ready to preach to those who do.
“We keep assuming that Europeans are like Britain and Japan
when in fact long ago they devolved more into a Switzerland and
Sweden – friendly neutrals but no longer real allies. In the
meantime, let us Americans keep much more quiet, wait, and
watch – even as we carry a far bigger stick.”
–Regarding bird flu, the Western Pacific regional director for the
World Health Organization said “We at WHO believe that the
world is now in the gravest possible danger of a pandemic.” For
one thing, the world is long overdue. The last pandemic was 40
years ago and normally they occur every 20-30 years.
–11 New Jersey county officials, including a few mayors, were
indicted in the latest corruption sweep in my home state, bringing
to 76 the number implicated in just the past few years. Said the
U.S. Attorney in charge of the investigation, “There is no
explanation for stupid conduct.”
–And speaking of bad behavior, the Star-Ledger newspaper here,
one with a most liberal bent, has nonetheless been terrific in
exposing Jon Corzine for the charlatan that he is. The following
is from a lead editorial last Sunday.
“In the 1990s, being an FOB (Friend of Bill) bought a certain
cachet. Big contributors got to cozy up to President Bill Clinton
and the Washington power base. These days in New Jersey, a
reverse spin has been put on the practice. An FOJ (Friend of
Jon) doesn’t have to contribute to U.S. Sen. Jon Corzine. Au
contraire, Corzine will donate to his friends, and in return he’ll
buy a cozy relationship with the state’s power base…
“He gave $2.4 million from 1999 to 2003 to churches and
schools run by very prominent – and political – black ministers
as well as the Catholic Archdiocese of Newark and Jewish
congregations and organizations….
“Corzine’s campaign manager says all of his giving is related to
‘values that are important to him.’
“That may well be true, although we wonder how he aligns his
politics with the positions of the Catholic Church, which
disagrees with him on abortion and stem cell research, for
example.”
–Many of the major U.S. oceanographic and scientific research
organizations, including Scripps, Lawrence Livermore National
Laboratories, and Woods Hole have come down on the side of
global warming in just the past few weeks, so expect the debate
to heat up quickly. Meanwhile, the leading source of greenhouse
emissions in New Zealand is still livestock.
–New York City hosted the International Olympic Committee in
its bid to secure the 2012 Games. Fat chance of that happening,
especially since Mayor Bloomberg couldn’t tell the IOC with any
degree of certainty whether or not New York will even have an
Olympic stadium. One bozo reporter asked the Mayor if Shea
Stadium could be employed instead. Shea Stadium?! That
dump?!
And so the official prediction here is that Paris will win the
Games. New York’s bid was a joke and the vast majority of us
in the area don’t want the Olympics anyway. [But, I still want a
new stadium for my Jets, sports fans! Just as long as I don’t have
to pay for it, you understand.]
–Finally, kudos to President George W. Bush for putting
Bush 41 and Bill Clinton together on the tsunami relief team.
We all have differences with one or the other, but they have done
a world of good for America’s image in the region.
—
God bless the men and women of our armed forces.
God bless America.
—
Gold closed at $436…highest since 12/31/04
Oil, $51.49…highest since week ending 10/29/04
Returns for the week 2/21-2/25
Dow Jones +0.5% [10841]
S&P 500 +0.8% [1211]
S&P MidCap +1.4%
Russell 2000 +1.2%
Nasdaq +0.3% [2065]
Returns for the period 1/1/05-2/25/05
Dow Jones +0.5%
S&P 500 -0.05% [down a fraction of one point]
S&P MidCap +1.1%
Russell 2000 -2.2%
Nasdaq -5.1%
Bulls 54.1
Bears 21.4 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate the support.
Brian Trumbore
