[Posted 7:00 AM ET]
Beirut / Lebanon
“The problem with Lebanon is everyone asks what you are.”
–Haitnam El chaar, my driver to Baalbek
As I pick up the story from last week, I told you my hotel room
in Beirut faced an apartment tower that had suffered heavy
damage in the civil war and, 15 years after the conflict ended,
still wasn’t being torn down or rehabilitated to any great extent.
But on Saturday, day three of my trip, and after posting the
column, I asked for a room change so I could get a view of the
Mediterranean Sea about two blocks away. I now had a terrific
sea view, that’s for sure, but I was also staring at the aftereffects
of the February 14 bomb blast that killed former Prime Minister
Rafik Hariri and 17 others. I knew my hotel was close to the site
when I first made the reservation but didn’t know just how much
so until I glanced down from the room to a slew of crumpled cars
(it remains an active crime scene) and it all came together. So I
then asked a waiter I had talked to the first night if he was in the
hotel when it happened and he said no, but now everyone calls
him and requests “a table for four with bomb view.” [The
outdoor café’s view is actually obstructed or I would have
realized where I was the first night I was there.]
And so began three of the more educational days of my life, to
say the least. Saturday I went to the national museum and then
spent a great deal of time hanging out at Martyrs’ Square, from
where you’ve seen the demonstrations on television. Monday, I
walked about five miles along the sea coast.
But it was last Sunday that will forever be etched in my mind. I
hired a driver to take me 85 km to Baalbek where there are some
Roman ruins. I also knew Baalbek, in the Bekaa Valley near the
Syrian border, was where the last Syrian troops had exited
Lebanon on Tuesday, April 26.
It was a spectacular drive up into the mountains and then down
into Bekaa. The valley itself is flat with orchards, vineyards and
very non-descript (ugly) towns. Then about 20 minutes outside
Baalbek the scene changed dramatically. It got darker, even
though the sky was bright, as we drove under our first banner
with pictures of Ayatollah Khomeini and Sheikh Nasrallah, the
current Hizbollah leader. As I later described to a friend, it
began to resemble Mordor as all the Hizbollah flags, marked
with the raised fist and Kalashnikov, waved in the breeze along
the road for miles on end into Baalbek. Let’s just say that for
one of the few times in my life I was truly scared.
[If you don’t know much about this region or Hizbollah, suffice
it to say this group and its 25,000-man strong militia that has
been responsible for the deaths of hundreds of Americans is not a
friend of the U.S.]
We arrived in Baalbek and as I’ve chronicled elsewhere on the
site I told my driver not to stop and to head straight back to
Beirut. Some of the stares I received while stuck in traffic on
the winding roads of the town convinced me it wasn’t a good
place to play tourist. [The ruins, however, did look pretty
amazing from what I could see.]
When we were five minutes out of town I finally spoke up again.
“I probably shouldn’t have been there.” “Your government
doesn’t want you here,” Haitnam replied. It’s true; the travel
warnings issued by the State Department were pretty explicit.
Over the coming weeks as we approach Lebanon’s May 29 date
for elections, I’ll be sharing lots of thoughts with you. From a
time standpoint it’s impossible to give a full report all at once but
for starters I was watching “Kudlow & Co.” on Thursday,
following my return, and Larry had California Congressman
David Dreier on, just back from a trip to the Middle East. Dreier
had a clip of his visit to Beirut and Rafik Hariri’s shrine, a place I
went to after my Sunday adventure out in the country. The
shrine is an incredibly moving site, located next to Martyrs’
Square.
But as I listened to Dreier I also knew one thing. He hadn’t been
into the heart of Hizbollah territory like I had, nor have 99% of
the opinion writers who comment on Lebanon. It was an
incredibly insightful adventure and with my driver’s ability to
speak English (he was a Sunni, incidentally) I learned a ton.
The people in Beirut, I would guess a slight majority, right now
have a generally favorable opinion of the United States because
we helped kick out Syria and gave the Lebanese back their
country. Rafik Hariri himself is viewed as a true martyr for the
cause with many, especially those in the lower classes, seeing
him as a god. But one of the insights I gained from my ride
outside Beirut was that I didn’t see Hariri’s picture in one shop
window outside the city proper. Think about that. His image
graced seemingly every store in Beirut and hung from more than
a few office towers, but not one picture of him outside of town.
That is but one example of the tribalism and factions in Lebanon
that have existed for centuries. The Sunnis have their leader, for
the most part Hariri’s son, a political neophyte, the Shia have a
number of disparate candidates, the Maronite Christians have
their own, the Druze have Walid Jumblatt and then there is
Hizbollah.
Hizbollah does not represent all of the nation’s Shiites but I saw
firsthand just how popular it is among the lower classes. Yes,
Hizbollah does build schools and hospitals and while it’s difficult
for an American (let alone an Israeli constantly under threat from
Hizbollah and its growing missile arsenal) to understand this, it’s
a fact.
But when it comes to the young people I encountered in Beirut, I
heard the following comment more than once. “We are free
now, we have an opinion” and on May 29 they will be able to
express it. But there is no united opposition political force,
despite the attempts of Eddine Hariri to pick up his father’s
mantle, and you have all kinds of players returning from exile
with others being released from prison. The election will be
fascinating and, I imagine, chaotic. The democracy advocates
speak of the “Intifada of Independence” and “The Truth” but this
is an incredibly complicated place and in the end I’m afraid the
status quo will prevail, which is not in the nation’s best interests.
True, Syria no longer has troops here but it has agents all about
and I wouldn’t be the least bit surprised to see a wave of violence
in the weeks leading up to the vote (Friday’s blast in a Beirut
suburb was but a sneak preview), though this may once again
drive the people into the arms of the more moderate candidates.
For the time being it’s like this. I don’t see Hizbollah being
disarmed as they were to have been back in 1989. And while the
Lebanese army seems capable (I got to see it close-up in a
myriad of checkpoints), the threat of renewed civil war is still
very real.
[As for Syria itself, the ruling Baath Party has a convention June 1
and it’s very possible there could actually be some good news
emerging from this, particularly in terms of economic reform.]
But with the situation deteriorating badly in Iraq these days, the
U.S. and its allies desperately need a political victory in
Lebanon. I’m hoping for the best, but my faith in a positive
outcome is shaky.
Wall Street
It was the best week in three months for the Street as stocks
continued to recover from their steep losses of March 7 – April
20. Two single events actually accounted for over half of the
gain in the Dow Jones, though; 87-year-old Kirk Kerkorian’s
offer to raise his stake in General Motors despite its myriad of
problems and a very good employment report for the month of
April with the economy adding 274,000 jobs, well above
expectations. So by week’s end everyone was foaming at the
mouth that the economy’s soft patch is already history. We
won’t know if this proves to be the case until we receive another
month of data, but for now I’m not going to play devil’s
advocate. Plus the yield on the 10-year Treasury is still but
4.26%. The housing bubble, in other words, isn’t about to pop
with this key mortgage variable well under control.
The equity markets also shrugged off the 8th rate increase by the
Federal Reserve since June 30, 2004; another 25 basis points in
the funds rate to 3.00%, and with the labor survey as strong as it
was and a few inflation components released during the week
probably giving the Fed mild palpitations, Chairman Alan
Greenspan and Co. will keep raising rates at least another two
times even as it claims “Longer-term inflation expectations
remain well contained.”
If you’re a bull you also can’t help but be encouraged by the
tame reaction to S&P’s downgrade of both Ford’s and General
Motors’ debt ratings to junk status. But while the move was not
totally unexpected, those sloughing it off are playing a fool’s
game. The sales picture for both, coupled with still soaring
pension and healthcare costs, are killing these two and
bankruptcy is virtually assured if the economy were to tip into
recession before they can steady the ship.
It was also curious that for his part Greenspan chose to issue
another warning on the credit derivatives market.
“The rapid proliferation of derivatives products inevitably means
that some will not have been adequately tested by market stress”
he said, adding, “Hedge funds could become subject to funding
pressures that would impair their ability to supply liquidity to
markets.”
Regarding the huge swaps positions still held by Fannie Mae and
Freddie Mac, Greenspan noted “Concerns about potential
disruptions…will remain valid until the vast leveraged portfolios
of mortgage assets held by Fannie and Freddie are reduced.”
As for energy and the Big Picture, the International Energy
Agency issued a warning of its own concerning the failure of the
big oil companies to spend money on exploration, with cap-ex
now expected to rise just 6% in 2005 vs. a 12% increase in 2004.
Giants such as BP and Exxon Mobil only assume $20 oil when
making investments that may last 25 years, even as we sit at
today’s $50 level, and so they hesitate because they don’t think
many of the projects would be profitable.
And down Mexico way, early in the week my friends at Pritchard
Capital were hearing that Mexico is the next Saudi Arabia in
terms of depleting reserves. Then at week’s end the chairman of
state-owned Pemex echoed these thoughts, warning that unless
Mexico’s oil industry is privatized with increased incentives for
exploration, output will tumble. Not good considering Mexico is
now #2 in exports to the U.S. behind Canada (and ahead of Saudi
Arabia and Venezuela).
Street Bytes
–While stocks rose on the week, the rally faded on Friday as
investors refocused on the impact rising interest rates would have
on the economy and earnings. Nonetheless the Dow Jones still
gained 1.5% to 10345, the S&P 500 picked up 1.3% to 1171 and
Nasdaq advanced 2.4% to 1967.
–U.S. Treasury Yields
6-mo. 3.19% 2-yr. 3.72% 10-yr. 4.26% 30-yr. 4.63%
The Treasury Department announced it may resurrect the 30-year
bond in 2006 after abandoning it in 2001. Pension funds in
particular need a longer-term investment to help match future
costs but, most importantly, the government needs to open new
markets of all kinds to prepare for the inevitable day when
central banks begin to cut back on their purchases of U.S. bonds.
Otherwise, the employment report led to a rise in yields across
the board though actual moves on the week, even in the 30-year,
were nothing to get too frightened over.
And just a note on China and the prospects it might formally
float its currency. A stronger yuan would make American
imports cheaper and China’s exports more expensive, but with
the huge wage differential between China and the developed
nations, it would take a huge move in the currency before there
was any real impact and obviously China would risk huge labor
dislocations at that point, a risk Beijing will not take given its
already restive population.
–As expected by this scribe when the scandal first hit, AIG was
forced to admit an internal probe had uncovered additional
accounting errors that will cut the net worth a total of $2.7
billion, or about $1 billion more than first estimated. The report
also concluded that former executives, including ex-chairman
and CEO Hank Greenberg, had “circumvent(ed) internal controls
over financial reporting.” Among the tricks AIG employed to
polish its reports for investors’ consumption was the use of
hedge funds at quarter end.
Folks, as Christopher Byron of the New York Post first wrote,
and I love parroting, AIG was a “fraud factory,” pure and simple.
New York Attorney General Eliot Spitzer has to indict
Greenberg, as I’m sure he will, and now the FBI is hot on the
trail of AIG as well as other players in the industry. [Plus
Greenberg is the subject of a separate stock manipulation inquiry
that could shred any remaining legacy the old man has.] What’s
good about all this, at least for those of us who want clean
financial markets, is that careers will be made and thus there is
ample incentive to pursue the crimes to the source.
But when I got home from Lebanon, the next morning I turned
on Don Imus’ radio program and New York State Parks
Commissioner Bernadette Castro was on, Ms. Castro being a
long-time friend of Imus and a former political candidate. She
went on and on, defending Hank Greenberg for his charity work.
Thankfully, Imus didn’t let her get away with it. “But he cooked
the books!” Listening to her I wanted to hop on the next flight
back to Beirut.
However, you can always count on Donald Trump to come
through in one fashion or another. He has had a longstanding
feud with Greenberg and here were his comments on Imus the
next day, as reported by Richard Wilner of the New York Post.
“Hank Greenberg is going down,” Trump said. “He’s a bad guy.
He should have gone down a long time ago.”
–Merck CEO Raymond Gilmartin was forced out after a
disastrous 11-year run as leader of the once-proud
pharmaceutical giant, replaced by an insider when outside
candidates said “No thank you.” Aside from a vapid product
pipeline, legal woes over the Vioxx fiasco will haunt this
company for years and Gilmartin will be implicated directly as
more and more evidence emerges of bad behavior on his part.
–Russian energy giants Gazprom and Rosneft are having major
problems reaching final agreement on their previously
announced merger. This is important because originally
Gazprom was to end up with 51% of the combined entity
(including old Yukos assets) and the other 49% was to be
eligible for foreign ownership. Now that’s all up in the air.
–My friend Harry Koza writes a piece for GlobeInvestor.com
and Harry has done very well, thank you, investing in the energy
sector over the years. But in commenting on all the new $100
forecasts for the price of crude, Harry writes “It’s beginning to
feel a lot like Bre-X, when the big dealers’ mining analysts vied
daily with ever-and-ever higher estimates of how much gold was
(not!) contained in Busang. So ignore the hype: the oil story is
about fundamentals – find good long-term holds and don’t trade
the noise.”
–IBM announced a major restructuring and in focusing on its
true growth areas, up to 13,000 jobs will be lost, mostly in
Europe.
–Germany’s SAP will continue to dominate the worldwide
business software market, according to AMR Research, and will
even take the top slot from Oracle in North America despite the
latter’s acquisition of PeopleSoft.
–In announcing it was restating earnings up slightly for various
quarters during the period 2001 through 2004, General Electric’s
CEO Jeff Immelt said “We remain committed to meeting or
exceeding our expectations and those of investors.” In other
words they will continue to do all they can to guide analysts
‘down’ so that they can then ‘exceed’ by a penny. Ah, they’re
masters of the game.
–Morgan Stanley directors endorsed embattled CEO Philip
Purcell and at least for now have rejected a breakup of the firm
or Purcell’s outright ouster.
–To give you a true sense of the trends in the auto industry here
in North America, Toyota and Nissan reported record sales in
April, up 21 and 27 percent, respectively, while GM’s and Ford’s
were down. Toyota’s market share is now up to 14% while
GM’s is down to 25%. So you’d think the two will cross at 19 or
20 in another 18-24 months.
–I noted before that while China’s economy has been growing at
a polished rate of 9-9.5% year after year, the equity markets there
have collapsed with the two main stock indices off 40 and 56
percent the last five years. [Financial Times] Why? One reason
is companies have “recklessly diluted” their own shares by
issuing new ones, according to one analyst on the scene. For
example, profits could be up 50% but if the # of shares
outstanding rose 70% it’s difficult for the stock itself to gain
altitude.
–The luxury retail sector continues to attract not just shoppers
but also acquirers, the latest target being Neiman Marcus which
is to be purchased by two private equity firms.
–I haven’t been to Norway since I was kid and my how costs
have soared. Gasoline, for instance, is now $6.60 a gallon, with
2/3s of the price being in the form of taxes in this energy
abundant nation. [Evidently, the people really don’t care here.]
More importantly, in Oslo a pint of beer is now $12! Goodness
gracious. That’s a Coors Light 30-pack, for crying out loud.
–In case you’re wondering, I wouldn’t invest in Lebanon these
days. While the potential is enormous, and I was impressed by
how many construction projects appeared to be running full tilt,
seven days a week, the political risk is still too high for me. It’s
one of those cases where, in all seriousness, it’s worth waiting a
bit until after the elections and risk losing the first 50-100%
move up in order to pick off the next 200%, as opposed to losing
50%. [In the aftermath of the February bomb blast, stocks
tanked 30% in a matter of days but have been recovering nicely
since.]
–My portfolio: I rolled back into my carbon fiber call options,
on top of ‘common’ that I own in the same company, so I’m now
roughly 17% equities and 83% cash. [One oil play, one carbon
fiber stock and some true toxic waste.]
Foreign Affairs
Iraq: As I alluded to in my opening comments on Lebanon, the
situation in Iraq has deteriorated in a most distressing manner
over the past 4-6 weeks in particular and I continue to pound
away at the point I’ve been making for about six months;
President Bush’s poll #s are a critical variable here and according
to the latest USA Today / CNN / Gallup survey, only 41% of
Americans now believe the war was worth fighting with 57%
against. That’s staggering…and depressing to those of us who
recognize that to lose here would be catastrophic. [New readers
of this column just need to understand I was a critic of the post-
war operation from virtually day one and would refer you to the
archives below and my columns of 12/20/03, 4/10/04 and
5/15/04 for good summaries of my positions.]
Long ago heads should have rolled in the Pentagon as since early
summer 2003 there has been a tremendous failure at the top of
the military command. Clearly some of our top brass in the field
are nothing more than political hacks. If the generals had put
their foot down in ’03, beginning with the incredibly overrated
former commander Tommy Franks, we could have crushed the
insurgency before it had a chance to take hold. Throw in the
political ineptness of administrator Paul Bremer and it was a
recipe for disaster. The brave men and women fighting this war
deserved better.
The above referenced poll #s are critically important because we
are rapidly approaching a Vietnam-like crossover point. While
the House has just approved $82 billion in additional funding for
Iraq and Afghanistan (and the Senate is expected to approve the
same figure this coming week), that could be the end of the
pipeline if an increasingly surly public truly turns on the White
House and its own congressional representatives.
As for the current political situation on the ground, the new
government is off to a terrible start as the Shiites have grabbed
their first opportunity for power and appear intent on shutting out
any Baathist representation, even if it means excluding talented
and respected figures such as former prime minister Iyad Allawi.
For their part the Sunnis have been largely left out but here they
have themselves to blame in many respects. This week at the
swearing in ceremony for the new government (with six cabinet
positions still going unfilled), the top Sunni didn’t even show up.
And isn’t it ironic that the corrupt Ahmad Chalabi is now in
charge of the oil ministry; the fox guarding the henhouse.
At least on the terror front the good guys secured a major victory
in the capture of Al-Qaeda’s #3, Al-Libbi, thanks to the heroic
actions of some in Pakistan’s intelligence service. Capturing bin
Laden now, or for that matter Zarqawi, won’t end the threats in
Iraq or elsewhere, but at least it would provide a morale boost in
the short term.
Russia: By the time some of you read this, Russia’s Victory over
Europe, World War II commemoration will be in full swing
(hopefully without terrorist interruption…this being a security
nightmare). World leaders will descend on Moscow, including
some characters straight out of the cast of “Clue,” as Russian
President Vladimir Putin had to virtually beg many to show up.
What is absurd about this whole celebration is how Putin is
blatantly encouraging the rehabilitation of Josef Stalin, down to
Putin’s approval to mint coins with Stalin’s likeness. Of course
it’s also true that a majority of the Russian people, as pointed out
on numerous occasions in this space, still praise Papa Joe for
“bringing order.” Truly pitiful, but that’s always been a part of
the Russian character, which is why the nation’s history is so
fascinating…and its present so unsettling.
As for President Bush’s own appearance at the festivities, he’s
trying to use the occasion to pressure Putin to accept the fact
Russia illegally annexed the Baltic Republics in both 1940 and
post-1945. The leaders of Estonia and Lithuania are boycotting
the ceremonies as Putin continues to deny the Soviet Union was
occupying the Baltics and much of Eastern Europe without the
consent of those it then tyrannized for about 50 years. The
Kremlin will not relent on this view but at least Bush will be seen
championing the new democracies of the region.
North Korea / Iran: Pyongyang launched a short-range missile
into the Sea of Japan to remind everyone it could, even though
it’s the Taepodong class of long-range missiles that are most
disconcerting to the U.S. and Japan, one having been launched
over the latter back in 1998. It also seems clear North Korea will
proceed with a nuclear test, possibly in the next few weeks.
At that point the assumption is the world community would
come down full force against Kim Jong il and his Orcs, including
China. Oh were it that easy. China wants to continue to jerk the
U.S. around for a spell and even South Korea is growing
increasingly frustrated by China’s weak attempts to pressure the
North to hold off. A North Korean test could lead to all-out war
on the peninsula within weeks.
As for Iran, those lovely mullahs announced they would resume
enriching uranium after supposedly suspending the operation last
December, their way of expressing dismay over the lack of
progress on talks with Germany, France and Britain. Iran also
has an election in June and while I think they will definitely go
through with a public display of their own nuclear capabilities as
soon as they’re ready, it wouldn’t be a shock to see it do so
right before the people go to the polls to show that the nation
has “arrived.” Regardless of whether you are a reformer or a
hardliner in Iran, the vast majority of the people will have a
sense of pride as the rest of us hide under the sheets.
I grouped North Korea and Iran together up top because as of
this date the Bush administration can claim nothing of a positive
nature when it comes to these two charter members of the axis of
evil. If both now move to fully show their cards, how history
treats the Bush presidency will be the least of our problems.
China / Taiwan: Following the previous week’s trip to China by
the leader of Taiwan’s main opposition party, Lien Chan of the
Kuomintang (Nationalists), President Chen Shui-bian invited his
Chinese counterpart, Hu Jintao, to Taiwan to see for himself that
Taiwan “is a sovereign, independent country.” Well that’s not
exactly what China has in mind when it calls for “one China”
with regards to the island democracy. Beijing turned down the
invite with a sneer.
Earlier, as part of Hu’s visit with Mr. Lien of the KMT, the
Chinese president said if the Nationalists recaptured the
presidency in future elections, Hu promised a broader dialogue
on the military front and increased “diplomatic space” (i.e.,
support for Taiwan’s admission to various international groups
it’s currently omitted from…like the World Health
Organization).
For his part, upon returning home Lien challenged Chen “to walk
toward a new future, toward a new outlook.” Chen responded
again that he, too, favors increased dialogue, particularly on the
military front, but only if Beijing accepts Taiwan as an equal.
So basically what we have is a giant trap laid out by China and
it’s the fervent hope here that a majority of the Taiwanese people
don’t fall for it. Longer-term, with all that’s at stake in the entire
Asia-Pacific region, it would be the equivalent of 1938’s Munich
Agreement.
Lastly, President Hu, as a goodwill gesture to the Taiwanese
people, is offering a pair of giant pandas. Oh, how sweet.
Don’t take ‘em in, my Taiwanese friends! The pandas are wired.
Japan: In a recent poll 56% now believe the 1947 constitution
should be changed to more clearly define the Japanese military’s
role, including the ability to aid allies. [Remember, Japan’s
current troop contribution in Iraq is non-combat.] This would be
an important first step in re-arming Japan, something Americans
should want in order to help shoulder the defense burden in Asia.
Britain: Prime Minister Tony Blair’s Labour Party won an
unprecedented 3rd term in elections on Thursday but Labour’s
parliamentary majority shrunk by about 100 seats. Blair was
battered over Iraq and it seems certain to this scribe that an early
election will be held within two years in light of my global
recession forecast; the solid economy in the UK having been
what kept Blair in office.
You’ll recall I thought Blair would have stepped down last year,
citing health reasons, in favor of #2 Gordon Brown. It only
makes sense that this could still occur to save his party.
Italy: Amidst the continuing uproar among the Italian people
over the accidental shooting by American forces in Iraq of an
Italian intelligence agent March 4, Prime Minister Silvio
Berlusconi has remained a stalwart ally of the United States.
Italy and the U.S. failed to agree on joint conclusions of an
inquiry but Berlusconi said the incident would not hurt long-term
relations and that he would coordinate any withdrawal of Italian
forces from Iraq with the allies.
Cooperation between the U.S. and Italian militaries is actually
increasing in a big, and important, way as well. A report by Tom
Kington of Defense News spelled out that 785 Italian Air Force
pilots have been receiving training in the U.S. at a cost to Italy of
$105 million. This has already paid dividends when during Pope
John Paul II’s funeral, a Learjet entered Italian air space and
headed for Rome. Intelligence reports indicated there was a
bomb on board, but the Italians, according to an American
defense official, handled the operation perfectly.
Israel: After last week’s column was posted, Russian President
Putin went from meeting with top Israeli officials to spending
time in the Palestinian territories and with President Mahmoud
Abbas. Putin has U.S. approval to sell the Palestinians 50 armored
vehicles that the security forces desperately need but Israel won’t
allow the sale until Abbas dismantles the terrorists. But as Putin
says (and I agree), you can’t fight them “with stones and
slingshots.”
Meanwhile, Turkey’s Prime Minister Erdogan paid an important
visit to Israel to patch up some differences that had developed in
what had been a solid relationship between the two nations for
the better part of a decade. Erdogan, as leader of a nation that is
98% Muslim, could be a key negotiator in any peace process.
Mexico: In a major development involving the front runner for
July’s presidential election, the government dropped contempt of
court charges against Mexico City Mayor Andres Lopez Obrador
who had previously been impeached by Congress in a bogus
move.
Random Musings
–When North Korea tests its nuclear capability, it will send a
chill down the collective spine of the civilized world. It will also
scare the hell out of our schoolchildren who won’t have a real
concept of what could then unfold.
–From Roger Cohen of the International Herald Tribune:
“(The) global forces stimulating anti-Americanism remain broad:
Islamic anger; broader ideological anger (at Bush’s brand of
conservatism); anti-war anger (driven by Afghanistan and Iraq);
cultural anger (at the advance of American values and lifestyle);
economic anger (as America prods, economies open and
competition stiffens); anger at fortress America (of which
heavily guarded, impenetrable embassies are a symbol); and the
envy-tinged anger of a world protected by American garrisons
but made uneasy by then.
“Perhaps the time has come for Washington to realize that the
collapse of its public diplomacy after 1989 was a costly error.
And to understand that double standards do not go unnoticed –
not at Abu Ghraib, not at Guantanamo Bay, and not in Indonesia
when America criticizes the short sentence for (the terrorist)
Bashir but denies Indonesian police access to key witnesses,
including the captured Al-Qaeda operative known as Hambali.
“To be so powerful is to be blamed for everything – even the
polarizing forces of globalization, which now lie outside any one
country’s control. It is no use America lamenting this
phenomenon, however unjust. Rather, it may want to listen
better.”
I don’t necessarily agree with all of the above, though I can tell
you from my overseas travels Abu Ghraib continues to be a huge
issue, as I thought it would be at the time.
But with regards to the Muslim world, I can also speak from
personal experience. In two trips to Turkey and now one to
Lebanon, I have spent 15 days in these parts the past few years.
Granted, while I don’t know what would have happened to me if I
had gotten out of my car at Baalbek and started touring (OK, I
have a pretty good idea), otherwise, I have never had an
uncomfortable moment. Nothing even close and I walked through
the slums of Istanbul. But the preceding is simply the statement
of a tourist…one who is also not naïve to the dangers posed by
the fanatics.
–There was a front page story in the Washington Post this week
on just how unprepared America is for nuclear terrorism.
Remember in the days after 9/11 when I wrote how every town
in America should establish its own evacuation plan and
distribute it to each citizen? At least the basics so if an
attack is to the east, certain roads west should be used, etc. The
simplest of plans, even with the inevitable chaos on the roads,
would potentially save millions of lives and yet nothing has been
done 3 ½ years later. It’s a case of Leadership 101, and the
president, well aware of the threats to our democracy, should
have at least noted the need for a local civil defense plan in every
State of the Union address, for example, while each governor
should have demanded their municipalities have a plan on their
desk six months after 9/11. This is but another reason why this
nation would collapse in a state of anarchy should an attack
occur.
–President Bush unveiled his “progressive indexing” plan for
Social Security and he deserves credit here for addressing the
issue in the first place, but it remains a big loser for him as the
private account aspect is still opposed 52%-44% in the latest
USA Today / CNN / Gallup survey.
–California Governor Arnold Schwarzenegger’s approval rating
fell below 50% for the first time since taking office November
2003.
–I rushed home from Beirut so I could catch the “American
Idol” / Paula Abdul scandal. Paula, listen to me. Pick someone
with at least half a brain next time.
–Final thoughts on Beirut:
I had originally planned on saying I was Canadian or Irish
instead of American if questioned in Beirut, but when the first
cabbie asked “Are you German?” I couldn’t lie. “American.”
He smiled broadly. “We love Americans! You kicked out
Syria!” He was sincere and after that when asked I wasn’t about
to hide my identity.
The streets of Beirut were spotless, the cleanest city I’ve ever
been in, and the people were friendly as I walked all over town
my last few days. While I was admittedly in the better areas, not
one person gave me a bad look. [Probably because they thought
I was German!]
What was sad is that the Hariri bombing, just as in the case of the
attack on the Twin Towers, displaced so many workers who
could least afford it. I ate many of my meals at a sidewalk café
across the street from the bomb site but also across from the
Morgan Hotel which ten weeks later still hadn’t reopened and of
course the workers weren’t being paid. The bombers selected
this area because it was a symbol of Hariri’s rebuilding effort,
the hotel district. My own hotel, the Intercontinental Phoenicia,
suffered extensive damage but no one was hurt. It took about 7
weeks for it to re-open. [Super place, incidentally.]
On the drive to Baalbek, at one point I saw about 8 men in Santa
Claus outfits collecting for some charity. I asked my driver
Haitnam, “Is this a Christian neighborhood?” “No, it’s Shia.” I
didn’t bother asking for an explanation.
Finally, when I returned from the day in Hizbollah country I was
talking to one of the hotel workers about my adventure and I
must have been smiling broadly, out of both relief and
excitement. This cracked Hanadi up.
“Americans never smile. You all work so hard and your faces
are always stressed out. But you have a smiley face.”
Most of my friends would say I normally have a dour one. Yet
when I look back on my adventure in Beirut and the road to
Baalbek, I can’t help but smile. It was one of the greatest
experiences of my life. But as in all of my travels I start out
seeking answers, and often end up with more questions.
—
God bless the men and women of our armed forces. And for
those Veterans of World War II still with us, happy VE-Day.
God bless America.
—
Gold closed at $426
Oil, $50.96
Returns for the week 5/2-5/6
Dow Jones +1.5% [10345]
S&P 500 +1.3% [1171]
S&P MidCap +2.3%
Russell 2000 +3.0%
Nasdaq +2.4% [1967]
Returns for the period 1/1/05-5/6/05
Dow Jones -4.1%
S&P 500 -3.4%
S&P MidCap -2.4%
Russell 2000 -8.5%
Nasdaq -9.6%
Bulls 43.5
Bears 30.4
[Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support and all the notes on
the trip.
Happy Mothers Day!
Brian Trumbore
