[Posted 7:00 AM ET]
Iraq
From a story in the Washington Post:
“ ‘The war has gone on longer and more violently than people
envisioned,’ Sen. Lindsey Graham (R-S.C.) said. ‘We always
accentuated the positive and never prepared the public for the
worst….People are dying in larger numbers than we thought, and
the insurgency seems to be growing stronger, not weaker.’ The
result, Graham said, is that Bush ‘ill-prepared the public for the
trial and tribulations’ of planting a new democracy in the heart of
the Middle East. Graham said the public’s sour mood is
infecting some GOP senators, especially those facing reelection
in 18 months….
“ ‘The president takes seriously his responsibility as commander
in chief to continue to educate the American people about the
conduct of the war and our strategy for victory,’ said Dan
Bartlett, a senior adviser. As part of the new focus, Bush will
meet with Iraqi Prime Minister Ibrahim Jafari at the White House
for the first time next week and dedicate several speeches to the
war, including a major address on the first anniversary of Iraq’s
sovereignty this month, White House officials said.”
From a lead editorial in the Washington Post:
“(The) U.S. mission in Iraq seems to be drifting dangerously –
and the president, once again, is not talking frankly to the
country about the sacrifice that may be required, or where the
troops and other resources for such an effort will come from.
Those ought to be the questions at center stage this summer.”
You know where I come down on this issue, but there was
some encouraging news that the minority Sunnis were offered,
and accepted, more of a presence on the committee responsible
for drafting a new constitution.
But then you have the ongoing violence and one incident in
particular was even more worrisome than the others, that being
the bombing in Kirkuk, in a region where the Post reported the
Kurds have been conducting abductions of Arabs and Turkmens,
with U.S. knowledge, which is exacerbating tensions.
It’s the Kurds that are at the root of the problems in the U.S. /
Turkey relationship. Evidently things did not go well when
Turkey’s Prime Minister Erdogan called on President Bush
recently as the administration refuses to crack down on the PKK,
the Kurdistan Workers’ Party, that is responsible for the deaths
of at least 50 Turkish soldiers this year. [Washington and
Ankara also disagree on how to treat Syria, Turkey’s neighbor
and a country with its own Kurdish minority.]
These next few months are critical. “Timetable” is the
watchword, and not the timetable for withdrawal sought by some
congressmen this week (which wasn’t that radical a proposal,
incidentally). The key timetable involves August and finishing a
constitution by mid-month so the process of adopting it can
continue. The American people, 60% of whom are now either
calling for a reduction in U.S. forces or believe the war is going
badly [USA Today / CNN / Gallup; New York Times / CBS
News], need to see progress or support will continue to wane.
And by now it’s clear training of new Iraqi security forces is
going poorly. Republican Congressman Curt Weldon said on
“Meet the Press” the level of training is being “misrepresented”
to the American people. On the same program Democratic
Senator Joe Biden said the president must lead. “Tell the people
what’s ahead, otherwise we’re out.”
Washington Post columnist Jim Hoagland best summed up my
own sentiments, as he has so often the past year.
“The Bush administration argues that out there ‘on the ground’ in
Iraq and Afghanistan, there is reason for optimism as well as
concern – and there is. But the White House is losing that
argument with the American public and does not seem to
understand why….
“Much of the questioning of American intentions and actions has
been manipulated by enemies and overblown by the gullible.
The allegations of Koran abuse are a supreme example of this.
The Pentagon is right when it says that by the standards of all
previous wars, American troops have been highly scrupulous.
“But the always grudging, often secretive and uniformly
defensive way in which the administration responds to requests
for information – often treating those requests as criticisms in
and of themselves – has fostered this growing credibility gap
about U.S. behavior.
“Yes, much of the criticism of President Bush comes from
partisans with their own axes to grind, and from those who
opposed the Iraq invasion under any circumstances and always
will oppose it, no matter how much Iraqis are helped by it. Such
complaints are white noise that Bush and aides no longer hear.
“But the White House is too quick to find comfort in the ignorant
partisanship of some foes and the partisan ignorance of others –
and in the reality that patience is required in all wars and
particularly in one as amorphous and demanding as this struggle
has become.
“All of that is true, but it is not the whole story. Patience in
times of hardship and danger has to be earned by leadership, by
candor and by demonstrated accountability and responsibility at
the top. A poll may be nothing more than a snapshot, but it can
show us things about ourselves we need to see.”
Wall Street
Oil hit an all-time high, closing the week at $58.47, as concerns
over supply, given current and expected demand, mount. Earlier,
OPEC, in a meaningless gesture, raised its official quota to 28
million barrels per day even though it is producing 30 million.
But while inventories of oil, natural gas, and heating oil remain
at levels that in no way justify such high current prices in the
spot market, if the economy continues to grow and we have a
cold winter, the world is in trouble. All three would then shoot
through the roof. But of course that would kill the global
economy (with energy prices eventually crashing as well). So, if
Federal Reserve Chairman Alan Greenspan thought he had a
conundrum on his hands with regards to action in the bond
market, we’d all have a real one here, too.
The solution? Long-term, there are many; from building more
refineries, to drilling more, to encouraging alternative sources, to
raising taxes on consumption, to outlawing SUVs…you get the
picture. But short-term? There are none, it would appear. Only
a recession will drive prices down, say below $40.
Meanwhile, despite the energy price spike, the readings on
inflation came in for May and both consumer and producer
prices fell, while various manufacturing indices (except in the
Philly area) all rose. And a Fed survey of regional activity
revealed the economy is on “solid” ground. Even consumer
confidence rose for the first time in ages. The only real downer
was the reading on May retail sales which fell.
For their part stocks sloughed off the price of oil and the major
averages all rose 1% or more to levels not seen in three months,
in the case of the Dow and S&P 500, and early January for
Nasdaq. So for this week I’ll give you all a break on my
recession by year end talk.
But what of real estate? U.S. housing permits were down 4.6%
in May, normally a decent barometer, but I vowed never to make
much of one month’s action in this sector. More importantly,
price gains in Southern California are definitely slowing…still
growing, but slowing. The year-over-year rate of appreciation in
Orange County, for example, is now below 10%. And you
probably saw the plethora of articles this week on the global real
estate scene. Nothing I haven’t been telling you over the past
year in particular, but it’s a global bubble, that’s for sure. At
some point it will burst and if one of the first stops is the U.S.,
then consumer spending in America will slow; China,
manufacturer to America, slows; that slows the buying of U.S.
bonds; interest rates rise; folks default on their interest-only /
adjustable mortgages and vacation homes and, voila!
Depression. Well, maybe not that bad and I’m not calling for
anything near that just yet. But it’s why some of us watch this
sector so closely, even as like many of you I sit on my own pile
of equity in a place I’ve owned 11 years. It’s also why if I’m a
banker I’d have trouble sleeping at night since mortgages make
up 40% of the assets of U.S. commercial banks with another 16%
in mortgage-backed securities.
Finally, on the topic of China, and to once again state the
obvious, what’s going on here is amazing, even if it is another
massive bubble of its own. China is building a middle class at an
exponential rate. One example of this is Hitachi, which sold
10,000 plasma televisions last year and expects to sell 100,000
this one. And while the government appears to be having some
success in reining in the real estate and manufacturing sectors,
consumer spending is soaring. An example of this is restaurant
sales, up 20% year over year in the last report. [South China
Morning Post]
But as I’ve noted before, incredibly the Shanghai Composite, the
major equity benchmark, is off over 40% the last five years so
the government is contemplating a massive bailout of the broken
down brokerage industry, starting with the purchase of some $15
billion in stocks. And on the banking front, source of $hundreds
of billions in bad loans, Bank of America is making the largest
single foreign investment in the sector in acquiring 9% of China
Construction Bank (with an option to purchase more), despite the
fact CCB has its own loan issues. At least politically, one can
only view the BofA acquisition positively. And for once I’ll
leave it on that note…a positive one.
Street Bytes
–The Dow Jones rose 111 points to 10623, a gain of 1.1%, while
the S&P 500 went positive for the year, up 1.6% on the week to
1216. [The 12/31/04 close was 1211.] Nasdaq advanced 1.3%
to 2090.
–U.S. Treasury Yields
6-mo. 3.21% 2-yr. 3.70% 10-yr. 4.08% 30-yr. 4.37%
While the tame inflation data would lead one to believe the
Federal Reserve is closer to being finished hiking interest rates,
the solid readings on manufacturing and soaring oil and
commodity prices put a damper on such talk. Another 25 basis
points is baked in the cake for the June 29-30 meeting and most
likely 25 more in August. Then we’ll see.
–Congratulations to Manhattan District Attorney Robert
Morgenthau for gaining a conviction on 22 of 23 charges in the
corporate looting case involving former Tyco CEO Dennis
Kozlowski and CFO Mark Swartz. Both now face up to 25 years
in prison. Yes, Virginia, there is a Santa Claus.
–In the largest security breach of its kind, MasterCard
International reported that 40 million cardholders are at risk,
including other major brands. As this just broke, this is likely to
be a big story all week.
–No matter how the economic data is presented, a large
percentage of Americans remain pessimistic when it comes to
their financial future. In the same New York Times / CBS News
poll cited above, while 54% say the economy is ‘very’ or ‘fairly
good,’ the number who say it’s getting worse rose from 30% in
February to 36% today.
–General Motors said it will unilaterally cut healthcare costs
June 30 regardless of whether or not the United Auto Workers
agrees to them. The union at first said it would not accept any
changes to the existing labor agreement until it expires in 2007
but by week’s end there appeared to be some cooperation
between the two sides. The shares continue to move smartly
higher on a hoped for partial resolution of this now $5 billion a
year problem.
–Efforts to get CAFTA (the Central American Free Trade Act…
Costa Rica, El Salvador, Honduras, Guatemala, Nicaragua and
the Dominican Republic) approved in the Senate are being hurt
by NAFTA. The unions have their ongoing campaigns against
the latter as the U.S. continues to shed manufacturing jobs, which
wasn’t the original intent of course. But to be fair, NAFTA has
been an overall success, with total trade between the U.S. and
Mexico having more than tripled. Plus all of North America is
handily outperforming the European Union, by way of
comparison. And supporters of CAFTA can also point to the
success of the 2004 trade agreement with Chile; one that has
already seen exports climb by over 30% on each side in just the
first year. [Bloomberg News / Business Week]
–I was reading a story about Venezuela and how President Hugo
Chavez is spending all his nation’s oil revenues on the poor,
subsidizing food and energy costs, for example (rather than on
badly needed infrastructure projects), as a way of boosting his
approval ratings which are indeed high. [There being far more
poor people here than middle- to upper-class ones.] So
Venezuela’s debt load is now 42% of GDP, according to
Bloomberg News, and for a brief moment I thought, gee, that’s
awful high. Then my brain cramp passed and I remembered the
figure is about 60% in the U.S.
–The G-8 cancelled the debt of 18 poor nations (including
Honduras, Nicaragua, Bolivia, Ethiopia, Rwanda and Uganda), a
total sum of $40 billion owed to the likes of the World Bank,
IMF and African Development Bank as British Prime Minister
Tony Blair was successful in pushing through one of his pet
projects. The creditors weren’t going to see the money anyway
but now this munificence must be accompanied by real reform
and clean government. As some have editorialized, this is where
the likes of Bono must channel their energies in addition to
urging compassion.
–Europe’s biggest cross-border banking takeover is coming to
fruition; Italy’s UniCredito swallowing up Germany’s HVB for
about $23 billion.
–Morgan Stanley CEO Philip Purcell announced he was
succumbing to the pressure of a job poorly done and would retire
by March 2006. Purcell cited the continuing “personal attacks”
and failed to mention that earnings are crumbling, shareholders
suffering, and employees walking. But in another example of
just how screwed up our system can be, Purcell will saunter out
with $62 million in cash and prizes.
–The Journal reported that the Justice Department has built a
criminal case against KPMG for its sale of abusive tax shelters as
senior executives also misled IRS investigators and concealed
evidence. So the issue is, do you indict the whole firm, a la
Arthur Andersen, thereby issuing another death sentence, or
merely go after individuals? Justice will likely opt for the latter,
only, and this week KPMG was scrambling to apologize while
admitting that now former senior partners broke the law.
–Bristol-Myers Squibb reached a $300 million settlement in a
criminal investigation relating to “channel stuffing”. Two senior
executives here were also indicted for spearheading the massive
accounting fraud.
–And then you have something many can relate to, the case of
channel stuffing of a different sort; this one being inflating the
circulation numbers of newspapers and magazines which then
costs advertisers $millions in higher rates. This week three
circulation managers for Long Island’s popular Newsday were
charged with fraud for running a scheme whereby delivery
companies accepted large quantities of papers and then simply
dumped them.
–J.P. Morgan Chase agreed to a settlement in the amount of $2.2
billion for its role in the Enron case, thereby joining Citigroup
which the prior week announced it was kicking in $2 billion of
its own. The total Enron pot is now up to $4.7 billion (with other
big investment banks to follow) and while investors will receive
some recompense way down the road, attorney William Lerach
and his cronies will pocket about 10% of the pot. I tell ya, I
shudda been a lawyer. [For its part, JPM’s figure is on top of $2
billion it coughed up earlier for its WorldCom transgressions.]
–Not for nothing but bird flu as an issue is still simmering just
below the radar and may yet prove to be a disruption for
financial markets, particularly in Asia. Plus, this morning there
is a story in the Washington Post that as government officials in
China attempted to suppress major flu outbreaks, they were using
an antiviral drug meant for humans, ergo, the drug will no longer
protect people in case of a worldwide bird flu epidemic.
Brilliant.
–Steven Meyers and Timothy O’Brien of the New York Times
had a piece on Kremlin control of Russian business, particularly
in the energy sector. Following is a list of executives tied to
President Vladimir Putin who also served in Russia’s intelligence
service in one capacity or another.
Victor Ivanov…Aeroflot board member…aide to Putin, former
K.G.B. member
Dmitry Medvedev…Gazprom chairman…chief of staff to Putin
Sergei Prikhodko…Tvel board member…foreign affairs adviser
to Putin
Igor Sechin…Rosneft chairman…Kremlin staff, former K.G.B.
member
Yevgeny Shkolov…Russia Railways board member…
presidential economic adviser
Vladislav Surkov…Transneft chairman… Kremlin staff
–Follow-up to my story on the pipeline from Siberia to the
Pacific and concerns it would be routed too close to world
treasure Lake Baikal. This week the Russian government
accused pipeline king Transneft of doing just that, placing it far
too close to the lake then the government had previously allowed
as well as illegally cutting the forests nearby. Greenpeace
uncovered this. Good for them. Note to “60 Minutes”. This
would make for a good story next fall; all kinds of angles to it.
–And here’s another environmental story with legs. Hong Kong
Disneyland is opening in September and there is a growing
controversy over Disney’s decision to sell shark’s fin soup at
receptions held at the park, the soup being a traditional dish in
these parts. Well the World Wildlife Fund and others are
threatening boycotts and Disney better be careful how they
handle this. Personally, when I was in Shanghai last year I
confessed to having ordered this delicacy. I felt awful about it,
the soup was outrageously expensive (something like $60 if
memory serves me) but boy was it delicious. I promise never to
have it again, though I will also never swim in the ocean because
I’m forever a marked man by the shark community.
–While the Bush administration continues to oppose hard limits
on greenhouse gases, increasingly U.S. business is beginning to
push its own agenda on global warming, such as with General
Electric which would be a big beneficiary of any energy bill that
extends credits for wind power, G.E. being a leading maker of
turbines for wind farms.
–A sleeper economic indicator that never gets enough press is
machine tool orders, up 29% in April, year over year. [The latest
recording period.]
–According to a worldwide Nielsen poll, Indians register the
highest reading on consumer confidence.
–Micheline Maynard of the New York Times had a fascinating
piece on just how close the airlines are to profitability. As a
group in 2004 they would have needed just 6 percent more in
revenue to break even, on an operating basis. For example,
American Airlines would have needed just 3.4% more revenue,
UAL 10.8% more, and Continental only 2.1%. [Delta needed
17.4 % and Southwest was already profitable.] It ends up being
about $8.50 per passenger; this despite record high fuel prices.
But before you go rushing to buy the shares, understand how
difficult it is to obtain that last $8.50 given the labor picture,
energy and the competitive environment.
–Marin Capital Partners, a large hedge fund, is returning $1.7
billion in investor money due to a “lack of suitable investment
opportunities.” Marin’s action is a classic example of the plight
many hedge funds find themselves in these days…too many
playing the same strategies. In Marin’s case it was the
convertible bond market. It’s also but another warning that when
these guys all decide to head for the exits at once (liquidating
their positions, not just returning funds), many regular investors
will be left holding their bags.
–In another hedge fund development, GLG, Europe’s largest,
admitted it had lost 14.5% in the month of May, alone, in one of
its 16 funds that was focusing on the ill-fated GM stock / bond
trade. [Ford, as well, to a lesser extent.]
–Business Week had a piece on advertising and the potential for
LED billboards with changing messages where advertisers would
be able to buy time, not space. It’s going to be great for stores
promoting sales, for example. But while the article correctly
noted the emergence of this media represents stiff competition
for newspapers, radio and television stations, it failed to add the
Internet. Per my previous comments on web advertising, if I was
responsible for an ad budget I’d certainly be more apt to put my
dollars into good old billboards as opposed to the web variety.
Plus we’re spending as much time in our cars as we are surfing
online these days. At least it seems that way.
–From Brian Krebs / Washington Post:
“Cyber-security officials in Britain issued an unusually dire alert
yesterday, warning that hackers are targeting e-mail-borne
viruses against government agencies and high-profile British
corporations with the aim of stealing sensitive and lucrative
data.”
The threat supposedly originates in Asia and for any government
to warn its citizens in this fashion, it speaks to the seriousness of
it all. The e-mail programs are becoming more and more
sophisticated in how they get folks to open up attachments; see
also MasterCard, I imagine.
–Estimates are that as much as $120 million will be pumped into
North Carolina’s economy as a result of the U.S. Open being
held at Pinehurst. One Greensboro meat vendor sold $100,000 in
filet mignons to hotels and catering companies. [GolfWorld] I
picked Arnie to win it but then I was reminded he wasn’t entered,
Arnie being 75 and all.
–My portfolio: My carbon fiber play had a solid week. I’m
hoping the Senate version of the energy bill carries the day over
the House version, particularly because it favors alternative
energy sources such as wind power; carbon fiber being a chief
component for the blades. But that’s just one use of carbon fiber
these days. Boeing is using gobs of it on its new 787. Overall
I’m approaching 25% equities, 75% cash, and still have my
remaining oil stock.
Foreign Affairs
Iran: In the days leading up to the election (results of which are
not known as I go to post) there was a spate of bombings,
including in Tehran, that killed 10 though they were not all
thought to be linked. The government did accuse Iraqi Sunni /
Baath Party supporters of Saddam of carrying out some of the
attacks. [Remember, Iran’s ruling Shiites are heavily involved
with the new Iraqi, Shia-dominated government.]
As for the vote itself, former president Rafsanjani is expected to
face a runoff; while on the nuclear weapons front Iran admitted
once again it had cheated and lied about aspects of its program
that prove it’s progressing far faster than some ‘experts’ thought.
North Korea: Kim Jong-Il met with a top South Korean official
for the first time in three years and hinted Pyongyang will return
to the negotiating table in July.
Lebanon: The final and decisive round of balloting is this
weekend with last week’s finding former commander Michel
Aoun, freshly back from 15 years in exile, opting to side with a
Christian coalition that included candidates supportive of Syria.
This is a classic example of the screwed up state of politics in
this frustrating nation. Aoun, after all, was defeated by the
Syrians in the last, bitter battle of the civil war, was forced to
flee, comes back as Syrian troops are finally expelled, acts like
he’s going to support those who picked up the mantle of Rafik
Hariri following his assassination, and instead forms a coalition
that helps defeat the Hariri-backed opposition.
Aoun’s excuse was that since Syria’s army is gone he no longer
has a quarrel with them and instead he seeks to lead the fight
against corruption. Well, Mr. Aoun has a point there; Lebanon is
rife with corruption. But why should Lebanese believe this
egotist will be any different? Suddenly the Hariri coalition needs
19 of the remaining 28 seats to gain control of parliament.
Meanwhile, Druze leader Walid Jumblatt, whose own slate of
candidates lost some seats to Aoun, said Syria desires “to
continue assassinations.”
European Union: The fight is on…the hoped for constitution
dead. It’s now Britain’s 21-year-old, 3 billion euro rebate vs.
France and its farm subsidies. Blair evidently picked up an
unexpected ally, however, in the possible successor to German
Chancellor Schroeder in September, Angela Merkel. She said
Britain shouldn’t give up its rebate unless France does something
with its agricultural slush fund. [A stance that augured well,
some would say, for Merkel’s potential foreign policy with the
U.S. should she be elected.] The deal with the rebate is as
follows. Without it, Britain would be the biggest net contributor
to the E.U. budget by far.
But there is this other issue, Turkey, that I keep addressing and at
the start of the week new French Prime Minister Dominique de
Villepin told the French parliament that the results of the recent
referendum showed the nation was against further expansion.
“We must take it into account,” he said. Bulgaria and Romania
should be admitted in 2007, but “beyond that we must certainly
open a discussion with our partners on the mode of future
enlargements.” [London Times] Without mentioning it by
name, there was no doubt who he was referring to. Later in the
week President Chirac echoed the sentiment. But next month,
Britain takes over the E.U. presidency and Blair has promised to
make Turkey’s admittance a top priority. It’s going to get down
and dirty, folks.
Russia: In another fascinating opinion poll, 43% believe the
country is headed toward anarchy vs. just 2% last year.
[Moscow Times] So how can this be? Things aren’t that bad,
are they? President Vladimir Putin himself is fanning the fears
of the future in every speech he gives to suit his own purposes;
the better to gain support for consolidating power. What I also
found interesting is that 2,000 rallied last week in support of
jailed oligarch Mikhail Khodorkovsky, as well as to rail against
Kremlin policies. The slogan among the mostly youthful crowd
was “I’m free: I forgot what fear means;” a line from a popular
Russian rock anthem these days, “Ya svoboda,” by a group
named Aria. 2,000 protesters is a solid figure and this potential
movement bears watching.
China: Hong Kong has a new chief executive, Donald Tsang,
who is popular with the people and was Beijing’s choice as well.
But Tsang will only be in office two years, as things now stand,
and he will be pressured by the people to bring more democracy
to the decision-making process here. Of course this isn’t what
Beijing wants to see.
But on a different topic, former secretary of state Henry
Kissinger had an extensive essay in the Washington Post on
dealing with China. At least he admitted up front he is a walking
conflict of interest here, as his consulting firm does all manner of
business with the mainland. Kissinger noted the history of U.S.
– Sino relations.
“In 1972 Beijing accepted a visit by President Nixon, even while
the United States recognized Taipei as the capital of all of China,
and by another president – Gerald Ford – under the same ground
rules in 1975. Diplomatic relations were not established until
1979. Despite substantial U.S. arms sales to Taiwan, Sino-
American relations have steadily improved based on three
principles: American recognition of the one-China principle and
opposition to an independent Taiwan; China’s understanding that
the United States requires the solution to be peaceful and is
prepared to vindicate that principle; restraint by all parties in not
exacerbating tensions in the Taiwan Strait.
“The task now is to keep the Taiwan issue in a negotiating
framework. The recent visits to Beijing by the heads of two of
Taiwan’s three major parties may be a forerunner. Talks on
reducing the buildup in the Taiwan Strait seem feasible.”
That was it on the China threat. Kissinger never even mentioned
the 600+ missiles facing Taiwan. He makes it sound as if both
sides have equal firepower. In other words, Kissinger would sell
Taiwan out in a heartbeat. Most of the rest of the piece is on
how the U.S. should treat China with respect.
While securing Russia’s weapons material is the paramount issue
of our time, today, China is obviously the prime issue for the
next few decades (along with the never-ending terror threat). As
I alluded to earlier, I’m wrestling with it myself, but I can’t help
but continue to fall on the pessimistic side of the equation.
Israel: Palestinian President Mahmoud Abbas was condemned in
some circles for carrying out the execution of four murderers, the
first in the Palestinian territories since 2002 as Abbas is
attempting to deal with a massive crime wave. I don’t see what
the problem is here.
Zimbabwe: NBC News aired an ITV reporter’s piece on the
current state of affairs in this hellhole. It’s a scene of incredible
carnage as President Mugabe takes revenge on the opposition.
When the history of this century is written, some will observe
that the failure of Britain and the United States to take out
Mugabe in 2000 (as I was urging then) was a key to all that
followed; including 9/11, the war in Iraq, and without a doubt
Darfur. It would have sent a clear signal to the bad guys…don’t
mess with us. But the West blew it.
Mexico: According to the Washington Post and Mexican
officials, some 600 have been killed in the country’s drug war
thus far in 2005.
Brazil: The level of violence in Brazil’s severely overcrowded
prison system is beyond comprehension. This week five inmates
were decapitated by their fellow prisoners and their heads were
displayed on poles for the media in the latest uprising. Brazil is
attempting to deal with a crime wave of major proportions by
throwing everyone in jail but this begets more violence as gang
leaders rule inside the gates.
Random Musings
–President Bush’s overall approval rating in the Times / CBS
News poll is down to 42%, but Congress is at 33%. Larry
Kudlow (CNBC) had this radio talk show host on the other day
and Larry (who can’t stomach any opinion but his own) asked
the right-winger if his callers felt as many of the polls allege the
people do. ‘Oh, Larry, the American people support the
president through and through,’ (I’m paraphrasing). ‘They
understand the challenges we face and they trust this president
implicitly.’ Talk about a crock (which Larry nonetheless lapped
up). If you read one poll in a vacuum I could understand, but the
worm has turned when it comes to Iraq. I can’t begin to tell you
how many once staunch supporters I know and communicate
with are disgusted with the post-war phase, as I am. As for the
issue of Guantanamo, I’m with Sen. Lindsey Graham… “redo
it.” But it should still be the “place where people go to answer
for their crimes.”
–The fragging incident in Iraq is so tragic. Your heart goes out
to the victims’ families as they are left with no answers.
–The New York Times’ Thomas Friedman clearly did a column
on Iraq this week on the back of a cocktail napkin because there
was zero thought behind his proposal we “double” troop strength
there. Where do we get these fine men and women? I mused.
And what if Kim Jong-Il crossed the line? Friedman, who will
nonetheless win another Pulitzer because the news crowd grovels
at his feet, didn’t even bring this up.
–Let’s pray the arrests of the terrorists in Spain this week was a
breakthrough of some kind.
–The House voted to spend $45 billion on the wars in Iraq and
Afghanistan in 2006, even though the president didn’t request it.
Why? They don’t want to wait for a far bigger submission later
on.
–The House also voted to curtail the FBI’s ability to track
terrorists by seizing library and bookstore records as part of the
Patriot Act. Ted Koppel had earlier opined in the Times that
such concerns were grossly misguided. Consider that devices
like On Star and Tivo track your every move, or even something
like EZ Pass (for commuters, for those of you from rural areas).
And some of the articles I read this week that blasted the library
program failed to mention that just in the past few months here in
New Jersey we learned some of the 9/11 hijackers were
accessing a local college library to go online and make their
plane reservations. Let’s face it, civil libertarians, there is no
such thing as privacy anymore. But as I’ve written before, if the
government then makes a mistake, as in a false arrest,
compensation to the victim must be swift and substantial.
–Kofi Annan will resign in September, according to some
reports, after new memos and e-mails surfaced that put him
directly in the mix concerning son Kojo’s shady business
dealings in the oil-for-food scandal. It’s become simply too
much for Kofi to withstand. Maybe he’ll go into the house-
sitting business, a profession I always felt he’d be good at.
“Mrs. Guggenheim, I watered your plants while you were gone
and I noticed you were out of toilet paper so I picked you up
some.”
“Oh, thank you, Kofi. You are so kind.”
Yeah, that’s about the speed for him, don’t you think?
–Boy, those police investigators in Aruba are really top notch,
aren’t they?
–I have nothing to say on the Michael Jackson case, except that
I’m continually amazed how some members of high-profile
juries can’t see that they are lacking in their own mental
faculties, as they insist on talking to the press afterwards.
–According to Bloomberg News, congressional disclosure forms
revealed that Hillary Clinton earned $2.4 million in royalties
from her memoir “Living History” last year after picking up $2.3
million the prior one. Husband Bill earned $875,000 for just six
speeches in ’04 after scarfing up $4.4 million from 25 such deals
in 2003. And we’ve learned all their Whitewater legal bills are
finally paid off. Well good for them.
–From Agence France-Presse in Moscow:
“Russia’s Progress cargo ship, carrying garbage from the
International Space Station plunged into the Pacific early on
Thursday after undocking from the space station, space officials
said.
“ ‘The remains of the Progress M-52 and bits of garbage sank
some four kilometers deep in a specially reserved area between
New Zealand and South America,’ Russian mission control was
quoted by the ITAR-TASS news agency as saying.”
So I had to glance at my world map. New Zealand to South
American is a pretty wide target area, after all; like from New
York to Baghdad. Still, you just hope some sperm whale didn’t
have an unlucky day. ‘Uh oh….’
–The sources for the following are many, because clearly no one
could believe it when they first heard it. [Daily News,
Washington Times, USA Today, Chicago Tribune, U.S. News &
World Report]
“I don’t watch it. Because there’s too much adult content.”
Illinois Gov. Rod Blagojevich, when asked if he watches Fox’s
popular show “The Simpsons.” Goodness gracious. My
sympathies to the people of Illinois.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $439…highest close in three months
Oil, $58.47…previous high $57.27, 4/1/05
Returns for the week 6/13-6/17
Dow Jones +1.1% [10623]
S&P 500 +1.6% [1216]
S&P MidCap +2.1%
Russell 2000 +2.9%
Nasdaq +1.3% [2090]
Returns for the period 1/1/05-6/17/05
Dow Jones -1.5%
S&P 500 +0.4%
S&P MidCap +4.5%
Russell 2000 -1.1%
Nasdaq -3.9%
Bulls 52.7
Bears 20.4 [Source: Chartcraft / Investors Intelligence]
Have a great week. Happy Father’s Day!
Brian Trumbore
🙂 _]
