[Posted 7:00 AM ET]
Iraq
As Americans all we want is the truth when it comes to the war
and while I have been touting the polls that show dwindling
support for the operation, I also recognize that if our president
would just lead, the majority of this nation will back him as long
as they feel he’s being honest with them.
For months now I have said President George W. Bush has been
AWOL, just as he was the summer of 2003 when the insurgency
in Iraq took hold. Now he appears to be finally getting the
message, but the issue will become is he too late? Incredibly,
Bush has taken the public’s support for granted and like many of
you I am awaiting his first prime-time speech to the people since
January this coming Tuesday.
Last Sunday on “Meet the Press,” Senator John McCain laid out
the president’s mission as the casualties mount and the poll
numbers drop. Bush has to “re-ignite patriotism…talk of the
challenges we face, talk about the need to serve.” We are at a
critical juncture and what worries me is the congressional
election cycle is coming up. Those congressmen feeling
threatened could roll over in a heartbeat and for those of us
recognizing we cannot afford to lose in Iraq, this would be a
disaster.
As for the situation on the ground, the top commander in the
Middle East, General John Abizaid, told a congressional
committee that the overall strength of the insurgency “is about
the same” as it was six months ago; not in the last throes as Vice
President Cheney recently offered. And when it comes to
reports from the field, the New York Times’ John Burns (whose
balanced accounts win plaudits from both the left and the right)
wrote that “no district of Baghdad…is entirely safe” and yet
that’s where the bulk of our troops are. Meanwhile, the Iraqi
security force is nowhere near being ready to take over.
I’m also continually reminded of a statement made awhile back
by retired General Barry McCaffrey, who warned that by early
2006 the U.S. military would be “broken” as enlistments end and
more and more fail to re-up after their 3rd or 4th tour of duty in
this hellhole.
When it comes to rebuilding, it’s another unmitigated disaster.
Two-plus years following the fall of Baghdad and the utility
situation (water, sanitation and electricity) couldn’t be worse.
Iraqi Prime Minister Ibrahim al-Jaafari told a conference of 80
donor nations, “What do we want from you? The Iraqis do not
want to live in the dark in the age of light and electricity, or to
live in poverty in a rich country.”
The nations pledged to speed up aid and debt relief but of $19
billion in U.S. support, for example, only $7 billion has been
spent and god knows how much of that just went down a rat
hole.
Or you have the situation where 95% of the Iraqi budget is paid
for by oil, but production is well below initial projections so the
nascent government can’t even fully take advantage of current
sky high energy prices.
Finally, I can’t help but go back to the issues of Guantanamo and
Abu Ghraib. We all understand we are dealing with a different
kind of war, a different kind of enemy. But I come down
squarely on the side of the likes of John McCain and Ross Perot,
both of whom remind us that the United States is signatory to
numerous international agreements on the treatment of prisoners
and we cannot possibly operate from a moral high ground until
our leaders understand that we can’t afford to lose the battle of
public opinion; one just as important in many respects as the
battlefront itself.
It was interesting that in the latest Pew Research Center survey
on attitudes towards Americans, our rating in Indonesia rose
considerably as a result of our extraordinary relief efforts
following the tsunami. Never was there a better example of the
best this nation has to offer and of our true moral values.
President Bush likes to say this war is hard work. But while we
take it to the insurgents and terrorists on the battlefield, we can
never forget what makes us special as a people. It’s our values,
our Constitution, and how some extraordinary men laid it all out
for us 230 years ago, and how countless figures thereafter
followed their lead. President Bush did just that in the days after
9/11. We desperately need him to do so again.
Wall Street
A funny thing happened on the way to Dow 11000…we were
shanghaied. After China’s state-owned oil company, CNOOC,
announced it was making a play for Unocal, already the target of
Chevron, all manner of folks were up in arms. “How can China
take over a U.S. oil company?” “We’ll show those Chinese just
who the boss is around here.” Federal Reserve Chairman Alan
Greenspan and Treasury Secretary John Snow had the misfortune
of appearing before a Senate committee on the same morning the
CNOOC bid was formally announced and they were grilled as
senators took the opportunity to grandstand.
Frankly, I got a kick out of all this. After all, what have I been
writing of for months now? I’ll give you a recent snippet from
6/4/05:
“Meanwhile, over in China, there is a concerted effort to capture
as many natural resources as possible to prepare for the next few
decades and the potential for diminishing supply in some key
commodities. So this week China announced it was investing
$550 million to develop copper mines with Chile’s Codelco, the
world’s largest producer, in a 50/50 joint venture. This continues
a trend of China spanning the globe to not only secure basic
materials but also to influence politics. For its part, Washington
has its head in the sand and seems totally unaware of Chinese
maneuvers. I mean we can’t even secure the oil-sands in
Canada, for crying out loud, and the pipelines I see proposed for
this soon to be critical region are heading west, not south. [I’m
exaggerating slightly, but the lion’s share of this oil will end up
in Asia, not the United States as it now stands.]”
For its part CNOOC promised it would sell all U.S. produced oil
and gas by Unocal in U.S. markets, though this pledge is
worthless given who it’s coming from. But before you get all
steamed up yourself on this issue, here’s why I’m not in this
particular instance. The deal has zero chance of going through.
Congress would never allow it. Plus Chevron will now make a
higher offer.
But should CNOOC, or any other China-based oil company be
allowed to acquire U.S. natural resources? No. Not today, at
least, especially if it isn’t a private company. [And remember,
sports fans, China is fully capable of nationalizing a once private
operation down the road, just as Russia is doing today with its
own energy assets.]
The problem, politically, is that we don’t have any kind of policy
in dealing with such matters and we should have been able to
convey to the Chinese, beforehand, that it wouldn’t be
acceptable. Thus, Washington is going to look pretty stupid in
the world community as we, not the Chinese, are branded as
hypocrites. I mean think about it. Bank of America was just
allowed to buy a big chunk of a Chinese bank. ‘So why can’t we
acquire Unocal?’ the Commies will complain. Hey, it’s not a
bad point if you didn’t know any better…and most of the world
doesn’t.
Forget the fact we’re being abused left and right by the Chinese
on the trade front. They’ll have a rhetorical field day with this
CNOOC bid and we’ll just have to ride it out.
For now, however, U.S. policy should be ‘hands off our energy
interests until we see how China reacts on foreign policy issues
such as North Korea and Taiwan.’ What we really need to do is
buy some time and here is where good diplomats can be so
valuable. Longer-term, however, for many Americans who
haven’t been focusing on such things, the cat is now out of the
bag. China is hell-bent on securing the raw materials necessary
to keep its economic juggernaut cooking. It’s been long time for
the U.S. to aggressively play catch-up and enact a realistic
energy policy; one that balances all sources, both fossil and
renewable. But until the day comes when we can be confident
our future needs will be met, many more moments such as this
week’s await us.
—
Meanwhile, the price of oil hit $60 a barrel. Let’s face it. Most
of us, including yours truly, thought $50 oil would negatively
impact the global economy (and it did, though just not in the
U.S.), but if the price sticks at current levels, recession is just
about guaranteed. It not only will impact consumer spending, it
will definitely hurt all manner of earnings and if we’ve learned
anything from the past decade, it’s that a miss of one penny here
and one penny there can result in a severe downdraft. Earnings
are already decelerating, anyway, and don’t need further help.
But what we’re also seeing are just general signs that the global
economy is slowing. China is braking (it will be more apparent,
shortly), India may not be growing at the rate it once projected,
Europe remains on its sickbed, and here in the U.S., I’d submit
the third quarter will be a bummer vs. expectations.
The global bond market is also telling you a slowdown is
basically baked in the cake. It’s not just in the U.S. (where our
10-year Treasury is back down below 4.00%), but rates around
the world are at all-time lows, or close to them. Sweden’s
central bank sent a clear signal when it lowered its benchmark a
full 50 basis points (0.5%) and yields on most European bonds,
such as the German bund, plummeted in tandem. Bond maven
Bill Gross of PIMCO offered that the Fed will be done raising
rates in August (if not this coming week) and by January could
be cutting them instead as the global slowdown bites.
Moi? Heck, I can’t help but smile and I’ll use the end of the first
half of ’05, next week, to remind those who may have forgotten
my forecast for the year. Suffice it to say, I see this economy
eventually flipping faster than a Florida condo.
Speaking of real estate, there were all manner of items this week
as the media continues to pile onto the bubble story…and with
good reason, for once. Yale economist Robert Shiller was in
Barron’s projecting that real estate will decline 2% a year over
the next decade, plus inflation, so it will be like an effective 5%
hit when you add in the loss of purchasing power. 2% a year, for
a spell, won’t kill a lot of people, but for those sitting on their
interest-only mortgages, especially the ones re-pricing in just two
or three years, it will be deadly.
Meanwhile, Fannie Mae is warning of regional housing “busts”
due to lower lending standards (in San Diego, 48% of mortgages
are interest-only these days) and the Wall Street Journal reports
that because the bubbles are in the biggest parts of the country,
like New York and California, regional busts will quickly take on
national characteristics. Oh well, at least for now local
municipalities are reaping a property tax windfall as homes are
revalued upward. Of course that extra cash is always put to good
use, right?
But while some are talking bubble and bust, remember, I’ve been
saying we just need stagnation to slow the overall economy
considerably and this week the good folks at UCLA Anderson
Forecast, who have been doing some terrific work on the
California bubble, offered that a “housing slowdown could push
California into recession, while causing a noticeable slowing in
U.S. economic growth…And it won’t even take home prices to
fall, just to flatten out, they (observed). ‘This process will have a
detrimental impact on the economy even if prices don’t fall,’
UCLA senior economist Christopher Thornberg said.” [Los
Angeles Times]
Yes, it’s all about the wealth effect. You get used to 8-10%
returns on your real estate investment and suddenly the brakes
are slammed and it’s closer to zero. You begin to sweat, you go
into the yard and dig up those coffee cans full of nickels and
dimes, you hear strange noises at night, and you don’t go out to
dinner as much, let alone head to Best Buy for a new plasma
television, because you’re afraid to leave your home, period.
OK….so I always wanted to write horror film scripts. You get
the picture. We don’t need a collapse in prices for there to be
major damage. But the collapse itself is bound to occur later
when the recession hits. One will cause the other, after all.
Street Bytes
–Thanks to the Thursday / Friday bloodbath that knocked about
285 points off the Dow Jones, stocks had their worst week in ten
with the Dow finishing off 3.1% to 10297, while the S&P 500
lost 2.1% to 1191 and Nasdaq dropped 1.8% to 2053. Right as
the market was closing on Friday, there was a report of a second
confirmed case of Mad Cow disease in the U.S. and this certainly
doesn’t supply a lot of joy for Monday morning as the networks
scramble to saturation bomb the story over the weekend.
–U.S. Treasury Yields
6-mo. 3.26% 2-yr. 3.58% 10-yr. 3.92% 30-yr. 4.22%
The long end of the yield curve plunged anew on the softer
outlook for global economic activity, let alone some less than
stellar data on the U.S. economy, including another decline in the
index of leading indicators. But when it comes to Alan
Greenspan and the conundrum of the 10-year bond, I think for
this week at least it’s safe to say there were just a ton of buyers
from around the globe. Heck, for starters a 3.90% yield on 10-
year paper is actually pretty high when weighed against the
alternatives, worldwide. And while the record price for crude is
inflationary, with regards to other commodities, such as steel,
you have a boom / bust scenario unfolding. China, in creating
excess capacity in steel, is exporting deflation in yet another
product.
–Not everyone is an energy bull. Respected Cambridge Energy
Research Associates says global capacity will increase
substantially the rest of the decade, resulting in an oversupply
that will send the price of crude plunging back below $40.
Personally, I can’t be real bullish either if I’m calling for a global
recession.
–From one of my favorite strategists, Marc Faber, as told to
Barron’s.
“Western countries seem to have two economies – the economy
of hedge-fund managers and people who have inherited money,
which is good, and the economy of the middle class and workers,
which is bad. Globally there has been a tremendous widening of
wealth inequity. In America, I am always asked about the social
problems in China, but before we get social problems in China
we’ll get them in the U.S. That is not on Wall Street’s agenda,
but it’s something for a contrarian to consider.
“All over the world, geopolitical conditions have deteriorated.
China feels threatened by the alliance of the U.S. and Japan.
Meanwhile, the U.S. is trying to drive a wedge between India
and China, which have become friendly….The Chinese are
reaching out to Venezuela and Cuba and some African regimes.
For the first time since the Communists took over in 1949, China
has a major foreign-policy initiative.”
Incidentally, I don’t agree with the first of Faber’s points. The
social unrest will hit China first.
–The #2 executive at LUKoil said Russia’s oil industry needs to
double and triple investments if it is to avoid stagnation when it
comes to production levels, but the only way this will happen is
if the Kremlin lowers the excessive tax burden on the energy
sector.
–Adelphia founder John Rigas was sentenced to 15 years for
looting his company and lying to investors about it. But if the
80-year-old is concerned about the length, the court has ruled it
can drastically reduce his term if it’s deemed he is about to die,
an act of true compassion.
Son Tim, the former CFO, received 20 years. Of the two of
them, U.S. District Judge Leonard Sand said, “To be a great
philanthropist with other people’s money really is not very
persuasive.” [Business Week]
–In the latest sign of distress in the hedge fund sector, Bailey
Coates of London returned $500 million to investors after losing
25% in one month, while halfway around the world one of
Singapore’s biggest funds is shutting down after losing 22% in
the first four months of 2005. Brilliant former experts at Smith
Barney and UBS were running the Singapore operation.
–U.S. companies doubled their overseas investment in 2004,
$252 billion vs. $141 billion in 2003, with most of this being in
Asia. Direct investment into the U.S. rose from $67 billion to
$107 billion over the same period.
But investment into Germany and France actually fell. In France
the level dropped from $43 billion to $24 billion, while in
Germany, foreign investors ‘withdrew’ $39 billion after having
invested $27 billion in ‘03.
–A document emerged in the Merck / Vioxx case that reveals the
pharmaceutical giant was attempting to reformulate Vioxx back
in 2000 to reduce cardiovascular side effects, even as Merck was
downplaying a study highlighting the potential heart attack risk.
–Guidant is having major problems with some of its heart
devices and this also imperils the proposed merger with Johnson
& Johnson.
–Drug maker Wyeth is cutting a third of its sales force.
–Ford reduced its earnings outlook, again, and is cutting an
additional 1,700 salaried positions, as well as eliminating its
401(k) match. Other than that, everything is just ducky.
–Over at General Motors, the employee discount offer it
extended to the rest of us is a big success thus far and the
automakers’ market share in the 1st half of June was 30% vs.
25.8% in May. But such sales obviously aren’t very profitable
and this comes at a time when G.M. was seeking to cut its
reliance on discounts.
–Winn-Dixie, in the throes of bankruptcy, announced it is
closing a third of its stores, resulting in 22,000 layoffs. The
grocery store chain is continuing to lose market share in its home
South to Publix and Wal-Mart and will now abandon Tennessee,
Virginia, North and South Carolina. I always liked these guys
when I lived down this way, but this seems like no strategy at all.
Better to just liquidate before the food spoils.
–As I noted last week, those concerned about some of the
provisions of the Patriot Act are directing their ire at the wrong
parties. CardSystems Solutions of Tucson, the source of the
recent MasterCard security breach, announced this week that it
had been storing personal data that was then compromised for
“research purposes…and we should not have been doing that,”
according to the CEO.
–According to a study by Gartner Group, 42% of online
shoppers and 28% of people who bank online are cutting back on
their activity because of assaults on sensitive data, such as
“phishing” attacks. [Wall Street Journal] You could easily add,
‘and because of dirtballs like CardSystems Solutions.’
–Fred Hickey is an analyst known for his work on the tech
sector. The other day in Barron’s he was asked to comment on
Google.
“People believe the average price of their paid search ads is
increasing. I don’t doubt that, but the Internet is not growing
rapidly anymore. As in 1999 and 2000, when banner ads were
the rage, investors are chasing ‘eyeballs.’ I didn’t believe the
banner-ad story and I don’t believe the paid-search story. I’m
not sure which will come first – the final collapse of the U.S.
consumer or the collapse of the stock. In either case, the price of
paid search will drop fantastically in percentage terms, even
without considering competition from Microsoft.”
Bang on, Mr. Hickey. Advertisers should be flocking to the new
LED outdoor billboards.
–Iranian hardliner Mahmoud Ahmadinejad noted in a recent
interview with state television that if elected president he would
close the Tehran Stock Exchange because the “uncertain nature
of trading offended the tenets of Islam. ‘The sort of work they
do in the stock exchange is like gambling, so it has got to be
closed,’ he said.” [Karl Vick / Washington Post]
–Ameritrade ignored overtures from E*Trade and instead
acquired TD Waterhouse for $2.9 billion. The combined entity
would account for 35% of all online trades given today’s
numbers.
–I didn’t know this….Texas is the #1 producer of watermelons
in the U.S. I never liked the stuff, actually.
–Statoil just drilled the world’s longest well; 29,800 feet
in the North Sea. Thanks to Trader George and my friends at
Pritchard Capital for this tidbit.
–Bollywood and its stars such as Aishwariya Rai are fueling
gold sales in India. Indians now own 7% of global “above the
ground” stocks and nearly 20% of the world’s gold supply is
absorbed by this nation each year. [Financial Times]
–Canadian coffee and doughnut king Tim Hortons is going to be
doubling its U.S. presence. I know my friends up in the Great
White North swear by this chain.
–My portfolio: I’ve made no secret of the fact I have a vested
interest in seeing tax credits for wind energy extended per the bill
winding its way through Congress. But there are some folks who
either don’t like the sight of the giant turbines or claim they are
too dangerous for the bird population. Well I’m reading my
High Plains Journal the other day and here are the facts. In the
U.S., there are 15,000 commercial turbines that are blamed for
about 33,000 bird deaths a year. Now contrast that with 60-80
million killed in vehicle collisions and 98 million that fly into
buildings. I thus continue to urge Congress to approve the wind
power credit so I can make money on my carbon fiber play.
Foreign Affairs
Iran: The plot thickens. Ultra-hardliner Mahmoud Ahmadinejad,
the mayor of Tehran, won 61% of the vote in his run-off with
Hashemi Rafsanjani. Ahmadinejad seeks to revive the spirit of
the 1979 revolution (lovely), while Rafsanjani (the devil we
knew) was presenting himself as the true candidate of reform.
On Thursday, for example, Rafsanjani had announced an
extensive privatization program. I’ll have far more on this next
time but for now one thing is for certain. Any thoughts of Iran
abandoning its nuclear weapons program (never realistic in the
first place) are out the window. And its influence on events in
Iraq is now all the greater.
Lebanon: The four-week election process is over and on the
surface you might think it was a victory for democracy…that is if
you didn’t know any better.
True, of the 128 seats in parliament, a solid majority, 72, are in
the anti-Syria / Hariri bloc, but Hizbollah and its partner Amal
captured 35 seats and former General Michel Aoun leads another
bloc of 21. Aoun is the wildcard as he has promised to go after
corruption while calling the opposition’s win “an illusion.”
Shortly, it is expected that 35-year-old Saad Hariri, son of the
assassinated former prime minister, Rafik, will assume the pm
post. But a slew of things must occur before anyone can claim a
new day is dawning in Lebanese politics.
First, pro-Syrian President Emile Lahoud must leave. [Probable.]
Second, Hizbollah must disarm. [Not going to happen.] Third,
the last vestiges of Syria’s intelligence operation need to be
purged. [Never.] Fourth, a program of true economic reform
must be put in place. [Hopeful on this one.]
Just last week I chose to quote Druze leader Walid Jumblatt.
“(Syria desires) to continue assassinations,” he said. A few days
later, Jumblatt’s good friend, George Hawi, was killed in a
highly sophisticated car bomb attack (the device went off under
his seat while his auto was moving).
This is the reality of Lebanon; a highly complex nation with so
many moving parts and a history of sectarian strife that it’s tough
to be much of an optimist.
Afghanistan: A resurgent al Qaeda and Taliban seem bent on
disrupting the elections slated for September 18. Fighting has
been heavy, yet for all the casualties the terrorists appear to be
suffering, replacements seem plentiful.
Israel: Prime Minister Sharon and Palestinian President Abbas
held a summit that was immediately labeled a disaster by almost
all on both sides. Disengagement from Gaza and a few
settlements in the West Bank begins August 15 and this promises
to be a most chaotic time. Many of the settlers will not give up
without a fight and it’s the guess here Palestinian militants will
take advantage of the ensuing chaos to formally break the
ceasefire.
As for the summit itself, Sharon was the only one putting a good
face on it in pointing out Israel had agreed to help the
Palestinians reopen Gaza airport as well as release more
prisoners, but the Palestinians want assurances settlement
building will stop while clamoring for aid to fight terror.
Palestinian security chief Mohammed Dahlan said the talks
produced “nothing.” Israel counters that Abbas has not been
doing enough to crack down on the terrorists, pointing to the
arrest this week of a Palestinian woman who was preparing to
detonate a bomb in a hospital.
And we also have the ongoing threat of assassination as Abbas
and Sharon face fierce internal opposition. Abbas’ prime
minister, Qureia, was shot at during a rally this week, while
Sharon deals with the constant threat posed by the ultra-right in
Israel.
North Korea: If you can figure out what’s going on here with
regards to a resumption of the six-party talks on nuclear
disarmament, let me know. Talks were slated to resume in July,
but now they are off (at least as of Friday). And it doesn’t help
that two of the main parties to any negotiations, Japan and South
Korea, failed to resolve their differences over the history of
World War II. Japan’s Prime Minister Koizumi and the South’s
President Roh had a fruitless meeting this week, with the big
bone of contention continuing to be Japan’s war shrine (which
honors convicted war criminals, among others) and the visits
paid by Japan’s leadership to the shrine on a regular basis.
European Union: I caught British Prime Minister Tony Blair’s
speech to the European Parliament this week and it was a
powerful one. I thought he never looked better.
Blair said that Europe risks “failure, and failure on a grand
strategic scale” unless it undertakes significant reform. Pointing
to the failed referendums on the EU constitution in France and
the Netherlands, Blair said the EU was out of touch and needed
to change.
“It is a time to recognize that only by change will Europe recover
its strength, its relevance, its idealism and therefore its support
amongst the people. And as ever, the people are ahead of the
politicians.” [This last bit was a none too subtle shot at French
President Jacques Chirac and German Chancellor Schroeder.]
“I am a passionate pro-European,” said Blair. “This is a union of
values, of solidarity between nations and people, of not just a
common market in which we trade but a common political space
in which we live as citizens.
“The issue is not between a free market Europe and a social
Europe, between those who want to retreat to a common market
and those who believe in Europe as a political project.
“This is not just a misrepresentation. It is to intimidate those
who want change in Europe by representing the desire for change
as betrayal of the European ideal, to try to shut off serious debate
about Europe’s future by claiming that the very insistence on
debate is to embrace the anti-Europe.”
But earlier, Jose Manuel Barroso, president of the European
Commission, attempted to quash Turkey’s bid for EU
membership, saying the EU could not ignore “the signal that was
sent by the electorate regarding Turkey.” [London Times]
However, Britain takes over the presidency on July 1, and Blair
has vowed not only to fight the EU budget, but also to ensure
Turkey’s candidacy continues on a path towards full
membership. By October, when the decision on whether to
proceed with Turkey is made, you will see one of the titanic
political struggles of our times.
[Just an aside on the EU budget, for those interested in such
things; 40% of it is for agricultural subsidies while only 5% of
Europeans work in this sector.]
Russia: You just can’t make this stuff up. From a report in the
Moscow Times by Carl Schreck and Antonio Lupher.
“A journalist has been sentenced to seven months in prison on
charges of slandering a Saratov official in an article that was
never published.
“Eduard Abrosimov…was also found guilty of slandering State
Duma Deputy Speaker Vyacheslav Volodin…in a separate
article…
“The charge over the unpublished article was filed during an
investigation into the Volodin slander case…”
Now it appears Abrosimov, using a pseudonym, had earlier
published an article speculating on which politicians were
homosexual. For this he was being investigated, but a search of
his computer turned up a piece that his own editor had
rejected.
Academic Sergei Plotnikov said, “This is an amazing precedent.
It means that any journalist can be convicted for words deleted
by his editor. You can’t even compare this to the 1930s. It’s
more like the Middle Ages.”
Separately, Spanish authorities arrested 28 alleged members of
the Russian mob (including Georgians) for operating what Spain
said was the largest money laundering operation in the world.
The suspects even funneled money through housing
developments that were yet to be built. [More bubble mania!]
Zimbabwe: Secretary of State Condoleezza Rice told a meeting
of the G-8 that the African Union needs to do something here.
This week, as part of the sweep against the peasants, two
children were crushed to death when their home was demolished.
British Foreign Secretary Jack Straw said, “If the reports are
simply half true, and we believe them to be much more than half
true, this is a situation of serious international concern, and no
government which subscribes to human rights and democracy
should allow this kind of thing effectively to go on under their
noses.” [BBC News]
But not one African government has condemned Zimbabwe’s
dictator Robert Mugabe.
Random Musings
–Secretary Rice gave a speech in Cairo.
“For 60 years, my country, the United States, pursued stability at
the expense of democracy in this region, here in the Middle East,
and we achieved neither.
“Throughout the Middle East the fear of free choices can no
longer justify the denial of liberty. It is time to abandon the
excuses that are made to avoid the hard work of democracy.”
Rice was pressuring those in Egypt and Saudi Arabia, for
example, to open up their political systems. But after criticizing
Henry Kissinger last week for clearly leaving Taiwan hanging
out to dry in statements he made concerning the U.S. / China
relationship, I agree with comments he made on Egypt and Saudi
Arabia in an interview with Larry Kudlow of CNBC. Now is not
the time to pressure these two nations, as Rice is urging. Get
Iraq done right, first. Then the U.S. would be operating from a
higher moral ground than exists today. What concerns Kissinger
is that we could see a 1979-style Iranian backlash in some of
these other nations.
–Strategist Robert Kagan, in an op-ed for the Washington Post.
“It is entirely possible….that if the Bush administration had not
gone to war in 2003, the United States might have faced a more
dangerous and daring Saddam Hussein later on and felt
compelled to act. So, in addition to whatever price might have
been paid, certainly by the Iraqi people and possibly by Iraq’s
neighbors, for leaving Saddam in power, we might have wound
up going to war anyway. There is the further question of what
the entire Middle East would have looked like with a defiant,
increasingly liberated Hussein still in power. To quote (former
National Security Advisor Sandy) Berger, so long as Hussein
remained ‘in power and in confrontation with the world,’ Iraq
would remain ‘a source of potential conflict in the region,’ and,
perhaps more important, ‘a source of inspiration for those who
equate violence with power and compromise with surrender.’
Whether historians judge the war favorably will depend heavily
on whether post-Hussein Iraq does indeed provide a different sort
of inspiration, but, again, the effort to change the direction of the
region was surely worth paying some price.
“This may be no solace to those who have lost loved ones in this
war – and it certainly does not absolve the Bush administration
from the errors that it made before and after the war and
continues to make today. But these are the kinds of
considerations that ought to be part of any serious debate over
whether the war in Iraq was ‘worth it.’”
–I was reading an old piece from American Heritage magazine
on the Korean War, penned by a Vet from the conflict, Stanley
Weintraub. Some of his comments pertain to today.
“Although each war reminds Americans yet again that neglecting
our readiness is more costly than investing in it, we do it every
time. Before World War II engulfed the United States, George
Patton on maneuvers in Louisiana had to go to a Sears, Roebuck
store and pay from his own pocket for bolts to keep his tanks
operating….
“One nineteen-year-old Marine corporal reporting at Camp
Pendleton in Southern California said his reservist experience
consisted of three summer camps, ‘where we mostly goofed off.’
His records were marked CR: combat-ready. He landed in Korea
on September 21, 1950, one month to the day after he had left
civilian life in Minnesota. [With no Army reservist training
whatever, I was in Korea seven weeks after learning how to
salute.] Fortunately, the core of the 1st Marine Division had
World War II amphibious experience. It made the difference.
“Veterans of Korea will protest that many of them were well
trained and equipped and evidenced no end of heroism. Agreed.
Unfortunately, our troops were often undermined by poor
generalship, poor equipment, poor preparation, poor
replacements. Food supplied by Army commissaries was often
as old as the Occupation itself…..There was not replacement
tentage, nor wire, radios, combat boots, or vehicle spare parts.
Weapons condemned as inoperable during an inspection the
previous February had not been replaced. Jeeps could not be
offloaded in Pusan because the gantry cranes there were
inadequate to lift them.”
See the parallels? I do. This Saturday marks the 55th
anniversary of the start of the Korean War.
–Here’s another bit of history. In June 1848, Paris was besieged
with violent protests over the lack of political reforms. By one
estimate, some 3,000 “insurgents” were killed. I was talking to a
friend of mine this week about the coming violence in many
European cities as a result of the growing tensions between the
Christian and Muslim communities. It is not too far-fetched to
see a day when the Paris of 1848 is repeated across the continent.
As I’ve noted from time to time over the years, a severe
economic downturn could be the flashpoint; that or a large-scale
terror attack.
–Historian David McCullough on the importance of history.
“If you know history, you know that there is no such thing as a
self-made man or self-made woman. We are shaped by people
we have never met. Yes, reading history will make you a better
citizen and more appreciative of the law, and of freedom, and of
how the economy works or doesn’t work, but it is also an
immense pleasure – the way art is, or music is, or poetry is. And
it’s never stale.” [Newsweek]
–The Arab oil nations have a tremendous opportunity with the
surge of petrodollars into their coffers; an opportunity to improve
the lives of their people through vast infrastructure projects, for
example, let alone new schools and hospitals. But how many
believe they’ll spend them wisely?
–This week the legislature here in New Jersey approved moving
our presidential primary up to February from June as a way of
giving our state more influence in the process. But I see this as
another indictment of our entire system of electing a president.
Compressing the timetable as we have will one day force a crisis.
The vast majority of Americans, including the media which plays
the critical role in this area, need time to flesh out the candidates.
Condensing the process as we have not only keeps the people
from accomplishing this, it puts the selection power into
increasingly fewer and fewer hands…many of whom have mega-
bucks, of course. Too bad George Washington didn’t take up the
offer to become a monarch when he had the chance…………….
–………………………just kidding!!!!
–Reader Scott P. had a unique suggestion. Replace Bill Frist
with John Bolton. Granted, some of us disgruntled Republicans
would have to figure out how to legally accomplish this, and I
guess we’d have to let the people of Tennessee in on the plot, but
we have some time on our hands. Scott and I are just tired of our
incredibly ineffective leadership. What Republican majority?
–I have to tell you, my Japanese friends, your policy on whaling
is really ticking me off. The other day, Japan basically told the
International Whaling Commission to take a hike in announcing
it was going to add the endangered humpback whale to the list of
species it would hunt for “long-term research” purposes, you
understand.
Japan always cites its long-term research program. Said one
expert at the conference, he’s never seen any output from it.
–And finally, on the same theme of the environment and
conservation (I’m becoming more and more of a greenie in my
old age), I saw this piece in the South China Morning Post.
“China’s Pearl River estuary is so badly polluted the fish that
once thrived in its waters have virtually vanished, state media
reported on Wednesday.
“ ‘We found 95 percent of the 2,500-square-meter sea area we
examined was excessively contaminated,’ said Xia Zhen….
“The contamination includes heavy metals, oil, nitrogen,
ammonia and other chemical matter with levels of pollutants far
higher than standards set by the State (EPA).
“In 2004, nearly 2.5 million tons of pollutants produced by
agriculture and industry flowed into the mouth of the Pearl River.
“The survey revealed that over 200 kinds of fish previously
spawned and lived in the area, but few remain.”
Remind me to check the label on all future food purchases.
Then again, I just received an order from Omaha Steaks.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $441
Oil, $59.84
Returns for the week 6/20-6/24
Dow Jones -3.1% [10297]
S&P 500 -2.1% [1191]
S&P MidCap -2.4%
Russell 2000 -2.1%
Nasdaq -1.8% [2053]
Returns for the period 1/1/05-6/24/05
Dow Jones -4.5%
S&P 500 -1.7%
S&P MidCap +2.0%
Russell 2000 -3.3%
Nasdaq -5.6%
Bulls 53.9
Bears 20.3 [Sources: Chartcraft / Investors Intelligence…or lack
thereof]
Congratulations to my niece, and goddaughter, Dale, on her high
school graduation. She’s a special girl…quite the musician…and
will be pursuing music studies at a university where the motto is
“Fear the Turtle!” [That’s for you ACC fans out there.]
Have a great week. I appreciate your support.
Brian Trumbore
