[Posted 7:00 AM ET]
Recovery…and Wall Street
“Americans have never left our destiny to the whims of nature,
and we will not start now.”
–President George W. Bush
“I don’t believe that everything that should happen in Louisiana
should be paid for by the rest of the country. I believe there are
certain responsibilities that are due the people of Louisiana.”
–Republican Senator Tom Coburn
Americans take pride in being a generous people and having a
can-do attitude, but I disagree with the president if he thinks
rebuilding the Gulf region, as it basically was before, isn’t a
recipe for another disaster. In fact over the coming days we will
probably be talking of another storm that may threaten this same
area…and if not this time certainly long before the rebuilding
effort is even half finished.
The president would have you believe he doesn’t look at the poll
#s, but his advisors sure do and they are reacting like whirling
dervishes. Beyond the obvious issue of taking care of the
immediate needs of the survivors of Katrina, there is all manner
of pollyannish talk in the face of some stark realities.
The feeling of good will that a vast majority of Americans feel
today will begin to evaporate over time as Congressman Coburn
is alluding to. Events have been unfolding at breakneck speed
and Americans haven’t had a chance to reflect on Katrina’s
probable legacy, but no matter how you look at it, and despite the
stimulus provided by the reconstruction efforts, the net effect to
the financial markets is likely to be negative.
For starters, how are we going to pay for the now estimated cost
of $200 billion that the federal government is all too eager to
pony up itself? Just look at Katrina aid already passed by
Congress compared to the 2005 estimated discretionary spending
totals of Cabinet departments. [in $billions]
Defense…$401.1
Health and Human Services…$67.1
Katrina…$62.3 (and growing)
Transportation…$57.2
Education…$56.9
Housing and Urban Development…$41.1
Homeland Security…$32.8
State…$29.3
Veterans Affairs…$28.4
Energy…$24.6
Agriculture…$21.8
Justice…$19.7
Labor…$11.9
Treasury…$11.4
Interior…$11.1
[USA Today / Office of Management and Budget]
There are other issues, however, that are likely to be put on the
back burner with huge consequences for the American people.
Such as the alternative minimum tax that is hitting an increasing
percentage of families. Beyond the temporary fixes in the works,
it’s a huge, and costly, long-term expense that needs to be
addressed and now may not see a solution beyond 2008.
What will happen with entitlement reform? What will happen
when new expenses are passed down to the state and local level,
let alone the consumer, starting with the possibility of higher
interest rates as a result of a flood of new supply hitting the bond
market as part of the federal government’s borrowing for Katrina
reconstruction? How will already stretched municipalities and
individuals pay for what would seem to be inevitable sizable
increases in some insurance premiums? The issue of private
insurers potentially having to pay for flood damage is a huge
one, to cite but one example. Some of these companies could
even go under before they have a chance to send out new
premium notices. [I’m exaggerating, but this is a years’ long
court issue, potentially, while individuals suffer for lack of fair
compensation.] These are but a few of the more obvious items.
And while President Bush talks of giving up some of his
spending priorities, each proposed giveback is a pet project for
some congressman, with an election coming up, and this is a
president who signed a transportation bill about $35 billion
higher than he once said was the maximum he would approve.
When it comes to profiles in courage, this is a man who has yet
to veto a single piece of legislation.
But there will be plenty of time to weigh the longer-term impact
of all this money sloshing around. Shorter-term there are some
other troubling issues.
Consumer sentiment is plummeting – thanks in part to Katrina
though it was already sliding as a result of higher gas prices at
the pump – and just in time for the critical holiday retail season.
Various readings on manufacturing this week also took a dive
amidst worrisome signs on new orders.
But now there is also evidence of inflation as various companies
announce they are paying more for materials, though for the most
part not as yet passing this through to consumers. And you have
the unsettling development that gold hit a 17-year high this week,
$463.
So are we headed towards the dreaded stagflation, slow or no
growth coupled with rising inflation? Or, as I believe, is the
economy ever closer to a tipping point that would spell
recession? [If on the other hand you feel everything is hunky-
dory, I would respectfully disagree.]
This week, however, the Federal Reserve weighs in and I’ve
been pointing you to Tuesday’s meeting for a month now. The
core official inflation numbers are still tame and there were signs
the economy was slowing before Katrina. When the hurricane
first hit, the consensus was the disaster gave the Fed an excuse to
pause after 10 consecutive rate hikes. But now, because of the
other data on prices, plus the coming stimulus from the
reconstruction zone, the Fed could opt to raise rates yet again to
help ensure inflation doesn’t take hold.
My guess is the Fed will hike, but try like heck not to say
anything too momentous in the accompanying statement in
order not to further roil the markets.
Lastly, let’s look at energy and the plight of the U.S. airline
industry. It can now be said that $60 oil represented the tipping
point for both business and the consumer. And while crude has
fallen sharply from almost $71 to $63, and even as gasoline
prices begin to drop, overall prices are still sky high and the
winter heating bills promise to be astronomical.
The inventory picture for oil would, however, argue that there is
plenty of crude to go around, especially in the face of lower
demand in the past few weeks, including a sizable decline in
gasoline usage over the Labor Day weekend. Oil inventories are,
after all, 11% higher than a year ago so what’s the problem?
Heck, I’ve been asking the same thing myself, having sold out of
my last position in the sector way too soon. Well, aside from the
ever-present terror premium, Katrina showed us just how
vulnerable we are to a supply disruption and until the hurricane
season officially ends, no one should relax.
The outlook for gasoline is murkier still. While it has collapsed
from $2.90 to $1.80 at the wholesale level (which over the
coming weeks would translate to a pump price of around $2.40-
$2.50), again, you still have the potential for disruptions and here
inventories are actually 7% lower than a year earlier. Natural gas
is a similar story, and in all cases what if demand picks right up
again?
Of course high fuel prices, specifically jet fuel, represented the
final straw for Delta and Northwest Airlines as both declared
Chapter 11, under which they will now attempt to reorganize by
slashing costs further and possibly dissolving their pension
programs. Retirees and those employees looking to retire soon
are absolutely getting killed across America as one plan after
another becomes the ward of the Pension Benefit Guaranty
Corp., which is responsible for picking up the discarded plans
while doling out substantially reduced benefits. It, too, is in
serious financial trouble and will require a government infusion
of cash.
Four major carriers now, including United and U.S. Airways, are
in bankruptcy; all part of a problem that will see U.S. airlines
lose $8 billion in 2005. Asia’s carriers, by comparison, will earn
$1 billion. Why the difference? 38% of U.S. airline operating
costs are labor while this component is only 20% in Asia. Throw
in the jet fuel element, plus stiff competition from low-cost
airlines in the U.S., and you complete the recipe for disaster.
[International Air Transport Association / International Herald
Tribune]
But before we go to “Street Bytes,” let’s take a look at some of
the other rather important issues occupying President Bush’s
time.
Iraq: Last weekend a joint Iraqi-U.S. force was battling
insurgents on the Syrian border at Tal Afar, and with great
success according to the reports. But then al Qaeda leader al-
Zarqawi threatened revenge and on Wednesday and Thursday he
delivered as over 200 mostly laborers and police were killed in
another horrific series of attacks. Perhaps even more worrisome,
though, was an episode where 17 Shia were executed, followed
by the death of six Sunni farmers in retaliation. In other words,
the low-grade civil war we’ve been following is on the verge of
becoming far more than that, which is exactly what Zarqawi is
seeking.
The referendum on the constitution is Oct. 15 and it’s impossible
to know whether or not the Sunnis can muster the 2/3s needed in
3 of the 18 provinces to kill it. It may not matter either way.
Senator Joe Biden had a decent idea, though; postpone the
referendum until after a new National Assembly can be elected
in December that would likely have more Sunni participation
than today, the Sunnis having largely boycotted the first vote last
January. One problem; it’s too late for this and we’re plowing
ahead.
Lastly, I keep returning to Turkey and its critical role.
Unfortunately, these days Turkey is increasingly upset at what it
sees transpiring on its border. Tal Afar, for example, is a
Turkomen area that had been overrun by the insurgents, but
innocent Turks are getting caught in the crossfire. It’s the second
time they’ve been hit in such an offensive. And Prime Minister
Erdogan’s security forces uncovered another assassination plot
that was to be carried out by a Kurd. You know the game. An
independent or de facto Kurdish state in Iraq spells big trouble
for the Turks.
Iran: The mullahs are playing the oil card brilliantly in the
deliberations over its nuclear program. The U.S. and Euro-3
(Britain, Germany and France) can not take the issue to the UN
Security Council without the support of a vast majority of the 35-
member board of the International Atomic Energy Agency and
India and China, to name two, aren’t about to cooperate for fear
it will hurt their ability to obtain Iran’s vital crude…let alone the
fact that for other developing nations, slapping sanctions on Iran
would only lead to far higher prices and instability in many
cases. [Russia, on the other hand, is simply blocking any move
to take Iran to the Council because of its interests in developing
Iran’s nuclear program.]
Both the White House and IAEA now act as if they have all the
time in the world to work this out. They don’t.
Separately, Defense News reports that President Ahmadinejad
may be playing with fire. He owes the Revolutionary Guard for
his election victory and felt compelled to give them increased
power in return. The Guard already has its own intelligence
apparatus and it controls the nuclear and ballistic missile work.
In other words, Ahmadinejad may at some point desire to reach
out to the West, but the Guard, let alone the Supreme Council,
could have other thoughts.
North Korea: As I go to post, once again the six-party talks have
gone nowhere. Pyongyang raised its demands and is now
insisting it receive a light-water reactor (not as conducive to
producing bomb-making material) before it will dismantle its
weapons program. The U.S. favors Seoul’s offer of free
electricity, but at last word was threatening to freeze North
Korean assets unless it gave up its gig.
Street Bytes
–The major averages avoided steep losses on the week with a
rally on Friday that was skewed by options expiration, though a
$2 drop in the price of crude was most positive. The market had
failed to rise earlier in the week despite a flurry of merger
activity, including eBay’s acquisition of Internet-telephony
player Skype, Wachovia’s purchase of California auto finance
company Westcorp., and the biggie, Oracle’s takeout of Siebel
Systems for $5.8 billion (including $2.2 billion in Siebel cash).
For Larry Ellison, it was his second sizable transaction in less
than a year, having recently completed his acquisition of
PeopleSoft.
–U.S. Treasury Yields
6-mo. 3.81% 2-yr. 3.97% 10-yr. 4.27% 30-yr. 4.56%
Rates have risen sharply the past few weeks, though before
anyone gets too excited, the key 10-year is smack dab in the
middle of its 4-4.5% trading range. The yield curve has been
steepening, however, as inflation fears are leading investors to
demand more compensation for taking the risk of going out on
the curve. One bit of decent news was contained in the not so
good current account data. Foreign investors bought $28.5
billion of U.S. Treasury bonds and notes for the latest recording
period. Financing the deficit remains a non-issue to date.
Otherwise, it’s all about Tuesday and the Fed meeting.
–Japanese Prime Minister Koizumi took a huge gamble when he
dissolved parliament and called for early elections, but he knew
his personal popularity was solid and the people rewarded him
by giving his ruling LDP 296 seats out of 480 in the key lower
house. Together with his coalition partner, Koizumi can now
call on a 68% percent majority; a strong mandate for accelerating
a reform agenda that includes cutting bureaucracy and increasing
privatizations, such as in the case of the massive postal service.
–President George W. Bush, on the issue of trade in a speech to
the UN General Assembly.
“Today I reiterate the challenge I had made before. We must
work together in the Doha negotiations to eliminate agricultural
subsidies that distort trade and stunt development, and to
eliminate tariffs and other barriers to open markets for farmers
around the world.
“Today I broaden the challenge by making this pledge. The
United States is ready to eliminate all tariffs, subsidies and other
barriers to the free flow of goods and services, as other nations
do the same.
“This is key to overcoming poverty in the world’s poorest
nations. It is essential we promote prosperity and opportunity for
all nations.
“By expanding trade, we spread hope and opportunity to the
corners of the world, and we strike a blow against the terrorists,
who feed on anger and resentment.”
I’m certainly for this, and it goes without saying this could be a
source of funds of Katrina relief when one talks of givebacks, but
European Union trade commissioner Peter Mandelson
immediately responded to the president’s offer (echoed recently
by British Prime Minister Tony Blair) by saying Bush was
simply “playing to the gallery.” No way, Mandelson adds, will
U.S. farmers approve such a measure. True, it will take
leadership. I’d put the odds at 30 / 70 at best.
–Fed Chairman Greenspan, in a letter responding to questions
arising from his recent congressional testimony, reiterated the
dangers posed by mortgage giants Fannie Mae and Freddie Mac,
unless meaningful reform is imposed on them by Congress.
“As Fannie and Freddie increase in size relative to the
counterparties for their hedging transactions, the ability of these
(companies) to quickly correct the inevitable misjudgments
inherent in their complex hedging strategies becomes more
difficult,” Greenspan wrote, as reviewed by the Wall Street
Journal.
Greenspan concludes: “In the case of (Fannie and Freddie),
excessive caution in reducing their portfolios could prove to be
destabilizing to our financial system as a whole and in the end
could seriously diminish the availability of home mortgage
funds.”
–In following up on my story of last week on how Yahoo aided
in the arrest of a Chinese journalist who had criticized China’s
press censorship in a piece on the web, Yahoo co-founder Jerry
Yang was unapologetic when he spoke at an Internet conference
in Hangzhou, one where Bill Clinton, incidentally, gave the
keynote address.
“To be doing business in China or anywhere else in the world we
have to comply with local law. I will not put our employees at
risk.
“When it comes to seeking information on our users, we have a
very clear-cut set of rules that any government has to engage
with us through court documents, legal documents and legal
procedures.
“We get a lot of those every day around the world. We get
hundreds of those in the U.S., we get hundreds in Europe, we get
a lot of them in China. We do not know what they want that
information for. We’re not told what they look for. If they give
us the proper documentation and a court order, we give them
things that satisfy both our privacy policy and the local rules.”
Reporters Without Borders said Yahoo is nothing more than a
“Chinese police informant.” Bloggers worldwide are attempting
to organize a boycott of Yahoo. [South China Morning Post]
–Microsoft is in discussions with Time Warner to acquire a stake
in AOL, but only if AOL would then agree to use MSN as its
search engine rather than Google.
–Shares in Chinese Internet portal Baidu.com plummeted $32 to
$81 on Wednesday following a Goldman Sachs report that said
true fair value is closer to $27-$45. Baidu had risen sharply
earlier on the euphoria created by the above mentioned Chinese
conference.
–Hong Kong Disneyland had a successful opening, despite the
region’s worst air pollution of the year. [In 8 days here over two
trips, I never saw a patch of blue sky.] The theme park has
created 5,000 new jobs.
–The basic Medicare premium is going up 13% next year, plus
higher prescription drug costs for those opting into that plan.
–If you are keeping track of the OSX and XOI energy indexes,
the new high-water marks are 175.19 for the OSX, intraday (9/1),
and 1074 for the XOI, also intraday (9/12).
–Barron’s polled 3,000 professionals and asked them to rank 100
corporations in terms of “most respected,” “least respected.” The
top three were G.E., Johnson & Johnson, and Microsoft. The
least respected were #99 Freddie Mac and #100 Fannie Mae. A
full 50% loath Fannie.
–Ford formally announced it was selling Hertz to a private
investment group for $15 billion (including debt) to help pay off
other debt.
–New York Attorney General Eliot Spitzer indicted eight former
Marsh & McLennan executives in the now year-long
investigation into bid rigging and price fixing in the insurance
industry. 17 others, not all at Marsh, have pleaded guilty thus
far.
–In an interview with Timothy O’Brien and Julie Creswell of the
New York Times, Citigroup chairman Sandy Weill said he was
proud “that I had a real good value system.” Gag me. No doubt,
Mr. Weill helped transform the financial services industry,
though as it turned out not necessarily for the better as his
soaring ego and hubris led to countless battles with regulators
around the world, massive conflicts of interest and the collapse
of the likes of Enron and WorldCom. For this he was rewarded
with $950 million in total compensation over just the past ten
years.
–When I get a rental car I always go for the fuel option, even
though it ends up costing me a few extra dollars, as a matter of
convenience. But when I turned in my car in Nebraska on
Monday, I learned a valuable lesson. The charge was $57.58!
Goodness gracious. What an idiot I was for not asking
beforehand what the per gallon charge was running these days.
–Gillette is issuing a new razor, Fusion, with five blades. I’m
sticking with my far less expensive two-blade Sensor, especially
since I need to start recouping my fuel charge from Nebraska.
–Former President Jimmy Carter, in an op-ed for the
Washington Post.
“With increasing gasoline prices bringing economic hardship and
concern to many Americans, we must not be misled by oil
lobbyists who are trying to convince us that our energy security
is singularly dependent on sacrificing the Arctic refuge.”
[No one I call responsible is saying that, Mr. President, but we
have to do everything at this point.]
“We cannot drill our way to energy security or lower gasoline
prices as long as our nation sits on just 3 percent of world oil
reserves yet accounts for 25 percent of all oil consumption. An
obvious answer is to increase the fuel efficiency of motor
vehicles, at least to the level we set more than a quarter-century
ago.”
[OK, I don’t disagree with this. But again, we still have to do
everything.]
“I have been to the coastal plain of the Arctic National Wildlife
Refuge to study the wilderness wildlife. Far from being the
frozen ‘desert’ some suggest, this is a rich, Serengeti-like haven
of life: nursery for caribou, polar bears, walruses and millions of
shorebirds and waterfowl that migrate annually to the Lower 48.
To sit, as Rosalynn and I did, watching a herd of musk oxen
circle-up to defend their young and then to find yourself literally
in the midst of thousands of caribou streaming by is to touch in a
fundamental way God’s glorious ark of teeming wildlife.”
[Oh, spare me. All the studies have shown wildlife in general is
thriving in the area of the Alaskan pipeline and minimal damage
will be done to the breeding grounds of the disease-ridden
caribou in ANWR. There are ten times more caribou today than
there were a century ago. For that matter, there are at least ten
times more deer in New Jersey than there were in George
Washington’s day. We have over 3,000 black bears in my state,
for crying out loud. But I would agree that on issues like truly
endangered species, all reasonable protections must be given. If
Carter wants a true cause, he should go to Congo and try to save
the lowland gorilla and the hippo.]
–My friends at Pritchard Capital (and Bud E.) passed along the
latest product…a Mortgage Checking Combo Account, whereby
your paycheck goes directly towards your mortgage and any
checks you write are applied against it. But if the amount of
checks written exceeds the paycheck, the balance gets tacked on
to the mortgage. Is this a great country or what?
–The World Bank’s 3rd annual ranking of easiest countries to do
business in out of 155.
1. New Zealand
2. Singapore
3. United States
4. Canada
5. Norway…beer is too expensive here for my tastes, especially
after going for the ‘fuel option’ the other day.
6. Australia
7. Hong Kong
8. Denmark
9. United Kingdom
10. Japan
70. Italy
79. Russia
91. China…watch your web postings.
116. India
119. Brazil
–According to The Atlantic Monthly and a recent Merrill Lynch
study, “women make fewer investment mistakes than men and
repeat their mistakes less often – even though women investors,
on average, know less about investing than men do (they scored
lower on questions about investing) and enjoy it less. Women
come out better on just about every count: they are less likely to
hold a losing investment too long, and less likely to wait too long
to sell a winner; they’re also less likely to put too much money
into a single investment or to buy a reputedly hot stock without
doing sufficient research.”
Can’t say I disagree with any of this. Now couples, discuss
amongst yourselves.
–My portfolio: Still roughly 80% cash and plan on keeping an
80 / 20 mix the balance of the year.
Foreign Affairs
Afghanistan: Parliamentary and local council elections are held
on Sunday and one can’t help but make note that despite the
pick-up in violence this year, the adventure in Afghanistan has
been a success for the U.S., its NATO partners, and the entire
region. It’s obviously frustrating, though, that we’ve been
unable to capture the tall guy with the beard, nor even the one-
eyed cleric, Mullah Omar.
The UN and the War on Terror: British Prime Minister Tony
Blair, in a speech to the Security Council.
“Terrorism will not be defeated until our determination is as
complete as theirs, our defense of freedom as absolute as their
fanaticism, our passion for the democratic way as great as their
passion for tyranny…
“Terrorists want us to believe that terrorism is somehow our
responsibility. They play on our divisions. They exploit our
hesitations. This is our weakness and they know it.”
On the charge that Iraq is now the root cause of extremist Islamic
terror, Blair said “The obstacle is terrorism, their victims are
largely Muslim…They use Iraq to divide us, just as they use
Afghanistan where again their terror is the obstacle to
democracy….The root cause is not a decision on foreign policy,
however contentious. It is a doctrine of fanaticism.”
Blair concluded: “We must unite to uproot it by cooperating on
security, by taking action against those who incite, preach or
teach this extremism wherever they are, and by eliminating our
own ambivalence by fighting not just their methods but their
motivations, their twisted reasoning, their wretched excuses for
terror.” [London Times]
The UN and reform: President Bush before the General
Assembly.
“The United Nations must stand for integrity and live by the high
standards it sets for others. And meaningful institutional reforms
must include measures to improve internal oversight, identify
cost savings and ensure that precious resources are used for their
intended purpose. The United Nations has taken the first steps
toward reform. The process will continue in the General
Assembly this fall, and the United States will join with others to
lead the effort.
“And the process of reform begins with members taking our
responsibility seriously. When this great institution’s member
states choose notorious abusers of human rights to sit on the UN
Human Rights Commission, they discredit a noble effort and
undermine the credibility of the whole organization.”
Israel: The nation’s defense forces left Gaza for good and
Palestinians celebrated the end of 38 years of occupation by
rioting and burning down synagogues as Palestinian President
Mahmoud Abbas took zero steps to restore order. Hamas, in
particular, is quickly building its new beachhead as Israeli
hardliners such as Benjamin Netanyahu predicted.
Arms are also pouring in at the border crossing with Egypt that
Cairo had promised to secure and a new crisis is developing.
Israel’s Prime Minister Sharon, who now has some international
support after his courageous decision to withdraw from Gaza, is
on record as saying Israel will meet any attack from Gaza with
massive force. Abbas is incapable of reining in the terrorists,
though he will complain that Israel still controls Gaza’s airspace,
waters and the border crossing with Israel. But until he proves
he can restore order he won’t have a leg to stand on.
So the potential exists for a conflagration with the first large-
scale attack by Hamas or Fatah, as Israel retaliates while some in
the international community simply look away instead of
threatening UN action against the Israelis as in the past.
Meanwhile, Sharon admits he will continue to increase the
existing settlements, recognizing Washington will not be happy
(though the Bush administration now has far greater concerns
…as do I) and the prime minister himself has a continuing
corruption scandal to deal with going back to his 1999 campaign
and potential bribes that were allegedly used to pay off his debt.
But that’s only half the story, as Sharon also deals with strife
within his own Likud Party. And on Friday, Sharon said he would
withhold Israeli cooperation in the Palestinians’ parliamentary
elections, slated for January, if Hamas is allowed to participate.
There will be far more on this explosive news in the coming
weeks.
Germany: Election Sunday…Angela Merkel vs. Gerhard
Schroeder, though it’s not clear as yet whether either will gain a
majority in parliament in conjunction with their coalition
partners. As noted in the past, Merkel, still in the lead, hopes to
mend relations with the U.S., but she does not want to admit
Turkey to the European Union.
Lebanon / Syria: UN prosecutor Detlev Mehlis has thrown
Syria’s ruling Baath Party into crisis as he furthers his
investigation into the assassination of former Lebanese Prime
Minister Rafik Hariri. Mehlis has been interviewing officials in
Damascus and the situation is so tense that Syrian President
Bashar Assad was forced to cancel his trip to the UN for the
General Assembly. Should Mehlis point the finger at the very
top of Syria’s government it will be explosive.
China: President Hu Jintao held a brief meeting with President
Bush in New York and Bush agreed to accept Hu’s invitation to
travel to Beijing in November. For now, Hu expressed
awareness of the contentious trade dispute in Congress and
vowed to do more to stimulate imports, but nothing of substance
concerning China’s exports. The White House is in a box,
needing China’s help on other major issues including North
Korea, Iran and Taiwan.
Russia: The Moscow Times reported on a pro-Kremlin think tank
that is warning of a coup by the oligarchs as they seek alliances
with military and security officials close to Russian President
Putin. While this may be more about the 2008 election than a
physical adventure, it’s also a sign that the Kremlin will use the
threat as an excuse to crack down on the oligarchs anew, a la
Yukos.
As for the jailed Mikhail Khodorkovsky, former Yukos
chairman, his appeal is now being rushed through the process in
order to prevent him from running for the Duma in December.
The only way he can run is if his court case is tied up at the time.
And lastly, former Prime Minister Viktor Chernomyrdin,
Russia’s ambassador to Ukraine, actually praised President
Viktor Yushchenko for his “courageous” move in dismissing the
government last week. A positive development in the eyes of
your editor.
Northern Ireland: Out of nowhere, Belfast has experienced its
worst violence in years as the Protestant Orange Order’s parade
was rerouted. The Reverend Ian Paisley, who I’ve compared to
the Devil in the past, is stirring up his band of idiots. Over 50
police were hurt, a 22-month-old child suffered a fractured skull,
a woman was dragged out of her car, and protesters hijacked a
bus, robbed passengers, and then set it ablaze, among other
things. The London Times’ Libby Purves commented.
“Why this revolution? Were these people who carefully hoarded
bombs and guns desperate and dispossessed, homeless and
starving? Were they herded into refugee camps, denied freedom
of speech and worship, oppressed by a secret police, invaded by
a pitiless enemy? Nope. None of the above. They just went ape
because (a march) got rerouted away from a Catholic area…
“The religiosity of the lodge is tied up with filth and firebombs,
burnt flesh and bullets.
“Read my lips, you fake Christians: no parade route is worth this,
and never has been. Nor, for Sinn Fein readers, is the ambition
to unite Ireland worth it. In an age of increasing pan-
Europeanism that cause too grows more ridiculous by the day.
Both sides are just thugs, or cheerleaders for thugs. Sinn Fein
says that it is pulling back from violence; we shall know they
mean it when we hear them condemn the next outrage by their
men.”
Random Musings
–President Bush’s overall approval number is down to 39-42%,
depending on which of the four major polls you look at.
Additionally, in an NBC News / Wall Street Journal survey, only
38% were satisfied with his handling of the Katrina aftermath,
just 37% approve of his handling of Iraq, 55% want him to
reduce troops there, 60% believe Katrina is the #1 national
priority (only 5% say Iraq), and 75% believe the U.S. is not
prepared for a WMD attack.
And if you thought my comments on the president’s reading
habits was a bit insensitive (remember, I voted for the guy
twice), this week we learned his own staff forced him to watch a
DVD of newscasts of the Katrina coverage to shake him out of
his stupor. No doubt, it was then he realized that while Governor
Blanco and Mayor Nagin bear the brunt of the responsibility, the
federal effort was itself pitiful and thus he had to shoulder some
of the blame.
Can the president turn it around? Not much. This isn’t a story of
instant fixes. But success in the Iraqi referendum on Oct. 15,
even should it prove fleeting, would help. And at least the
pictures from New Orleans should be largely positive over the
coming months.
–I think it’s already clear that President Bush could have
avoided much of the fallout of Katrina if he had simply ordered
the 82nd Airborne to the Superdome and New Orleans
Convention Center. Those would have been stirring pictures,
instead of the chaos we were swept up in. But we all now know
he didn’t technically have that authority and Secretary of
Defense Donald Rumsfeld wasn’t about to give it to him. [Let
alone the sensitive issue of stepping on the governor’s toes since
they are in charge of the National Guard troops in their
respective states.] As reader Christopher C. wrote me, it’s so
frustrating knowing how much our country has accomplished in
a short period of time during international crises such as the
Berlin Airlift. Oh well, that’s water over the levy at this point.
–Some of the steps that U.S. News & World Report publisher
Mort Zuckerman would take in rebuilding New Orleans and the
Gulf region.
“7. Review what kind of “new” New Orleans can prudently be
rebuilt, given how compromised it is by its location. No major
American city has ever been entirely emptied of people while
faced with a failing infrastructure and severely limited economic
activity, perhaps for years. The port facilities are critical for
agriculture, oil and natural gas. They will have to be rebuilt to
withstand Category 4 and 5 hurricanes. A qualified independent
group should be named to plan and supervise the construction.
“8. Reverse the irresponsible policy of allowing development on
coastal dunes, barrier islands and other vulnerable areas that
cause the land to sink, submerging thousands of acres that act as
a buffer to a massive storm surge.
“9. Get serious about energy. There is a whole raft of measures
that could reduce our vulnerability to energy-supply shocks. By
regulation or incentives, press energy diversity, boost efficiency,
increase domestic production and improve the fuel economy of
cars and trucks gradually to 40 miles per gallon. That could save
some 6 million barrels of oil a year. An additional 2 million
barrels might come from increasing domestic output….”
Ah, but politics is getting in the way of such a common sense
approach.
–Commentator George Will in an op-ed in the Washington Post
on the issue of inequality and an appearance on “This Week” by
Illinois Democratic Senator Barack Obama. Obama criticized
Bush’s inadequate “empathy” while forgetting LBJ’s war on
poverty.
“The senator is called a ‘new kind of Democrat,’ which often
means one with new ways of ignoring evidence discordant with
old liberal orthodoxies about using cash – much of it spent
through liberalism’s ‘caring professions’ – to cope with cultural
collapse. He might, however, care to note three not-at-all
recondite rules for avoiding poverty: Graduate from high school,
don’t have a baby until you are married, don’t marry while you
are a teenager. Among people who obey those rules, poverty is
minimal…
“Given that most African Americans are middle class and almost
half live outside central cities, and that 76 percent of all births to
Louisiana African Americans were to unmarried women, it is a
safe surmise that more than 80 percent of African American
births in inner-city New Orleans – as in some other inner cities –
were to women without husbands. That translates into a large
and constantly renewed cohort of lightly parented adolescent
males, and that translates into chaos in neighborhoods and
schools, come rain or come shine.”
–Regarding last week’s discussion of the violence in New
Orleans, friend Allen H. wrote in with the following.
“Sunday (9/11), I was helping a group from Ipswich get ready
for a two week relief mission in New Orleans and the officials
we were on the phone with were pretty grim. They instructed
our team not to take any valuables. [On Saturday they had a
female volunteer who had her gold earrings ripped out of her ears
while she was giving aid.] Gangs still roam the streets and
women should not travel alone. They went on for about 30
minutes with other examples to make sure our team knew what
they were getting into….It is a sad commentary on our country.”
Granted, with the flood of troops into the region, the security
situation has improved, but with the discordant tone of debate
across our land, and with polls showing 70% of blacks saying the
president was insensitive to the plight of the poor in New
Orleans, you can imagine how the hip-hop community will be
jumping all over this during the coming year. More fodder for
the gangs. More fanning of the flames.
–If you watched last Sunday’s “60 Minutes” from New Orleans,
you now understand my comments on police superintendent
Eddie Compass. He’s not ready for prime time. But Ed Bradley
failed to interview deputy superintendent Warner Riley, the
man who should have been in charge all along.
–New Jersey Senator Jon Corzine has opened up a 20-point lead
over Republican challenger Doug Forrester in our gubernatorial
race. The New Jersey electorate, like elsewhere across the
country, is taking out its anger over Katrina on Republican
candidates. This is the immediate message for the 2006 mid-
term elections that scares the heck out of Republican incumbents.
–The Wall Street Journal had a good piece on the developing
backlash in communities such as Baton Rouge and Houston over
the handling of evacuees. Locals are wondering why they aren’t
receiving such aid.
–Judge John Roberts is one cool cat. President Bush made a
terrific choice here.
–Congratulations to The Weekly Standard on its tenth
anniversary.
–Barron’s Thomas G. Donlan wrote of a subject I noted last
time, the need to create evacuation plans “for every community
…When a mayor or a police chief say ‘Go!’ we all ought to
know where we are going.” Absolutely, and I still say
evacuation plans should be published each 9/11.
–And a front page story in last Sunday’s Washington Post noted,
“On the nation’s fourth anniversary of the Sept. 11 attacks, the
nation’s capital lacks a comprehensive way to tell people what to
do in an emergency…according to Homeland Security officials.”
–I have a slew of quote books lying around my office. You can
be sure that as they are updated, the following will make every
edition.
“And Brownie, you’re doing a heckuva job.”
–My friends Ken and Colene in Nebraska were telling me how
revered former Cornhusker football coach and current
congressman Tom Osborne is. Osborne wants to run for
governor now. In his last campaign he spent something like $60.
At least that’s all that was expensed.
–I loved Nebraska, incidentally. And for those of you traveling
out that way, about five miles outside of Lincoln there is a refuge
by the name of “9-mile prairie.” I was shocked. I drove out a
few hours after posting last week’s column, it was a gorgeous
day, and there was absolutely no one around. Yeah, you had to
be there…but just the sound of the wind and the prairie grass was
pretty cool. You don’t have to go all the way up to ANWR to
find a piece of heaven, in other words. Then again, after walking
a ways I began to think, ‘What the heck am I doing out here all
alone. What if a puma comes out of the grass?!’
–A California professor has been analyzing the sweat from a
hippo since it offers great sun protection and it keeps off insects
as well. [Business Week] But then you’d have those little birds
landing on you all the time.
–I’m increasingly impatient when it comes to having to listen to
idiots on television who can’t even speak the language. Like
ESPN football commentator Michael Irvin who said before a
game the other night, “Jeremiah (Trotter) looks like he can’t
believe he’s got thrown out.” What a great role model for our
youth.
–Uh oh…now I have to be extra careful in proofing this one.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $463…17-year high
Oil, $63.00
Returns for the week 9/12-9/16
Dow Jones -0.3% [10641]
S&P 500 -0.3% [1237]
S&P MidCap -0.7%
Russell 2000 -0.9%
Nasdaq -0.7% [2160]
Returns for the period 1/1/05-9/16/05
Dow Jones -1.3%
S&P 500 +2.1%
S&P MidCap +7.9%
Russell 2000 +3.1%
Nasdaq -0.7%
Bulls 53.2
Bears 26.6 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
And welcome to our many new readers from overseas who now
comprise about 60% of the total traffic on this site. [China is #2]
Brian Trumbore
