[Posted 7:00 AM ET]
Iraq et al
The vote is being tallied in Iraq and the United States is
preparing to exit. It remains to be seen just how quickly the
troops can be brought home, but we should have a good idea of
the speed in just the next six to eight weeks. Aside from
Secretary of Defense Rumsfeld’s symbolic action of this week in
spelling out the first phase of withdrawal, 7,000 troops in Iraq
(plus an additional 3,000 in Afghanistan), I would suggest that
U.S. force levels will remain well above 100,000 by our own
election day this coming November.
Nor should anyone be surprised at the rancor between Sunni and
Shia as the first ballots are tabulated from the Dec. 15 vote. In
Baghdad it has been reported the Shia alliance of religious
parties captured 59%, with the Sunni Arab coalition at 19% and
Iyad Allawi’s secular group only 14%. The Sunnis are already
making waves they will not participate in the legislature unless
there is another vote. And so begins this critical phase in
building a democratic Iraq…building consensus in order to
survive.
President George W. Bush addressed the nation last Sunday and
decried the “defeatists” who question his policy. “We are
winning,” he said, while finally admitting “This work has been
especially difficult…more difficult than we expected.” You
should have also noticed, though, that the president was unable
to speak of other progress in the region, outside of Afghanistan,
because there has been little. Specifically regarding Iran,
Lebanon, and Syria, the situation is as dangerous as ever.
Former Secretary of State Henry Kissinger wrote of the desperate
need for an international “contact group.”
“The time has come not only to define the strategic future in Iraq
but also to broaden the base of political consultation in the region
at large. A political contact group including key European allies,
India (because of its Muslim population), Pakistan, Turkey and
some neighbors of Iraq should be convoked after the Iraqi
election. Political discussions between the U.S. ambassador in
Baghdad and Iranian authorities regarding Iraq have already been
approved.
“These cannot be the sole contacts with Baghdad’s neighbors.
The functions of the contact group would be to advise on the
political evolution of Iraq, to broaden the basis of legitimacy of
the government and to reflect a broad international interest in the
stability and progress of the region. As time goes on, the group
could become a forum to deal with other issues affecting Middle
East stability, including some of the causes of Islamic radicalism.
A political framework is not a substitute for a successful military
outcome, but military success cannot be long sustained without
it.”
Regarding Lebanon, this week analyst Michael Young had the
following observations in an op-ed for the Wall Street Journal.
“For the first time in months, Syrian President Bashar al-Assad
can relax. After facing international pressure for its presumed
role in the Feb. 14 assassination of former Lebanese Prime
Minister Rafik Hariri, Syria last week made the U.N. Security
Council blink. The consequences will be felt hardest in
Lebanon, which has yet to break free from Syria’s stranglehold.
Unless the Bush administration and its European allies,
particularly France, reverse this trend, they risk losing everything
they have worked for in the country during the past year….
“As for the U.S., it seems odd that only days after Secretary of
State Condoleezza Rice wrote in the Washington Post that
Democratic institutions, especially in the Middle East, were ‘the
only realistic response to [America’s] present challenges,’ the
administration should sign off on a U.N. resolution suggesting
the contrary. Lebanon, like Iraq, is that rare country that has
proven Mr. Bush right in pursuing regional democracy. He
shouldn’t have so easily averted his gaze when a bright light of
Lebanese liberalism was butchered last week. Maybe it’s time
for the president to hear what his father heard from Maggie
Thatcher after the Iraqi invasion of Kuwait: ‘Don’t go wobbly,
George.’”
The great strategist Robert Kaplan said the following in a Q&A
for The American Enterprise.
“If we don’t stick it out in Iraq, Lebanese democracy is just
ephemeral; the Syrians will ultimately reconstitute Lebanon in
their own totalitarian image. If we don’t stick it out in Iraq,
Libya will go backward after going forward, and in Egypt
Mubarak will be succeeded by another Brezhnev-type leader.
And on and on.”
Then there’s Iran. While the mullahs and the EU-3 agreed to
resume talks on Iran’s nuclear program in January, this week
Tehran said it was close to crossing the line; resuming uranium
enrichment. It’s also apparent Iran has military workshops, not
under the purview of the International Atomic Energy Agency,
that are churning out vital centrifuges.
And in a further sign of what a wacko President Ahmadinejad is,
he banned Western music on state radio and television, including
classical. If it wasn’t so scary, it would almost be funny.
On a more positive note, you did have the historic scene this
week of Afghanistan’s parliament being seated.
But will we see similar progress in Iraq come January and
February? Much of the debate will center on the sharing of oil
revenues, as well as the rule of law. The U.S. and its remaining
allies here cannot hand off security just yet to the fledgling Iraqi
forces, and no one should be surprised if we suffer some big
setbacks in the coming weeks. Assassination is one tool
employed all too frequently in this part of the world.
Wall Street
Just a few thoughts as 2005 draws to a close and your editor
prepares for his extensive 2006 outlook next week. You’ve
undoubtedly noticed that the fall rally in equities stalled out the
past four week. On Nov. 25 the S&P 500 was at 1268 and it
closed this week at the same 1268; not necessarily a bad thing,
but not a particularly good sign, either.
The prime topics for the week, aside from the transit strike if you
had to schlep to work in New York, were once again housing and
energy.
This week the National Association of Realtors released its index
on housing affordability and it’s at its lowest level since 1991.
And this is with still historically low interest rates. Then on
Friday we received word that new home sales for November
plummeted 11%, though I have vowed never to make too much
of one month’s numbers in this highly volatile sector. What the
figure does help confirm, however, is we’re in a one step
forward, two or three back mode as we continue to gather
evidence housing has peaked and is now threatening to roll over.
And while the 30-year fixed mortgage rate is still low, it’s the
adjustable and interest-only varieties that are about to reset which
are of particular concern. Regarding the I-O holders, the
Washington Post noted that 23% of all new mortgage loans
nationwide in ’05 were interest-only and a staggering 54% of the
loans in the D.C. area. [Similar to the California experience.]
That’s frightening as short rates have marched ever higher.
On energy, there was better news as natural gas prices hit the
crest of the rollercoaster and plunged to $12.28 from the $14+
level. Despite a big drawdown in inventories, the longer-term
weather forecast is improving with each week.
Energy maven T. Boone Pickens offered on CNBC that natural
gas could decline to the $8 to $9 level…still historically high,
incidentally, but it would be seen as a big relief for consumers.
Mr. Pickens also said he expected crude to decline, perhaps to
$45 in the first half of 2006, but that we’d essentially end the
year where we are today, $55 to $65.
But in terms of global demand, Pickens said China has to keep
all engines humming on its economy for one big reason…the
2008 Olympics in Beijing. This is the final showcase and I
would add the challenge is to keep everyone happy until then.
What a challenge it will prove to be, as I’ll spell out next time.
There was another significant event in the oil patch, this one
involving our troublesome neighbor, Venezuela, as the
government here demanded ExxonMobil enter into the same
joint agreement other majors have given into recently, a step
before full nationalization. Exxon said no way. We’ll see how
this plays out shortly, I imagine.
As for OPEC, of which Venezuela is a member, it’s tussling with
non-member Russia over who gets to supply China with the most
crude, while at the same time talking more and more about
production cuts come spring. OPEC, which not too long ago had
a $22-$28 price band for crude, has gotten used to $60 oil, thank
you very much, and quite likes it.
Finally, the global economic outlook is still solid. Even the
European Union has raised its growth estimate for ’06 to 1.9%,
while China raised the size of its overall economy a whopping
17% to $1.9 trillion for 2004, placing it #4 behind the U.S.
($11.7 trillion for ’04), Japan and Germany. For its part Japan
took heart in a big real estate bet placed by AIG on the Tokyo
market, which along with the rest of the country has been in a
depression / recession for 15 years. Confidence by a major
player that the real estate market here has finally bottomed is a
good thing. And since it’s Christmas and all, I’ll finish this
segment on that high note. But be back next week all the earlier.
We have lots of work to do.
Street Bytes
–I have never seen a week like this one. The three major indices
all finished up or down a whopping 0.1%. Technically, Nasdaq
now has a three-week losing streak but the total loss over that
period is all of 1.1%.
–U.S. Treasury Yields
6-mo. 4.31% 2-yr. 4.36% 10-yr. 4.37% 30-yr. 4.55%
In aftermarket trading on Friday, the 2-year Treasury was
yielding 4.39%, or two basis points more than the 10-year; the
classic definition of an inverted yield curve which normally
presages recession. But today there are so many different
variables and conundrums that haven’t been in the cards in years
past when this occurred. In other words, I’m stalling for time
before I stick my neck out. [Of course you know what side I’ll
come down on in the end; but let’s keep the suspense for new
readers.]
Overall, the long end of the curve rallied due to the punk durable
goods number (down 0.6% for November, ex- the volatile
transportation sector) as well as the poor news on housing starts.
–Toyota will produce a record 9.06 million cars this year, while
General Motors is slated to end up around the 9.10 million mark
as Toyota prepares to overtake it for the #1 slot in 2006.
Billionaire investor Kirk Kerkorian pared his significant GM
stake for tax reasons. Heck, anyone purchasing these shares in
the last 20-some years has a loss these days. Might as well use
it, my accountant always says.
–On a related matter, auto parts maker Delphi’s management is
seeking a compromise with its union and has extended a deadline
on drastically reducing its wage and benefit package to Feb. 17.
–And over at Ford, hourly workers narrowly approved a deal on
reduced health care benefits that Ford says will save them $850
million a year.
–The New England Journal of Medicine reported two people
died that were suffering from the H5N1 / avian flu strain while
being treated with Tamiflu. [Another two in Asia died under the
same circumstances, though this is part of a separate finding.]
Tamiflu can be effective, but the best scientists have long known
it is far from a cure all and the virus is beginning to build up a
resistance to it.
–Pfizer won a court ruling blocking generic competition for its
Lipitor cholesterol-fighting drug. The shares rebounded strongly
on the news, as did those of the pharmaceutical sector in general,
as the decision was seen as a ray of hope for those drug makers
dependent on one or two key products facing imminent patent
expiration.
–Thankfully, former Commerce Secretary Donald Evans turned
down Russian President Vladimir Putin’s offer for a top slot at
oil giant Rosneft as Putin continues to attempt to buy influence
with the West, witness Gazprom’s selection of former German
Chancellor Gerhard Schroeder to head up a new pipeline
building unit.
–So much for the latest “Doha” round of World Trade
Organization talks. As Senator Charles Grassley remarked
afterwards, the discussions in Hong Kong merely “kicked the can
down the road.” The European Union agreed to cut all export
payments on agriculture, but by 2013, while the U.S. agreed to
end cotton supports to help African exporters of the commodity.
But the devil is in the details and the hoped for broad-ranging
agreement once again proved elusive, leaving many to doubt the
viability of the WTO itself.
–Yes, Japan’s stock market has been rocking and rolling as the
economy recovers, but long-term the nation is about to officially
announce its population has declined for the first time since they
started keeping records on this over a century ago; a worrisome
development for a nation heavy on entitlements.
–The New York City transit strike cost roughly $1 billion in lost
business and extra expenses. More on this in “random musings.”
–Power producer Calpine filed for Chapter 11 bankruptcy as it
staggers under up to $22 billion in debt. Calpine is a victim of
the Enron collapse and the Ponzi scheme between merchant
generators, as well as an ill-advised 1990s building spree.
–Former Qwest Communications CEO Joseph Nacchio was
indicted on 42 counts of insider trading. As I laid out in this
space 8/3/02, Nacchio earned $227 million, 1999-2001, during a
period when Qwest was cooking the books. Without a doubt this
man is one of the true dirtballs of the Bubble Era.
–The reverberations from that errant trade on the Tokyo Stock
Exchange that cost Mizuho Securities about $335 million
continue to be felt as the TSE’s president and other officials
resigned for not being able to cancel the trade before it went
through.
–Singer Michael Jackson’s errant life continued to unravel as his
more lucid family members attempt to stave off bankruptcy and
the loss of Jackson’s most valuable assets, including his stake in
the Beatles’ music catalogue. Jackson recently foreclosed on a
$272 million loan that obligated him to pay $2 million a month
(9.5%) in debt service.
–On Monday, CNBC’s Jim Cramer stepped before the cameras
in his 3:30 p.m. daily slot and said, “Watch out for Latin
America…the last thing we need are a bunch of communists.”
As I noted in my “Week in Review” columns of 10/29/05 and
11/19/05, this is the same guy who’s had no problem
recommending a basket of issues on the continent, while your
intrepid editor warned against it for political reasons. I was then
quoted in a regional paper to that effect, being the only one the
reporter could find who would challenge the man.
I also told you I wouldn’t comment anymore on Cramer,
knowing what a devoted following he has, but I’m prepared to
lose some readers in an attempt to keep him honest. I also have
to admit I normally only catch him once or twice a week for the
first ten minutes of “Mad Money,” so there is much I’m missing,
but my timing on his Latin American recommendations has been
propitious.
[Incidentally, I’m tracking the seven issues he mentioned on his
10/25 and 11/15 shows. Thus far, 3 are up, 4 down, and you
would have been far better off in the S&P 500 during these
stretches.]
–I glance at the insider buying / selling information from time to
time and couldn’t help but notice a recent week’s tally…insider
selling was 100 times greater than insider buying for the energy
sector. Granted, it’s just one week and these figures are
obviously volatile when one individual’s moves can skew the
data, but it’s worth pondering.
–Global PC sales are headed towards the weakest year since
2001 as many are buying flat-panel televisions instead as they
come down in price.
–Barrick Gold sweetened its bid for Placer Dome, Placer
accepted, and the combined entity now officially becomes the
world’s largest gold producer ahead of Newmont Mining.
–The SEC sued a New Jersey hedge fund by the name of HMC
International, where the two principals misappropriated $5.2
million of the firm’s $12.9 million. The complaint said “the fund
was little more than a Ponzi scheme, with the defendants using
new investor funds to meet redemptions of existing investors.”
One of the two, Bert Grebow, is a 29-year-old who was featured
in a Wall Street Journal article last year as being an example of
the new generation of big spenders, Grebow having bought a
Lamborghini in addition to chartering private planes. In China
he’d have a bullet put to the back of his head.
–Speaking of China, mainland officials have prosecuted 96
officials blamed for six high-profile coal mine accidents that
killed a total of 528 people over the past 13 months. These
incidents, along with countless others that have cost thousands of
lives, are a source of national embarrassment. Expect a few of
those charged to be executed, though we’re unlikely to hear of it.
–And then you have the latest Chinese chemical spill, this time
of cadmium, that threatens the drinking water of Guangzhou, a
city of 7 million.
–Asian stocks, as measured by the Morgan Stanley Capital
International Asia Pacific Index, have risen nine consecutive
weeks; the longest winning streak since 1993. Goodness
gracious.
–Bed, Bath & Beyond (Beer) plummeted 12% as sales for its
fiscal third quarter missed estimates. I love the place for the
gadgets I use once and then throw out, but the store traffic at my
location has been noticeably light the past few weeks.
–The developer of light beer, Joseph L. Owades, passed away at
the age of 86. It was Owades who figured out how to make a
beer without residual carbohydrates and fewer calories. And so
we pause to toast this giant of a man.
–Crain’s New York Business had the compensation figures for
the leaders of various nonprofits in the area. #1 in terms of
assets is the New York Blood Center where the director earns a
reasonable $446,000 (by my way of thinking). But then you
have the CEO of the Metropolitan Opera at $836,000 and the
Museum of Modern Art at $872,000. So why would you give a
dime to these institutions, unless it was to satisfy your ego?
–Along the same lines, the Journal has run some great pieces on
endowments at many of our major universities, as well as the
compensation for some of those managing the money. For
example, the top six managers overseeing Harvard’s endowment
received collective compensation of $57 million this year.
Granted, they did a superb job, but you can’t blame some alumni
for thinking it’s outrageous. [All six have since left to form their
own shop, while a PIMCO superstar moves in to fill the void.]
But as the Journal also points out, the bigger issue with some of
the larger endowments is; why isn’t more being distributed?
Harvard, for example, now has an endowment of $26 billion, yet
distributed only 4.3% of it in fiscal 2004. When you look at
some of the other biggies, like Stanford, Princeton, and Yale, you
have a similar pattern.
In other words, there’s a backlash coming. Just as in the
example of CEO pay for some of the charities cited above, why
would you as an alumnus give another dollar to Harvard? I sure
as heck wouldn’t.
Now small schools are totally different. In almost every case
you need every penny for future capital expenditures.
As for yours truly, a Wake Forest grad, I just want a basketball
team that goes to the Final Four.
–Commentator Ben Stein had the following thoughts in the New
York Times, a brilliant recitation of our current greed at all costs
world.
“(Let’s) briefly look at Edward S. Lampert, a staggeringly
successful investor. He recently acquired Kmart, then
recapitalized it; its stock soared, making him and his very rich
investors a lot richer.
“Why did its stock soar? Certainly not owing to Mr. Lampert’s
genius at retailing. Kmart is struggling against the Wal-Mart and
Target juggernauts. No, Mr. Lampert’s Kmart is considered a
real estate play. Its stores, while not selling a lot of merchandise,
are in good locations and are expected to deliver huge returns on
liquidation. Mr. Lampert, meanwhile, acquired Sears and
merged it with Kmart, and is contemplating laying off employees
in large numbers. Again, this is expected to be a real estate play.
“But if the poor pre-bankruptcy Kmart was so loaded with
valuable real estate that it has made investors in the post-
bankruptcy Kmart rich, didn’t that real estate belong to the
stockholders of Kmart? Why was it not liquidated for the benefit
of existing stockholders? Why was it turned over to the new
stockholders while the old stockholders walked off with nearly
nothing? Where was the management of the old Kmart?
Asleep?
“And what about Mr. Lampert’s plans to lay off Sears
employees, which he inevitably must do if he sells off the stores
in which they worked? What about the severe cuts in retirees’
medical benefits that Mr. Lampert has announced? How can he
square these with decency to the employees? They are hard-
working, modestly paid men and women who probably expected
to be with Sears for a lifetime. Mr. Lampert is already
fantastically rich. Does he really have to fire people in small-
town America or cut their health care to become even richer?
How many yachts can he sail on? How many meals can he eat a
day? How many homes does he need to own?
“Then there is Carl C. Icahn, badgering the brass at Time Warner
to make the stock go up so he can make money on his multi-
billion dollar stake. One way he is suggesting that Time Warner
can do this is by slashing what he says is its ‘bloated
bureaucracy’ – meaning, no doubt, laying off thousands of
people in New York….
“Alas, there are other examples, but I’ll say it again: This is a
country at war. For men who are already billionaires to look for
more billions by firing hard-working middle-class employees or
demanding they take a pay cut is not the kind of thing that unites
a nation. I’m a devout capitalist, but this is just plain ugly.”
Of course you can pick apart Stein’s opus and throw in the
globalization argument, staying competitive, and all that jazz.
But my own point would be anyone who as yet doesn’t recognize
the massive fissure opening up between the classes in today’s
America simply isn’t dealing with the truth.
Foreign Affairs
Israel: 77-year-old Prime Minister Ariel Sharon suffered a mild
stroke and his health is now a huge campaign issue as Israelis
prepare to go to the polls in March. As I noted months ago, this
was going to be a particularly stressful campaign to begin with,
but look for main opponent Benjamin Netanyahu, who captured
the Likud Party nomination, to exploit it as only Netanyahu can.
It will be vicious and it comes at an immensely dangerous time
in Israel’s relationship with the Palestinians.
The Palestinians go to the polls in January to select a new
Parliament and Israel has said Hamas must be prevented from
running. Palestinian President Mahmoud Abbas also faces
opposition within his own Fatah group, but here jailed Fatah
leader Marwan Barghouti is calling for unity. The biggest issue
right now is East Jerusalem and Israel’s attempts to ban voting
here, an act that Palestinians say could lead to civil war.
China / Japan: It’s not a stretch to say that lately there has been a
war of words between these two. This week Japan’s foreign
minister, Taro Aso, spoke of the threat to his nation posed by
China’s exploding military budget.
“It’s a neighboring country with nuclear bombs, and its military
expenditure has been on the rise for 12 years. It’s beginning to
pose a considerable threat….China is fanning threat and anxiety.
The content of China military expenditures is difficult for
outsiders to know, and that fuels suspicion.” [Kyodo News
Agency / AP]
For its part China continues to point to Japanese Prime Minister
Koizumi’s frequent stops to the shrine where convicted war
criminals are honored along with other war dead.
Earlier I noted T. Boone Pickens’s comment on the upcoming
Olympics in Beijing. Now try to imagine the scene as Japan
goes head to head against China in events ranging from
gymnastics to boxing. Oh, it could get very ugly, sports fans.
Russia: The gas price hikes being imposed on those countries
that have turned West, like Ukraine, Georgia and Moldova, are
having a debilitating impact as Russia employs the oil and gas
weapon, just as I first mentioned it would years ago. In fact, in
its entirety, warts and all, here is what I wrote in this space on
6/2/01.
“There was a positive development this week, for those of you
who would like the Russian economy to turn around. President
Putin replaced the CEO of natural gas behemoth Gazprom with
his own crony. What’s good about this is it shows Putin may be
committed to true reform. Gazprom accounts for a huge
percentage of Russia’s revenues and it is critical to the politics of
the whole region.
“Putin is attempting to send the signal that by installing his own
executive, he is going after the massive corruption that exists
within the company (so that the national treasury may finally
receive its fair share of the tax revenue). But, politically,
Gazprom is equally important. For example, Germany receives
37% of its natural gas from its pipelines. And you’ll recall that
Gazprom has been used as a weapon in the past, when the
pipeline to Georgia was shut off because the government there
wasn’t sucking up to Moscow.
“Europe understands that Gazprom is its own OPEC. Unless
they diversify away from them, Gazprom can be wielded like a
club. What’s ironic about this last bit is that while
environmentalists in the U.S. decry any effort to drill for new
sources of energy here, in Europe they are promoting exploration
virtually everywhere. J. Robinson West, a former Interior
Department official, writes that, for example, France produces
high-sulfur petroleum in the Paris Basin; while Norway, the
Netherlands and the U.K. produce oil and gas in fishing grounds.
As he concludes, ‘Nowhere outside the United States would
fields of world-class potential be withheld from exploration.’
You hear that, ye caribou of the Arctic?”
It’s Christmas, so I’m giving myself an A- on this one, 4+ years
later.
One other item involving Russia this past week. Two members
of Parliament told RIA Novosti that Russia would take Syria’s
side if the U.S. and Syria got into a conflict. Now wouldn’t that
be special?!
Britain: The six-month presidency of the European Union is over
and except for proceeding with the accession of Turkey and
Croatia, the term was spent haggling over the E.U.’s budget. In
the end, Britain gave up a large rebate with nothing to show for
it, say Prime Minister Tony Blair’s critics.
Bolivia: Evo Morales, an Aymara Indian, became the first
indigenous president in Bolivia’s 180-year history. Morales,
who fashions himself along the lines of Hugo Chavez and Fidel
Castro, represents a huge shift to the left here and is pro-coca
growing. While he says he personally is against drugs, his
essentially pro-cocaine policy (he campaigned with the slogan
“Long live coca, no to the Yankees”) flies in the face of U.S.
anti-drug efforts, which Morales says are a “false pretext for the
U.S. to install military bases.”
Morales also spoke of nationalizing Bolivia’s considerable
energy industry during the campaign, but post-election said he
would not confiscate international assets; so he could face a
backlash here from those who supported him.
Then you have this huge incident between Spain and Bolivia. It
seems that an ultra-conservative radio station had one of its
personalities call Morales, impersonating Spain’s liberal Prime
Minister Zapatero. The fake Zapatero, as replayed endlessly on
the station, congratulated Morales for his victory and called for
him to join his “Cuban brothers, and our brother Chavez, in the
triumphal new order we want to establish in Spain and Latin
America.”
Morales, totally oblivious to having just been ‘punked,’ said he
was looking forward to working with Castro and Chavez to
achieve “the liberation of our peoples.”
“You have the unconditional support of the Spanish government.
Down with imperialism,” Mr. Zapatero’s impersonator replied.
Morales was never told the conversation was a prank. Needless
to say, this has created quite an uproar in both countries.
[Source: Financial Times]
Peru: The government here was forced to declare a state of
emergency following the killing of 8 soldiers by Shining Path
guerillas in a remote region. Peru’s President Toledo has been
trying to eradicate the coca crop that the remnants of Shining
Path need for income.
Germany: New Chancellor Angela Merkel pushed through a
series of tax reforms, while scrapping some subsidies, all of
which is good for the health of the economy and a sign that the
coalition she has cobbled together may not be as unwieldy as
first thought.
Netherlands: The other week I noted the support that the Dutch
government has given the U.S. in the war on terror with troops
deployed in both Iraq and Afghanistan. But now parliament is
holding a special hearing on Jan. 26 to decide on whether or not
to send an additional 1,400 troops to Afghanistan per NATO’s
request. These troops are critical to NATO’s intended push into
the south of the country, one of the most dangerous parts and a
first for NATO. Some members of Prime Minister Balkenende’s
coalition are concerned that the Dutch role will be peacemaking
rather than peacekeeping. As alluded to above, the timing of this
deployment was to have coincided with the withdrawal of 3,000
U.S. soldiers.
South Korea: The nation is in an uproar over disgraced scientist
Hwang Woo Suk, who this week was forced to acknowledge his
pioneering stem cell research was fake.
“I sincerely apologize to the people for creating a shock and
disappointment. As a symbol of apology, I step down as
professor of Seoul National University.”
South Koreans had taken great pride in the doctor’s spectacular
biomedical achievements of the past few years, but now this
fraud takes its place among science’s biggest ever (like cold
fusion).
It also calls into question Hwang’s alleged cloning of an adult
dog, said to be the first, though “Snuppy” may indeed still be
one. But I’m not breaking the news to him, would you?
Random Musings
–Never has a man qualified for “Idiot of the Year” faster than
New York Transport Workers Union head Roger Toussaint. As
the three-day strike that crippled the Big Apple began, the Daily
News opined:
“Roger Toussaint, we dare you to take to the Brooklyn Bridge
this morning to tell the cold, walking throngs why you choose to
disrupt the lives of millions, jacked up the expenses of tens of
thousands, shuttered and crimped businesses, exposed the
subway system to terrorism and generally threatened the public
health and welfare.
“It would be delicious watching you try to justify the reckless,
lawless transit strike that you have inflicted on the city –
assuming your fellow New Yorkers didn’t hurl you over the
railing into the icy waters before you got a word out. For this
town, a labor town, is seething at getting hammered for no good
reason.”
Here’s what upset all law-abiding citizens who have even an
inkling of the realities of today’s world. Aside from the fact the
union broke the law barring public employees from striking, the
average laborer in this region sees conductors earning $54,000,
past contracts that have kept pace with inflation, the ability to
retire at 55, and free healthcare and says, “Are you guys nuts?”
One of the remaining sticking points (the two sides are now back
at the bargaining table) is the authority overseeing the trains and
buses wants new hires to contribute 1%…just freakin’ 1%…to
their healthcare costs.
And for those of you from outside the region and around the
world, you should have seen some of Toussaint’s supporters try
to explain to the rest of us schleps why the strike was justified.
But the vast majority of transit workers are now asking
themselves, “What the heck did we do that for?!”
–I watched some of the Senate debate on Wednesday concerning
the Defense appropriations bill, with Katrina, avian flu and
ANWR (Arctic National Wildlife Refuge) attached. Truly
pitiful. Why, for example, we let a Grand Dragon like West
Virginia’s Robert Byrd remain in the Senate, 20 years past his
prime, is a travesty. The Founding Fathers couldn’t have
possibly sought to have a system whereby senility is rewarded in
such a fashion. But I digress….
Drilling in ANWR was defeated yet again and once shorn from
the legislation, the defense bill was reworked, including $50
billion for Iraq and Afghanistan. With regards to Katrina relief,
earlier Congress excluded tax breaks for the casino industry on
the Gulf Coast, a totally irrational act seeing as in the case of
Mississippi, casinos bring in $168 million in state and local taxes
and employ 17,000.
Meanwhile, as Congress flailed away, the Patriot Act was
granted just a four-week extension beyond Jan. 1, meaning
between negotiations over this, the seating of an Iraqi parliament,
further debate over a deficit reduction pact, tax cuts and the
alternative minimum tax, the confirmation hearings for Judge
Alito, and the soon-to-be explosive revelations from the Jack
Abramoff fiasco, January promises to be a helluva good month
for politics junkies. To paraphrase the great Dodgers broadcaster
Vin Scully, grab a beer and pull up a chair.
–Speaking of former super lobbyist Abramoff, more than a
handful of congressmen will be fretting big time this holiday
season as Abramoff prepares to finalize a plea agreement and
sing like a bird.
–President Bush received some good news as an ABC News /
Washington Post survey showed a nice pop in his overall
approval rating from 39% in November to 47%. But four other
major polls I’ve looked at still have him in the 39 to 42 percent
range. The ABC poll did also show sizable gains in the
president’s handling of Iraq as well as the economy, 46 and 47
percent approving, respectively.
–Here’s my take on the eavesdropping issue, as well as the late-
breaking news on surveillance at Muslim sites. My faith in this
administration has been waning for years and I believe that it was
unnecessary to circumvent the Foreign Intelligence Surveillance
Act and the court system already in place when seeking approval
to eavesdrop on conversations. I do not believe Congress was
told the truth in all those meetings the president has cited since
this story broke. Overall, however, I fall in line behind the
following comments from George Will.
“Without more information than can be publicly available
concerning threats from enemies operating in America, the
executive branch deserves considerable discretion in combating
terrorist conspiracies using new technologies such as cell phones
and the Internet. In September 2001, the president surely had
sound reasons for desiring the surveillance capabilities at issue.
“But did he have sound reasons for seizing them while giving
only minimal information to, and having no formal complicity
with, Congress? Perhaps. But Congress, if asked, almost
certainly would have made such modifications of law as the
president’s plans required. Courts, too, would have been
compliant. After all, on Sept. 14, 2001, Congress had
unanimously declared that ‘the president has authority under the
Constitution to take action to deter and prevent acts of
international terrorism,’ and it had authorized ‘all necessary and
appropriate force’ against those involved in Sept. 11 or
threatening future attacks….
“On the assumption that Congress or a court would have been
cooperative in September 2001, and that the cooperation could
have kept necessary actions clearly lawful without conferring
any benefit on the nation’s enemies, the president’s decision to
authorize the NSA’s surveillance without the complicity of a
court or Congress was a mistake. Perhaps one caused by this
administration’s almost metabolic urge to keep Congress
unnecessarily distant and hence disgruntled.
“Charles de Gaulle, a profound conservative, said of another
such, Otto von Bismarck – de Gaulle was thinking of Bismarck
not pressing his advantage in 1870 in the Franco-Prussian War –
that genius sometimes consists of knowing when to stop. In
peace and in war, but especially in the latter, presidents have
pressed their institutional advantages to expand their powers to
act without Congress. This president might look for occasions to
stop pressing.”
–Is Senator Bill Frist a walking conflict of interest or what? Now
we learn that his AIDS charity has distributed some $456,000 in
intertwining consulting fees, paid mostly to political consultants.
Can you say presidential campaign? One would hope, though,
that at this point Frist would realize harboring such thoughts is
fruitless. He’d be shot full of holes quicker than Clyde Barrow.
–The U.S. population hit 286.4 million, according to the Census
Bureau; in case this comes up at one of your holiday cocktail
parties.
“I say, ol’ chap. Just what is the population of the States these
days?”
“Well, Seymour, I have it on good authority that it’s around
286.4 million.”
[It’s a stuffy party.]
Separately, the Population Reference Bureau offers that the
population of the world around the time of Christ’s birth was 300
million. No word on the number of Indian casinos.
–The New York Daily News reported that the great Alistair
Cooke’s bones were carved up upon his death recently at the age
of 95; the victim of a body-snatching ring that is currently under
investigation. These dirtballs also run a profitable tissue
operation.
–And we make note of the final “Monday Night Football” game
on ABC after 36 years. ESPN takes over in 2006. As one
commentator noted of this occasion, ABC’s Roone Arledge in
essence created America’s first reality show as the trio in the
booth of Howard Cosell, Frank Gifford and Don Meredith
became larger than life. In its heyday, MNF consistently ranked
as the highest rated program on television, but its audience in
recent years has been halved. Personally, I can’t remember the
last time I stayed up for an entire game.
–50% of America’s male college students play poker at least
once a month, with 15% doing it once a week. Which means that
millions are in debt up to their eyeballs and deeply depressed; at
least that’s my take on things. But as a Reuters story pointed out,
the poker craze in general has peaked, just like every other fad
inevitably does. Online gambling, though, is obviously here to
stay.
–Karl Vick did a story in the Washington Post on a new
“Kurdish beer,” ‘Roj,’ that is being brewed in Vienna. But this is
not being treated as a good thing in Turkey, where enmity
between the two communities runs deeper than the Grand
Canyon. So next time I go to Turkey, I won’t expect to find Roj
alongside my favored Turk brew, Efes.
Beer is supposed to bring us together, not tear us apart….sniffed
your editor.
–Time magazine selected Bill and Melinda Gates, along with
Bono, to be their “People of the Year.” I can’t argue with the
picks. But I have my own “Person of the Year” award and I’ll be
announcing it next week, along with the “Dirtball of the Year,”
though this latter choice in particular is an easy one…and
hopefully the bastard dies in the next few days.
–Oops….sorry to be so harsh at this festive time. But there’s
another thing that is ticking me off these days. The College
Board is contemplating breaking up the 3 hour, 45 minute SAT
into three sittings because of student complaints. What a bunch
of coddled wimps we’re raising…..except those serving our
country.
–Finally, I was reading my Wake Forest magazine and just
thought the following comments from our new president, Nathan
O. Hatch (former provost at Notre Dame), were rather thought-
provoking.
“We live today in a nation and a world that is difficult to
comprehend for students and professors alike. ‘Experts can
explain anything in the objective world to us,’ the Czech leader
Vaclav Havel has said, ‘yet we understand our own lives less and
less.’ One of the most vexing issues is that the world seems
simultaneously more radically secular and radically religious.
Globalization may be flattening the world’s economy, but it is
also pitting extreme religious voices against the encroachments
of the modern and the secular….
“How the world has changed. Today’s students have become
young adults in a starkly realistic, even Hobbesian decade.
Scandals in business, government, the professions, even the
church, have shaken confidence in institutions, and the
contemporary world order looks every bit as treacherous as that
of the Cold War. As David Brooks has noted, ‘we have seen
bodies falling from the twin towers, beheaded kidnapping
victims in Iraq, and corpses floating in the waterways of New
Orleans five days after the disaster that caused them.’
“Students today are whipsawed between an ethic to serve and an
ethic to achieve. Fewer come to college looking to find a
philosophy of life, and fewer still find their college to be a once-
in-a-lifetime oasis of learning. Having built a resume worthy of
admission to a premier university, they feel doubly pressured to
leverage their university years for professional advancement.”
Now discuss amongst yourselves.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $505
Oil, $58.43
Returns for the week 12/19-12/23
Dow Jones +0.1% [10883]
S&P 500 +0.1% [1268]
S&P MidCap +0.9%
Russell 2000 +0.5%
Nasdaq -0.1% [2249]
Returns for the period 1/1/05-12/23/05
Dow Jones +0.9%
S&P 500 +4.7%
S&P MidCap +12.8%
Russell 2000 +5.4%
Nasdaq +3.4%
Bulls 55.0
Bears 21.0 [Source: Chartcraft / Investors Intelligence]
Next week: The 2006 outlook…including all manner of gloomy
predictions designed to get your New Year off to a miserable
start.
Merry Christmas, my friends. Happy Hanukkah.
Brian Trumbore
