[Posted 7:00 AM ET]
The (Not So) Funnies
Last fall, as Paris and its suburbs were burning amidst Islamic
violence, I had the following thoughts.
WIR…11/5/05
“The far-right’s recruiting efforts have been bolstered this week,
while the Muslim community will increasingly turn to radical
leaders of its own.”
WIR…11/12/05
“In Europe…virtually every nation has a (far-right, anti-
immigrant party) that regularly garner(s) 10%+ and their
numbers threaten to increase exponentially….
“This is bad news for Europe, as it will only heap fuel on the fire
of the Islamic neighborhoods that are now listening to their own
merchants of hate with renewed dedication.”
While the focus today has been on the violence in Damascus,
Tehran and Beirut, the even bigger picture is exceedingly bleak.
Whether it’s a tragic ending to a police chase, as was the case in
Paris, or some idiotic, if insensitive cartoons, it only takes a
spark these days to have disastrous consequences. Some
thoughts.
Washington Post editorial:
“Last week, as protests escalated in the Middle East, European
newspapers in Spain, France and Germany rushed to republish
the cartoons, claiming they were defending freedom of speech.
But there is no threat to freedom of speech in Europe – no
newspaper was prevented from publishing the cartoons, and
demands by Muslims that European governments impose such
censorship were quickly dismissed. In reprinting the drawings
the European papers demonstrated not their love of freedom but
their insensitivity – or hostility – to the growing diversity of their
own societies. It is just such attitudes, more than any insult to
Islam, that have inspired much of the Muslim resentment toward
the West, and the growing anger of Muslims who live in
Europe.”
Ret. Lt. Col. Ralph Peters / New York Post:
“There’s plenty to criticize in the failed civilization of Middle
Eastern Islam. But the European press avoids the serious issues.
They could’ve run cartoons about al-Zarqawi’s savagery, al-
Jazeera’s hypocrisy or the oppression of women. Instead, they
attacked a religion’s heart. Gratuitously.
“Those cartoons said more about Europe’s own arrogance toward
religious believers and intolerance of faith than they do about
Islam. Today’s Europeans consider religious belief as beneath
their sophistication. They’ve come so far that they no longer
grasp how intense faith can be – and how furiously the faithful
can react.
“Through their clumsiness and vanity, the Europeans have made
this an all-or-nothing issue. What began as a nasty little Danish
problem has been globalized. If the Europeans appear to
capitulate now, it will only encourage Muslim extremists around
the world.
“Wasn’t it those oh-so-clever Europeans who complained about
a heavy U.S. hand in the Middle East? Who made excuses for
9/11, the Madrid bombings, street murders, terrorist kidnappings
and beheadings, the London bombers, French suburbs aflame
and no end of hate speech? Then treated Islam the way a dog
treats a fire hydrant?…
“The Arab world, especially, is a pile of tinder waiting for
random sparks. And the alacrity with which regional
governments and Islamist groups have moved to blow up the
cartoon issue into a conflagration is as tactically astute as it is
despicable.”
It all started last fall in Denmark. In hindsight, Prime Minister
Anders Fogh Rasmussen merely had to meet with some Muslim
representatives when the cartoons were first published in
September. But he refused to do so, as such a move may have
jeopardized his ruling coalition; one of whose members is the
far-right Danish People’s Party, which in turn describes Islam as
a terrorist religion and has called the Middle East an inferior
civilization. The DPP’s leader wrote in a newsletter this week:
“The seeds of weeds have come to Denmark – Islamists and liars
– who have fueled the lethal fire through their tour of the Middle
East. We will deal with them.” [London Times]
[See my opening comments.]
Rasmussen, a valuable ally of Washington and a seemingly good
man, observed:
“Some people are speaking with two tongues. The Government
watches the news circulated in Arabic countries very carefully so
we can catch these false stories and correct them immediately.”
And no doubt there is a ton of garbage being flung around by the
other side, such as the television shows that have been spewing
hate for an entire generation. U.S. Secretary of State
Condoleezza Rice correctly pointed out that the violence has
Syria’s and Iran’s fingerprints all over it. How else to explain
the government in Damascus allowing the Danish and
Norwegian embassies to be trashed (along with Chile’s,
accidentally)? How else to explain Tehran standing by while the
Danish embassy there was attacked? And how else to explain
the fact those arrested for the violence against the Danish
embassy in Beirut were largely Syrian nationals?
But I have to bring up a front page story from the New York
Times the other day that mentioned the December Organization
of the Islamic Conference I discussed last week; the one where
Saudi King Abdullah gave an important speech blasting
terrorism.
The Times piece detailed how Islamic militants, snubbed by
Prime Minister Rasmussen in September, took their grievance to
this Muslim gathering and it was there that the anger coalesced
into a communiqué which read in part that the West was using
“freedom of expression as a pretext to defame religions.”
But the Times failed to say anything about the rest of that
meeting, including Iranian President Ahmadinejad’s diatribe
against Israel and King Abdullah’s scolding of the extremists.
Last week I pointed out how President Bush missed a crucial
opportunity in his State of the Union address in not praising
Abdullah; choosing instead to lump Saudi Arabia with the other
“unstable” nations of the region.
So what do we see this week? From the Daily Star of Lebanon:
“The U.S. appealed to Saudi Arabia Monday to exercise its
influence in the Muslim world to ease rising tensions over the
publication of cartoons…
“State Department spokesperson Sean McCormack said Saudi
Arabia and other powerful actors in the region should ‘take a
leadership role in lowering tensions.’”
Sometimes I just want to scream, and if most Americans fully
understood what was going on they would to.
And to those who think Lebanon is a democracy (see my
comments on Thomas Friedman below), it’s a loose one at best,
in the mold of the new Palestinian government.
Having been to Beirut less than a year ago and having traveled to
Hizbullah territory, I can picture the scene in Beirut this past
week when Hizbullah leader Nasrallah told a crowd of at least
500,000:
“Defending the prophet should continue all over the world. Let
Condoleezza Rice and Bush and all the tyrants shut up. We are
an Islamic nation that cannot be silent when they insult our
prophet or our sacred beliefs.
“Today, we are defending the dignity of our prophet with a word,
a demonstration, but let Bush and the arrogant world know that if
we have to, we will defend our prophet with our blood, not our
voices.” [Daily Star]
[500,000! Other sources said as much as 700,000.]
From the other side, columnist David Brooks / New York Times:
“You (militant Islam) frame the contrast between your world and
our world more bluntly than we outsiders would ever dare to. In
London the protesters held signs reading ‘Freedom Go to Hell,’
‘Exterminate Those Who Mock Islam,’ ‘Be Prepared for the Real
Holocaust’ and ‘Europe You Will Pay, Your 9/11 Is on the
Way.’ In Copenhagen, an imam declared, ‘In the West, freedom
of speech is sacred; to us, the prophet is sacred’ – as if the two
were necessarily opposed.
“Our mindset is progressive and rational. Your mindset is pre-
Enlightenment and mythological. In your worldview, history
doesn’t move forward through gradual understanding. In your
worldview, history is resolved during the apocalyptic conflict
between the supernaturally pure jihadist and the supernaturally
evil Jew.
“You seize on any shred – even a months-old cartoon from an
obscure Danish paper – to prove to yourself that the Jew and the
crusader are on the offensive, that the apocalyptic confrontation
is at hand. You invent primitive stories – like the one about Jews
who kill children for their blood – to reinforce your image of
Jewish evil. You deny the Holocaust because if the Jews were as
powerful as you say, they would never have allowed it to happen.
“In my world, people search for truth in their own diverse ways.
In your world, the faithful and the infidel battle for survival, and
words and ideas and cartoons are nothing more than weapons in
that war.
“So, of course, what started in Denmark ended up for you with
Hitler, the Holocaust and the Jew. But in your conversation this
past week, your defensiveness is showing. Democracy is coming
to your region, and democracy brings the conversation.
Mainstream leaders like Grand Ayatollah Ali al-Sistani are
embracing democracy and denouncing your riots as ‘misguided
and oppressive.’
“You fundamentalists have turned yourselves into a superpower
of dysfunction, demanding our attention week after week. But it
is hard to intimidate people forever into silence, to bottle up the
conversation, to lock the world into an epic war only you want.
While I don’t share your rage, I do understand your panic.”
Iran
Of course everything above is related to Iran in one form or
another. After I went to post last Saturday morning, the
governing board of the International Atomic Energy Agency
voted 27-3, with five abstentions, to refer Iran to the U.N.
Security Council. [Cuba, Syria and Venezuela voted ‘no.’
Algeria, Belarus, Indonesia, Libya and South Africa abstained.]
From George Jahn / Associated Press:
The resolution calls on Iran to:
“Reestablish a freeze on uranium enrichment and related
activities.
“Consider whether to stop construction of a heavy water reactor
that could be the source of plutonium for weapons.
“Formally ratify an agreement allowing the IAEA greater
inspecting authority and continue honoring the agreement before
it is ratified.
“Give the IAEA additional power in its investigation of Iran’s
nuclear program, including ‘access to individuals’ for interviews,
as well as to documentation on its black-market nuclear
purchases, equipment that could be used for nuclear and non-
nuclear purposes and ‘certain military-owned workshops’ where
nuclear activities might be going on.
“The draft also asks IAEA director general Mohamed ElBaradei
to ‘convey…to the Security Council’ his report to the next board
session in March along with any resolution that meeting might
approve.”
Iran’s response was to resume “commercial-scale uranium
enrichment,” while the U.S. and Europe called for a “graduated”
approach diplomatically. Little will transpire over the coming
weeks until ElBaradei’s March 6 review.
Once again, however, the Saudis spoke up, though I didn’t see
the Bush administration jump on it…as you’ll soon see why.
Saudi Ambassador to the United States Prince Turki Faisal, in
denouncing Iran’s uranium enrichment program:
“It escalates the tensions, and brings about competition which is
unneeded and unnecessary and uncalled for. Where is Iran going
to use these weapons? If their intention is to bomb Israel, then
they will kill Palestinians, Syrians, Jordanians and Saudis, as
well.
“If they intend to bomb the United States, for example, they will
kill other people, as well. Where is the value of having a weapon
of destruction that people know you are not going to use?”
But then Turki added that most Iranians support the nuke
program because they see a double standard in U.S. policy.
“They see the U.S. government negotiating with North Korea…
and they see the U.S. signing a nuclear peace agreement with
India…and they see the U.S. turning a blind eye completely to
Israel, although Israel has the most nuclear weapons in our part
of the world.” [Daily Star]
And it’s here where the debate always stops. Often, you can’t
argue with the logic if you just read words in a vacuum. But it’s
the reality of it all that slaps you in the face.
Wall Street
It was a light week on the economic front so there are just a few
main themes to touch on.
Whether it was an earnings warning from luxury-home builder
Toll Brothers or pronouncements from the National Association
of Realtors that we will see a decline in new and existing home
sales, the real estate bubble that many parts of the country have
experienced has peaked. Now it’s just a question of how fast it
will collapse, or, will the real estate market just stagnate for a
long spell. Either way, homeowners are going to be increasingly
harboring doubts about their #1 investment and it will have an
impact on consumer spending.
The NAR, though, says that while sales will slow the overall
volume will still be near record levels and that the median price
will rise between 5 and 6 percent. On the other hand, Toll
Brothers notes that the days of flipping houses and speculative
buying are over and, coupled with rising inventories and delivery
times, at least by my way of thinking 5 to 6 percent is overly
optimistic.
As for energy, just two months ago, Dec. 13, 2005, to be exact,
the natural gas contract topped out at $15.37. This week it
closed at $7.31…remarkable…and what a break we all caught as
consumers. Meanwhile, crude oil fell to its lowest level in six
weeks, finishing up at $61.84, though here there is way too much
complacency with regards to the Iranian crisis.
But when I look at the Big Picture on the energy front, I am
increasingly convinced that when it comes to the consumption of
oil in this country, our “addiction,” we have turned the corner.
Not because President Bush focused on it in the State of the
Union, but rather because of a coalescing of forces; geopolitical,
domestic, private sector, environmental and economic that taken
together demand action. Of course it’s an easy statement to
make since I have years to defend it, but the winds of change
(hopefully powered by carbon fiber-based turbine blades) are
upon us. [I have the first in a series of pieces on ethanol on my
“Wall Street History” link, by the way, not that I’m convinced
this is the direction to go as yet.]
Then there is the president’s annual budget. Here, you can be
sure I won’t spend a lot of time on the topic until the real battles
take place in Congress.
But what we need to know for now is that Bush submitted a
$2.77 trillion record plan in which he is proposing to slash 141
programs for a total savings of $14.5 billion. Whoopty-damn-do.
The administration is also proposing to slash $36 billion from
Medicare over five years! But you know what? As small as that
is, particularly since it’s just a cut in the rate of growth, it at
least is the first real attempt at cutting entitlements so on this
we give the White House some credit.
Last Saturday I was perusing Barron’s and the market lab section
in the back and the Federal debt figure hit me…up to $8.2
trillion. Just 7 years ago it was $5.5 trillion. True, this is only
about 60% of GDP and not anywhere near Japan’s, for example.
But that $8 trillion is costing you and me some $247 billion in
net interest costs on the 2007 fiscal budget. This figure was $153
billion in 2003. I’ve raised this point before but it irks me to no
end that more Americans aren’t upset over this single fact.
Think about it. The president is lauding the fact he’s slashing
141 programs with savings of $14.5 billion (which itself will be
slashed during the congressional negotiations to follow), but we
spend $250 billion on interest…a figure that will soon be $300
billion. Another way to look at it is if we eliminated the interest
expense, the budget would practically be balanced. But we can’t
do that now, can we? Without defaulting, that is.
That about does it on this subject. Once a year I feel compelled
to ramble and it’s true that when it comes to the fiscal budget
deficit, the fact it’s only 3.2% of GDP is not so bad and that
number hopefully will decline over the coming years. But it’s
that gross interest figure that’s a crime. It took decades to get to
where we are, though, and obviously both parties share in the
blame; which is the single best reason to throw ‘em all out.
Street Bytes
–Stocks were mixed, with the Dow Jones finishing up 1.2% to
10919, the S&P 500 up just 0.2% to 1266, and Nasdaq off a
meager one point to 2261. After a spectacular rally to start off
the year (a continuation of 2005’s performance), oil stocks have
declined about 10% in less than two weeks, as represented by the
XOI and OSX indexes. There were a few decent earnings
reports, though, like with Cisco which is bullish on future
revenue growth. And Disney beat estimates, but I will always
have a hard time getting excited over the media category.
And I also have to make note of Prudential’s chief strategist Ed
Keon and his sudden change from 100% equities to 55%. It was
mid-July of last year that I noted Keon’s call was rather
outrageous, and for all the risk you would have taken having
followed his advice, you would have earned about 5%. Not my
idea of what risk vs. reward is all about.
So now he’s slashing his position in equities to a market weight,
as these folks like to put it, citing, among other risk factors, the
fact “Iran is dragging out longer than anticipated.” You know,
there are some clients of Keon’s who probably pay big money
for such insight.
–U.S. Treasury Yields
6-mo. 4.69% 2-yr. 4.68% 10-yr. 4.58% 30-yr. 4.55%
There’s a line in the movie “Shenandoah” where Jimmy Stewart
is watching his boys choose sides in the coming Civil War and
he goes “Ahhh, now it concerns us.” You could say with regards
to the inversion of the yield curve that we are finally at a point
that is perhaps worthy of concern as well. The spread between
the 2- and 10-year, 10 basis points, isn’t yet Fort Sumter, but it’s
getting there. I’ve said the inversion would not be a concern
until it was for real and it’s now gaining my attention…though
I’m holding back on outright fretting.
The government did auction off 30-year Treasury bonds for the
first time in four years and the reception was strong because of
the need for pension funds to match up long-term obligations
with long-term fixed investments…at least a significant portion
of their portfolios in order to better predict returns.
Next week, Fed Chairman Ben Bernanke takes the floor in
Congress for the first time in his new role and every word will be
parsed and picked apart in an attempt to glean some divine
wisdom on the future direction of interest rates.
Lastly, the trade deficit came in at another world record, $726
billion for all of 2005, as our gap with China alone exploded to
$201 billion.
–General Motors cut its dividend in half, slashed executive pay,
and froze salaried workers’ health benefits. But will the product
sell?
–Volkswagen is laying off 20,000 over the next three years.
–British Petroleum, ExxonMobil and Royal Dutch Shell are
among the oil giants who reported lower production in the fourth
quarter over the year earlier period. While it’s true much of this
has to do with the hurricanes’ impact on Gulf output, it is also
part of a disturbing trend. It’s getting tougher and tougher to find
new fields, let alone keep up production from existing ones.
Case in point regarding the latter was a story in Friday’s Wall
Street Journal that Mexico’s state-owned Pemex “may be facing
a steep decline in output that would further tighten global oil
supply and add to global woes over high oil prices.” The big
culprit is the deteriorating picture in Mexico’s biggest oil field
where water and gas are spreading, making extraction of oil more
difficult.
–By late-April, Russia’s Gazprom will become the single largest
stock in the S&P emerging markets index, doubling Russia’s
overall weighting to 10.2 percent, according to S&P officials.
Gazprom will displace South Korea’s Samsung as the largest
single issue, while Russia will trail only South Korea and Taiwan
in the country weightings.
–While the focus is on Bush administration rhetoric and the
amount of oil the U.S. imports from the Middle East, just 20%,
Philip Bowring of the International Herald Tribune points out
that Japan, South Korea and Taiwan not only import all their oil,
but 75 percent of it comes from the Gulf. India imports 80% of
its total crude and 80% of that is from the region. China imports
35% of its needs and 60% of this is from the Gulf. It’s all part of
the political calculations taking place not just in Washington, but
in Tokyo, Seoul, Taipei, Delhi and Beijing.
–Real Estate, part deux: A local mortgage lending company in
the New York City area forecast home prices would fall 2% in
2006. New York Mayor Michael Bloomberg’s own people are
calling for prices to decline 10% in the Big Apple.
–New York State residents, however, have been suffering for
over a decade and have not participated in the growth
experienced by the rest of the country when it comes to the
overall economy. Since 1990, ¼ of the people between the ages
of 20 and 34 have fled. The reasons? Among them are the
highest per-capita tax burden, coupled with falling home values
as manufacturing continues to exit the region.
–Last week I passed on the thoughts of Josh P. and the San
Diego area real estate market. On Friday, the Journal confirmed
Josh’s observations. “Of the condo markets we surveyed
(nationwide), San Diego showed the strongest signs of a
slowdown.” The city has seen a staggering 82% rise in inventory
as the speculators abandon the market in droves. And as Josh
first pointed out, the incentives for buyers now include
everything from sofas to cars.
–The Journal reported that the FBI today considers Internet fraud
the agency’s third-highest priority after counterterrorism and
counterintelligence. Criminal cases are being developed at a
rapid clip and one key individual who is helping expose the
dirtballs is Barry Minkow, the former felon who ran one of the
classic Ponzi schemes of the 1980s.
–Former Federal Reserve Chairman Alan Greenspan isn’t
wasting any time in padding his bank account. According to the
New York Post, Greenspan was paid a cool $250,000 in his first
‘consulting’ gig; a dinner for Lehman Brothers’ top clients. Of
course for Lehman this is chump change and its traders had a
field day afterwards. But many take issue with the ethics of it
all. Knowing his clout in the markets, it’s troubling he couldn’t
wait until at least the first Fed meeting in March that Bernanke
chairs before hitting the money trail.
–Bird flu continues to simmer and this week’s news of its spread
to Nigeria is potentially disastrous. Oh yeah, they have a proper
infrastructure in place. Just remember, it’s all about the global
economy. Those who continue to bet heavily on the Asian
markets, for example, without at least factoring in H5N1 are
nuts.
–Crain’s New York Business reminded its readers that Lucent’s
Patricia Russo has been paid $60 million in bonuses the past four
years…and for what?
–A federal advisory panel voted 8 to 7 to suggest that drugs for
attention deficit disorder such as Novartis’ Ritalin and Shire’s
Adderall carry a “black box” warning on associated heart risks.
F.D.A. officials described some 25 sudden deaths among people
using the stimulants…mostly children.
–Nortel settled two class-action lawsuits resulting from its
accounting scandal for a cool $2.46 billion, which will include a
14.5% equity stake in the company after Nortel offers a zillion
new shares.
–AIG has agreed to a $1.64 billion settlement in its accounting
fraud case. New York Attorney General Eliot Spitzer rightfully
crowed.
“What we alleged a year ago has been proven. The fact that
these material misstatements were orchestrated from the very top
of the company is clearly demonstrated.”
AIG is now forced to hire an outside consultant to monitor its
internal controls for three years while $1.52 billion of the penalty
(a joint NY / SEC / Dept. of Justice settlement) will go towards
restitution, with the other $125 million in actual fines.
Meanwhile, the fate of former CEO Hank Greenberg remains a
big question.
–The Journal reported on a slew of price-fixing suits being
launched against Chinese manufacturers. For example, China
now supplies more than 85% of the vitamin C used in the U.S.
and collusion is the name of the game. As reported by John R.
Wilke and Kathy Chen, “As China becomes ever more dominant
in manufacturing, its ability to dictate the prices of industrial and
consumer products is steadily rising.”
The story, though, fails to say anything about North Korea. Yup,
just another reason why China’s cooperation in talks over
Pyongyang’s nuclear weapons program will be limited. I know I
keep repeating this theme, but no one else is. The last thing
China needs is a new low-cost competitor in the region, which is
what North Korea will inevitably become if a satisfactory
agreement is ever reached.
–Reader Bill M. had to comment on my note last time about
Nebraska friend Ken S. and his thoughts on the trucking
industry. While a booming trucking sector is obviously a good
sign for the economy, the drawback in major metropolitan areas
is increased gridlock. Bill happens to be a big fan of resurrecting
America’s freight rail network, which in many parts of the
country has been left to die. He’s 100% right, but the political
reality of it is another story. Right here in Summit, N.J., where
my offices are, residents beat down an attempt to resurrect an old
freight line. Like everything else, the ‘not in my backyard’
mentality prevails more often than not.
[As an aside, one conventional freight train can carry the volume
of up to 500 truck trailers. Plus you save on fuel and reduce air
pollution. Thanks, Bill.]
–Great news as for the first time in 70 years, the government is
reporting there were fewer annual cancer deaths than the year
before for the most recent reporting period; this despite a steadily
rising population. It’s due primarily to reduced smoking and
earlier detection. Too bad the president didn’t have this at his
fingertips for the State of the Union, per my complaint of last
week.
–I saw a story on how Google Desktop 3 is being integrated into
Dell PCs and it was on the Dell I purchased in the past few
weeks. But even before I saw the story on how it can track
personal data far better than other operating software, I
uninstalled it.
–Vonage, the leading Internet telephony company, has filed for
an IPO. The reception on this one will be interesting as Vonage
continues to bleed $10s of millions.
–Contained in the Pentagon’s Quadrennial Review is a proposal
that 35% of all combat aircraft be drones in 10 years, i.e., there
are some potential investment opportunities here.
–Congratulations to my old friends at PIMCO / Allianz Funds.
In an annual survey of fund families published by Barron’s, it
was #1, overall, for both stocks and bonds. Now get selling,
guys.
–Ted Turner owns 40,000 bison, having started in 1976. [I was
just reading my High Plains Journal, getting hungry over all the
articles on beef and buffalo burgers.]
–The ratings for the Super Bowl were great, even if the game
wasn’t. ABC drew 91 million viewers, the best since 1996, and
the network ended up charging $2.5 million for a 30-second spot.
–My portfolio: Late last year I said I was going to stick with a
recommendation of 80% cash / 20% stocks for quite some time
and the only thing that will change this is a big swing in the
market, either way. Today, my own holdings are still largely
made up of my carbon fiber play, which I was happy to see
reported its first profit in eons. But I also have to admit I’m now
dabbling, in the truest sense of the word, with ‘puts’ in
international markets. This is well below 1% of my assets,
though I’m thinking of increasing it substantially over the
coming weeks and months…especially if we get a big rally. I
just firmly believe the emerging markets, in particular, are due
for a tumble. [Thus my eye on bird flu, perhaps more than
others.]
–Royal Caribbean commissioned the world’s largest cruise ship
for $1.1 billion, slated for delivery in 2009. It will carry 5,400
passengers, or the average crowd at an Atlanta Hawks game.
Currently, the Queen Mary 2 carries the most at 3,090, but this
April the “Freedom of the Seas” is hitting the water with a
capacity of 4,300.
I don’t believe the new one has a name yet, so let me submit my
pick for it… “Nightmare”
–Visa introduced a new slogan, replacing “It’s everywhere you
want to be” with “Life takes Visa.”
I have one. “Life is short…charge it!”
Foreign Affairs
Iraq: There is so little to say these days. The Dec. 15 election
results were finally certified, which means a new government
must be in place in two weeks…or at least parliament seated.
And “60 Minutes” is evidently shining a light on the massive
levels of corruption in the reconstruction effort, not that any of
you should be surprised at what is revealed. It’s been a disaster
from minute one, whether it’s the diversion of oil funds to the
insurgency or repairing the power grid.
Israel: All eyes are on Russian President Vladimir Putin. Could
he possibly be so stupid as to meet with Hamas’s leadership
before the terrorists renounce violence and / or recognize Israel’s
right to exist? Well, Putin wouldn’t see it as being a poor move
because he has never labeled Hamas a terrorist organization in
the first place. An Israeli cabinet minister said Russia is
“stabbing Israel in the back.”
Hamas’s council got together this week and the political leader,
Khaled Meshaal, who has been exiled in Damascus (of course),
said he would talk to Israel; but first it must return to the 1967
borders and, no, Hamas will not renounce violence. Oh yeah,
that’ll fly.
As for the Israelis, under pressure from the Quartet – the U.S.,
Europe, Russia and the U.N. – they turned over $54 million in
monthly back tax revenues to the Palestinians but could easily
cut off the spigot at any time.
Afghanistan: As the violence has escalated, the U.S. has
achieved a victory of sorts. Both the leaders of Denmark and the
Netherlands overcame opposition at home to win approval for
continuing operations in Afghanistan and Iraq. Denmark’s Prime
Minister Rasmussen has been openly supportive of the Bush
administration (not always reciprocated…as in the White
House’s delay in issuing a statement on the cartoon flap) and the
Danish legislature actually voted to double its force in
Afghanistan. The Netherlands then said it would send an
additional 1,200 troops to the theater. NATO finally stepping up,
to some extent.
Russia: Senator John McCain is calling for a boycott of the G-8
summit in St. Petersburg in June over Russia’s human rights
record and moves against press freedom. McCain had the guts to
say this in front of Defense Minister Sergei Ivanov at a
conference in Munich.
As for the so-called final deal reached between Gazprom and
Ukraine, extending the temporary one that ended the New Year’s
natural gas crisis, don’t fall for it. It’s a sham.
The other day, Ukraine’s deputy foreign minister told the
Moscow Times “Everything is extremely unpredictable. This is
leading to huge uncertainty. This is all very bad for Ukraine.”
The problem is the shady middleman I wrote of last month,
RosUkrEnergo. Part is owned by Gazprom, which is made up of
Putin cronies to begin with, while the rest is nothing but
organized crime figures.
China: Japan’s controversial foreign minister said Taiwan’s high
educational standards were a result of Japan’s occupation after
1895 (following the Sino-Japanese War). Not exactly what
Beijing wants to hear.
But on a different topic, cooperation between China and the U.S.
in space, according to Defense News, China recently hosted a
group of U.S. lawmakers to its space launch facility in an attempt
to show how transparent it could be. Supposedly, it was the first
official foreign delegation to be shown the complex in Inner
Mongolia.
Of course China draws no distinction between its civilian and
military space programs and would use any sharing in
technology to better its defense capabilities. I sure as heck hope
our elected representatives understand this. But as we should all
know by now, follow the money; as in I wish I had the time to
keep track of future donations flowing into the campaign coffers
of those in attendance.
Lastly, Reporters Without Borders says Yahoo supplied personal
data on a user in China for a second time that led to a dissident’s
jailing in 2003. The group, based in Paris, said Li Zhi was
sentenced to eight years for “inciting subversion” and alleging
corruption by local government officials. Said a representative
of the group, “It’s one thing (for Yahoo) to turn a blind eye to the
abuses of the Internet censors in China. It’s another thing to be a
part of them.”
Thailand: There have been large demonstrations across the
country calling for the resignation of Prime Minister Thaksin.
One of Asia’s richest men, he sold $billions in assets recently
without paying taxes (though Thailand has no capital gains tax).
So you’d think it wouldn’t be much of a story except the
Thailand Stock Exchange is investigating whether the sales were
properly disclosed.
North Korea: While no dates have been set, it is being reported
that Kim Jong-il has accepted an invitation from the Indonesian
government to visit the country. Should he go, it would be the
first time he has traveled anywhere besides Russia or China since
he took over from his father in 1994. It would also be just the
second time he has ever flown…the first being in 1965, also to
Indonesia.
Of far more import, however, is a story from U.S. News &
World Report that North Korea has smuggled an arsenal of
ballistic missiles to Iran.
Random Musings
–Each week I feel like commenting on New York Times
columnist Thomas Friedman and then 9 times out of 10, I censor
myself. But I’ve had it.
No doubt, there are times I agree with him and have so stated,
but you have to wonder just where he’s coming from these days.
For starters, back in this space on 10/29/05, I quoted a column of
his from that week.
“Not only is China not a communist country anymore…”
No, Mr. Friedman, it’s a dictatorship.
Friedman’s column of 1/11/06:
“Mr. Sharon’s legacy will be a mixed one. Arafat’s and (Hafez)
Assad’s will be pure – pure mediocrity, and both of their nations
are now paying the price.”
“Mediocrity”? You’ve got to be kidding me. They were
terrorists.
Then in his column of 2/1/06, Friedman wrote:
“(The) Arab world’s first and only true democracy – Lebanon –
never had a drop of oil.”
That statement showed an amazing lack of knowledge about
today’s Lebanon. They may have held an election, but you all
know this is a totally dysfunctional country right now.
Thomas Friedman, 2/10/06, writing of Iran’s nuclear ambitions
and the role that China, Russia and India can play:
“I want to share power and responsibility with them – starting
with the three of them, which represent half of humanity, looking
Iran in the eye and telling its leadership that they will join in any
and all U.N. sanctions if Iran tries to build an A-bomb. That
would get Tehran’s attention.”
“…if Iran tries to build an A-bomb”?
What world has he been living in, a flat one? Iran has been
working on this for 20 years now, with the help of none other
than A.Q. Khan.
But I give up. Enough ranting for today. Yes, Friedman has
written some good things on energy, but he’s also a specialist at
ripping others off, which I’ll prove next time my blood starts to
boil.
–Republican Senator Tom Coburn, who has been working with
Senator John McCain on the issue of combating congressional
pork.
“Speaker Hastert, for his part, has said pork is ‘what members
do’ and that members are best positioned to know where to put a
‘red light in their district.’ This vision of an imperial Congress,
where urban planners in state and local governments can be
usurped by individual congressmen and their 20-something
staffers, is unsettling. And every hour members spend on
parochial obsessions is an hour they can’t devote to oversight,
balancing the budget or serious national security issues.
“The American people are demanding real reform, not cosmetic
measures that will clean the outside of the cup but leave the
inside filthy. As Congress confronts its culture of corruption and
our enormous fiscal challenges, it’s time to ‘just say no’ to
earmarks.” [Op-Ed, Wall Street Journal]
The American people should demand real leadership and in
Coburn and McCain at least we have two to lead the charge.
[Congressman Jeff Flake (R-AZ) is another.]
–I loved Coburn’s line about “20-something staffers.” We’d be
scared to death if we truly knew what kind of power the kids
wield behind the scenes.
–Senate Minority Leader Harry Reid is in up to his eyeballs in
the Jack Abramoff scandal, as reported by John Solomon and
Sharon Theimer of the Associated Press. Reid wrote letters of
support for Indian tribes tied to Abramoff and took in $68,000 in
campaign donations from his lobbying firm and partners
Republicans catch a break here. But now Abramoff claims, of
course, President Bush knows him.
–Good thing for the Republicans former FEMA director Michael
Brown is so unlikable. The White House is holding back e-mail
messages that evidently show the administration knew about the
levee breach long before it first said it did.
–I’m really tired of Peggy Noonan and her precious op-ed
pieces. In Friday’s Journal, she defends the obscene politicking
that took place at Coretta Scott King’s funeral as “the authentic
sound of a vibrant democracy doing its thing. It was the exact
opposite of the frightened and prissy attitude that if you draw a
picture I don’t like, I’ll have to kill you.”
Oh, c’mon. Everyone is now stretching big time when it comes
to freedom of speech and the press.
What we saw in Atlanta was appropriate for newspapers, talk
radio and cable television; not the funeral of a national figure
who commanded our respect and was a woman of dignity.
I respectfully submit that Ms. Noonan listen instead to former
ambassador and King family friend Andrew Young, who blasted
those using the stage to levy criticism against the president,
calling it totally inappropriate. MLK and Coretta would not have
wanted it that way, as Young put it.
–The Washington Post had a front page story on Friday that is
both scary and depressing. 14- and 15-year-olds in the Maryland
suburbs are being abducted and then forced to rob banks. As
reported by Allison Klein:
“After the teenagers came out of the banks with the money, the
gunmen made off with the take and left the stunned youths
behind.”
At least four recent robberies have taken place in such a fashion
and police say the kids’ stories are totally “credible.” So credible
that one 14-year-old who robbed a Bethesda bank was released
to his parents immediately.
Here in New York, we had another of those hip-hop murders;
this time the bodyguard of rapper Busta Rhymes. The fellow
was killed trying to protect Rhymes, with all manner of
celebrities having witnessed it, and now neither Rhymes nor any
of the others will help police. A “code of silence” among the rap
community is being enforced. Just remember this kind of thing
next time you see 50 Cent on television, accepting an award.
One other thing, Rhymes told the victim’s family he’d take care
of his three children. Isn’t that rich?! In simpler times, this
would be our “Dirtball of the Year,” hands down.
–According to the New York Post, Mayor Michael Bloomberg
had an employee from the Albany office fired after the mayor
paid a surprise visit and saw the fellow playing solitaire on his
computer. Lesson learned.
–In the largest study ever of the health benefits of low-fat diets
in preventing cancer and heart disease, researchers have
discovered there is none…zippo…nada. Better just to exercise,
stop smoking, eat some fruits and veggies, a few almonds, and
enjoy that nightly glass of wine or bottle of premium beer.
[Unless you’ve had a bad week in the market, at which point you
have to substitute domestic beer for your Canadian or European
lager.]
–Uh oh. Big controversy in Chile these days. Only two Chilean
vineyards were among the top 100 for 2005, according to Wine
Spectator magazine. From the Santiago Times:
“The results are disheartening for Chilean winemakers, who have
been working hard to improve the image of Chilean wine
abroad.”
Well, I’m always ready to help my friends down there. The two
that made the cut are Concha y Toro’s Cabernet Sauvignon Don
Melchor 2001 and Montes’s Syrah Alpha Apalta Vineyard 2003.
Incidentally, the top wine in the U.S. was Joseph Phelps’ Insignia
Napa Valley 2002.
–Scott P. in Melbourne, FL, told me he got some funny looks
last weekend when he started assembling his hurricane shutters.
“I appear to be the only coastal resident who’s realized that this
warm winter we’re having doesn’t bode well for the ensuing
season.”
So true…but at least this weekend we’re about to get walloped
here in the northeast. I need to wrap this up so I can stock up on
my provisions of Chex Mix….cheddar flavor.
–Japan’s commercial whaling business is experiencing hard
times and I, for one, couldn’t be happier. As reported the other
day by the London Times, inventories of whale meat are soaring
because the public’s appetite for the stuff is “dwindling so fast
that much of it will end up as pet food or in school dinners.”
But despite the international uproar over Japan’s whaling
program, the government has now launched a campaign to sell
the benefits of the “scrumptious whale.”
“The promotional campaign has been seized on by
environmentalists and anti-whaling groups, who say it gives the
lie to Japan’s argument that it kills whales for scientific, not
cultural or commercial, reasons.”
You know, I love our key ally but this is one instance where the
reemergence of Godzilla may be appropriate.
–And thanks to Brad K., here’s an update on last week’s story of
that hapless chap at the museum in Cambridge; the one who
knocked over rare Chinese vases when he tripped on his
shoelaces. The man has been identified as Nick Flynn, 42, and
the damage he caused has been estimated at $236,000. Flynn
told Agence France-Presse:
“I snagged my shoelace, missed the step and crash, bang, wallop,
there were a million pieces of high-quality Qing ceramics lying
around underneath me….
“Seeing they were the prize possession of the museum, they were
just lying on a window sill…I thought they might take a bit
better care of them.”
Nick’s got a point there, sports fans.
Meanwhile, you’ll recall my skepticism last week when the
museum director said he was just happy Mr. Flynn wasn’t hurt.
It turns out Nick has been banned from the museum, as director
Duncan Robinson sent him a letter informing him of this. Mr.
Flynn:
“I think they are a bit embarrassed at the moment, with them
being worth such a considerable amount, and there is no way my
pocket will stretch to reimburse them for the damage I’ve done.”
No kidding, Sherlock. Robinson and crew have no doubt made a
clay model of you and they’re taking turns putting pins in it.
–LT and I went to see singing legend Tom Jones on Friday. I
have to tell you, this is a guy I first saw in Tivoli Gardens,
Copenhagen; back in 1968 when he was first hitting it big. Yet
his voice today is almost as strong as it ever was. A great
showman. Catch his act.
–Finally, I loved the story from the Lost World in the Indonesian
jungle this week where some new species were discovered and
others, thought to be extinct, were found. There’s something
particularly beautiful about the research team, stumbling along in
the jungle and finding two Long-Beaked Echidnas that simply
allowed the scientists to pick them up and carry them back to
camp to be studied. Of course what you didn’t hear is that the
Echidnas, upon being told of the ‘Real World,’ high-tailed it out
of there, vowing never to expose themselves again.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $554
Oil, $61.84
Returns for the week 2/6-2/10
Dow Jones +1.2% [10919]
S&P 500 +0.2% [1266]
S&P MidCap -0.9%
Russell 2000 -1.0%
Nasdaq -0.0% [2261…off a point]
Returns for the period 1/1/06-2/10/06
Dow Jones +1.9%
S&P 500 +1.5%
S&P MidCap +3.7%
Russell 2000 +6.5%
Nasdaq +2.6%
Bulls 51.6
Bears 25.3 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Brian Trumbore
