[Posted 7:00 AM ET]
Disaster
Iraq
The week started off with news that Iran wanted Britain out of
Basra (which is on the Iranian border) because, according to the
mullahs, the British were destabilizing the region. Basra city
officials, though, said the Brits stay.
Next, frustrated over the inability of Iraq’s elected officials to
come to an agreement over a new government, outside of the
reappointment of Prime Minister al-Jaafari, U.S. Ambassador
Khalilzad said he was not going to waste the resources of the
American people and that the Iraqi government would lose U.S.
support unless it forms a unity government that includes Sunnis.
Further, Khalilzad said the Defense and Interior ministries must
be non-sectarian and not tied to militias, adding, “Iraq faces the
risk of warlordism that Afghanistan went through for a period.”
The Shiites were furious, saying Khalilzad’s denunciation of the
process was interference in the affairs of a sovereign state.
Vali Nasr, a professor at the Naval Postgraduate School, wrote
the following in an op-ed for the New York Times:
“Among the Shiites, such threats (such as Khalilzad’s) carry an
ominous tone; not only because they view their militias as the
only force now protecting them from car bombs, but also because
Shiites see the overt American push for a national unity
government as nothing more than coddling the Sunnis and, worse
yet, rewarding the insurgency.
“Shiites also see American policy as unduly influenced by Sunni
rulers in Jordan and Saudi Arabia, who have been aggressively
lobbying Washington for a greater Sunni role in running Iraq.
This has led many Shiites to talk of a ‘second betrayal’ by the
United States, a sequel to what occurred in 1991 when the Shiites
rose up against Saddam Hussein only to be butchered as
American forces refused to intervene.”
Then the bomb went off.
The following is a gross generalization, but it’s important to
draw a distinction between the Sunni and Shia faiths in order to
understand the disaster at Samarra.
Sunnis, 90% of Muslims worldwide, accept the Koran as Prophet
Muhammad’s spoken word.
Shia believe the true successor of Muhammad was Ali (not
recognized by Sunnis) and the Shia base their faith on the
pronouncements of a succession of holy men, Imams.
The Golden Mosque at Samarra was one of the holiest sites of
the Shia faith and was said to be the tomb of Imams Ali bin
Mohammad and Hassan bin Ali, the latter the father of
Mohammad bin Hassan, who believers say will one day return as
“the Mahdi” before Judgment Day.
Understand, then, that the bombing of the Golden Mosque was
akin in many respects to bombing St. Peter’s Basilica. Whoever
did it (most likely al Qaeda) perpetrated a crime of enormous
magnitude and the shockwave will reverberate for years.
The violence that followed the bombing was horrific, with 47
peace protesters, in one instance, pulled from their buses and
summarily executed. A leading female journalist for al-Arabiya
was shot. Over 100 mosques were damaged or destroyed as of
this writing. At least 200 in total killed, including seven more
American soldiers.
Jordan’s King Abdullah warned of a Shia crescent, from Iran and
Iraq to Lebanon. What is he referring to?
Iraq is approximately 60% Shia and 20% Sunni (the rest Kurds)
Iran is 90% Shia…but the history of the Iran / Iraq war stands in
the way of a united Shiite population between the two…at least
for now.
Lebanon is 34% Shia, 21% Sunni (the rest Christian and Druze;
the latter having broken off from a Shia sect, the Ismailis)
Saudi Arabia is 84% Sunni
Egypt is 84% Sunni
Jordan is 93% Sunni
You get the picture. Any civil war in Iraq, or Lebanon, will
easily spill over into neighboring countries.
The ceasefire that Iraqi leaders are attempting to maintain won’t
last forever and the curfew will have to be lifted shortly. Grand
Ayatollah al-Sistani, the great moderate, has lost his patience
with the constant slaughter of his fellow Shiites and the
desecration of the faith’s holiest shrines. At a moment’s notice
he could let his people loose in earnest. Shia cleric Moqtada al-
Sadr already has in some respects, though this chameleon wants
the world to believe he’s reining them in at the same time.
The leading Sunni parties have pulled out of talks on the
formation of a new government and many of the Iraqi troops and
national guard that the U.S. has been training stood idly by while
Shias exacted their revenge.
Many Shia also blame the United States for the bombing, as
irrational as that may be, and tens of thousands of Lebanese
Shiites have been protesting, shouting anti-U.S. slogans.
“America is the enemy of Muslims” and “America, you are the
Great Satan.”
Iranian President Ahmadinejad told his followers:
“These heinous acts are committed by a group of Zionists and
occupiers that have failed. They have failed in the face of
Islam’s logic and justice. But be sure, you will not be saved
from the wrath and power of the justice-seeking nations by
resorting to such acts.” [Daily Star]
And all we can do is sit back and watch what happens next. The
bombing of the Golden Mosque may have unleashed the
whirlwind.
Iran
The only encouraging development on the Iranian nuclear
weapons program front was the fact Russia now knows,
firsthand, how brilliant Iran’s stall tactics are and for the first
time the Kremlin seems a bit disconcerted.
Russia has proposed to enrich uranium for Iran, but only if Iran
stops its own production first. A high Russian official told the
Moscow Times after talks between the two broke down this
week, “Unfortunately, Iran so far has not shown significant
goodwill.” Welcome to the real world, comrades.
Iran knows that in dragging out these fake negotiations, it
prevents the U.N. Security Council from levying sanctions. It’s
working. But time is running out for Tehran as the International
Atomic Energy Agency prepares its final report for the UN
Security Council on March 6. Even China is now leaning on
Iran, but my guess is Iran will once again find a way to avoid any
severe action and its scientists will soldier on.
Israel
The Israeli government froze $55 million in customs duties and
taxes to Hamas and the Palestinian government; a devastating
maneuver since this accounts for about ½ of the Palestinian
Authority’s payroll. Palestinian President Mahmoud Abbas told
Hamas, “You cannot accept any questioning of the (1993) Oslo
accords’ legitimacy…and you must resume negotiations
according to international and Arab initiatives.” Hamas replied,
“Negotiations with Israel are not on our agenda.”
Hamas’ political leader, Khaled Meshaal, met with Ayatollah
Khamanei in Iran and the Iranian grand mullah urged all Muslim
nations to chip in with aid, as Iran will. The Muslim
Brotherhood, 20% of Egypt’s new parliament, launched its own
funding drive.
For its part, Israel continued to go after terrorists in the West
Bank and Gaza, killing at least five.
I commented to a friend the other day that when you look around
the world at the true hot spots, there is zero cause for optimism
these days. I hope over the coming months we can begin to feel
otherwise. But then another bomb will probably go off.
Dubai Ports World
I am for the acquisition by Dubai Ports World of some terminal
operations in New York, New Jersey, Philadelphia, Baltimore,
Miami and New Orleans. Many in Congress are deserving of
scorn in the way the debate that has flared up has been handled,
but it’s also primarily President Bush who let this situation get
totally out of control and, potentially, we could be paying a price
for years to come. Following are two opinions.
Washington Post editorial:
“There are at least three issues here. One is the specific concern
about the deal itself; another is disquiet over the administration’s
approach to homeland security; and the last is a larger pattern of
American unease about the changing global economy. What the
potential deal highlights most of all is that the U.S. cannot have it
both ways: We cannot both advocate a global system of free
trade with low barriers of entry and then cry foul when foreign
companies try to buy U.S. assets.
“On the first point, what the disparate opponents have insinuated
is that there is a relationship between the government of Dubai
(which controls Dubai Ports World) and terrorist groups – and
that therefore the purchase of the port operator will endanger
U.S. security. There are serious and legitimate concerns which
must be addressed, but halting the deal is not a solution.”
David Brooks / New York Times:
“In short, there is no evidence this deal will do any harm. But it
is certain that the xenophobic hysteria will come back to harm
the U.S.
“The oil-rich nations of the Middle East have plenty of places to
invest their money and don’t need to do favors for nations that
kick them in the teeth. Moreover, this is a region in the midst of
traumatic democratic change. The strongest argument the
fundamentalists have is that they are engaged in a holy war
against the racist West, which imposes one set of harsh rules on
Arabs and another set of rules on everybody else. Now comes a
group of politicians to prove them gloriously right.
“God must love Hamas and Moqtada al-Sadr. He has given them
the America First brigades of Capitol Hill. God must love the
folks at Al Jazeera. They won’t have to work to stoke
resentments this week. All the garbage they need will be
spewing forth from press conferences and photo ops on C-Span
and CNN.”
Both Republican and Democratic leaders leapt on the issue in an
election year, catching the White House totally off guard. Then
President Bush stepped forward and said if any legislation is
promoted that blocks DPW’s takeover of the port facilities from
a British company, “I’ll deal with it with a veto”; this from a man
who hasn’t vetoed one bill in his entire presidency.
Bush did add “(Lawmakers need to) step up and explain why a
Middle Eastern company is held to a different standard….DPW
has played by the rules…(UAE) is an ally in the war on terror,
and it would send a terrible signal to friends and allies not to let
this transaction go through….I am trying to conduct foreign
policy now by saying to the people of the world, ‘We’ll treat you
fairly.’”
I agree with the president, but consultation with Congress was
non-existent and the secret panel that reviews foreign
transactions was politically tone deaf as well in not apprising the
White House of what was coming down the pike.
But totally lost in the furor are the important facts. I have done a
ton of work on this topic, including pieces for my “Hott Spotts”
column, as well as in this space over the years, and I put a few
of them together for this week’s installment of “Wall Street
History.”
Bottom line, I have yet to see a concise explanation of what
Americans should really be concerned with.
For starters, DPW, as manager of the ports in questions, is
mostly a bookkeeper and facilitator. Manufacturers and shippers
want to send their goods to those ports where the merchandise
will be handled most efficiently and where rail and truck
transportation is readily available. If I’m Sony and I know a port
in New York can handle my televisions in two days, and another
port on the east coast would take up to five, I’ll probably choose
New York. Of course if you’re shipping foodstuffs, it’s even
more critical.
Security at U.S. ports, though, is handled by Customs, the Coast
Guard and the Dept. of Homeland Security. Most of you after
this week now know all of this. But here’s what most reports fail
to tell you.
The Bush administration is spending $18 billion on securing our
airports and $630 million on our ports. I wrote immediately after
9/11 that we had to spend everything…everything…to secure our
country. That means soaring deficits, far higher than today’s
already lofty levels, and some economic pain, but nothing was
more important than preventing a catastrophic attack.
Today, there is no doubt airport security is in much better shape
than pre-9/11. If I’m a terrorist, knowing that I have to plan acts
years in advance and that funds may be limited to one shot at an
operation, I’m not going to chance getting on a large commercial
airliner in an attempt to hijack it knowing I could easily get
stopped at a security checkpoint, let alone not knowing how
many air marshals may be on the plane or if I can even get into
the cockpit.
[Putting a bomb on the plane via checked luggage or air cargo is
a different story…and that’s distressing.]
But when it comes to our 350+ port facilities that can accept
goods, we are screening only 5% of the cargo containers. For
years, experts like Stephen Flynn have been screaming that we
must get this up to as close to 100% as possible, as soon as
possible. We have the technology, but we need to spend money
not just on more screening machines, but, critically, more
manpower. Our Customs and Coast Guard services are stretched
to the max, let alone the fact the Coast Guard’s aging fleet and
equipment is laughable.
But until we get to the 100% screening capability, the issue is,
how do you know what is being packed in the containers at the
source? Customs, post-9/11, is now supposed to receive the
manifests from all ships coming to America before they leave
foreign ports, and on this operators such as DPW play a role. At
worst, we are made aware of what is supposedly on a given
tanker a few days outside the U.S. Customs and the Coast Guard
then have the ability to board ships offshore, as has already
happened on a number of occasions, if the ship has suspicious
registry or a poor track record, such as with arms smuggling or
drug trafficking.
It’s a monumental task. When I was in Singapore two years ago,
taking my trip into the Strait of Malacca to check out tanker
traffic in that critical part of the world, I picked up a shipping
newspaper. Here are some of the more obscure places from
which goods are sent to the mammoth port in Singapore, and
from which goods can also transit to the United States.
Abidjan (Cote D’Ivoire), Antofagasata (Chile), Apapa (Nigeria),
Balingasag / Cagay (Philippines), Bandar Abbas (Iran),
Banjarmasin (Indonesia), Batam (Indonesia), Beira
(Mozambique), Bintulu (Malaysia), Buenaventura (Colombia),
Callao (Peru), Chah-Bahar (Iran), Chittagong (Bangladesh),
Cochin (India), Colombo (Sri Lanka), Concepcion Bay (Chile),
Cotonou (Benin).
Da-Nang (Vietnam), Dalian (China), Daman (India), Damietta
(Egypt), Damman (Saudi Arabia), Dampier (Australia), Dar Es
Salaam (Tanzania), Douala (Cameroon), Felixstowe (U.K.), Fos-
Sur-Mer (France), Guayaquil (Ecuador), Honiara (Solomon
Islands), Inchon (South Korea), Itajai (Brazil), Jambi (Indonesia),
Jebel Ali (United Arab Emirates).
Kaohsiung (Taiwan…2nd largest city), Karachi (Pakistan),
Khorramshahr (Iran), Koh Sichang (Thailand), Kopervik
(Norway), Kota Kinabalu (Malaysia), Kuala Belait (Brunei), La
Spezia (Italy), Labuan (Malaysia), Lae (Papua New Guinea),
Laem Chabang (Thailand), Latakia (Syria), Lautoka (Fiji),
Libreville (Gabon), Lome (Togo), Luanda (Angola), Male
(Maldives), Manaus (Brazil), Manzanillo (Panama), Matadi
(Zaire), Mombasa (Kenya).
Napier (New Zealand), Nhava Sheva (India), Ningbo (China),
Nouakchott (Mauritania), Noumea (New Caledonia), Odessa
(Ukraine), Papeete (French Polynesia…Tahiti), Paranagua
(Brazil), Pasir Gudang (Malaysia), Piraeus (Greece), Pointe
Noire (Congo…yes, it has a port), Port Elizabeth (South Africa),
Port Harcourt (Nigeria), Port Moresby (Papua New Guinea), Port
Osim (Saudi Arabia), Pusan (South Korea).
Quinhon (Vietnam), Rio Grande (Argentina), Saipan
(N. Mariana Islands), Salalah (Oman), Sampit (Indonesia),
Savona (Italy), Semarang (Indonesia), Sharjah (UAE), Sokhna
(Egypt), Sriracha (Thailand), Taichung (Taiwan), Takoradi
(Ghana), Tanga (Tanzania), Tartous (Syria), Tema (Ghana),
Tilbury (U.K.), Tincan (Nigeria…hope the ship isn’t), Truk
(Micronesia), Ulsan (North Korea), Valparaiso (Chile), Victoria
(Cameroon), Yangon (Myanmar…i.e., Rangoon / Burma),
Yantian (China), Zeebrugge (Belgium).
I got a big kick out of all the congressmen talking about DPW
and the dangers that someone could infiltrate one of the ports
they would control if the deal goes through, someone with ties to
al Qaeda.
For crying out loud, you just need two or three people to blow up
the Mall of America, or any chemical plant in this country. On
Friday, Saudi Arabia thwarted an attack on its major oil facility.
The fear there is that it’s an accepted fact al Qaeda has infiltrated
some facets of the Saudi petroleum industry, so at what time
does it strike with full force?
So looking at the above list, how easy could it be to place three
operatives in any one of those ports, fudge the shipping manifest,
U.S. Customs receives it, thinks nothing, and it’s not one of the
5% of the containers then scanned? There’s your problem. Not
DP World.
That said, what the U.S. government needs to do is station as
many agents as possible around the world, such as it will do in
Dubai. Our people are already in many key ports, but to do more
requires strong diplomatic relations and it’s here where the
backlash engendered by the DPW mess will have an impact.
Lastly, as I go to post, I see that former 9/11 Commission co-
chair, Thomas Kean, announced he is against the deal. I have a
tremendous amount of respect for my former governor here in
New Jersey, but you need to know his son is running for the U.S.
Senate and has already said he is against DPW as well. In other
words, I hesitate to call it a conflict of interests, because of the
personalities involved (I’m supporting the son), but weigh it all
in forming your own conclusion.
Wall Street
Oil rose on increasing tensions in Nigeria, Iran’s intransigence,
and then the aforementioned attempt to damage Saudi Arabia’s
leading oil facility. Crude finished the week back over the $60
level…$62.91.
Nigeria, OPEC’s 5th-largest producer, is threatening to implode.
Forget the fact the militants in the oil-rich delta forced the
shutdown of at least 20% of Nigeria’s oil production this week
after launching a series of attacks on oil platforms and
kidnapping at least nine foreign workers. Nigeria is on the verge
of a true civil war, between Christians and Muslims. The latest
violence started over the cartoon flap and has blown wide open.
An estimated 150 have died in rioting thus far.
As for Saudi Arabia, security forces thwarted a suicide bomb
attack, opening up on two cars that sought to break through the
first of three lines of defense. Saudi security at its facilities is
now so tight, as alluded to above, the only way for al Qaeda to
wreak havoc is to have at least a handful of insiders. Friday’s
attempt, though, still came far too close for comfort, especially
considering the targeted site processes 7% of the world’s oil.
Meanwhile, there was an interesting story in the Wall Street
Journal that individual investors are streaming back into the
market with volume way up at discount brokerage firms; by
some indicators to the highest levels since early 2000. The
reason is growing disenchantment with real estate and bonds, but
contrarians know this is a sure sign we’re approaching a market
top; let alone the geopolitical concerns that need to be at the
forefront of every investor’s mind.
Street Bytes
–Stocks were mixed on the week, with the Dow Jones off 0.5%
to 11061, while the S&P 500 and Nasdaq each gained 0.2%.
–U.S. Treasury Yields
6-mo. 4.72% 2-yr. 4.72% 10-yr. 4.57% 30-yr. 4.53%
Bonds rallied early on what was perceived by most to be positive
news on the inflation front, a core (ex-food and energy) increase
in consumer prices for January of 0.2%. But the gross figure was
up 0.7%. The Federal Reserve released its minutes from Jan. 31
and traders seemed split on whether or not there was truly light at
the end of the tunnel. By week’s end yields were back up,
slightly, as the inverted curve now shows a spread between the 2-
and 10-year of 15 basis points.
But those dabbling in the high yield and emerging markets
sectors were spooked this week by a credit downgrade in Iceland,
of all places. Iceland has been attracting investors because
interest rates here have doubled in two years to 10.75 percent.
Those applying the carry trade (borrowing in low-yielding
currencies such as the yen to buy Icelandic paper) were burned
when Iceland’s currency collapsed on the downgrade. Selling
begat selling in other markets.
By the end of the week, though, calm was restored, helped in no
small part by news from Latin America, where Brazil and
Mexico announced they were buying back large amounts of
government debt due to their improving economies. S&P also
raised its credit rating on the debt of Colombia, another good
sign. But this does not change my overall negative opinion of
the continent.
–Last week I mentioned what a casino the Japanese stock market
has become and the next day the Sunday New York Times had a
piece talking about how much day trading is taking place there…
29% of all volume. That pretty much sums it up.
–The Federal Reserve released a study showing average U.S.
household income fell in the 2001-2004 period after adjusting for
inflation. Growth in household wealth also slowed sharply,
though it rose 6.3%. However, this is far less than the 1998-2001
period. Household debt as a percentage of assets also increased
to 15% in 2004 from 12.1% three years earlier.
But where Democrats have a real campaign issue is in the fact
the data shows increased wealth inequality, with median wealth
dropping for those families in the bottom 40%, and rising for
higher-income families.
–The independent report commissioned by Fannie Mae’s board
on the mortgage-finance giant concludes that Fannie’s massive
accounting scandal was “motivated by a desire to show stable
earnings growth” and hit Wall Street’s targets.
The report said Fannie’s culture was “arrogant,” but while noting
former CEO Franklin Raines was “ultimately responsible for the
failures that occurred on his watch,” it “did not find that [Raines]
knew that the company’s accounting practices departed from
[generally accepted accounting principles] in significant ways.”
[Wall Street Journal]
Ah, commissioners, you can’t have it both ways. As Wall
Street cheered the fact the report didn’t uncover any further
abuses by taking shares in the company up this week, one fact
remains. Fannie has no clue what its true derivatives exposure is.
That’s been my story for years and I’m sticking to it.
–Spain’s electricity giant Endesa is the subject of a surprise $35
billion takeover bid from Germany’s E.On, but Prime Minister
Zapatero has threatened to block it. The proposed acquisition is
symptomatic of a wave of cross-border transactions on the
continent that are shaking up traditional monopolies and native
sensitivities. Long term, though, it’s good for Europe.
–Venezuela announced it was prohibiting flights to the country
from Continental and Delta, as well as severely limiting flights
from American, as part of a long-running dispute with the U.S.
Federal Aviation Administration which has refused to lift certain
sanctions on Venezuelan carriers due to safety concerns. It’s
tempting to blow this out of proportion, but let’s see where
negotiations go next week. The FAA can not compromise on
safety, while President Hugo Chavez can claim he is sticking it
to Washington.
–After decades of discussion, British Petroleum, ExxonMobil
and ConocoPhillips have reached a tentative agreement (pending
approval by Alaska’s state legislature) to build a $20 billion
natural gas pipeline from the north slope to Canada, after which
it would be funneled to Chicago for distribution nationwide. But
the project wouldn’t be completed until 2012-2014 at the earliest.
–Sherwin-Williams, the largest paint retailer, saw its shares
plummet 20% on word a Rhode Island court ruled it and others
could be liable for lead paint exposure.
–Wal-Mart guided lower on earnings for the full year and,
separately, announced it was expanding health care benefits for
some classes of employees, including part-time workers.
–You can’t make this stuff up…H&R Block having to restate
earnings going back to 2004 due to accounting errors. Plus it had
software issues that prevented it from servicing 250,000
customers in January. All it needs now is an ad campaign with
Bode Miller.
–40% of global imports are from emerging markets and this
percentage is growing. [Wall Street Journal] This is good, and
the worst thing the United States and Europe could do right now
is turn protectionist.
–The showdown between BlackBerry-maker Research in Motion
and rival NTP ended in a draw, for now. U.S. District Judge
James R. Spencer said he would rule on shutting down
BlackBerry service later, as well as how much RIM owes NTP in
its long-running patent dispute. NTP claims RIM refuses to
negotiate. Spencer could issue a shutdown order any day.
BlackBerry’s 4.3 million users wait…thumbs at the ready.
–The New York Times’ Gretchen Morgenson reported on an
interesting case involving a major WorldCom shareholder,
Donald L. Sturm, who recently lost a $900 million securities
arbitration case against Citigroup, the largest customer suit ever
brought against it. Sturm, who acquired a significant WorldCom
stake by virtue of his holdings in MFS Communications
(acquired by WCOM in the mid-1990s), claimed Salomon Smith
Barney analyst Jack Grubman persuaded him to hold onto his
shares, some 21.4 million, even as the company spiraled into
bankruptcy in 2002.
But Sturm now says his lawyers have learned since the
arbitration ruling that one panelist, David H. Drennen, general
counsel for an investment firm, Bathgate Capital Partners, failed
to disclose that “Mr. Drennen’s firm had won underwriting
business to take public a company represented by a law firm that
had represented Citigroup and other WorldCom-related
defendants. It was the biggest underwriting job Bathgate
completed in 2005.” NASD Arbitrators must disclose all such
conflicts of interest beforehand.
–Worldwide gold sales reached $53.6 billion in 2005, according
to the World Gold Council. Jewelry accounted for 3/4s of the
volume, while India now accounts for 23% of global “consumer”
gold purchases in jewelry, medals, bars, and investment funds.
The U.S. is next at 12%.
–My portfolio. Volatile time for my carbon fiber play, but the
trend has still been up. Otherwise, I remain content with my
large cash position.
Foreign Affairs
Lebanon: Secretary of State Condoleezza Rice, continuing to
wrack up major frequent flyer miles, paid a surprise visit to
Lebanon to encourage the democracy movement here. Rice met
with most of the leading political figures except for President
Emile Lahoud, Syria’s lackey. Rice offered, “We look forward
to the day when Lebanon is free from interference and
intimidation…it is about time the country knows peace.”
But as noted above, the day she arrived, Thursday, saw major
protests in Beirut by Shia extremists, including Hizbollah.
And to give you a sense of local sentiment in Lebanon, here is an
editorial from the Daily Star, written before it was known Rice
would visit the country and prior to the attack on the Golden
Mosque in Samarra.
“As U.S. Secretary of State Condoleezza Rice begins her tour of
the Middle East today, she will have a firsthand glimpse of a
region that has become immersed in turmoil. And the stark
realities on the ground – such as the nonstop bloodshed in Iraq, a
defiant Iran insisting on its legal right to enrich uranium, and
Syrian President Bashar Assad waging an undeclared power
struggle against the United States in Iraq and Lebanon – will no
doubt complicate her efforts to promote America’s objectives in
the region. Also in the backdrop will be the anti-Western fury
that has been stirred by the publication of offensive caricatures of
the Prophet Muhammad, new images of American abuse of Iraqi
prisoners at Abu Ghraib and footage of British troops brutally
beating Iraqi teenagers. Add to this Israel’s recent decision to
enact a series of harsh sanctions against the Palestinian people –
measures that many view as the equivalent of ethnic cleansing.
“Very few people would want to be in Rice’s shoes right now.
All of the rubble of American policy over the past decade is at
her feet and piling up quickly. The central thrust of the Bush
administration policy in the region has been to promote the right
of people to live in free and democratic societies. But while
promoting democracy and freedom is a worthwhile goal, this
policy begins to unravel at the first sign of hypocrisy. How can
America be committed to freedom and simultaneously remain
quiet about Israel’s continued illegal occupation of Palestinian
territories? How can the U.S. promote human rights and at the
same time allow the torture of Arab prisoners, many of whom
have been held in Abu Ghraib and Guantanamo Bay for years
without charge or trial? How can Washington support
democracy while encouraging Arab states to sanction the
democratically elected government of the Palestinian people?
Contradictory policies such as these only play into the hands of
extremists.
“These are dangerous and unpredictable times in the Middle
East, and an imaginative, trusted and capable U.S. secretary of
state is needed to help steer the region toward peace and stability.
Fortunately, Rice is all of these things. But the secretary of state
cannot come to the region and hope to counter turmoil with a
policy so full of contradictions.”
That’s a moderate view for the Middle East, and you see proof of
what I warned of long ago. We needed to fight the perfect war,
an impossible task. The consequences of Abu Ghraib, for
example, will be with us for decades and there’s not a whole lot
we can do about it at this point.
Philippines: President Gloria Arroyo proclaimed a state of
emergency on Friday following the foiling of an alleged coup
plot that was to have been carried out by military and civilian
leaders. Arroyo declared in a televised address, “The
government has crushed this illegal action. As commander-in-
chief, I control the situation.” But look for massive protests the
next few days and the reaction of the soldiers who will be
employed to control them.
Much of the tension in the Philippines goes back to the disputed
2004 election, let alone the fact the majority in this country still
live in poverty and various militant factions hold sway over parts
of the nation. Arroyo has also done nothing during her rule to
combat charges of massive corruption, including in the ’04 vote.
China: When Pope John Paul II was elevated to the papacy in
1978, it helped set the stage for the fall of communism in
Europe. What his successor, Pope Benedict, did this week could
have a major impact on the politics of China over the coming
years. The pope named Hong Kong Bishop Zen Ze-kiun
cardinal. Cardinal Zen has been a champion of democracy and a
critic of the mainland.
China’s foreign ministry wasted no time in warning Zen.
“The Catholic Church has always advocated that religious
figures should not interfere with politics.”
Beijing demands the Vatican first sever its ties with Taiwan
before re-establishing diplomatic relations. Taiwan has long
expected this to be a price paid if the Vatican can negotiate
tolerance for Catholics on the mainland. Cardinal Zen could be a
sleeper figure over the next decade.
Meanwhile, it’s not too soon to think about President Bush’s trip
to China in April. With the administration’s increasingly hard
line on trade, China’s ongoing missile build-up across the
Taiwan Strait, and Beijing’s jerking Washington around on the
whole North Korean issue, it could be tension city when Bush
arrives. Behind the smiles, the mood is likely to be sour.
India: When President Bush visits here this week, the primary
discussion will be over the agreement reached last year between
the two nations over the transfer of nuclear technology to India.
Congress is insisting the split between India’s civilian and
military nuclear programs be transparent and that inspections be
allowed on military facilities. India says ‘no’ to this. Of course
it’s an issue used by Iran for its own propaganda; as in ‘The West
trusts India to have a peaceful program, though it already has a
military one; yet at the same time you won’t even let Iran have a
civilian program.’
But the Washington Post reported on another issue that threatens
to take the spotlight during Bush’s trip. Gioverdhun Mehta is a
prominent scientist; president of the International Council for
Science, an adviser to the prime minister, and a man who has
made countless trips to the U.S. Now, some faceless bureaucrat
has denied Mehta a visa. This is humiliating and while the White
House is trying to backtrack quickly, assuring Mehta all will be
resolved to his satisfaction, it’s one of those stories that has
exploded here.
Pakistan: Watch anti-Musharraf protests as Bush hits Pakistan.
Serbia: Former Bosnian-Serb general Ratko Mladic has been in
hiding for 10 years but this week there were a rash of rumors he
was negotiating his surrender. Mladic faces trial at The Hague
on charges of genocide and war crimes, including the murder of
7,000 at Srebrenica. It speaks volumes about the Balkans and its
future that all these years elements of the Serbian government
have shielded him.
Thailand: Talk about simmering under the radar, on Friday,
Thailand’s Prime Minister Thaksin dissolved parliament and
called for a snap election on April 2. Thaksin has been the
subject of all kinds of stories concerning his family’s extensive
wealth and conflicts of interest involving his vast business
empire. The prime minister told his nation, “I want the people to
decide: do you still want to use this government again, or not? I
will respect your decision.” Massive anti-government protests
were slated for this weekend.
Australia: 200 more troops are being committed to the
reconstruction effort in Afghanistan, bringing Australia’s total
force here to 500.
Random Musings
–From an editorial in the Washington Post:
“(Congress), in attempting to cast aspersions on the reliability of
the United Arab Emirates…reached back to its behavior before
Sept. 11, 2001 – a standard of judging under which neither the
Clinton nor Bush administrations would fare all that well.”
–New York Post columnist John Podhoretz:
“The more we learn about the Dubai ports deal, the less
worrisome it seems. The more we see the White House in action
these days, however, the more worrisome it seems – for
conservatives and Republicans, at least. Democrats and liberals
have every reason to be beside themselves with glee.
“ ‘Can’t anybody here play this game?’ baseball manager Casey
Stengel famously cried out in the midst of the legendarily awful
first-season team fielded by the New York Mets. In conversation
after conversation this week, that same cri de Coeur has erupted
on the right.
“What has happened to the Bush White House? Throughout
President Bush’s first term, it functioned like a well-oiled
machine. It would be hard for friend or foe to point out more
than a handful of occasions when the White House lost control of
an issue. Even in its darkest days – say, when former White
House counterterror chief Richard Clarke came out with guns
blazing against Bush – the administration kept a clear head and
effectively fought back from the brink.
“Not now…
“That’s why it was a very, very bad move for the president to
come out and threaten a veto of any congressional action on the
(Dubai Ports) matter. By being so aggressive – and by accusing
those with trepidations about the deal of being unfair to Muslims
– Bush demonstrated a surprising unwillingness to examine the
political consequences of his actions.”
–New York Post columnist Deborah Orin:
“President Bush is now putting his entire presidency at risk,
thanks to incompetence by his staff – and his own I-know-best
stubbornness on the port furor.
“Bush has landed fellow Republicans in Congress with a
nightmare choice: They can create a diplomatic incident by
blocking the United Arab Emirates takeover of ports like New
York, or they can commit political suicide.
“ ‘No member of Congress is going to risk a TV ad run by their
opponent showing Arab street thugs burning American flags and
waving AK-47s superimposed over port icons like the Statue of
Liberty,’ says a veteran Republican strategist.”
–So in line with the above, here’s what frustrates me. Why
didn’t Bush clean house after the 2004 election? Why is Andrew
Card still there, let alone Karl Rove? Where is the
accountability?
–Then there’s Dept. of Homeland Security chief Michael
Chertoff. Appearing on “Meet the Press” last Sunday, Chertoff
told Tim Russert that the government was “procuring trailers
today” for Katrina victims. He said this on February 19, 2006.
Katrina hit almost a full six months earlier. But he’s still there.
–It was commonly believed that in the time of the 2000 and
2004 elections our nation was split 40/40/20…both Democrats
and Republicans would maintain their 40% bases as the two
parties fought elections over the other 20%. These days I’m of
the opinion it’s now 35/35/30…heading towards 30/30/40. As
my friend Dan L. said to me the other day, that’s a formula for a
viable 3rd party.
–Regarding my comments following the Dick Cheney shooting
incident, after I ‘post,’ invariably I wish there were one or two
words I could have changed. That was the case last week. But I
stand by the overall tone.
–The New York Times had an interesting piece on New York
City and changing demographics that mirror much of what is
taking place elsewhere. Between 2000 and 2025, the Big Apple
is projected to see the following swings.
Asians… +1,327,000
Hispanics… +577,000
Blacks… +24,000
Whites… -880,000
Regardless, the city faces major challenges, particularly in the
area of affordable housing.
–Rush Limbaugh didn’t know a certain Ohio Democratic
congressman was white, and when apprised by his listeners, his
response was, “We have corrected this, and I, you know, I’m not
gonna apologize because I don’t think it’s an insult to be black.”
Perhaps, Rush, you should have just said “Doh!” and moved on.
It works for Homer Simpson.
–So I’m looking at my New York Mets schedule and a number
of years ago they instituted a series of “Heritage Dates.”
Included on this year’s calendar are…Asian Night, Korean Night
and Taiwan Night.
If I were the People’s Republic of China, I’d be miffed, and if I
were a Mets fan, I’d avoid Shea Stadium the night of September
8.
–Skiers and snowboarders who wear helmets are 60% less likely
to suffer head injuries, according to a study published in the
Journal of the American Medical Association.
–Former Pittsburgh Steelers great Lynn Swann is running for
governor of Pennsylvania as a Republican. Sports Illustrated had
a story on his candidacy.
“Swann’s race may help him win in November. In 2002 an
estimated 263,500 African-Americans voted for (Gov.) Rendell.
If Swann can attract just 10% of those voters – and hold on to the
46,500 black Pennsylvanians who voted Republican four years
ago – it might be enough to get him elected. And among many
white voters, his race may well be no issue at all. One weekday
last month Swann was campaigning in a working-class
Democratic district in Allentown. ‘Are there any black families
in this neighborhood?’ a reporter asked one resident, a retired
union machinist and a Democratic-lever puller.
“ ‘No,’ the man said. ‘Colored’s all down the hill still.’
“ ‘Who are you going to vote for?’
“ ‘Swann.’
“ ‘Why?’
“ ‘Rendell said he’d lower my property taxes. All they’ve done
is gone up. Swann’s race don’t make no difference.’”
–Finally, on a semi-serious note but related to one of my favorite
topics, Mars, economist Robert Samuelson refuted some of the
statistics being bandied about these days when debating whether
or not America really has a growing knowledge gap compared to,
say, India and China.
“(It’s) emphatically not true, as much of the alarmist
commentary on America’s ‘competitiveness’ implies…
“Here are some facts:
“In 2004 American colleges and universities awarded a record
233,492 undergraduate science and engineering degrees (S&E),
reports the National Science Foundation (NSF). That was up 38
percent from 169,726 in 1990….
“Graduate S&E enrollments hit 327,352 in 2003, another record.
They’ve jumped 22 percent since their record low in 1998.
Computer science graduate students have increased 60 percent,
to 56,678, since their low point in 1995…It’s true that for these
higher degrees, especially doctorates, foreign-born students have
represented a growing share of the total. But that’s also
changing because – after years of declines – enrollment of
native-born Americans and permanent residents for graduate
work has increased 13 percent since 2000.
“Judged realistically, China and India aren’t yet out-producing
the United States in engineers. Widely publicized figures have
them graduating 600,000 and 350,000 engineers a year
respectively, from six to 10 times the U.S. level. But researchers
at Duke University found the Chinese and Indian figures
misleading. They include graduates with two- or three-year
degrees – similar to ‘associate degrees’ from U.S. community
colleges. And the American figures excluded computer science
graduates. Adjusted for these differences, the U.S. degrees jump
to 222,335. Per million people, the United States graduates
slightly more engineers with four-year degrees than China and
three times as many as India. The U.S. leads are greater for
lesser degrees.” [Washington Post]
Ah ha! But then I was reading this terrific article on a potential
manned mission to Mars by Benjamin Wallace-Wells in Rolling
Stone and he has a comment from scientist Gentry Lee, who is
helping oversee NASA’s Mars project.
Lee doesn’t think America “is smart enough to pull it off right
now.”
“The biggest problem, Lee says, is that America doesn’t have the
engineering brainpower it did in the days of Apollo. Kids aren’t
studying engineering anymore, and the minds we imported from
China and India in the 1990s are now returning home in pursuit
of more lucrative opportunities. ‘I’ve got to put the dozen best
systems engineers in the country around a table sometime soon
and figure out what questions we’ve got to answer in order to get
to Mars,’ Lee says. ‘We don’t have a dozen engineers that
good.’”
And so the debate continues. I still just say put a bunch of
snowboarders on a rocket and eventually they’ll get there.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $561
Oil, $62.91
Returns for the week 2/20-2/24
Dow Jones -0.5% [11061]
S&P 500 +0.2% [1289]
S&P MidCap +0.8%
Russell 2000 +0.8%
Nasdaq +0.2% [2287]
Returns for the period 1/1/06-2/24/06
Dow Jones +3.2%
S&P 500 +3.3%
S&P MidCap +5.8%
Russell 2000 +9.4%
Nasdaq +3.7%
Bulls 45.3
Bears 29.5 [Source: Chartcraft / Investors Intelligence…exact
same figures as Oct. 18…when the Dow was at 10285 and the
S&P 500, 1178.]
Have a great week. I appreciate your support.
Brian Trumbore
