[Posted 7:00 AM ET]
Israel vs. Hizbullah
Following is a sampling of opinion, all sides. Some of it is
harsh.
Rami G. Khouri / Daily Star (of Lebanon), July 22, 2006
“The consensus in Israel, the U.S. and parts of Lebanon and the
Arab world is that Hizbullah recklessly triggered the Israeli
rampage in Lebanon this month by kidnapping two Israeli
soldiers, causing all the Lebanese to pay a very heavy price.
This will be debated for a long time, and supporters of a more
truthful picture of reality would argue that the kidnapping of the
soldiers is only the latest move in a long-running war between
Israel and Lebanon, not a sudden unilateral action.
“However, a more compelling question is being asked now: Why
do the U.S., Europe and much of the Arab world allow Lebanon
to be pulverized by Israeli bombs when most of those same
people in the West last year held Lebanon up as a beacon of
democratic change; a model for other Arabs?
“We now have two Arab countries that Bush has trumpeted as
models and vanguards of America’s policy of promoting
freedom and democratic change; Iraq and Lebanon. Neither is a
very comforting sight today. Not many Arabs will sign up for
Bush’s democracy and freedom plan if this is what they will
expect to happen to their countries.”
Rami G. Khouri / Daily Star, July 24, 2006
“American officials are very good at vernacular descriptions, but
lousy at history and political reality in the Middle East. As U.S.
Secretary of State Condoleezza Rice sets off Sunday on her short
trip to a Middle East that is increasingly engulfed in violent
confrontations and political turmoil, she has described the
massive destruction, dislocation and human suffering in Lebanon
as an inevitable part of the ‘birth pangs of a new Middle East.’
“From my perspective here in Beirut, watching American-
supplied Israeli jets smash this country to smithereens, what she
describes as ‘birth pangs’ look much more like a wicked
hangover from a decades-old American orgy of diplomatic
intoxication with the enticements of pro-Israeli politics.
“We shall find out in the coming years if indeed a new Middle
East is being born, or – as I suspect – we are witnessing the
initial dying gasps of the Western-made political order that has
defined this region and focused primarily on Israeli national
dictates for most of the past half-century. The way to a truly new
and stable Middle East is to apply policies that deliver equal
rights to all concerned, not to favor Israel as having greater rights
than Arabs…..
“The numbing fact that Bush-Rice fail to acknowledge…is that
Washington now can only speak to a few Arab governments (in
Saudi Arabia, Egypt and elsewhere) who are in almost no
position to impact on anyone other than their immediate families
and many guards.
“Washington is engaged almost exclusively with Arab
governments, whose influence with Syria is virtually nonexistent,
whose credibility with Arab public opinion is zero, whose own
legitimacy at home is increasingly challenged, and whose pro-
U.S. policies tend to promote the growth of those militant
Islamist movements that now lead the battle against American
and Israeli policies. Is Rice traveling to a new Middle East, or to
a diplomatic Disneyland of her own imagination?”
Kamal Dib / Daily Star, July 24, 2006
“As Lebanon was recovering from a year of cruel assassinations
and explosions, it was hit this month yet again by another
confrontation with Israel. The year 2005 saw the murder of
former Prime Minister Rafik Hariri and a score of other
personalities and bystanders, the mysterious bombing of several
civilian targets, and a decline in economic growth to almost nil.
“However, no one would have imagined that Hizbullah’s border
incident with Israel could spiral into a catastrophic escalation of
violence that would give millions of people in Lebanon only a
few hours to run away or seek shelter. The depth of the current
crisis is exemplified by the fact that in a matter of 48 hours Israel
destroyed much of Lebanon’s major roads and infrastructure, a
feat that took the Israelis weeks to do in 1982…..
“July 2006 will enter the annals as another episode in a series of
Israeli attacks against Lebanon that started in 1968….While
Israel waged raids and mini-wars and one major war in 1982
against the Palestinian organizations and later against Hizbullah,
it never spared civilian installations and economic infrastructure
(roads, bridges, power and water stations, communications),
hospitals and schools, manufacturing and commercial
establishments and the like.”
Editorial / Daily Star, July 25, 2006
“After aggressively supporting Israel’s siege of Lebanon – a
brutal military campaign that has threatened the very existence of
the Lebanese state – U.S. Secretary of State Condoleezza Rice
came to Beirut to profess American ‘support’ for the Lebanese
government. Rice’s arrival in Beirut – but failure to demand an
immediate cease-fire – was not seen by many here as a sincere
show of concern for their alarming humanitarian situation….
“Throughout this crisis, Rice has been right about one thing: that
it would be pointless to resolve the current conflict in a way that
will only bring us back to the same situation in six months’ time.
She is right that any lasting truce will require a dramatic change
in the Lebanese-Israeli status quo. But the status quo is likely to
deteriorate further without a cease-fire and will never improve
until all of the core causes of the conflict are addressed.
“In this sense, it is promising that Rice’s talk addressed the
whole package of concerns that have long plagued the Lebanese-
Israeli front. These issues include Israel’s air, land and sea
incursions into Lebanese territory, which have occurred nearly
every day since its withdrawal from South Lebanon in 2000; the
decades-long occupation of the Shebaa Farms; and the detention
of Lebanese citizens in Israeli jails.”
Rami G. Khouri / Daily Star, July 26, 2006
“What is it that needs to be solved to stop the clashes, and why is
this war taking place? That is a rudimentary question, but an
increasingly relevant one, given the slow shift toward diplomacy,
especially with the meeting in Rome on Wednesday of the U.S.
and European and Arab parties.
“Three concentric circles of confrontation are self-evident in the
Lebanon-Israel situation: the immediate Lebanese-Israeli clash;
wider regional confrontations involving Syria, Iran, Palestine,
Israel and Arab leaders in Egypt, Jordan and Saudi Arabia who
seem to fear Shiite empowerment; and a global confrontation
between a U.S. that seems to want to revamp the Middle East
region to suit American-Israeli preferences, and regional
governments and popular forces that resist such hegemonic aims
politically and militarily. Any successful attempt to quell the
Lebanon-Israel clashes must consider which of these three is the
most important problem to be resolved, or victory to be earned at
the negotiating table rather than on the field of battle A sure
recipe for failure would be to lump all three circles together and
hopelessly confuse a narrow bilateral dispute with the larger
regional and global confrontations….
“The purely bilateral issues are few, and clear: Israel wants its
two captured soldiers returned alive, and not to be attacked by
Hizbullah rockets from southern Lebanon. Lebanon and
Hizbullah wants Israel to stop bombing Lebanese targets, leave
the Shebaa Farms area it still occupies, return the very few
Lebanese prisoners it holds, and stop menacing Lebanon and
intruding on its sovereignty by over-flights, sonic booms, and
occasional attacks….
“If such an accord offered a sense of victory for both sides –
diplomacy’s ideal outcome – this would subsequently prod
progress on the second circle, the Arab-Israeli conflict.
Achieving an Israel-Lebanon cease-fire and permanent calm, on
the basis of international law and mutual rights, implemented
simultaneously, would have enormous positive implications for
progress on wider regional and global issues.”
Editorial / Daily Star, July 28, 2006
“Israel, with the blind support of the United States, has insisted
that a cease-fire must be delayed until its military can inflict
meaningful damage upon Hizbullah. The Israelis believe that by
bombing Lebanon back 20 years, Hizbullah will be weakened.
But so far, Israel’s unimaginative military campaign has had the
opposite effect. Support for Hizbullah – which was limited
before the war – has reached record highs in Lebanon and around
the region, with each atrocity only adding to the ranks of angry
people who would like to see Israelis suffer retribution. And as
Hizbullah gains strength, the Lebanese state – an entity that will
be necessary for any political process that would restore calm
along the border – is being systematically weakened….
“The Lebanese people will be weighing Washington’s words and
actions very carefully in the coming days to see whether the
‘urgent’ effort to secure a cease-fire promised by U.S. Secretary
of State Condoleezza Rice will actually materialize. If this
promise was merely a ruse to prolong the destruction of
Lebanon, then the Lebanese had better prepare themselves for a
different vision of their future. The ‘new Lebanon’ could end up
looking more like an Islamized Somalia than the free and
democratic country that was recently held up as a shining
example by the Bush administration. If that should be the fate of
Lebanon, then the Israelis ought to also prepare themselves for a
different future: one of perpetual violence and instability along
their border.”
Benjamin Netanyahu / Wall Street Journal, July 22, 2006
“Since Israel’s unilateral withdrawal in 2000 to an internationally
recognized border, Hizbullah has established in Lebanon a terror
state-within-a-state, and, working on behalf of Iran and Syria, it
has sought to undermine the emergence of a free and democratic
Lebanon. In crossing an international border, murdering and
kidnapping Israeli soldiers and firing rockets at Israeli cities,
Hizbullah has also committed blatant acts of war. Like any
nation exercising its right of self-defense, Israel is responding not
only to the specific incidents that occurred but is also working to
eliminate the threat posed by this clear and present danger.”
Anshel Pfeffer / Jerusalem Post, July 25, 2006
“Whether or not the IDF Chief of General Staff Lt.-Gen. Dan
Halutz really issued a directive to the air force to bomb 10
multistory buildings in south Beirut for every salvo of rockets
fired at Haifa, the question of the price Israel should be exacting
from Hizbullah and Lebanon in retaliation for the bombardment
of its civilian population and what is a proportionate response
remains a potent one….
“(Maj.-Gen. Uzi) Dayan says, ‘We have to make a distinction
between Lebanon and exacting a price from Hizbullah. But also
with Hizbullah, the price is immaterial; they are willing to fight
to the last Lebanese, especially if he’s a Christian. Hizbullah
will not be deterred and that’s why the price we have to exact
from them is denying them the strategic capability to fire
medium- and long-range missiles at Israel.’….
“(Prof. Uzi) Arad, who was strategic adviser to prime minister
Benjamin Netanyahu and before that head of research in the
Mossad, says, ‘Deterrence doesn’t really work in a conventional
situation. The question is how much pain you’re prepared to
sustain and the amount of damage you can inflict. Only when
nuclear weapons are involved can you really say that it’s an
unbearable price, and that’s why the superpowers had a policy of
mutually assured destruction during the Cold War; that was
classical deterrence.’
“Arad explains that from Israel’s point of view, ‘deterrence
mainly means denying the other side the capability to attack us.
There are two stages: the first is convincing the enemy that if he
tries to attack, he’ll fail. The second is that even if he succeeds,
he will be forced to pay such a high price that it won’t be
worthwhile.’”
Isi Leibler / Jerusalem Post, July 25, 2006
“Clearly the present campaign to root out Hizbullah has created a
greater sense of Israeli unity than at any time since the Six Day
War….
“Our adversaries no longer even bother to go through the
pretense that the conflict is related to land for peace. Hizbullah
and Hamas, backed by the Iranians and Syrians, seek the
elimination of Jewish sovereignty – nothing less.
“We are not attacking Lebanon. We are attacking Hizbullah,
which has stuck itself like a leech on the Lebanese people. They
are terrorists with lethal hi-tech weapons who believe they are
sanctified to ravage our sovereign territory in order to kill and
kidnap civilians and soldiers….
“And whereas decent nations at war may seek to minimize
casualties of innocent non-combatants, to relate to
‘proportionality’ in this context can only be described as playing
foul….
“This could represent the beginning of a campaign to reverse the
global tide of media demonization and bias confronting us.
“History may make us grateful that the Hizbullah offensive took
place now rather than in a few years’ time, when the price in
blood would undoubtedly be much higher. Our challenge is to
guarantee that the bloodshed and the sacrifices our people are
currently making will not be in vain and will result in a more
secure Israel.
“That means finishing the job.”
Evelyn Gordon / Jerusalem Post, July 26, 2006
“Even more serious, however, is the proposal that Hizbullah’s
disarmament be conditioned on an Israeli withdrawal from
Shebaa Farms, thereby rendering meaningless the UN’s own
certification, just six years ago, that Israel had withdrawn from
every last inch of Lebanese territory.
“This certification, unanimously issued by the UN Security
Council following Israel’s pullout from Lebanon in May 2000,
was based on the recommendation of UN experts who carefully
studied old maps of the border and compared them to Israel’s
withdrawal line.
“However, Hizbullah rejected the UN’s determination, claiming
that an additional bit of land, Shebaa Farms, was also Lebanese
(the UN experts deemed this land Syrian). Therefore, it
announced, it had every right to continue attacking Israel in order
to ‘liberate’ Shebaa Farms.
“Successive Lebanese governments – both the former Syrian-
controlled government and the new government elected
following Syria’s ouster from Lebanon – promptly backed this
claim, and the international media followed suit: Within months,
the UN determination that Shebaa Farms was not Lebanese had
virtually disappeared from coverage of the region; instead, the
area was referred to as ‘disputed territory.’…
“If the international community gives into this Hizbullah
blackmail it will decisively preclude peace in the Middle East for
decades to come – because it will ensure that no deal is actually
final. Instead, each agreement will merely be the starting point
for a new round of territorial claims….
“Thus unless the rest of the international community decisively
rejects the idea of conditioning Hizbullah’s disarmament and the
Lebanese army’s redeployment on an Israeli withdrawal from
Shebaa Farms, the Lebanese cease-fire deal will prove the death
knell of the Middle East for many years to come.”
Nicholas D. Kristof / New York Times, July 25, 2006
“(One) of the oldest lessons in international affairs is that not
every problem has a neat solution. The first rule of foreign
policy, as in medicine, should be ‘Do no harm.’ Unfortunately,
the legacy of today’s Lebanese adventure, like the 1982 Israeli
invasion of Lebanon and our invasion of Iraq, may be plenty of
strategic damage.
“Granted, there’s a counterargument that fills my mailbox and
goes like this: What else can a country do when it is subjected to
rocket attacks and cross-border raids by a terrorist organization
committed to its destruction? If that terror group finds a safe
haven just across an international border, and the government
and the army there cannot control it, then what other option is
there but to destroy that menace?
“Uprooting Hizbullah may inadvertently cause some civilian
casualties, so the argument goes, but the number would be
unnoticed if the victims had died at the hands of an Arab
government (so far, 1,000 times as many Muslims have died in
Darfur as in Lebanon). In the end, sitting ducks have to fight
back.
“The problem with that argument is that it’s wrong.
“One day before the Hizbullah incursion that provoked this war,
terrorists bombed train lines in Mumbai, India, killing nearly 200
people (about 10 times as many as had been killed in all the
Hizbullah attacks on Israel since the withdrawal from Lebanon in
2000, until this month). The Mumbai bombings were the latest
in a string of attacks against India that had gone on for years, at
the hands of terrorists operating with support from across the
border in Pakistan.
“Many Indians complain that their prime minister, Manmohan
Singh, has been too wimpish in responding….Yet Mr. Singh has
wisely recognized that military action would only make the
problem worse.
“And there’s another example. Israel itself, in the past. Under
both Ariel Sharon and Ehud Barak, Israel responded with
restraint to attacks by Hizbullah. That’s one reason Hizbullah
was on the defensive politically, and one reason Sunni Arab
governments have criticized it….
“ ‘Those of us who had welcomed Bush’s vision of democracy in
the Middle East still believe in the promise of a free Iraq and a
free Lebanon,’ The Daily Star of Lebanon wrote in an editorial
on Monday. ‘What a pity to see Bush’s vision engulfed in the
flames of the current shortsighted American foreign policy.
What was once a dream of democracy is fast becoming a
nightmare of unstoppable civil war and terror.’
“President Bush never became minutely engaged in Israeli-
Palestinian negotiations or oversaw shuttle diplomacy to
Damascus the way Bill Clinton did. It’s true that the Clinton
efforts in the end didn’t achieve much. Nor did the dovish
efforts of Barak.
“But we may end up nostalgic for American and Israeli
diplomatic efforts that never accomplished much, for they work
out far better than military interventions that leave us worse off
than before.”
Ralph Peters / New York Post, July 22, 2006
“A U.S. government official put it to me this way. ‘Israel’s got
the clock, but Hizbullah’s got the time.’ The sands of the
hourglass favor the terrorists – every day they hold out and drop
more rockets on Israel, Hizbullah scores a propaganda win.
“All Hizbullah has to do to achieve victory is not to lose
completely. But for Israel to emerge the acknowledged winner,
it has to shatter Hizbullah. Yet Israeli miscalculations have left
Hizbullah alive and kicking.
“Israel has to pull itself together now, to send in ground troops in
sufficient numbers, with fierce resolve to do what must be done:
Root out Hizbullah fighters and kill them. This means Israel will
suffer painful casualties – more today than if the Israeli Defense
Force had gone in full blast at this fight’s beginning.
“The situation is grave. A perceived Hizbullah win will be a
massive victory for terror, as well as a triumph for Iran and
Syria. And everybody loves a winner – especially in the Middle
East, where Arabs and Persians have been losing so long.
Ralph Peters / New York Post, July 28, 2006
“So why is defeating Hizbullah such a challenge? Israel
smashed one Arab military coalition after another, from 1948
through 1973. Arabs didn’t seem to make good soldiers.
“Now we see Arabs fighting tenaciously and effectively. What
happened?
“The answer’s straightforward: Different cultures fight for
different things. Arabs might jump up and down, wailing, ‘We
will die for you Saddam!’ But, in the clinch, they don’t – they
surrender. Conventional Arab armies fight badly because their
conscripts and even the officers feel little loyalty to the states
they serve – and even less to self-anointed national leaders.
“But Arabs will fight to the bitter end for their religion, their
families and the land their clan possesses. In southern Lebanon,
Hizbullah exploits all three motivations. The Hizbullah guerrilla
waiting to ambush an Israeli patrol believes he’s fighting for his
faith, his family and the earth beneath his feet. He’ll kill anyone
and give his own life to win.
“We all need to stop making cartoon figures of such enemies.
Hizbullah doesn’t have tanks or jets, but it poses the toughest
military problem Israel’s ever faced. And Hizbullah may be the
new model for Middle Eastern ‘armies.’….
“Those of us who support Israel and wish its people well have to
be alarmed. Jerusalem’s talking tough – while backing off in the
face of Hizbullah’s resistance. Israel’s on-stage in a starring role
right now, and it’s too late to call for a re-write….
“Israel and its armed forces are rightfully proud of all they have
achieved in the last six decades. But they shouldn’t be too proud
to learn from their enemies: In warfare, strength of will is the
greatest virtue.”
David Ignatius / Washington Post, July 26, 2006
“Lebanese sources outlined for me the compromise package they
say was discussed Monday when Rice met with Fouad Siniora,
the Lebanese prime minister, and Nabih Berri, the parliament
speaker and leader of the Shiite militia known as Amal. The
cornerstone of this package, according to my sources, is that
Hizbullah would agree to withdraw its armed fighters from south
Lebanon and accept an international force there that would
accompany the Lebanese army. Israel, for its part, would agree
to halt its attacks and lift its air and sea blockade. The United
States would call for negotiations over the return of a disputed
territory known as Shebaa Farms, claimed by Lebanon even
though the United Nations ruled in 2000 that it was Syrian….
“Hizbullah’s military power would be severely degraded under
such a negotiated settlement, but it would remain intact
politically. The Shiite militia is trying to put on a brave face,
sending me an e-mail message yesterday through a Lebanese
intermediary claiming that it has the upper hand. If a cease-fire
isn’t reached and Hizbullah fights on, it will ‘accept a four-to-
one casualty ratio,’ the message warned. ‘Human losses all go to
heaven as martyrs with families and children handsomely
compensated.’ But for all this brave talk, statements by
Hizbullah’s leader, Hasan Nasrallah, seem to be defining victory
as simple survival.”
Editorial / Defense News, July 24, 2006
“The problem here is one of strategy. Hamas and Hizbullah are
playing Israel like a fiddle. They knew that attacks on Israeli
territory would draw a response of overwhelming force that
would inflame their supporters – just the thing to shore up their
own flagging standing with their base….
“Ever emboldened, Iranian President Mahmoud Ahmadinejad
appears convinced he can get his way by alternately outsmarting
and bullying the world community. His government is
marveling at its handiwork while busily moving forward with its
nuclear program.
“But the world is watching the calamity in the region – and
Iran’s role in it. The realization may come that the only way to
alter Tehran’s destructive behavior may be through force, before
it goes nuclear and becomes even more dangerous.”
Editorial / Washington Post, July 27, 2006
“The truth is that there is no reasonable compromise to be made
with the extremists who began this war: Either they will retain an
extra-governmental military force that can attack Israel whenever
it suits the interests of the Iranian or Syrian regimes, or they will
lose that capacity. If they are to lose it, then the Rome
conference governments must be prepared to support realistic
measures to achieve that result. Those need not only be military;
just as important will be the effort to bolster the Lebanese
government so that it attains the political strength and will to
assert its authority.”
Leslie H. Gelb / Wall Street Journal, July 28, 2006
“To stop and turn this dangerous historical shift in the military
and political balance of power, Mr. Bush needs a plan to restore
American power in the Middle East. He has to move across the
board with creative diplomacy, a full-scale economic effort, and
a new way to credibly exercise U.S. military might.
“The first step has to be an act of diplomatic jujitsu. Mr. Bush
needs to use the present crisis to justify new and wide-ranging
talks with Syria and Iran and, if necessary, indirectly with Hamas
and Hizbullah. These rank at the top of the world’s nastiest and
most untrustworthy negotiating partners, but they also happen to
be the ones causing most of the trouble – and are, therefore, the
ones we have to deal with….
“Mr. Bush and Ms. Rice are right to want a durable cease-fire,
not just any cease-fire, and right to want a new Middle East, not
this Middle East. But only American power can do this job, and
hold back the radical tide and reverse it. For years now,
Washington has compromised that power by fearing to exercise
it fully. For Mr. Bush’s first five years, it was either large-scale
U.S. military force or nothing. Now, he has the opportunity to
unleash American power in every dimension, letting the weight
of diplomacy, money and arms reinforce each other, pitting
American strengths against the radicals’ considerable
vulnerabilities. Our friends and allies wait for these actions, and
will join us. Such an effort could also restore Mr. Bush’s power
and prestige for the tough decisions he will face in his last two
White House years.”
Thomas Friedman / New York Times, July 28, 2006
“The world hates George Bush more than any U.S. president in
my lifetime. He is radioactive – and so caught up in his own
ideological bubble that he is incapable of imagining or forging
alternative strategies.
“In part, it is also because China, Europe and Russia have
become freeloaders off U.S. power. They reap enormous profits
from the post-Cold War order that America has shaped, but
rather than become real stakeholders in that order, helping to
draw and defend redlines, they duck, mumble, waffle or cut their
own deals.
“This does not bode well for global stability. A religious militia
that calls itself ‘the party of God’ takes over a state and drags it
into war….and the world is paralyzed. Those who ignore this
madness will one day see it come to a theater near them….
“When will the Arab-Muslim world stop getting its ‘pride’ from
fighting Israel and start getting it from constructing a society that
others would envy, an economy others would respect, and
inventions and medical breakthroughs from which others
benefit?
“There will be no new Middle East – not as long as the New
Middle Easterners, like Rafik Hariri, the former Lebanese prime
minister, get gunned down; not as long as Old Middle Easterners,
like Nasrallah, use all their wits and resources to start a new
Arab-Israel war rather than build a new Arab university; and not
as long as Arab media and intellectuals refuse to speak out
clearly against those who encourage their youth to embrace
martyrdom with religious zeal rather than meld modernity with
Arab culture.
“Without that, we are wasting our time and the Arab world is
wasting its future. It will forever be ‘on the eve of modernity.’”
Otherwise, it was a week of absurd statements.
U.S. Assistant Sec. of State David Welch: “(Americans) are now
firmly in the picture and leading the diplomacy.”
Chief of Staff Josh Bolten: “The president believes all freedom
loving people deserve our support.”
Secretary of State Condoleezza Rice to the people of Lebanon:
“Thank you for your courage and steadfastness.”
Israeli spokesman Mark Regev: “We have no interest in failed
states…We want to see our neighbors move forward.”
President George Bush: “We need to help the Siniora
government in order to help democracy succeed.”
Note to the above. Next time I feel like doing some work on my
home, such as for a new kitchen or bathroom, I’d appreciate it if
you would leave the wrecking ball at the plant.
I just don’t understand the fantasyland so many of our leaders
and their acolytes seem to be living in. I’ve always been in the
pro-Israel camp, and remain so, but the fact is Lebanon is
destroyed…and it can still get worse.
President Bush on Friday was talking of helping Lebanon
rebuild. How do you even respond to a statement like that?
Yes, no sane analyst can question who started this mess…
Hizbullah and Hamas. But there was no justifiable reason for
destroying Lebanon’s infrastructure. Ret. Gen. Barry McCaffrey
and the aforementioned Ralph Peters both called it “mad” when
appearing on “Kudlow & Co.” For crying out loud, I could have
done a better job picking out targets.
The people of southern Lebanon should have been given 48-72
hours to leave and then Israel could have moved in, full force.
Bomb south Beirut, as Israel did, after giving at least 24 hours
warning in that instance. When you go from the airport to the
nicer part of the city, you pass through the Hizbullah ghettos on
that super flyway you see that’s been bombed in all the pictures.
Totally understandable. But I was going through my own
pictures of Lebanon, and my drive over the mountains into the
Bekaa Valley, and I can’t believe a spectacular suspension
bridge, for example, was also bombed. I’ll spare you other
thoughts on this specific topic for now.
What you learned in the above commentaries, though, was this
sudden interest in Shebaa Farms. I told you last week that was
the key all along and President Bush, when it comes to the
history of this episode, will forever go down as a failure for not
caring a wit about Lebanon the past 12 months outside of holding
it out as a model of what’s possible in the Middle East.
I keep coming across things I’ve written in the past, like this gem
which I didn’t mention the past two weeks.
From my yearend review, Dec. 31, 2005.
“Syria / Lebanon: Pitiful. The U.S. and its allies, particularly
France, had a window of opportunity last spring with the removal
of Syria’s army and the Lebanese elections. Alas, because both
the U.S. and France were afraid to confront Syria’s President
Bashar Assad, the window closed and the bombs and
assassinations have resumed. For its part, Lebanon is too weak
to confront Hizbullah’s presence, and here Israel does the cause
no favors when it continually violates Lebanese airspace beyond
targeting Hizbullah along the disputed border.”
What the heck was going on in the State Department? What
were Bush’s advisers saying? When someone shoved a note card
in front of him and Bush talked of Lebanon, did anyone then tell
him, “Mr. President, we still have a lot of work to do here before
it explodes”?
Most pundits say, of course the White House is consumed with
Iraq at the expense of all other issues, such as North Korea, Iran
and now Lebanon.
But a solution has been staring us in the face. As more than one
of the commentaries cited above noted, and as I did last week,
Hizbullah has pinned its resistance on Shebaa Farms. The UN
said the 100-square mile piece of land was Syria’s, Lebanon
claims it, and Israel kept it. Call Hizbullah’s bluff, Israel. Give
them Shebaa Farms. Let Lebanon then work it out with Syria.
Israel would then counter, ‘But that only moves the missiles
closer.’ That’s where the international peacekeeping force
comes in, until such time (two years), as the Lebanese army has
the clout to do the job on its own. Hizbullah then is left with
becoming a political power, and with Syria’s continuing backing
would resort to terrorism, internally, I imagine. But then it’s at
least limited to Lebanon.
Of course for some of this it may already be too late. It’s
nonetheless where we’re headed in future negotiations, though
now we’re still left with the fact Lebanon is destroyed and the
Arab Street is more anti-American then ever.
—
Wall Street
To paraphrase Lloyd Bridges in the movie “Airplane,” I sure
picked the wrong week to call the Street a bunch of “idiots.” But
I stand by everything I write. It’s your guarantee of quality.
After two weeks of fretting over the international scene, Wall
Street chose to focus on itself, which more often than not it is
wont to do.
And it spent time deciding that the U.S. economy is slowing and
the Federal Reserve may be finished raising interest rates, so the
heck with missiles and bombs flying across the Israel / Lebanon
border, and Orcs slaving away, making nukes or nuclear fuel in
North Korea and Iran. We’ll get back to them later, on our own
time, said the gamblers that easily make up more than 50 percent
of the activity each day in our financial markets.
Now if nothing else I’m consistent. To wit, I wrote the following
on 12/31/05:
“The U.S. housing market will continue to stagnate in the first
two quarters, with some regions seeing slight declines in value,
but then things really begin to get dicey in the second half. I
would call for an outright crash, with values down 20% or more
in many areas, were it not for the fact that long-term interest rates
will remain at benign levels for much of the year.
“The consumer will slow due to a creeping unease about their
largest investment and excessive personal debt. Yes, I and many
others have been saying this for years now, but for the first time
during that period real estate is no longer going to be the
piggybank it has been.”
I wouldn’t change a word of this, seven months later.
Where I was wrong was in forecasting that “major foreign policy
issues (will) potentially dominate the 24-hour news cycle before
April” and thus I was too pessimistic on economic activity
beginning in the second quarter.
Then again, how bad was that? We just saw that the U.S.
economy grew at only a 2.5 percent clip in the second quarter,
versus a 5.6 percent pace in the first. Expectations were closer to
3.2 percent. Granted, it could still be revised upward some, but
that’s a nice slowdown in my book and I can’t imagine the third
quarter will be any better. As for the warning that hot spots
would dominate the news cycle, I wasn’t that far off here, either.
So this is what we learned this week aside from the GDP data.
The core price deflator that the Federal Reserve likes to follow
rose 2.9 percent in the second quarter, far higher than its comfort
level of 1-2 percent. Durable goods for June were also up more
than expected.
But the Fed’s beige book on regional economic activity correctly
forecast a slowdown, while both existing and new home sales fell
in June with median home prices essentially flat from a year ago,
though down in some regions. Just as I forecast last December.
We thus know the consumer is slowing, thanks in no small part
to $3 a gallon gasoline, the housing sector has hit a wall, which
in turn hurts psychologically in terms of the wealth effect, and
hidden in the GDP report was the fact business spending on
software and equipment was actually down one percent in the
second quarter.
So in the case of our three-legged stool, the consumer, housing
and capital spending are all flashing warning signs.
Add it all up, sports fans, and you’ll see corporate profits coming
in below current expectations for most sectors in the third and
fourth quarters. And that’s assuming the Middle East quiets
down and oil stays around $70 at worst. Frankly, with regards to
the last two items that’s not a bet I’d take.
But why then, Mr. Editor, did Wall Street rally big? As I noted
above the feeling is the Federal Reserve now has enough
ammunition to hold the line on rates come its August 8 meeting.
Bonds rallied on the news and the stock market’s number one
concern has been the Fed so it had cause to celebrate as well.
Hey, we’re all entitled to some premium beer now and then.
Enjoy it while you can.
Finally, back to housing, I got a kick out of the new mantra that
it’s a “buyers’ market” out there; as if stagnant or slightly lower
prices present a killer opportunity.
Remember, the real estate bubble has been compared to the tech
bubble. Do you remember analysts saying Cisco was a
screaming buy when it fell from its all-time high of $82 to $70?
Do you remember when the Street’s shills (oozing grease out of
every pore) said Sun Micro, once $65, was a buy at $55?
They’re now $18 and $4.30, respectively, in case you forgot. So
take this buyers’ market talk with a grain of salt. I suspect if you
can afford to wait another 6-12 months, prices will be even
lower. Of course that also means your own place is likely to be
as well.
My southern California real estate expert, Josh P., passed along a
piece from the San Diego Union-Tribune dated July 21.
“ ‘I know every time we’ve gone into a downturn in the home
building industry, they’ve always been longer and deeper than
we’ve all imagined,’ D.R. Horton chief executive Donald
Tomnitz said. ‘So we’re preparing for the worst, and we think
this one will be longer and deeper than just the last six months.’”
And remember when I reminded those playing the homebuilding
sector to watch what the companies are doing with their land
portfolios? D.R. Horton is cutting “the number of lots it has
under contract in San Diego County and elsewhere earmarked for
future development.”
“The Fort Worth-based company had put money down on the
land because it expected to eventually buy it to build homes.
D.R. Horton didn’t say exactly how much deposit money it lost
in San Diego County.”
Nationwide, the company wrote off $57.2 million for the quarter
in lost deposits.
And this last note from the Washington Post on the local
property scene in Maryland and Virginia.
“The market will take months to shake out, because too many
sellers have not accepted that their houses are not worth as much
as they had thought,” said economist Mark Zandi.
I doubt many of the sellers are rushing out at the same time to
buy a lot of big ticket items.
Street Bytes
–It was the best week for stocks since the fall of 2004 and spring
of 2005, depending on the barometer, with the Dow Jones, S&P
500 and Nasdaq all climbing 3.1 to 3.7 percent. But that just
means in the case of the first two that they’re back to the levels
of June 2, while Nasdaq is still below levels of three weeks ago.
And in keeping with some of the opening market commentary,
while there were plenty of companies that reported good
earnings, including Merck, Schering Plough, AT&T, Altria, and
U.S. Steel, there were others like Amazon, Aetna, and Boeing
that didn’t.
Then you had issues like UPS and Dupont, which both
disappointed. In the case of UPS, they cited a global slowdown,
while with Dupont, higher energy and materials costs hurt its
bottom line, even as they were able to pass some of these costs
on. The point being, you have company specific stories, like
Merck or Amazon, that aren’t necessarily overall economic
barometers, while when a UPS tells you global activity isn’t as
strong as it used to be, or that future prospects aren’t as good,
you need to take notice for the bigger picture it presents.
Earlier in the week, stocks did get a boost from more merger and
buyout activity, including HCA (more below) and two big tech
mergers, AMD and ATI Technology, plus Hewlett-Packard’s
acquisition of Mercury Interactive.
–U.S. Treasury Yields
6-mo. 5.14% 2-yr. 4.98% 10-yr. 4.99% 30-yr. 5.07%
Bonds rallied on the GDP news and the growing feeling the Fed
is finished hiking. Market players are confident that Bernanke
meant what he said in his recent congressional testimony; the
Fed is willing to stomach higher inflation in the short term in the
belief that as the economy slows down, price pressures will
abate, too.
–While a NBC / Wall Street Journal survey said 41 percent of
Americans approve of Bush’s handling of the economy, a full 74
percent are “uneasy” about economic prospects.
–After five years the Doha round of global trade talks collapsed
amid a sea of recriminations. Agriculture remains the number
one stumbling block as the United States and European Union
blame each other. Of course both are big time hypocrites.
The U.S. wants to see more open markets, but for political
reasons, primarily, refuses to get rid of its heavy subsidies in key
sectors. Europe is acting in the same fashion.
According to Bloomberg News, the EU had offered to trim its
farm tariffs by an average of 50 percent, while shielding 8
percent of tariff lines from the highest duty cuts.
The U.S. said the highest tariffs should fall 70 percent, with only
1 percent of products protected from duty cuts, but at the same
time it declined to lower the more than $22 billion limit in annual
subsidies that it established last year. Currently, farm support in
the U.S. is $19 billion a year.
Overall, the World Bank had estimated that savings of $96
billion in lower tariffs would have been achieved had an
agreement been reached. In the end, however, all that’s left is
more protectionist fervor, with the hope for more bilateral and
regional type agreements.
–For the first time, Chinese Prime Minister Wen Jiabao admitted
the mainland’s economy was on the verge of overheating as he
called for “forceful measures,” including a more flexible
currency policy. In a conference call with local officials, Wen
cited still soaring fixed asset investment and bank lending in
particular.
–General Motors surprised the Street, reporting a profit of $1.2
billion, ex-special charges, as revenues rose 12 percent, far
higher than expected. Recovery, however, is far from complete
but this was a great first step.
–There is the usual hue and cry over ExxonMobil’s latest
earnings report, a cool $10.4 billion in profits for the second
quarter and the second highest in the history of the world. It’s up
to the oil companies to show that they are plowing a substantial
amount of this back into finding more crude and natural gas.
For its part, Exxon has not been spending as much as you’d
think, though it did announce it would increase its capital-and-
exploration budget for all of 2006 to $20 billion, a 13 percent
increase from last year’s level.
Royal Dutch Shell earned $7.3 billion. On the cap-ex front,
Shell has doubled its budget on a huge gas-to-liquids project in
Qatar to $12 billion. Shell’s problem these days has to do with
massive cost overruns at some of its sites.
–On the topic of ‘energy security,’ the Kremlin is rattling the
cage yet again. The Caspian Pipeline Consortium, in which
Chevron is a major player, has been handed a bill of $253 million
for back taxes by federal authorities, shades of Yukos. The oil
from this pipeline connects fields in western Kazakhstan to the
Black Sea, via Russia, but it’s not controlled by Russian national
monopoly Transneft.
Russia doesn’t want Kazakhstan to be able to increase its oil
exports because it not only could one day lead to lower prices
(more supply on the market), but there is a limited number of
tankers that can then transit through the Bosporus (Istanbul).
–And speaking of the Kremlin and its influence, as I was reading
a piece in Business Week on natural gas giant Gazprom, from
time to time its important to remember that its chairman, Dmitry
Medvedev, is also a first deputy prime minister and, along with
Sergei Ivanov, a candidate to replace Vladimir Putin in 2008.
There are persistent rumors that if Putin does indeed step down
as he keeps insisting he will (he won’t), Putin would then
become CEO of Gazprom.
And while I’ve cited these figures before, one can never forget
that countries like Finland, Latvia, Lithuania, and Slovakia
receive 100% of their natural gas needs from Gazprom. The
Czech Republic receives 81% and Austria 73%, to cite a few
more that can easily be held hostage.
–HCA, the nation’s largest for-profit hospital operator, received
a buyout offer of $31 billion, including debt, from the likes of
KKR, Bain Capital and Merrill Lynch Global private equity. If it
goes through, and a higher bid may yet emerge, it would be the
largest leveraged buyout in history. [Sen. Bill Frist’s father is the
founder of HCA.]
Of course the deal is yet another example of the clout these days
of private capital. And as a piece in the Wall Street Journal by
Greg Ip and Henny Sender pointed out, the private-equity owners
have done a great job at extracting immediate dividends out of
the deals. For example:
“Since 2003, companies have borrowed $69 billion primarily to
pay dividends to private-equity owners, according to Standard &
Poor’s Corp. That compares with $10 billion in the previous six
years.
“The resurgence of the buyout investors, and their new skill at
quickly extracting money long before any turnaround bears fruit,
are signs of the ascendance of private money and its broad
impact on the world of finance.”
It’s all just a further example, as well, of the growing power of
hedge funds, which are often accounting for half the daily
volume at the New York and London stock exchanges.
–UAL Corp. reported its first quarterly profit since 2000, another
terrific airline success story. And thanks to rising demand, the
airlines were able to raise fares a record 10 percent in the first
quarter, thus allowing them to more than cover rising fuel costs.
–Spain has a goal of generating 12 percent of its electricity
through wind farms by 2010. [Go carbon fiber!] In the EU, all
forms of renewables are supposed to meet 20 percent of energy
needs by the same year.
–Aetna is the latest victim of rising medical costs. Its shares
tanked 17% on Thursday following release of disappointing
earnings thanks to accelerating cost pressures. Ergo, look for
your premiums to skyrocket in 2007.
–More on former Brocade Communications Systems’ CEO
Gregory Reyes, recently charged by the Justice Department with
fraud for backdating stock options (for his employees, not
necessarily himself).
As Floyd Norris of the New York Times reports:
“Mr. Reyes arrived at Brocade in 1998, hired as chief executive
to get the company ready to go public, which it did the next year.
A maker of switches involved in the storage of data sent over the
Internet, the company became a hot initial public offering.
“It did not hurt that Brocade appeared to be profitable, in contrast
to most Internet companies. In fiscal 2000, which ended in
October of that year, Brocade reported earnings of $67.9 million.
“But when the company got around to restating its earnings –
taking into account the expenses it should have recorded because
it did not comply with the rules on stock options – that ‘profit’
turned into a loss of $951 million, a swing of more than $1
billion. That disclosure was made after Mr. Reyes left.
“During his tenure at Brocade, which lasted six and a half years,
the company ended up reporting net losses of $312 million. Mr.
Reyes made profits of $556 million on his stock trades, his
filings with the Securities and Exchange Commission indicate.”
IS THIS A GREAT COUNTRY OR WHAT?!
–Good news, potentially, on the bird flu front. GlaxoSmithKline
says it has developed a vaccine for the H5N1 strain that may be
ready for mass production by 2007.
The key is that the size of the dosage is small, so obviously more
people can be covered, but the only question involves the
vaccine’s efficacy should H5N1 mutate significantly.
–The Chicago City Council passed a bill that would require the
“big box” stores, like Wal-Mart and Home Depot, to pay a
minimum wage of $10 an hour by 2010, plus benefits. While
sponsors considered it a ‘great day for the working men and
women of Chicago,’ Mayor Richard Daley wasn’t so sure,
observing that the bill could impede growth and tax revenues
should the big retailers opt out of the market. This is a landmark
case and it doesn’t seem as if Daley has the votes to successfully
veto it.
–New chief software architect Ray Ozzie of Microsoft (who
inherited the title from Bill Gates), admitted in a meeting with
analysts that the Internet, not the PC, is the center of the new era,
but as company’s like Google appear to pass them by, one
analyst, Rick Sherlund, summed it up best for Microsoft’s
suffering shareholders. “They’re never as fast as you’d like.”
–Lucent previously warned on its second quarter, but this week
formally announced sales fell 12 percent. The company
continues to blame its revenue problems on delayed spending by
telecom carriers that are focused on mergers, as well as Lucent’s
sales force being focused on survival because of its own merger
with Alcatel. So….if one wants to be optimistic, Lucent says the
telecom sector’s spending will definitely pick up by the fourth
quarter.
Which got me in the car to check out the lawn over at
headquarters. [For new readers, just blocks from my home.]
Now granted, New Jersey has had an extremely wet summer thus
far, but the lawn does indeed look as good as it ever has. Is this a
buy signal? Stay tuned. [I haven’t looked at the Alcatel / Lucent
share split, with the deal still expected to close by year end, but
for the archives, Lucent shares finished the week at $2.13.]
–Federal authorities charged three Florida residents with
conspiracy and securities fraud in a voicemail scam that first
arose in the summer of 2004. This was the one, you’ll recall,
where a caller identifying herself as “Debbie” left messages on
answering machines passing along hot stock tips to her girlfriend
after meeting a “hot stock exchange guy,” of course pretending
not to know she had dialed a wrong number.
Your first tip-off if you had received one of these, though, is that
there is no such thing as a “hot stock exchange guy.” Sleazy,
yes. Hot, no.
But you have to hand it to these three. The combined market
value of the six small-cap companies they were discussing rose
$179 million in just 26 days. If convicted on all charges,
however, each would face a maximum prison term of 45 years.
So kids, don’t try this at home.
–Authorities in China launched an investigation into product
quality and in the first half of this year found that over 20 percent
failed national standards, i.e., were shoddy or counterfeit.
Most worrisome are food safety concerns. Personally, I’m
avoiding Chinese eel.
–My portfolio: No changes, with my major play still being the
carbon fiber stock. It’s been suffering and I’m worried about the
earnings report. Overall, unless the market totally collapses, thus
presenting a possible buying opportunity on at least a short-term
basis, I doubt I’ll change my 80% cash / 20% equity
recommendation for the balance of the year.
Foreign Affairs
Iraq: Prime Minister Nouri al-Maliki came to Washington for
consultations with President Bush and my immediate reaction to
their joint press conference was I had never seen Bush look so
grim. Other descriptions from reporters and pundits included
“uncharacteristically gloomy,” “unusually dour,” and “I’ve never
seen him so pessimistic,” the last one being from Howard
Feinman of Newsweek.
Prime Minister Maliki’s security plan has been a shambles as the
militias and death squads continue to control Baghdad. And
what an embarrassment for President Bush to have to concede,
now, that there aren’t enough troops in the Iraqi capital. I’ll
spare you points of reference from yours truly that predicted this
years ago, let alone recently. The “brilliant” Gen. George Casey
should be dismissed of his duties.
Then again, just how much longer will the United States really
be in Iraq? On one hand it’s now clear there will not be
significant troop withdrawals before November’s mid-term
elections, as desperately hoped for by the administration as well
as all Republican candidates. It seems highly unlikely that
conditions on the ground will improve enough by then for the
White House to be able to claim any great progress. I’m just not
so sure we don’t begin pulling out far faster than anticipated
beginning next spring.
In fact, the Washington Post’s David Ignatius reported that the
key figure in Iraq, moderate Ayatollah Sistani, has sent word to
Bush, through his network, that he himself has given up.
Certainly the polls in the U.S. reflect this opinion, with only 34
percent approving of Bush’s handling of Iraq, while just 32
percent see a successful conclusion. [NBC News / Wall Street
Journal]
And it doesn’t help when Maliki blasts Israel and refuses to
condemn his fellow Shiites, Hizbullah.
The Washington Post editorialized:
“The Iraqi government of Prime Minister Nouri al-Maliki was
commonly described as the country’s last chance to avoid civil
war when it took office two months ago….Mr. Maliki appears
close to failing that fateful test.”
As David Ignatius reports, though, there perhaps is one last
chance to begin to secure Baghdad and that is the policy of
targeting death squad leaders, ten of whom have been “taken
out,” primarily by U.S. and British special forces. Moqtada al-
Sadr threatens to bring his militia out en masse, but perhaps this
is what the U.S., Britain and the Iraqi government really want.
As one administration official puts it: “If confrontation comes,
it’s best that it come now.”
Lastly, we still have this ongoing issue of Kurdish fighters using
Kurdistan as a refuge for hit and run attacks across the border
against the Turks. Turkish Prime Minister Recep Erdogan has
called for NATO to join the combat, just as it is doing in
Afghanistan.
Iran: Our good friends the Russians continued to block any UN
Security Council resolution that would lead to Iran having to
suspend its uranium enrichment operation, though on Friday the
Security Council did approve a watered down version requiring
Iran to quit the program by end of August. However, before you
get too excited, the resolution apparently has no teeth.
–Russia: Speaking of Vladimir Putin and Co., he hosted
Venezuelan President Hugo Chavez as the Che Guevara
wannabe wrapped up a $1 billion arms agreement with Russia
for 30 helicopter, 30 fighter jets, and a new plant in Venezuela to
build Kalashnikov rifles; this last bit on top of 100,000
Kalashnikovs that Chavez previously purchased. In the case of
Iran and Venezuela, Putin is blatantly ignoring U.S. criticism.
As for Chavez, who this week also visited the dictatorship in
Belarus, he told the Russian people in a televised appearance.
“The United States is the most immoral and cynical empire,
worse even than the Roman empire….If somebody is going to
meddle with us we’ll fight back, like you did in Stalingrad.”
Separately, four members of the Commonwealth of Independent
States, including Georgia and Ukraine, blew off a meeting of
leaders in Moscow. Georgia is ticked about Russia’s military
presence in the breakaway republics of Abkhazia and South
Ossetia, while Ukrainian President Victor Yushchenko said he
was too busy at home given Kiev’s political crisis.
But if you are traveling to Moscow, the eight leaders who did
show dined at the “exclusive riverfront Prichal restaurant outside
of Moscow, where they dined on meat and fish kebabs, grilled
starlet and carp, marinated mushrooms and a whole calf roast on
a spit.” [Moscow Times]
What the heck is starlet? Bet it’s their version of mahi-mahi, this
being the label attached to any strange fish delivered to U.S.
restaurants. “What should we call it?” “What do you think?
Mahi-mahi!”
Back to Georgia, it sent a force into the rebel held Kodori Gorge
near Abkhazia, which had the potential to put them in conflict
with Russian “peacekeepers” there. Supposedly the mission was
successful in regaining control. Remember, the U.S. is training
Georgia’s military.
North Korea: Pyongyang refuses to rejoin the six-party talks on
its nuclear program unless the U.S. lifts its financial sanctions.
Interestingly, it just came to light this week that China back in
September had followed Washington’s lead in freezing North
Korean bank accounts, a mild positive.
Overall, China is still mostly concerned that should Kim Jong-
il’s regime collapse, China would be left with a huge refugee
problem, a fear Kim has thus far been successful in exploiting
which is why the bank move was interesting.
India: The U.S. House approved the nuclear cooperation
agreement between Washington and New Delhi, 359-68, with
few changes in the original document signed by the two nations.
Indian Prime Minister Manmohan Singh had warned “(India)
will never compromise in a manner which is not consistent with
the (statement signed last year).”
California Democratic Congressman Tom Lantos said, “History
will regard what we do today as a tidal shift in relations between
India and the United States. This will be known as the day when
Congress signaled definitively the end of the Cold War paradigm
governing interactions between New Delhi and Washington.”
I agree, especially in light of recent developments that have India
holding extensive talks with China and Iran. Energy needs are
one thing, but we can’t let India drift into their orbit.
Opponents of the nuke agreement, though, argue it pours fuel on
the fire in terms of a regional arms race. To wit….
Pakistan: The Washington Post reported that Pakistan is building
a new plutonium reactor capable of producing fuel for 40-50
bombs a year; plutonium being easier than uranium to mount on
warheads. Of course this sparks fears of a South Asian arms
race, though in this instance, because Pakistan is doing little to
hide the building of the plant, at least we have a better
understanding of how far along they are and the experts are
saying 2010 before production could begin. So Washington will
formally address it on, oh, about Dec. 27, 2009.
[As an aside on the nuclear front, this week Libya’s Mummar
Gaddafi was quoted as admitting his nation was “close to
building a nuclear bomb,” the first such formal admission since
Libya agreed to dismantle its program.]
The Balkans: You can’t ignore this region. While a flare-up
might not roil international markets, these days what it would do
is potentially sap NATO of military resources that are needed
elsewhere such as in Afghanistan and possibly the Middle East.
And so I’ll keep my eye on Kosovo independence talks that
commenced this week, the first between itself and Serbia since
Yugoslav Serb forces were driven out of Kosovo in 1999. Serbia
is adamant that Kosovo remain part of it. [I’m heading to the
Balkans mid-September…Bulgaria and Romania.]
Democratic Republic of Congo: Despite some recent, relatively
small-scale violence, it is truly historic what is happening this
weekend, the first democratic election in the country’s history.
This is hard to believe, but outside of its cities Congo has just
200 miles of paved roads, in a nation about 1 ½ times the size of
Texas. So this creates some logistical issues, as you might
imagine. Paper ballots for 25 million will be delivered by
“plane, boat, dug-out canoe, bicycle, mule and foot.”
The ballot itself is the size of a poster, with 33 presidential
candidates plus those up for parliament. Of course the vast
majority of the people will have never seen or heard of those
running.
Zimbabwe: President Robert Mugabe is still around,
unfortunately. His government just announced it will eavesdrop
on every aspect of private life, including mail, e-mail and phone
calls without any court approval.
The joke of it is, Mugabe claims it’s all part of the international
war on terror. Right. Al-Qaeda is targeting Harare.
Australia: I’ve known the years-long drought here has been
severe, but didn’t realize just how bleak the future is until I read
that some believe Perth will run out of water within ten years
unless a desalination plant is urgently constructed.
Random Musings
–President Bush’s overall approval rating ticked up in two polls
but is still below 40 percent. [39%, NBC / Wall Street Journal;
36%, CBS / New York Times] On the issue of whether or not
the country is on the right or wrong track, the NBC / Journal poll
had only 27 percent believing we were on the right track, 60
percent the wrong one.
–The CBS / Times survey showed 59 percent approve of
medical research on embryonic stem cells. This past Sunday on
“Meet the Press,” Tim Russert had the following discussion with
White House chief of staff Josh Bolten.
To set the stage, Russert showed a video of White House
spokesman Tony Snow, wherein Snow said:
“The president believes strongly that for the purpose of research
it’s inappropriate for the federal government to finance
something that many people consider murder. He’s one of
them.”
Russert: Murder. The president believes that using an embryo
for stem cell research is murder.
Bolten: Let me (step back for a second)….
Russert: The president’s spokesman used the word “murder.”
Does the president believe the use of an embryo for stem cell
research is murder?
Bolten: ….I will get to your question, because it’s very
complicated, very, very delicate issue, that I think a lot of people
misunderstand what the president’s policies were that he first
enunciated five years ago.
First, the policy announcement that the president made five years
ago was not that stem cell research would (be banned), but rather
that federal funding of stem cell research would be banned.
Second….just that research that involves…the new destruction
of fertilized embryos. (This president), in fact, was the first one
to permit federal funding to go to any embryonic stem cell
research, but only for lines that had been…already created where
the embryo was already created. The president’s objective in his
policy was to prevent the use of federal funds toward the
promotion of destroying these fertilized embryos….
The president (has tried to strike a balance) between the needs
and desires of science and the morals and ethics…that our
government leaders are charged to try to sustain. On the one
hand, the president recognizes that embryonic stem cell research
has promise, unfulfilled as yet, but a great deal of promise. On
the other hand, the president believes, as do millions and millions
of Americans, that the fertilized embryo is a human life that
deserves protection. The president recognizes that there are wide
differences of opinion on this, and that’s why his policy has been
not to prevent that research from going forward altogether, but to
prevent your tax dollars…from going to support the destruction
of that human embryo, because there’s so many of us who
believe that human embryo is a human life that deserves
protection….
Russert: Then if the president believes it is human life, how can
he allow private stem cell research to go forward, if, in fact, that
is murder?
Bolten: ……..What the president has said is that as far as the
federal policy is concerned, no federal funds, your tax dollars
and my tax dollars, will go towards promoting the destruction of
that human embryo.
Russert: But you’re using federal funds for existing lines, which
were embryos. So were those embryos that the federal
government is experimenting on obtained by homicidal means?
Bolten: Those embryos, those stem cell lines, were already
destroyed, and that’s where the president draws the line….
Russert: The logic, Mr. Bolten, as people are listening to this,
the president is saying no, we can’t use embryos that are going to
be discarded by in vitro clinics because, according to a
spokesman, that’s murder. But we can use embryos that were
existing before I became president, that’s OK. And if you have a
private company and you want to use those embryos, that’s
OK…..
[Russert continued his line of questioning on the use of the term
“murder.” Then they talked about the embryos that were
adopted.]
Russert: 128 embryos were adopted. But 400,000 are now not
being used, and will be probably discarded. And you’re saying
they should not be used for research by the federal government.
Bolten: Yes, that is the president’s policy.
Russert: Would you then move to close down in vitro clinics – if,
in fact, those embryos are being created and used by private
companies for research and the president’s spokesman says that’s
murder, and the president said it’s a human life, why not then
close down the in vitro fertility clinics? Because they’re creating
embryos that, in the president’s view, will be murdered.
Bolten: That’s not where the president has drawn (the line). He’s
drawn the (line) with federal funding, people’s tax dollars not to
incent the further destruction of human life…..
Russert: But he will allow private cell research companies to
“destroy human life.”
[The debate continued a while longer and the next day Tony
Snow apologized for the use of the term “murder,” though
clearly that was a calculated decision on his part to use it in the
first place and Snow is, after all, the president’s spokesman. I
felt it was important to lay out the debate, as much for my benefit
as yours. The European Union, incidentally, agreed this week to
allow EU funding for stem cell experiments, though scientists
will be prevented from using EU cash to extract stem cells from
human embryos, only those cells from national and other
sources. Again, in the U.S. funding is only provided for those
existing before August 2001. This is the last I’ll address the
issue unless otherwise warranted.]
–So the Muslim world hates the United States. But fear not, we
have Karen Hughes to press our case!!!!!
–Following is the opening of a story reported by Jonathan
Casiano and Jonathan Schuppe of the Star-Ledger.
“The man charged with a murderous Essex County crime spree
taunted the victims’ families in a Newark courtroom yesterday,
winking at them, licking his lips, mouthing threats and shouting a
profane insult that sent the distraught relatives storming into the
hall.
“Throughout his 15-minute arraignment, Noah Cuebas grinned
and locked his eyes on the families. Twice, he flashed a middle
finger at them. Then, after pleading not guilty, Cuebas, 23,
turned and shouted, ‘F— your family.’
“The raucous hearing was Cuebas’ first public appearance since
he was charged Thursday with a string of horrific crimes: the
shooting death of 20-year-old Allen Reese in a Newark
backyard; the rape and murder of 14-year-old…in an abandoned
East Orange building; the shooting of 24-year-old Michael
Fredericks in an Orange apartment and a carjacking in which he
allegedly raped and shot a woman in the head, leaving her
comatose.”
Mr. Cuebas is being held on $3.5 million bail.
New Jersey has the death penalty, but it hasn’t been applied in
decades and Governor Jon Corzine said he will try and abolish it
because of the arbitrariness of its application.
I’ve never understood opponents of capital punishment. Is there
anyone out there who believes Noah Cuebas deserves to live?
I had dinner on Thursday with my friends from Newark, Mary
and her son M.S. They’ve been my link to the inner city for
years now but I hadn’t seen them in awhile. I asked Mary about
all the crime and she and her friend Bonita, also at the dinner,
said it’s gotten so bad you don’t dare honk your horn, flash your
lights (if the car in front doesn’t have them on when they
should), or ever talk to a stranger. Everyone is armed these days.
I also asked M.S., now 29, what he thought about Mayor Cory
Booker’s plan to play basketball around the city on Saturday
nights as a way of telling Newarkers he was taking the streets
back from the thugs. M.S. just shook his head. “Do you believe
these stories that he’s really being targeted?” I asked. “He
doesn’t have to constantly watch his back, but, yeah, there are
guys who would do it,” he said.
There was some good news, though, in New Jersey. State and
federal officials took down 100 members of the Bloods, thank
God, in what is believed to be the largest sweep in state history.
Unfortunately, many will be back on the streets in five years or
so, I imagine. Heck, the godfather of the faction was allegedly
directing activity from prison.
So with the spike in crime that we are witnessing in many of our
nation’s largest cities, it’s also worth noting that Philadelphia
police have killed 16 people this year, making it the highest
annual total here in the 25+ years Philly has been keeping
records. All have been ruled justified.
Back to my friends, and on a lighter note, we were reminiscing
how I first contacted them eleven years ago and the first time we
met when I took Mary and M.S. to dinner.
I picked them up at their home, in a rundown area, and was
scared to death. But what I didn’t know until the other night was
that they were scared of me! Mary said all her friends were
telling her, ‘What the heck are you doing going out with this
strange white guy? Anything could happen to you.’ We had a
good laugh over that one.
–One of the toughest jobs I have is selecting the jerk and
dirtballs of the year. I’ll wait for the second test, but it would
appear Tour de France winner Floyd Landis could be a strong
candidate for the former.
–The first gay couple in the U.S., Julie and Hillary Goodridge,
who were wed in Boston on May 17, 2004, are now going
through divorce proceedings.
–I held off commenting on some of the more personal aspects of
President Bush’s performance in St. Petersburg at the G8 summit
for various reasons last time. But in reading Richard Wolffe’s
extensive piece in Newsweek, I couldn’t help but note some of
his own observations, having been granted exclusive access to
the president.
[Sunday…day two]
“That afternoon the leaders are promised they will see the final
text of their statement on the Middle East, which calls on
Hizbullah to end its rocket attacks and then urges Israel to end its
military strikes. But the document fails to arrive at the promised
hour of 4, and it’s still not there at 5 o’clock. Bush has had it.
‘I’m going home,’ he says to the room full of presidents and
prime ministers. ‘I’m going to get a shower. I’m just about
meeting’d out.’ Some of the leaders suggest they should all
work out their differences together. But Bush can no longer keep
up appearances. ‘I thought that was a lousy idea and so did
others,’ Bush says later. ‘It would lose focus and everybody
would then have an opinion.’”
[Monday… the last day…after the infamous lunch.]
“Bush rushes to the airport as soon as the lunch is over, ditching
the traditional news conference that every other leader holds.
U.S. PRESIDENT AVOIDS MEDIA AFTER G8 SUMMIT,
reads the headline on Russia’s official summit Web site.
“Showered and rested, Bush sits in his conference room on Air
Force One, clearly glad to be heading home. A large bowl of
popcorn sits in front of him, and he proceeds to demolish it by
the fistful….”
Maybe this last bit wasn’t fair on the part of Wolffe, but I’ve
reread the infamous transcript of the Monday lunch where the
microphones were on, and one passage I can’t help but highlight.
[The camera is focused elsewhere, but it is thought Bush is
talking to China’s Hu Jintao.]
Bush: Gotta go home. Got something to do tonight. Go to the
airport, get on the airplane and go home. How about you?
Where are you going? Home? This is your neighborhood. It
doesn’t take you long to get home. How long does it take you to
get home?
[Reply is inaudible.]
Bush: Eight hours? Me too. Russia’s a big country and you’re a
big country.
[At this point, Bush seems to bring someone else into the
conversation.]
Bush: It takes him eight hours to fly home.
[He turns his attention to the server.]
Bush: No, Diet Coke, Diet Coke.
[He turns back to whomever he was talking to.]
Bush: It takes him eight hours to fly home. Eight hours.
Russia’s big and so is China.
I know many of you may question whether or not any of this is
important. I just read it, and observe President Bush in other
moments, and shake my head.
–Finally, Charles K. brought to my attention The New York
Times story that in the Tibetan plateau motorcycles are now the
method of choice for herding sheep and yaks. Said Qu Jiang,
“The price of a horse and a motorcycle are about the same.” I
would add it’s easier to get condo board approval for a
motorcycle; another added plus.
Sorry these last few reviews have been exceedingly long. But
you get extra credit, you know!
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $645
Oil, $73.24
Returns for the week 7/24-7/28
Dow Jones +3.2% [11219]
S&P 500 +3.1% [1278]
S&P MidCap +4.0%
Russell 2000 +4.2%
Nasdaq +3.7% [2094]
Returns for the period 1/1/06-7/28/06
Dow Jones +4.7%
S&P 500 +2.4%
S&P MidCap +0.4%
Russell 2000 +4.0%
Nasdaq -5.0%
Bulls 42.4
Bears 34.5 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Brian Trumbore
