[Posted 2:00 AM ET…Sofia, Bulgaria]
Happy Independence Day! Here in Sofia it was, Friday.
Independence from the Ottoman Turks in 1908, if I understood
my waiter this morning. As I write this passage, it’s 2:00 pm,
my hotel overlooks the main square, and there’s really nothing
happening on this day off for the people. I just took a walk up to
Alexander Nevski Cathedral, the main landmark here, and there
were about five folks wandering around inside.
In the meantime, I’ve been overseas since Tuesday but have kept
up on much of what’s going on, including my Mets finally
clinching the division crown, and at the end of the day, some of
us care more about that then a few little rants at the UN.
OK, maybe they were big rants, by some of the world’s great
dirtballs…men like Iran’s Mahmoud Ahmadinejad and
Venezuela’s Hugo Chavez. Sudan’s President Bashir wasn’t
much better.
I got a kick out of some of the headlines I saw in the New York
Post and Daily News. Those of us who live in the shadows of
the Big Apple often deal with the downside of having the United
Nations there. The United States foots up to 25 percent of the
bill for this incredibly dysfunctional world body, while Japan is
next at 19 percent.
I bring up this last point because I was reminded this week that
as Japan futilely attempts to become the 6th permanent member
of the Security Council, it’s kind of amazing that China, which
pays 2 percent of the bill, and Russia, one percent, are in.
Yes, I know why they are. It’s about post-World War II and
having nukes and the like (and China replacing Taiwan…but
that’s a different story), but you really don’t need to hear the
annual rants at the General Assembly to understand how bad the
UN can be. All you really need to know is that the nation fitting
one-fifth of the bill really has no equal seat at the table.
I imagine, though, well over half of the American readers of this
site wish the UN would just go away, but I’m not one of them.
There has to be some organization where the nations of the world
get together and hash out disagreements, aid the poor and unify
behind rebuilding efforts in the event of national catastrophes.
But that doesn’t mean you need this huge bureaucracy, on this
we can all agree.
I also have noted for years now that there is one man who should
replace Kofi Annan…former Czech president Vaclav Havel,
health willing. He gets it.
Anyway, last Sunday, appearing with Wolf Blitzer on CNN,
Israel’s Foreign Minister Tzipi Livni said Iran was only
“months” from mastering uranium enrichment. This is important
because once they’ve hit this stage the broader issue of
weaponizing it becomes moot. The second part is easy,
especially in the case of Iran which already has sophisticated
missile technology, including of the long-range variety.
There are many other experts, however, who’ve stated recently
that Iran is progressing far more slowly than anticipated. Which
requires me to repeat myself yet again. Neither the United States
nor the International Atomic Energy Agency knew for 18 years
that Iran was working on a nuclear program, so who the heck
knows what the real story is? At some point, though, Israel can
not afford to just sit back if they are able to obtain hard evidence
that Iran has crossed the threshold.
So those thinking this seemingly peaceful interlude, post-Aug. 31
and Iran ignoring the EU-3 / UN Security Council demand that
Iran cease with its uranium enrichment, will continue aren’t
dealing with reality. And those thinking Iran can be trusted with
any agreement to halt production at this point probably believe
Barry Bonds has been clean all these years because he never
admitted to using steroids.
Back to the General Assembly, it ended up being all about
Chavez and Ahmadinejad, “revolutionary brothers.” In the case
of Hugo it’s easy to blow him off, except for the fact he is
allowing Iran, in essence, to build a base of operations in our
hemisphere, and that’s not good. So you roll the dice. If you
think Ahmadinejad and Chavez are going to be in power even
just another five years, the Pentagon better be thinking of
contingency plans. If not, then in the case of Chavez you just
ignore him, except he’s set to be president for life.
Elsewhere, General John Abizaid, commander of all U.S. forces
in the Middle East, said troop levels in Iraq would remain the
same “through next spring.” And Prime Minister al-Maliki made
news in removing the presiding judge in the Saddam Hussein
trial for saying Saddam was “not a dictator.” But the civil war
rages on and both al Qaeda and Iran, for different reasons, love
it.
In Israel, anything I write on the Palestinian issue could be old by
the time you read this because the story is being rewritten every
hour, or so it seems. One moment President Bush is praising
“heroic” Palestinian President Mahmoud Abbas, while Abbas is
assuring everyone the new unity government between Fatah and
Hamas will recognize Israel and renounce violence as a
precondition for true peace talks, and then the next Hamas is
saying ‘no way will we recognize Israel.’
Both Abbas and Hamas desperately need the flow of foreign aid
to resume but most donors won’t give another dime, except for
extreme humanitarian purposes, as long as ruling party Hamas
speaks in violent tones.
At the same time, if Abbas gets to sit down with Israeli leaders in
the near future, and Israel keeps building new settlements,
Abbas will be forced to walk away from the negotiations.
Then there’s Lebanon. On Friday, Sheikh Nasrallah appeared for
the first time in public since July and addressed a throng in
Beirut, calling for the downfall of the Lebanese government.
Israel had vowed to kill him if he popped his head out and they
had their chance, though this wasn’t the stage for such an
operation.
Finally, and back to the issue of Islamic fundamentalism in
general, President Bush told his UN audience and Muslim
leaders specifically:
“Extremists in your midst spread propaganda claiming that the
West is engaged in a war against Islam. This propaganda is
false, and its purpose is to confuse you and justify acts of terror.”
Which is kind of what Pope Benedict XVI was saying when he
got in hot water the other day. You, leaders of Islam, need to
confront the perversion of your religion. It’s not about what
medieval theologians and emperors were saying, it’s about the
here and now. But the historian/theologian in Benedict sought to
point out that for centuries some have warned about taking
certain passages in the Qu’ran and distorting them for evil
purposes. [Others would say it’s no distortion…these are facts.]
My gut reaction last week, that the Pope knew full well what he
was doing, appears to be right. And I just glanced at a piece in
The Wall Street Journal by Daniel Henninger that I think is bang
on. Benedict is spoiling for a fight, and for good reason.
Christians around the world, particularly in the Middle East, are
being rolled up and threatened in what boils down to “religious
cleansing.”
And many of us now wish the Pontiff would stop apologizing.
Yes, there is little doubt that the Pope’s words were perhaps
insensitive, and almost all of us had the same initial reaction…uh
oh! Pope Benedict was also naïve to the power of the Internet,
one suspects, but as a British writer noted all the Pope was
saying was “violence in the name of faith is never acceptable.”
That’s the modern world, not the language of the Middle Ages
where none were truly without sin.
So after ‘waiting 24 hours,’ we did see some encouraging words.
The top cleric in Turkey accepted Benedict’s apology and the
fundamentalist Muslim Brotherhood of Egypt did as well.
Separately, the former Archbishop of Canterbury, Lord Carey,
defended the Pope, too, reiterating that Muslims must address
their religion’s association with violence. Nor should the Pope
let extremists limit our right to free speech, as the Washington
Post’s Anne Applebaum put it. For crying out loud, the Pope is
allowed to quote from a medieval text!
—
Wall Street
I printed out two stories before I left home on Monday afternoon
for my flight to Prague. The first was a Bloomberg piece on how
the Street’s five largest brokerage firms – Goldman Sachs,
Lehman Brothers, Bears Stearns, Morgan Stanley and Merrill
Lynch – are expected to earn $28 billion in 2007, up another 7
percent from 2006’s anticipated record performance. This
despite the fact fees from acquisitions fell 14 percent in the third
quarter, trading of government securities declined 6 percent, and
commodities took it on the chin.
As reported by Adrian Cox and Christine Harper:
“The results show how Wall Street’s five largest companies…are
weathering declining markets by hedging, speculating and
investing on their own behalf while continuing to help clients
buy and sell stocks, bonds, currencies and commodities.”
Merrill Lynch’s Guy Moszkowski, an expert on brokerage
stocks, is quoted as saying “It comes down to the diversification
both by line of business and geographically, and the better risk-
management tools that the firms use.”
Oh, what was the other article I brought along, a story that then
continued to mushroom?
The debacle at Amaranth Advisors and their hedge fund.
Why how can a ‘well-diversified’ fund, with the, err, latest in
risk-management tools, lose $6 billion off a peak base of $9.5
billion in a matter of about ten days? Gee, Mr. Moszkowski, I’m
stumped!
Excuse my sarcasm, but what have I been saying for years now
in this space? These guys aren’t as smart as they think they are.
No doubt, however, there are some firms that are better than
others when it comes to risk-controls, though for obvious reasons
these also tend to be on the stodgy side in terms of their share
price.
And I realize that Wall Street’s Big Five aren’t hedge funds, in
the purest sense of the word, though in all cases (1) more and
more of their own capital is going into the vehicles, many self-
created, and (2) those with a large retail presence, such as
Morgan Stanley and Merrill Lynch, have been pitching hedge
funds to Mr. and Mrs. Middle America (often in the form of
‘funds of funds,’ which are supposed to spread out the risk but in
the case of Amaranth, a few examples have emerged where
perhaps certain such vehicles had too much exposure to these
dealers; as Josh P. just informed me was the case with already
troubled San Diego and its pension fund…like to the tune of
$125 million!).
Well it just so happens that the same Bloomberg article on the
brokerage industry quoted Peter Solomon, 68, and a former
Lehman vice chairman now running his own advisory firm.
The investment banks have been increasing earnings in part by
taking greater risks, he said, a strategy that could backfire.
“They are highly leveraged institutions. They think that they
have every type of hedge in the world, but you know that isn’t
true. Don’t ever believe that they can’t have huge reverses.”
Arrogance….thy name is Wall Street.
—
Meanwhile, down in Washington, the Federal Reserve gathered
for its latest Open Market Committee and, as expected, held the
line on interest rates again, averring as before that “some
inflation risks remain,” though any additional firming depends on
the outlook and data. Chairman Ben Bernanke and crew (with
one dissenting vote) continue to believe that the economy will
moderate enough, in time, to take care of any inflation pressures
still in the system and today it’s helped in this regard by the
tumbling housing market.
So is the economy moderating as nicely as the Fed would like?
We need more information before drawing any real conclusions,
but no doubt it’s slowing as a reading of manufacturing activity
in the Philadelphia region pointed out on Thursday. In fact the
Street was shocked by a negative number for this particular
index, while earlier in the week housing starts were off a
whopping 6 percent, the 5th such decline in the past six months.
What’s good? Energy. The national average for a tank of gas is
already below $2.50 and heading lower still. As I was walking
around Sofia today, thinking of what to write, I came up with
this thought, as weak as it may be.
Today’s situation with the consumer boils down to this.
With the decline in gasoline prices, let’s say the average driver
fills their tank once a week and the car has 15 gallons. At a 60
cent savings off prices from early in the summer, that’s $9.00, or
about $450 a year. Hey, $9 is $9 and $450 is real money,
especially if your commute is long, or you’re a trucker, and the
savings are even higher.
But measure that against the value of your home. I’ve told you
before of the 22-unit townhouse development that I’ve lived in
now for 12 years. I paid $240,000 for my place then, yet a
basically identical unit went for $690,000 last fall. I wrote of
this then and said it was definitely the top. The next sale, about
two months ago, was at $640,000 and I bet anyone selling today
wouldn’t get $600,000. By next spring it will probably be closer
to $550,000.
So how does this affect consumer spending? That remains to be
seen. Bringing things down closer to the national averages, if
you owned a home that cost $200,000 initially, and then saw it
go to $400,000, but now it’s valued at $350,000, do you spend
less? That’s a $50,000 paper loss, you might be thinking, as
opposed to a $150,000 gain, but assume you still have your job
and everything else is equal.
Compare the $50,000 paper loss then with the hard currency gain
of $9 a week, or $450 a year. There is no comparison, by my
way of thinking, but that’s not necessarily how people react.
[Of course I’m ignoring the recent cases where those who bought
are already down.]
I just suspect it will take a bit more time for the wealth effect to
kick in on the downside for the simple reason that bubble mania
of any kind normally takes a while to wear off. The bursting can
be quick, a la Nasdaq 5048 in the spring of 2000, but many
investors didn’t totally throw in the towel until two years later,
which of course represented a terrific buying opportunity for
others.
Well enough on this topic. For now enjoy the savings; splurge
on some premium beer, if you’re really feeling good. But if you
were in the camp that believed your home’s value was going to
rise at 5, 7 or 9 percent forever, it’s time to start readjusting your
targets, and before you know it you may also be adjusting some
of your spending habits; much to the chagrin of Corporate
America and Wall Street, the latter with still frothy earnings
expectations for the former well into the future.
Street Bytes
–The pattern of one week up, one down, continued as the major
averages all declined this week on fears the economy is softening
too rapidly. But the down weeks have been tame during this
stretch, as for example the Dow Jones declined only 0.5% to
11508, after once again getting within 100 points of its Jan. 2000
high of 11722.
–U.S. Treasury Yields
6-mo. 5.01% 2-yr. 4.67% 10-yr. 4.59% 30-yr. 4.74%
Bonds staged a spectacular rally, across the board, partially due
to a tame reading on producer prices for August, up just 0.1%,
with the core, ex-food and energy, actually sliding 0.4%. Of
course the Fed’s holding the line helped as well, as did the
housing numbers. But it was the Philly manufacturing index that
put bonds into overdrive.
–On the earnings front, Yahoo warned its latest quarter would be
negatively affected by a slowdown in advertising, particularly in
the auto and financial sectors. But Oracle handily beat for its
Aug. 31 quarter and said it is regaining momentum in its battle
against fellow business software giant SAP, which SAP itself
disputes. Shares in Oracle are at a 4-year high.
[Separately, Forbes announced its list of the 400 richest
Americans and for the first time everyone on the list is a
billionaire. Bill Gates ($53 billion) and Warren Buffett ($46
billion) remain #s 1 and 2, but casino mogul Sheldon Adelson
has soared up to #3 at $20.5 billion. However, for the article
Oracle’s Larry Ellison is at $19.5 billion, though no doubt he has
passed Adelson as his shares in Oracle have soared since the
cutoff date for the piece.]
One other earnings item. Federal Express offered a classic case
of the conundrum we now face. Just how much is the economy
slowing? Fed Ex said it was seeing a “little slowing” but
remained optimistic on the fourth quarter and 2007. Of course
that could all change.
–And you can’t ignore a fact like German investor confidence
hitting a new 7-year low amid fears of a global slowdown.
–If you’re an emerging market investor, while your market
showed little nervousness over events in Thailand and Hungary
(more on this later), it doesn’t mean that will always be the case.
–Back to Amaranth and its bad bet, for the record it was the
prime responsibility of 32-year-old Brian Hunter, who reportedly
made $75 million in compensation for his great energy plays in
2005, though when natural gas went against him, and he had
levered up way too much, he cost Amaranth’s investors $6
billion. But I guess since he already “passed Go” he gets to keep
his earlier winnings.
–In the ever-burgeoning saga of Hewlett-Packard and its attempt
to spy on the media in searching for the source of leaks on
confidential boardroom matters, it’s come to light that even CEO
Mark Hurd, Wall Street’s darling for his performance following
the ouster of Carly Fiorina, “approved of a sting operation on (a
reporter for CNET) in an attempt to plug leaks to the media.”
Finally, shares in HP reacted negatively. Then late Friday, we
learned Patricia Dunn, chairman of the board, left before her
previously announced January exit date and Mark Hurd was
taking over. But for his part Hurd refused to answer questions
during a press briefing. Oh, but he will be this week as he
testifies before Congress.
–BP admitted its giant Thunder Horse rig in the Gulf of Mexico,
severely damaged by Hurricane Katrina and responsible for
250,000 barrels of oil per day, may not be ready to come back on
stream until 2008 rather than 2007.
–And then there’s the ongoing controversy over Russia’s
Sakhalin II project in Siberia that was to connect by pipeline to
the Far East and supply Japan and the U.S., predominantly, with
oil and gas. Shell has a 55 percent stake in it and suddenly the
Russian government announced it was putting the whole deal on
hold for environmental reasons.
No questioning there are legitimate issues in this regard, but
there is also little doubt the Kremlin and government-owned
natural gas giant Gazprom is strong-arming Shell and other
foreign participants (like Exxon on Sakhalin I) to allow Gazprom
to take ultimate control.
Japan is furious as these tactics could obviously discourage
future foreign investment (badly needed by Russia’s energy
industry, incidentally) and thus further destabilize energy
supplies.
–Back to Yahoo, it supposedly has offered social-networking
site Facebook and its 22-year-old founder Mark Zuckerberg $900
million. Take it, kid. You’d be nuts not to.
–Wal-Mart picked up a ton of publicity in announcing it was
slashing prices on 300 generic prescription drugs, a potential
challenge to pharmacy chains and drug makers. Wal-
Mart is launching the plan in the Tampa Bay, Fla., area.
But while it’s touting savings of 20-90 percent off existing
prices, some of the more popular drugs, such as generic versions
of cholesterol-lowering Zocor are not on the list.
–Emirates Airlines is the latest to have issues with Airbus’ A-
380, double-decker flying hot dog that seats 550. After the
manufacturer, EADS, announced deliveries would be delayed,
Emirates said its purchase of 45 of this incredibly stupid aircraft
is now “up in the air.”
–DaimlerChrysler said it was cutting production 16 percent the
second half of the year. CEO Dieter Zetsche’s stint as “Dr. Z” in
the $100 million ad campaign is in jeopardy.
–I didn’t know this…over the past five years, healthcare, broadly
defined, has been responsible for more job creation, 1.7 million,
than the housing industry, 940,000. [Business Week]
–Barron’s had a piece on Heineken and the buzz surrounding its
new Heineken Premium Light beer. From personal experience it
was all the buzz at a recent gathering of friends in terms of beer
selection. One investor has labeled it Heineken’s “Starbucks-like
moment.” In the end, though, it’s all about taste. Will your
editor make it his own beer of choice in the ‘light’ category?
Stay tuned.
–And in the latest options disclosure, Cablevision revealed it
backdated some for a former vice chairman, after the fellow died
in 1999, in order to make it appear they were granted when he
was alive. Why that would be enough for one to hop right out of
their coffin, don’t you think?
Foreign Affairs
Thailand: Billionaire Prime Minister Thaksin abused the powers
of his office for personal financial gain, of this there is little
doubt, but he was democratically elected and loved in Thailand’s
rural areas.
But the country’s political situation has been in crisis for the
better part of a year now and so the military, with the king’s
blessing, staged a bloodless coup while Thaksin was in New
York for the UN General Assembly.
The leader of the coup, General Sonthi, promised an election in a
year as well as an investigation into all corruption at the
government level.
On the surface it really doesn’t sound that bad, only one
problem; the generals are reinterpreting democracy, a common
occurrence in Asia.
Hungary: And it’s a somewhat similar situation here, though in
this instance Prime Minister Gyurcsay was caught on tape
admitting he had lied continuously about the state of Hungary’s
economy prior to April’s elections. Protesters took to the streets
in large numbers and there was some violence.
The problem in this instance is that Gyurcsay is supposed to be
an economic reformer and Hungary needs it in the worst way as
its debt is 10% of GDP, a staggering sum. [By contrast, the
U.S.’s budget deficit is about 2.5% of GDP, 4% or thereabouts if
you use the kind of accounting rules corporations abide by.]
Hungary joined the EU in 2004, along with Slovakia and Poland,
and it’s been downhill ever since. Recall that everyone wants to
join the club, particularly an agrarian economy such as Poland’s,
because they seek the kind of success Ireland had with subsidies
and handouts.
But the EU’s old guard just isn’t about to let that happen, and
now the EU decides on Tuesday whether or not to admit Bulgaria
and Romania. Hungary’s recent experience will certainly give
the EU pause.
It’s a coincidence I happen to be in Bulgaria now, and on
Monday, Romania, so I’ll be curious to get some local reaction to
the vote.
To give you an idea of the economies in both, the average
monthly wage in Romania is $400 vs. $890 in the Czech
Republic. [I don’t know Bulgaria’s, exactly, but it’s close to
Romania’s figure.]
Anyway, there is only one Celtic Tiger. Ireland was in the right
place at the right time. Europe had guilt pangs when it was
doling out the EU subsidies, such as in Ireland’s struggle with
the potato famine and all, while at the same time Ireland used the
money wisely and also famously lowered corporate tax rates, to
the 10 to 12 percent level at the time, which encouraged a flood
of foreign investment.
But the share of the EU pie for all the new members is obviously
much smaller, let alone the established countries aren’t about to
throw good money after bad.
[It’s actually a fascinating topic, college students out there. Use
it for a thesis.]
Mexico: Andres Manual Lopez Obrador is continuing his effort
to spoil Felipe Calderon’s victory in the recent presidential
election, launching a shadow government as he had promised.
And Mexico’s drug war continues to take a heavy toll. At least
1,500 died last year and 15 alone in Tijuana in one four-day
period last week. Many of the victims are tortured before being
beheaded. So you may want to think twice about venturing south
of the border, all you bachelor party and San Diego area
convention goers.
[I have to admit I had the chance to go here on more than one
occasion and passed it up….thank goodness.]
Sudan: President Bashir reiterated he will not renew the mandate
for UN peacekeepers for the Darfur region upon its expiration.
The do-nothing African Union’s army will be allowed to stay.
Just as in the case of Zimbabwe’s Robert Mugabe, the West and
Africa had ample opportunity to take on Sudan’s leadership and
failed to act. And because of this inaction, as I believe I long
proved, including prior to 9/11 in the case of Mugabe, the bin
Ladens of the world interpreted it to mean it was clear sailing
for their terror operations.
Taiwan: I apologize that I missed last time a 300,000 strong
demonstration against President Chen Shui-bian that took place
before I went to post. It was the second consecutive week such a
protest had taken place, but at the same time the follow-up seems
to be lacking as Chen, similar to the situation involving Thaksin
in Thailand, battles those accusing both him and his family of
massive corruption and abuse of power.
China: The Commies arrested another online dissident.
North Korea: Robert Kaplan has a terrific piece in the current
issue of The Atlantic Monthly titled “When North Korea Falls.”
Here’s one scenario I haven’t discussed in this space before.
“(Some levels) of the American military worry less about an
indiscriminate artillery attack on the South than about a very
discriminate one. My sources feared that in the aftermath of the
KFR’s (Kim Family Regime’s) missile launches in July, the
Bush administration might actually have been foolish enough to
react militarily – which might have been exactly what Kim Jong
Il was hoping for, since it would have allowed him to achieve a
primary strategic goal: splitting the alliance between South
Korea and the United States. How would that happen? After the
United States responded in a targeted fashion to the missile
launches or some other future outrage, the North would initiate
an intensive five- or ten-minute-long artillery barrage on Seoul,
killing some Americans and South Koreans near Yongsan
Garrison, the American military’s Green Zone in the heart of the
city. Then the North would simply stop. And after the shell fire
halted, the proverbial question among American officers in a
quandary would arise: ‘What now, Lieutenant?’
“Politically speaking we would be trumped. The South Korean
left – which has been made powerful by an intrusively large
American troop presence and by decades of manipulation by the
North – would blame the United States for the carnage in Seoul,
pointing out that it had been provoked by the Americans’
targeted strike against North Korea. The United Nations and the
global media would subtly blame Washington for the crisis – and
call not so subtly for peace talks. With that, the KFR would get a
new lease on life, with more aid forthcoming from the
international community to keep it afloat.”
Kaplan says for this reason many military and civilian experts
continue to argue for increased economic warfare instead. Cease
all humanitarian aid, but the fact is today China and South Korea
continue to send food into the North.
But for their part, this week Australia and Japan announced a
series of financial sanctions on Pyongyang. They are largely
symbolic, with little real teeth, but it’s yet another sign of my
hoped for supra-alliance…Japan, Australia, India, Britain and the
United States. I call point man in Sydney for the U.S. side!
Zimbabwe: Back to our two-time “Dirtball of the Year,” The
Times (of London) reported that Mugabe’s regime recently
tortured 15 members of the opposition Movement for
Democratic Change.
“As a case of police brutality on a group, it is the worst I’ve ever
seen,” a doctor who helped to attend to them said.
Sweden: The Moderate Party emerged victorious in
parliamentary elections, thus ending 12 years of center-left rule.
Sweden’s new leader will be Fredrik Reinfeldt, who is really a
conservative but the Moderates packaged themselves as centrists
for the vote. Reinfeldt has promised reforms in the welfare state.
Good luck.
Random Musings
–Two major opinion polls were released.
USA Today/Gallup showed President Bush with a 44 percent
overall job approval rating. But a N.Y. Times/CBS News survey
had Bush at 37 percent.
In the Times/CBS poll, only 36 percent approve of Bush’s
handling of Iraq (up from 30), though 54 percent approve of his
handling of the war on terror.
In the USA Today survey, by a 57-38 margin we believe the U.S.
should abide by the Geneva Conventions on the interrogation of
suspects.
And when it comes to Congress, not only does this institution
have a pitiful 25 percent approval rating in the Times poll,
registered voters still favor Democrats 50-35.
Here you have to be careful because Republican leaders would
instead tout the USA Today/Gallup figure that had it split 48-48,
but, when you limit it to registered voters, Democrats in this
same survey still hold a 51-42 advantage.
Finally, in the Times poll, only 35 percent said Democrats had a
clear plan of governing, vs. 48 percent who said Republicans did.
–In the case of the Geneva Conventions and the president’s
attempt to interpret the key Article 3 as he sees fit, compromise
was reached with Republican Senators John McCain, Lindsey
Graham, and John Warner. Those prosecuting terror suspects
will have to reveal the evidence beforehand, but on the broader
issue of interrogation techniques, President Bush will have carte
blanche, through executive order, to pick the methods.
In other words, I don’t see where McCain and Co. got anything
close to what they sought, but for the good of the party they
backed off. Earlier, Sen. Graham had said “What is being billed
as ‘clarifying’ our treaty obligations will be seen as
‘withdrawing’ from the treaty obligations. It will set precedent
which could come back to haunt us.”
–Peggy Noonan on President George W. Bush, from an op-ed in
The Wall Street Journal.
“I think that Americans have pretty much stopped listening to
him. One reason is that you don’t have to listen to get a sense of
what’s going on. He does not appear to rethink things based on
new data. You don’t have to tune in to see how he’s shifting
emphasis to address a trend, or tacking to accommodate new
winds. For him there are no new data, only determination.
“He repeats old arguments because he believes they are right,
because he has no choice – in for a penny, in for a pound – and
because his people believe in the dogma of the magic of
repetition: Say it, say it, to break through the clutter.
“There’s another reason people don’t listen to Mr. Bush as much
as they did. It is that in some fundamental way they know they
have already fully absorbed him. He’s burned his brand into the
American hide….
“What is polarizing about him is the response he elicits from
Americans just by being himself. They have deep questions
about him, even as he is vivid to them.
“Americans don’t really know, deep down in their heart,
whether this president, in his post-9/11 decisions, is a great man
or a catastrophe, a visionary or wholly out of his depth.
“What they increasingly sense is that he’s one thing or the other.
And this is not a pleasant thing to sense. The stakes are so high.
If you woke most Americans up at 3:00 in the morning and said,
‘Tell me, looking back, what would you have liked in an
American president after 9/11?’ most of them would answer, ‘I
was just hoping for a good man who did moderately good
things.’ Who caught Osama, cleaned out Afghanistan, made it
proof of the possibility of change and of the price to be paid by
those who choose terror as a tactic. Not this historical drama
queen, this good witch or bad….
“The Democrats’ mistake – ironically, in a year all about Mr.
Bush – is obsessing on Mr. Bush. They’ve been sucker-punched
by their own animosity…
“One of the oldest clichés in politics is, ‘You can’t beat
something with nothing.’ It’s a cliché because it’s true. You
have to have belief, and a program. You have to look away from
the big foe and focus instead on the world and philosophy and
programs you imagine.
“Mr. Bush’s White House loves what the Democrats are doing.
They want the focus on him. That’s why he’s out there talking,
saying ‘Look at me.’
“Because familiarity doesn’t only breed contempt, it can breed
content. Because if you’re going to turn away from him, you’d
better be turning toward a plan, and the Democrats don’t appear
to have one.
“Which leaves them unlikely to win leadership. And unworthy
of it, too.”
I would have added one line to Ms. Noonan’s excellent piece.
“It also leaves 2008 wide open for a legitimate third party
candidate.”
–Speaking of which, I see where Pat Buchanan’s new book,
focusing on illegal immigration, is on the top of the best seller
list. It’s obviously a topic that resonates in America and as his
health appears to be good, I’m convinced he’s running, unless
Michael Bloomberg announces. [There’s only room for one
high-profile third party candidate, though I’m also not saying
Buchanan is a legitimate one, in terms of being capable of
receiving 10 percent or more of the vote.]
–Publisher Mort Zuckerman in a Daily News op-ed.
In speaking of the war on terror:
“This is not a time for fantasy. There will be no James Bond
figure acting as undercover agent who, with the help of beautiful
women, will defeat cunning terrorists seeking world domination.
Our enemy is more subtle than any Dr. No – and far too
dangerous for us to simply trust in fate that we will somehow
obtain the intelligence we need to prevent future attacks. We
must do what is required to ensure that we have that intelligence.
Indulging in the bitter politics that have marked our political
dialogue on this issue is contrary to our national interest.”
Au contraire, mon frere. I see today’s environment on the
intelligence side as being one in which, more than ever, one man
may make the difference, though we’re unlikely ever to find out
who it was. There just may not be time for the women, that’s all.
–The New York Times’ Frank Rich was railing about ABC’s
docudrama “The Path to 9/11,” which I praised last time. He
couldn’t understand why the network spent $30 million on the
production, and then didn’t get all the facts exactly right.
That’s not the point, Mr. Rich. What ABC did was construct 300
(!) sets in Morocco and conveyed an incredibly realistic picture
of the enemy we face. Much of the story line was indeed how it
played out. As a history of events leading up to 9/11 it will
easily stand the test of time.
And I’d like to remind Rich that former Senator Sam Nunn and
Senator Richard Lugar put together a dramatization of a few
nuclear weapons being smuggled into the United States, another
super production, as part of their Nuclear Threat Initiative. I
didn’t hear anyone complaining about that one. It too served a
useful purpose.
But I’ll leave the last word to Cyrus Nowrasteh, who wrote the
screenplay for “The Path to 9/11.”
In a Journal op-ed, Nowrasteh addresses his critics.
“It would have been good to be able to report due diligence on
the part of those who judged the film, the ones who held forth on
it before watching a moment of it. [Ed. referring to the likes of
Bill Clinton, Madeleine Albright and Sandy Berger.] Instead, in
the rush to judgment, and the effort to portray the series as the
work of a right-wing zealot, much was made of my ‘friendship’
with Rush Limbaugh (a connection limited to two social
encounters), but nothing of any acquaintance with well-known
names on the other side of the political spectrum….Clearly those
enraged that a film would criticize the Clinton administration’s
antiterrorism policies – though critical of its successor as well –
were willing to embrace only one scenario: The writer was a
conservative hatchetman.
“In July a reporter asked if I had ever been ethnically profiled. I
happily replied, ‘No.’ I can no longer say that. The L.A. Times,
for one, characterized me by race, religion, ethnicity, country-of-
origin and political leanings – wrongly on four of five counts.
To them I was an Iranian-American politically conservative
Muslim. It is perhaps irrelevant in our brave new world of
journalism that I was born in Boulder, Colo. I am not a Muslim
or practitioner of any religion, nor am I a political conservative.
What am I? I am, most devoutly, an American. I asked the
reporter if this kind of labeling was a new policy for the paper.
He had no response….
“ ‘The Path to 9/11’ was intended to remind us of the common
enemy we face. Like the 9/11 Report itself, it is meant to enable
us to better defend ourselves from a future attack. Past is
prologue, and 9/11 is merely another step in an escalating Islamic
fundamentalist reign of terror. By dramatizing the step-by-step
increase in attacks on America – all of which, in fact, occurred –
we are better able to see the pattern and anticipate the future….
“Despite intense political pressure to pull the film right up until
airtime, Disney/ABC stood tall and refused to give in.”
–The Journal had a story on hedge fund king Steven Cohen,
including details of his art collection. He spent at least $100
million on a Van Gogh and Gauguin (Gauguin is incredibly
overrated…and Van Gogh only has like six works worth a damn
himself) as well as $52 million on a Jackson Pollack. After
Amaranth, I hope Mr. Cohen is checking his risk-controls.
–A friend of mine, who needs to go nameless, agrees with me
that humans are overrated, putting us #6 on his top ten species
list.
I didn’t ask him what his first five are, but with dogs obviously
#1, I might have penguins #2, tigers #3, elephants #4 and
manatees #5 (despite the fact the New York Times knocked their
brain mass).
Why penguins so high? Because they’re orderly, that’s why.
Tigers are simply too cool, elephants ditto, plus the latter stepped
up in the relief effort following the tsunami, and manatees, well,
they just deserve a break and have never meant us any harm.
And not for nothing but with the death of Steve Irwin, stingrays
plummeted from #58 to #694. Frankly, they better hire a good
PR firm, quick. No EU handouts for them, otherwise, that’s for
sure.
–And if you needed further evidence of humans being overrated,
look no further than former New Jersey Governor Jim
McGreevey. Can this dirtball please exit the stage? Why is he
given a forum of any kind? As the Star-Ledger wrote, you also
have to feel for his last wife, Dina Matos, who is being forced to
relive her nightmare as McGreevey humps his book. She in no
way deserves this.
–Enjoy the Ryder Cup, staged in “Rip off Ireland,” as one
sportswriter for the Boston Globe put it. Talk about price-
gouging, many hotels are charging five times normal rates. I said
this after my recent return trip here, but my Irish friends better
watch it. These days there are a lot of good places to play golf.
Heck, I even saw a nice-looking one on the approach to the
airport here in Sofia. And I can guarantee it’s not $425 a round,
like the normal greens fee is at the K Club.
–To wrap up, not a heck of a lot to say about my trip thus far. I
spent the first two nights in Prague and loved it. It’s been 33
years since I was here last (as well as Sofia) and boy the Czech
Republic has made great strides. In all honesty what floored me
was how nice the neighborhoods were on the outskirts of the
city. The driver who took me back to the airport said he was
taking a shortcut (and it proved to be cheaper) and some of the
towns we passed through were like my favorite parts of western
Pennsylvania. Prague itself is clean and beautiful. I go back
later in the trip.
As for Sofia, this is only night two but I can already tell there
isn’t a heck of a lot going on for a conservative guy like me. It
also is not Prague in terms of cleanliness and beauty.
But if you want to understand the world in which we live, you
need to see it all…or so I’ve always felt. And in just my brief
experience here, the Bulgarians are special people. Incredibly
friendly. What really shines through is they are trying so hard,
with nowhere near the assets of other places.
Then again, let’s see what happens when I hit the road with my
housekeeper’s brother…my driver for my adventure on Saturday.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $594
Oil, $60.55…$72.55 just four weeks ago.
Returns for the week 9/18-9/22
Dow Jones -0.5% [11508]
S&P 500 -0.4% [1314]
S&P MidCap -1.2%
Russell 2000 -1.5%
Nasdaq -0.8% [2218]
Returns for the period 1/1/06-9/22/06
Dow Jones +7.4%
S&P 500 +5.3%
S&P MidCap +0.6%
Russell 2000 +6.8%
Nasdaq +0.6%
Bulls 47.4
Bears 33.7 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Next week from Bucharest…computer willing.
Brian Trumbore
