[Posted 7:00 AM ET…from Tucson, Ariz.]
North Korea
The United States confirmed that North Korea had indeed
detonated a small nuclear device and the UN levied sanctions
barring the sale and transfer of weapons and materials that could
be used for WMD, but, as expected, Russia and China
immediately said they had problems with inspecting North
Korean ships, while South Korea said it would be business as
usual in terms of continuing Seoul’s policy of engagement,
including support for the enterprise zone in the North called
Kaesong, which supplies Kim Jong-il with hard currency. North
Korea’s ambassador to the UN termed the sanctions a
“declaration of war” and of course it was all the fault of the U.S.
Secretary of State Condoleezza Rice traveled to the region where
she reassured both Japan and South Korea that the U.S. would
defend them against Kim, while for its part Japan said it would
not go nuclear. Rice reiterated that the Bush administration did
not seek to “escalate the crisis.”
But the week also saw China finally come down hard on Kim,
according to reports (one never knows when it comes to Beijing),
as they sent a high-level envoy to talk to the man with the bad
hairdo, after which Kim reportedly said he regretted the nuclear
test and wouldn’t try it again. Kim also supposedly told China’s
representative that he was interested in restarting negotiations,
though exactly with whom is unclear.
Here’s what I think Kim realized. Winter is approaching, and it
gets cold there. In other words, he realizes he needs China’s
fuel. He also needs Beijing’s and Seoul’s ongoing food aid. So
why not string things along for another few months. It’s about
saving his own skin as much as anything else these days for the
dictator with a penchant for cognac, the supply of which, too,
could be cut off if the sanctions were adhered to.
Other opinion…
Editorial / Defense News
“After a startling decade during which North Korea has
disregarded with impunity virtually every international demand,
it’s time world powers finally reined in Pyongyang, if for no
other reason than self-preservation.
“Thanks to short-sighted gamesmanship – or irresponsibility,
take your pick – the international community has not erected a
single hurdle in North Korea’s march to a nuclear future….
“The bottom line is: Each time Kim has been warned not to do
something, he has gone out of his way to do it.
“In the absence of punishment, missiles have been flown,
plutonium processed, bombs built and tested – with little
indication that any future path is unthinkable.
“Worse, Pyongyang has made it clear it will do with its bombs
and nuclear matter what it pleases, including giving them to
terrorists….
“Perhaps Pyongyang thinks that with friends like China and
Russia, it can get away with it. But can those friends be sure
they won’t suffer the ill effects of an attack?
“Russia and China appear to perpetuate a long-running regional
irritant that served comfortable Cold War ends.
“When will Moscow change its tune? Perhaps after Chechen
separatists detonate one of Pyongyang’s nuclear bombs in a
Russian city.”
Bret Stephens / Wall Street Journal
“If Pyongyang fired a nuclear-tipped ballistic missile at Seoul,
Tokyo or Seattle, the U.S. would have no choice but to respond
in kind, and that would be that. And if Pyongyang sold a bomb
to al Qaeda which in turn put it on a container ship and detonated
it in Long Beach, the nuclear signature would soon give away its
origin. North Korea would then be held ‘fully accountable of the
consequences of such action,’ as President Bush warned last
week.
“But the problem with this thinking is that it is lazy and probably
wrong. Consider three scenarios, each taking place five years
out when North Korea has improved its long-range ballistic
missile capabilities and learned to miniaturize its weapons so
they can fit in the missile’s nosecone
“In the first scenario, Kim, by then 70 years old, decides to throw
the dice on his decayed regime by launching an invasion of the
South. And to warn the U.S. against fighting alongside its ally,
he launches a nuclear-tipped Taepodong missile that explodes
over the Pacific just west of Cape Flattery, Wash. How would
the next administration respond? It could incinerate the North in
minutes, but not without risk of losing a major U.S. city. Would
it trade Seattle for Seoul?
“In the second scenario, North Korea sells al Qaeda several
batches of weapons-grade fissile material with the agreement that
the targets would be in countries that lack a retaliatory capability
– Denmark, say, or Italy. Selling the fissile material rather than a
bomb would make it considerably easier to pass the material
undetected. Terrorists could construct a weapon at another site,
explode the material as a dirty bomb, or plant it someplace
secure as insurance for a rainy day. Would the next
administration make good on Mr. Bush’s warning of
‘consequences’ for North Korea because a neighborhood in
Copenhagen has been rendered uninhabitable?
“In the third scenario, North Korea passes highly enriched
uranium or plutonium to Iran and perhaps Syria, allowing them
to acquire a nuclear-weapons capability much sooner than if they
relied on their own efforts. Actually, this scenario needn’t wait
another week, much less five years, creating two or three
nuclear-armed rogue regimes where there was previously one.
Tehran, Damascus and Pyongyang also sign a mutual security
pact threatening unspecified consequences if any of them is
attacked. What punitive measures would the U.S. and its
partners have at their disposal then?
“All this is fiction. But it becomes increasingly plausible as the
Bush administration responds to North Korea by retreating
behind one red line after another.”
Iraq
I watched PBS’ “Frontline” program this week, a look back at
the first year following the invasion of Iraq, 2003-04. The pitiful
actions of a few led to the tragedy we face today; men like
General Tommy Franks, who immediately after the fall of
Baghdad said 30,000 troops would be all that’s left by that
September. September 2003! And then he retired. Only to be
replaced by the totally inept and unqualified Gen. Rick Sanchez.
And then you had Paul Bremer, appointed to lead the Coalition
Provisional Authority.
As U.S. News & World Report editor-in-chief Mort Zuckerman
notes this week, former House Speaker Newt Gingrich regards
Bremer as “the largest single disaster in American foreign policy
in modern times.” Adds Zuckerman:
“Bremer seemed to feel that he was Gen. Douglas MacArthur in
Japan – despite our objective to have Iraqi faces at the head of
the government, so that this would not seem like an American
occupation.”
But that’s in the past. What to do now?
President Bush conceded the current violence in Iraq is like the
1968 Tet Offensive of Vietnam, a major admission on his part
and more than a bit late. In an interview with ABC News, Bush
then defended the mission and defined success as “whether
schools are being built or hospitals are being opened.”
My goodness, as Donald Rumsfeld would say. We’ve been
discussing in this space for years now how the doctors have all
fled, if they weren’t killed first, and how the militias have been
turning the hospitals into their own prisons and torture chambers.
And the fact is not one single hospital has been built since we’ve
been there. As for schools, if I hear one more administration
official talk about opening 10 or 20 or whatever number, I’ll
scream. Stop treating us like chumps.
When you hear words such as the president’s while at the same
time seeing and reading what is actually happening on the
ground, where our own secretary of state couldn’t land for 40
minutes the other day because the air base was under mortar
attack, and where when she finally did land she couldn’t take the
highway because after 3 ½ years we still can’t secure it, let alone
the rising death toll among American forces, it’s easy to
understand how in a new poll only 20 percent are more
optimistic about Iraq versus 68 percent who are less optimistic.
[NBC/Wall Street Journal]
As for the Iraqi government, this week Prime Minister Maliki
met with Shiite leaders Moqtada al-Sadr and Grand Ayatollah
Sistani in some kind of effort to rein in the militias. But then just
two days later Sadr’s Mahdi Army captured the southern city of
Amarah. [It appears the Iraqi Army then recaptured it.]
Earlier, the government was forced to postpone indefinitely a
much anticipated national reconciliation conference. The ethnic
cleansing going on in Iraq’s neighborhoods is getting worse, if
that was possible.
It seems at this point that the only real plan for Iraq will be
revealed in the findings of the commission headed up by former
Secretary of State James Baker. As reported by Doyle McManus
of the Los Angeles Times, one participant told him:
“It’s not going to be ‘stay the course.’ The bottom line is
[current U.S. policy] isn’t working….There’s got to be another
way.”
Hopefully they come up with something the American people
can agree on. In the meantime we have a president who seems to
remind us at least once a week that he is clueless.
Wall Street
Happy 12000! As it turned out, however, while the Dow Jones
finished the week above this mark at 12002, Nasdaq declined a
bit so we have to call the action ‘mixed.’ This term also sums up
the news on both the earnings and inflation fronts.
For instance bonds were virtually unchanged on the week despite
some interesting figures on producer (wholesale) and consumer
prices for September.
The PPI was down a whopping 1.3 percent, but the core rate, ex-
food and energy, was up a disturbing 0.6 percent. The CPI was
down 0.5 percent but the core was up 0.2 percent. For the past
12 months, the CPI, ex-stuff you and I use, is up 2.9 percent. Put
it all together and the Federal Reserve will hold the line on
interest rates when it meets in a few days, though the 2.9 figure
will give some members pause.
Meanwhile, industrial production plummeted 0.6 percent, far
weaker than expected, which added to the chorus in the bear
camp that the economy is cooling rapidly.
And on the housing front, while housing starts were up a
surprising 5.9 percent in September, versus a down 4.9 percent
reading in August, the figure for permits, a measure of future
activity, was down 6.3 percent. Ergo, we still have problems
here and the Fed knows it.
There was a story in the Washington Post this week that
cancellation rates in the D.C.-area market have tripled in the past
year to 17 percent.
“Developers and builders say buyers are abandoning five-figure
deposits on their future homes because they cannot sell their
existing homes or did not sell them for nearly as much as they
had counted on.”
Not good, sports fans.
And defaults are rising, nationwide, though here we have to be
careful. They are rising to a rate just equal to the historical
average, but what’s worrisome is that this is all occurring amidst
a seemingly solid economy, not what history would tell you, and
of course much of it has to do with the banks, their aggressive
lending practices, and homeowners who were stretched to the
limit even with their 2 percent adjustables and now can’t deal
with 6 percent rates or higher. In California, statewide, defaults
have risen 111 percent in the past year. Imagine if and when the
U.S. economy goes into recession.
So it should come as no surprise that on the earnings front,
Friday’s big story was Caterpillar, which missed its forecast by a
mile and blamed a sharp drop in housing construction for lower
than anticipated sales. CAT then cried for the Fed to lower
interest rates to save the industry.
Otherwise, earnings were the usual mix of hits and misses. On
the plus side we had the likes of J.P Morgan Chase, Merrill
Lynch, AMR, Continental, 3M, IBM, Coca-Cola, Apple and
Google.
On the disappointing end were Motorola, Advanced Micro
Devices, Southwest Airlines, Citigroup and Pfizer.
And in the “eh” camp we have the likes of SAP and eBay along
with Intel, at least by more scoring.
A few addendums to the above. I don’t know how the heck
some can say Intel’s numbers were great when its revenues were
down 12 percent year over year. Yeah, yeah, I know that was
what the company had warned so in the convoluted methodology
employed by Wall Street that’s actually good considering how
poorly Intel has been doing. So some analysts were happy
Intel had “stabilized.” More to the point was AMD’s dreadful
outlook, citing the ongoing price war in the chip industry.
Southwest’s results were disappointing because it warned on
actual air traffic, while shares in AMR and Continental rocketed
on increased passenger load and falling fuel prices. So some are
talking about how discounters are losing out to the premium
carriers. If the economy tanks, they all go down, though in the
meantime I couldn’t be happier for my favorite carrier
Continental and its employees.
As for Google, its shares soared $33 on its news, while Apple
Computer added it may still face a large restatement of prior
earnings due to the ongoing investigation into its options
practices.
What does all of the above mean, especially after the spectacular
rally in stocks since July? The market is going to need a catalyst
if it is to move much higher and the only thing that I see helping
would be a continuing slide in oil prices, seeing as the Fed isn’t
about to lower rates soon. OPEC tried to lay a production cut on
us this week and the market totally ignored it, sending oil to 11-
month lows below $57. But with the issue of Iran still looming
out there, in particular, I’d be surprised if it goes much lower.
Certainly stocks in the energy sector are telling you we’re near
the bottom.
And on the negative side you still have housing. I remain
unconvinced the sector will land softly, like Dorothy’s house in
Kansas. [Was that good construction or what?! They sure don’t
make ‘em like that anymore.]
Street Bytes
–U.S. Treasury Yields
6-mo. 5.13% 2-yr. 4.87% 10-yr. 4.79% 30-yr. 4.91%
The Treasury market was unchanged on the week, despite all the
inflation data, as it awaits further guidance from the Fed and
housing.
–Those of us who keep harping on items like the U.S. trade
deficit have to at the same time note that foreigners continue to
buy huge amounts of U.S. stocks and bonds. In August, for
example, the trade deficit may have been a record $69.9 billion,
but foreigners purchased a net $116.8 billion in our securities.
Thus, until you see this trend reverse it’s pretty tough to make an
issue of the trade figures.
–Somewhat related to the above, however, China has now
amassed reserves close to $1 trillion in foreign currencies and
securities, most of which are invested in dollar-denominated
debt, such as U.S. Treasurys. There is no doubt that China,
under the right political circumstances, could use these holdings
as a club, though as we begin to wrap up 2006 and have the
Olympics less than two years away, it’s hard to imagine they
would do this before then.
[The amassing of dollar reserves is a direct result of China’s
manipulation of the yuan; to prevent it from strengthening too
quickly and hurting China’s exports, it buys dollars and issues
yuan in exchange which helps hold the Chinese currency’s value.
At the same time, though, this can help fuel inflation in China
because cheaper foreign goods aren’t as readily available.]
–China’s Industrial and Commercial Bank of China (ICBC)
floated an IPO in Hong Kong and Shanghai, a mammoth $22
billion, in the largest initial public offering ever. What the ICBC
deal also proves, aside from an appetite for anything China, is
that New York and London continue to lose market share to the
likes of Hong Kong and Singapore, as well as in this instance
Shanghai.
–The Financial Times reported that China is now fifth in patent
applications, according to the World Intellectual Property
Organization, having passed Germany. I didn’t know WIPO
considered patents for ideas stolen from the U.S. and Europe.
–Wal-Mart is acquiring China’s largest hypermarket chain,
Trust-Mart, for $1 billion, which would place it ahead of
France’s Carrefour in this area. But China is souring on foreign
acquisitions of its biggest companies so it will be some time
before this is completed, if ever.
–Speaking of France, the incoming CEO for French energy giant
Total was imprisoned for 48 hours and charged with corruption
in the oil-for-food scandal. Pretty major stuff.
–Incredibly, the editorial board of the Wall Street Journal
attempted to defend UnitedHealth Group’s soon-to-be-former
CEO, William McGuire, who agreed on Sunday to depart after
an internal review found millions of stock options were
backdated on his watch. In addition, supposedly the board was
unaware of the fact a member of the compensation committee
was also McGuire’s personal financial advisor who stood to gain
through McGuire’s growing wealth.
It is estimated that at their peak value McGuire’s unexercised
options were worth close to $1.8 billion, but he could still walk
away with over $1 billion in options and retirement payments.
As reported by the Journal’s Charles Forelle and Mark Maremont
[thankfully the reporters have nothing to do with the editorial
board]:
“In October 1999, the (internal) report says, Dr. McGuire
suggested in a memo that ‘employee morale and retention’ were
being hurt by old options that carried strike prices above the
company’s then-market price. The board agreed to suspend a
total of two million out-of-the-money options and replace them
with a similar number of new options, which were priced at the
lowest point of the year. The Wilmer report concluded the new
options likely were improperly backdated to that low point to
give the insiders an extra boost.
“By the following August, however, the company’s stock price
had risen significantly. The board then agreed to reactivate the
suspended options. So in effect, Dr. McGuire and the others
double-dipped, getting back their original options while also
keeping the replacement options.
“In Dr. McGuire’s case, the Wilmer report found, the maneuver
in essence got him an extra 750,000 options, with an instant
paper gain of about $26 million. Those options are now valued
at about $250 million because of share splits and an increased
stock price.
“The report also concluded that the company failed to properly
disclose and account for the complex transaction.”
–KLA Tencor, a leading supplier of chip-making equipment, is
being forced to restate earnings to the tune of $400 million for
cooking the books on options related issues from July 1997
through June 2002. So again, investors were making decisions
based on fraudulent financial statements. The former chief
operating officer and CEO for this period in question, Kenneth
Schroeder, who had been on board as a consultant after
retirement, was taken out back and sh……..oops, sorry, I was
about to let my feelings get ahead of the truth. He was let go.
–Everyone likes to talk about how Russian energy giant Lukoil
is still independent of the Kremlin’s clutches, but this week the
government began to nibble away, as only it can, in stating that
Lukoil could lose 19 licenses for prospecting for oil, drilling and
starting production at some large fields under its control due to
environmental issues such as setting up rigs in state-owned
woodlands and illegally cutting trees along the pipeline. [Think
Stalin and trumped up charges.]
The real reason for the move, according to experts, is the
Kremlin wants state-owned Rosneft to consolidate assets in the
disputed regions. A few years from now, fellow “national
champion” Gazprom and Rosneft will have swallowed the entire
country’s asset base.
–Shares in British Energy Group Plc, producer of 20 percent of
the UK’s electricity and owner of 8 of the country’s 12 operating
nuclear power plants, fell 24 percent when the company said it
had discovered boiler-tube cracks at two plants, forcing them to
shut down. This is a blow to Prime Minister Tony Blair’s efforts
to promote nuclear power.
–The Journal reported the FBI is investigating a series of scams
involving identity theft in the posting of online resumes with
Social Security numbers and other personal data. One way, for
example, is a headhunter calls an individual whose resume has
been posted and says he is representing an employer and doing a
background check.
–The Chicago Mercantile Exchange and CBOT (the Chicago
Board of Trade) look set to merge, combining world leaders in
things such as interest-rate futures (including Treasury bonds),
currency futures and options with commodities such as corn,
soybeans and wheat…plus live cattle futures, which really have
no future because live cattle are eventually dead cattle.
–Speaking of the dead, Enron founder Ken Lay had his
conviction on fraud and conspiracy charges thrown out because
of a 2004 U.S. District Court of Appeals ruling that found that a
defendant’s death pending appeal extinguished his entire case
because dead men really have a tough time of challenging the
conviction in court. Actually, the only dead man I can recall
defending anything he did in life was Jacob Marley…and Marley
had been dead seven years.
–Shares in Dell fell after Gartner Group said Hewlett-Packard
took over the top slot in worldwide PC sales.
–Google is now picking up half of all searches on the Web, with
Yahoo at 23 percent and MSN 9 percent. While Google shares
soared, Yahoo’s continue to slide as the company admitted it is
having serious problems in its online advertising effort due to
increased competition, namely Google!
–Credit Suisse Group lost about $120 million in an ill-fated
derivatives bet on the South Korean equity market.
–Immigrants’ remittances from the U.S. to Latin America will
total more than $45 billion this year; or 51 percent higher than
just two years ago.
–The New York City Marathon, which is being run in two
weeks, brings $188 million into the Big Apple, while a study of
runners’ income reveals 15 percent earn more than $250,000.
–Sandy Weill has issued his memoir, “The Real Deal: My Life
in Business and Philanthropy.” You can rest assured I won’t
touch it, especially after reading a slew of reviews panning the
tome. Such as Janet Guyon’s, who reviewed it for Bloomberg.
“(Weill) offers ten lessons for success….Things like, ‘Be brave,
but vulnerable,’ and ‘There’s nothing wrong with brand envy.’
“He should have added, ‘Remain as self-unaware as possible,’
and ‘When accused of wrongdoing, blame others and deny, deny,
deny.’ Only a man deeply ignorant of his own inner workings
and motivations could tell this tale of deal-making and
backstabbing.”
On the Jack Grubman affair, Guyon writes Weill is “similarly
disingenuous…using the star telecom analyst’s salacious
correspondence with a female client to declare that Grubman
‘suffered from a serious ego problem and psychological
deficiency.’ How is that relevant to Weill’s admission that he
urged Grubman to reconsider his negative opinion on AT&T
before the telecom giant planned a mega-IPO that would pay
Wall Street firms millions in fees?”
–Here’s something else to make you sick, in this era of the likes
of William McGuire and Sandy Weill; Tom Freston, the head of
Viacom fired by Sumner Redstone after just 8 months on the job
will receive a payout of $85 million, including $59 million in
severance. It’s beyond absurd. Where’s my copy of “The Rise
and Fall of the Roman Empire”?
–Walt Disney Co. is changing the food offerings at its theme
parks by eliminating some unhealthful foods and artery-clogging
trans fats. It’s also going to change the way its characters are
used in promotions to kids; i.e., no more “Roasted Donald Duck
sandwiches.”
–Ann M. Fudge was added to the board of the Rockefeller
Foundation. In a statement the foundation touted Ms. Fudge’s
heart-healthy and flavonoid-filled background
–And finally, we can’t help but note New York State Supreme
Court Judge Charles Ramos, a potential “Man of the Year”
candidate for his ruling that former NYSE Chairman Dick
Grasso must return $10s of millions in compensation, some say
up to $100 million, because the Exchange board was not fully
made aware of Grasso’s pay package. Baby, you’ve gotta love
it. Grasso is appealing the ruling but it would appear he is going
to have to cough up a considerable amount of his ill-gotten gains
regardless of the outcome. Remember, New York Attorney
General Eliot Spitzer began this whole deal by saying Grasso’s
pay (up to $187 million, cumulatively) was outrageous because
the New York Stock Exchange at the time was a not-for-profit
organization.
Foreign Affairs
Iran: President Ahmadinejad said Israel was “illegitimate” and
that Iran would not back down “an inch” over its nuclear
program. But if you live in Europe it had to be unsettling to hear
for the first time Ahmadinejad targeting the continent, warning
Europe “it may get hurt” for its ongoing support of Israel.
Russia: Former Fed Chairman Alan Greenspan, in a speech in
New York, blasted Russia’s “national champions,” such as those
alluded to above; Rosneft and Gazprom. Greenspan also cited
the new alliance that formed the world’s largest aluminum
company. From a pure capitalism standpoint (and ignoring the
political implications of Gazprom controlling Europe’s natural
gas supply), Greenspan notes that companies such as these can
not be innovators if they are protected by the state.
Separately, Human Rights Watch and Amnesty International
were among 77 NGOs (non-governmental organizations) whose
operations were suspended by the Kremlin, forcing them to
“reregister” under harsh terms. Anyone out there not understand
where Vladimir Putin is taking his country?
Israel: Prime Minister Ehud Olmert met with Putin in Moscow to
seek the Russian leader’s help in dealing with Iran’s nuclear bid,
but Putin seemed more interested in the sex scandal swirling
around Israeli President Moshe Katsav.
“Pass our best regards to the president of Israel,” Putin told
Olmert. [Moscow Times]
In public statements after their meeting, Olmert said Putin
understood “all the aspects of our attitude toward Iran’s nuclear
program and everything linked to that,” but Putin didn’t utter the
word “Iran” once. Instead Putin read some prepared remarks
talking about Russia helping to resolve the situation in the
Middle East. It must not have been a great flight home for
Olmert.
Incidentally, Russia is going to begin construction of a new $800
million nuclear power plant in Iran by the fall of 2007.
The Daily Star’s Rami Khouri had an interesting take on the
Middle East, comparing it to recent efforts in Northern Ireland to
bring back power-sharing in the government there after it had
been suspended for the past four years.
“Israel and the U.S. refuse to deal with a Palestinian government
led by Hamas, which was democratically elected. Yet in
Northern Ireland the British and the U.S. had no problem dealing
with the IRA, which used terror for many years. Their decision
to engage the IRA through Sinn Fein proved wise and
productive, because the IRA soon got out of the terror business
and decommissioned its arms. That experience suggests that
focusing on the substance of the political goals that one desires
from a negotiation is more important than allowing oneself to get
hung up on whom one should talk to or not talk to.
“Israel and Hamas do not like or recognize each other, but they
are both acting irresponsibly in continuing to avoid engaging
each other in a political process that gives their people the
possibility of living normal, peaceful lives. The same can be said
of Iran and the United States. It is instructive for these and other
parties in the region to ponder the Northern Ireland situation and
acknowledge the importance of focusing on how to achieve
desired outcomes that respond to the legitimate rights and needs
of both parties to a conflict, rather than getting stalemated on
false issues of honor and dishonor in engaging one’s adversaries.
Northern Ireland has much to teach us all about the business of
conflict resolution – and also about acting like adults.”
As for any peace efforts between Israel and Lebanon, Prime
Minister Olmert said he wanted to talk peace while Lebanon’s
Prime Minister Siniora reminded Olmert that Lebanon would be
the “last Arab country to make peace with Israel.”
However, it was curious that at week’s end Lebanon’s
parliament speaker, Nabbi Berri, who you’ll recall is both a
Shiite and a supporter of Hizbullah, urged the Arab world to
negotiate with Israel, saying the time was right for a
comprehensive peace effort.
China: A cyber-dissident was jailed for four years for subversion
after posting politically sensitive essays on the Net. The group
Reporters Without Borders called the charge absurd, while
human and media rights groups note that China’s leaders are
tightening their crackdown on dissent. RWP ranks China 159th
of 167 countries on its global press freedom index. [South China
Morning Post/Agence France-Presse]
Turkey: Defense News reported that the rift between Turkey’s
staunchly secular military and the Islamist government of Prime
Minister Recep Erdogan is widening and could become a crisis.
The Chief of the General Staff, Army Gen. Yasar Buyukanit
(something tells me I’ll be writing his name a lot in the future),
said:
“Aren’t there those who at every opportunity express the need to
redefine secularism? Are they not in the most senior positions of
the state?” referring to the parliament speaker’s call to redefine
it. “If you cannot answer ‘no’ to these questions, then there is a
threat of Islamic fundamentalism in Turkey, and every measure
must be taken against this threat.”
Secularist President Ahmet Sezer warned parliament just a few
weeks ago, “The fundamentalist threat has not changed its goal
to change the basic characteristics of the state.”
Writing in the Wall Street Journal, scholar Michael Rubin
opined:
“Five years into the war on terror, inept U.S. diplomacy risks
undercutting a key democracy (and ally) that President Bush
once called a model for the Muslim world. The future of Turkey
as a secular, Western-oriented state is at risk. Just as in Gaza and
Lebanon, the threat comes from parties using the rhetoric of
democracy to advance distinctly undemocratic agendas.”
Rubin points out that U.S. Ambassador Ross Wilson has stupidly
dismissed concerns. Rubin concludes:
“Diplomacy should not just accentuate the positive and ignore
the negative. When a country faces an Islamist challenge, PC
platitudes do far more harm than good. At the very least, the U.S.
should never intercede to preserve the status quo at the expense
of liberalism.”
On the EU candidacy front (which as I wrote the other day is
really dead), the President of the European Commission, Jose
Manuel Barroso, said it could be up to 20 years (not 10) before
Turkey joined the club, citing a slowdown in reforms, including
a resolution over Cyprus. Erdogan’s government faces an
election next year and he isn’t about to compromise.
Britain: Tony Blair came to the defense of his former defense
secretary Jack Straw, who said Muslim women should not wear
the full-face veil.
“It is a mark of separation, and that is why it makes other people
from outside the community feel uncomfortable.
“No one wants to say that people don’t have the right to do it.
That is to take it too far. But I think we need to confront this
issue about how we integrate people properly into our society.”
Italian Prime Minister Romano Prodi weighed in.
“You can’t cover your face; you must be seen. This is common
sense, I think. It is important for our society.”
Venezuela: It would appear President Hugo Chavez has lost his
bid for Latin America’s rotating seat on the UN Security
Council. 125 votes are needed and Venezuela lost the first ballot
to U.S.-preferred candidate Guatemala, 110-77. Now, after 35
ballots, the score is 103-81. This process has been known to go
on awhile and balloting begins anew on Wednesday.
Sri Lanka: Long ago, prior to 9/11, I said a car bomb going off in
Sri Lanka has zero impact on our markets, but one going off in
Tel Aviv can. But the violence here the past two weeks has been
horrific, with a suicide attack killing over 90 Sri Lankan soldiers,
another aimed at the tourism industry killing at least 16, though
missing its intended target, and a full-scale battle between
government forces and Tamil Tigers killing over 200 (this last
item was two weeks ago).
There have always been fears that the violence could one day
spread to India, making it all the more important that Sri Lanka
become a bigger focus of the world community.
Random Musings
–In the latest NBC/Wall Street Journal poll, President Bush’s job
approval rating is back down to 38 percent. And, shockingly,
when asked who should control Congress, 52 percent said the
Democrats and only 37 percent Republicans; the worst margin
ever for the Republicans in this survey. Overall, only 16 percent
approve of Congress, 75 percent disapprove.
–As if the Republicans don’t already have enough problems, you
have the FBI raids of six locations in Pennsylvania and Florida,
including the home of Karen Weldon, daughter of Republican
Congressman Curt Weldon in what is shaping up to be a classic
influence peddling scheme to benefit both of them.
The Washington Post reported that one piece of evidence
involves a trip Weldon took to Belgrade three years ago where a
luncheon in his honor was hosted by a Serbian businessman who
had been barred from visiting or trading with the United States
due to his ties to former Yugoslav leader Slobodan Milosevic.
Weldon was trying to get the fellow off the “blacklist,” which
seemed odd to U.S. Embassy officials also present who couldn’t
figure out what possible ties there were to Weldon’s district
outside Philadelphia.
What the embassy didn’t know is the Serb had a contract with
Karen Weldon and her lobbying firm, calling for $20,000 in
monthly payments for “management, government and public
relations.”
The FBI is also looking into various connections Weldon has to
Russian oil companies, one of whom paid Karen a $170,000
startup fee and $300,000 more in monthly retainer fees.
Congressman Weldon, thinking we all are morons, labeled the
investigation politically motivated.
We need a third party in America…a real one. It’s also obvious
that after over 200 years, there’s a lot broke with our nation that
needs to be fixed. I’m tired of people saying, “We’re not perfect,
but look around the world; America is still the best thing going.”
That may be true, and I should know as well as anyone having
seen the competition up close and personal.
But that doesn’t mean we have to settle for this B.S.!
–Along the lines of the above, in addressing the likes of Karl
Rove and Howard Dean, comes this from Ralph Peters in the
New York Post.
“Wouldn’t America be better off if every parasite living off the
election-campaign circus were to disappear tomorrow? Why
should we, the people, suffer the tyranny of mediocre, unelected
men and women whose selfish agendas so rarely reflect our
needs?
“The men and women in uniform who died for this country
across the last 23 decades didn’t give their lives so that we could
vote straight party lines. Party lines are for communists, fascists
and fools. Neither party is ever 100 percent right.
“It’s our duty – our duty – to our country to vote for the best man
or woman, not just for the candidate the backroom boys shoved
at us.
“Don’t vote for the Democratic or Republican party in
November. Vote for individuals. Vote on the issues. Vote for
what you really believe. Vote for the common good.
“Vote for America.”
–It was significant that conservative New York Times columnist
David Brooks called on Barack Obama to run for president in
2008. He’s way too precious for me. [Maureen Dowd has a
funny take in Saturday’s NY Times.]
–You know who I’ve never liked? Cardinal Egan of New York.
No wonder there’s a revolt among some of the clergymen in the
diocese, while it’s nonetheless extraordinary that the priests
are complaining publicly about this man. What brought the ill
feelings to a head was Egan calling a meeting with the hierarchy
at the very time a popular priest was being buried.
[I was a huge Cardinal O’Connor fan…it’s tough to measure up
to him, I grant you.]
–Of course it doesn’t help the Catholic cause these days when a
priest admits to having had a relationship with Mark Foley.
–But at least dozens of Muslim scholars from around the world
signed a letter accepting Pope Benedict’s apology for his recent
remarks on Islam, even though the Pope had nothing to apologize
for. Grand muftis from Egypt, Russia, Bosnia, Croatia, Turkey
and even Iranian Shiite cleric Ayatollah Taskhiri signed it.
–Did you see the story on wildlife in New Orleans these days?
From Mary Foster of the AP:
“Alligators have been dragged from abandoned swimming pools.
Foxes had to be removed from the airport. Coyotes are stalking
rabbits and nutria (a sort of countrified rat) in city streets. And
armadillos are undermining air conditioning units.”
Most are drawn by piles of rotting garbage and abandoned
homes. One woman said opossums are living under her place
and one moved into her house. Deadly brown widow spiders, a
cousin of the black widow, have also been seen where they never
previously existed.
Oh yeah, I’m going down there to be a homesteader.
–Speaking of rats, lawyer Lynne Stewart was sentenced to just
28 months for enabling terrorist Sheik Omar Abdel-Rahman,
“the blind sheik” and architect of the 1993 World Trade Center
bombing. Stewart was arrested six months after 9/11 for
providing support materials to terrorists.
The judge, however, John Koeltl, actually hailed Stewart as a
“lawyer to the poor and unpopular.”
When Stewart took the case, she agreed not to pass any messages
from Abdel-Rahman but did so anyway. To top it off, during the
trial Stewart said she was a supporter. Stewart was giddy after
her sentencing. It should make your skin crawl.
–A study by the Josephson Institute of Ethics found that 60
percent of high school students said they cheated during a test at
school within the past 12 months. What I found even more
remarkable is 23 percent said they stole something from a parent
or other relative in the same period, with 28 percent saying they
stole something from a store.
–According to the National Highway Traffic Safety
Administration, of 4,881 pedestrians killed last year, 974 died in
hit-and-run accidents. Hit-and-runs are up 20 percent since
2000.
–Actor Wesley Snipes becomes an “Idiot of the Year” candidate
for filing false tax refund claims and bilking the federal
government out of $12 million, according to the IRS. Snipes
became a disciple of Eddie Ray Kahn, founder of Guiding Light
of God Ministries. Kahn espouses the belief that U.S. citizens do
not have to pay federal income tax. Sorry, Eddie, and Wesley.
Hey, where is Wesley, anyway?
–Yes, this week there seem to have been quite a few dirtballs to
write about (and I’m not even going to bring up Madonna), but
few are greater than the militia group in Congo that has
slaughtered half the hippos at Virunga National Park, about 400
of them, as well as some elephants. The Mai Mai eat and sell
hippo meat and ivory found in the hippos’ teeth; all of this
illegal.
Sadly, the park staff is doing what it can to save the animals but
many of them haven’t been paid in months, so the Zoological
Society of London is supplementing their income and training
them in anti-poaching techniques, though it’s probably too late.
[The Times of London]
–And then there are the nations of Iceland and Norway which
have resumed commercial whaling, claiming there are enough in
the waters for everyone. Japan continues to kill 1,000 as well,
though it claims it’s for “scientific research.”
I’ll tell you what. You know I’m a big supporter of Japan but
about now if I’m Secretary of State Rice, I have her tell her
counterpart in Tokyo, “We won’t defend you against North
Korea unless you stop slaughtering whales.”
I need to call Kissinger to see what he thinks of this idea.
–An American woman, working as a short-term volunteer at a
panda reserve in China, had a large piece of her thumb bitten off
by one. She clearly hadn’t heard pandas have a mean streak.
“The panda…not as cute as you think.”
–Two stories from the art world. The painting “The Crowning
with Thorns,” on display in Genoa, had long been assumed to be
a copy of a 1605 Caravaggio work. But now that restorers have
taken a closer look they realize it’s a work by the man himself.
Which is kind of cool for us classical art lovers, since many of us
know that a lot of the works we’re being presented are probably
fakes.
But then there’s the case of casino mogul Steve Wynn. From
Reuters and the South China Morning Post:
“(Wynn was forced) to cancel the sale of a famed Picasso for
what would have been a world-record U.S. $139 million after he
accidentally punched his elbow through the canvas.”
Wynn was showing the work to friends at his Las Vegas office,
after finishing the sale to collector Steven Cohen, when
according to director and screenwriter Nora Ephron, who saw the
incident, “Mr. Wynn raised his hand to point out something
about Picasso’s 1932 portrait of his mistress, Marie-Therese
Walter.”
“At that moment, his elbow crashed backward right through the
canvas. There was a terrible noise,” Ephron said, noting Mr.
Wynn has an eye disease that has damaged his peripheral vision.
“Smack in the middle…was a black hole the size of a silver
dollar. ‘Oh s—,’ he said. ‘Look what I’ve done. Thank goodness
it was me.’”
Mr. Wynn’s office confirmed the story and it’s said he will repair
and keep the painting himself.
–Two definitive studies were released on the risks/rewards for
eating fish and the bottom line is, unless you’re pregnant or a
young child the dangers are exaggerated. Eating 3 or 4 servings
a week can reduce the risk of heart attack by 36 percent.
So since I already celebrate Salmon Sunday each and every
week, I’m adding Tilapia Tuesday and Fish Chowder Friday to
my own menu.
–Scientists created, albeit for a fraction of a second, the heaviest
atomic element ever made. One potential name was
‘ununoctium,’ or element 118. I’d call it obeseonium.
–I had a nightmare that the 300 millionth American was Terrell
Owens.
–Normally this would be a story for another column I write, but
watch the NBA and an unfolding tale involving the shooting the
other day of the rapper Fabolous [sic]. The Boston Celtics’
Sebastien Telfair is probably involved. Telfair had a $50,000
piece of jewelry ripped off the night in question and witnesses
have him placing a call to set things right, once he identified a
member of Fabolous’ crew as being the suspect. This could be
fun, especially for those of us who can’t stand the NBA.
–But to show you how our nation is one of greater contrasts than
at any other time in our history, many of you have commented on
the Amish following their tragedy. Incredibly, the grace of these
good people continues to exhibit itself as they are now sharing
the money donated to them with the gunman’s wife and three
children. Said one, “If we give it to God, he’ll take it and make
something out of it.”
–I arrived in Tucson on Thursday, in time to see my Mets lose to
the Cardinals, but since I was working on Friday I don’t have any
observations as yet; except that there are some creepy vagabonds
near where I’m staying. But today starts my two-week adventure
and over the next seven days I’ll work my way from here,
through Las Cruces, Santa Fe, Colorado Springs and on to
Scottsbluff, Nebraska…where I’ll be reporting from next time,
with more than a few things to say.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $594
Oil, $56.82
Returns for the week 10/16-10/20
Dow Jones +0.4% [12002]
S&P 500 +0.2% [1368]
S&P MidCap -0.6%
Russell 2000 -0.1%
Nasdaq -0.6% [2342]
Returns for the period 1/1/06-10/20/06
Dow Jones +12.0%
S&P 500 +9.6%
S&P MidCap +5.7%
Russell 2000 +13.2%
Nasdaq +6.2%
Bulls 52.2
Bears 30.0 [Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Brian Trumbore
