[Posted 7:00 AM ET]
Post-Election Foreign Policy
I’ve been incredulous how during the just concluded campaign
President Bush acted as if the Iraq war was still in its infancy
rather than in its 44th month. So for the last time, and for new
readers, let me remind you of a little history.
Week in Review…8/30/03
“I thought some of the results from the latest Newsweek survey
on current attitudes were quite telling.
“61% of Americans still believe the U.S. was right to take action
in Iraq, while…
“60% say the U.S. should scale back the effort, and…
“56% approve of keeping a large force in Iraq for 2 years or less.
“This is what I’ve been referring to the past few months as soft
support. This is why President Bush, in prime time, must do a
better job of explaining the long-term mission.
“Robert Kagan and William Kristol had the following thoughts
in the Sept. 1 / Sept. 8 issue of The Weekly Standard.
“ ‘We believe the president and his top advisers understand the
magnitude of the task. That is why it is so baffling that, up until
now, the Bush administration has failed to commit resources to
the rebuilding of Iraq commensurate with (the) very high stakes
(first and foremost being a safer Middle East).’
“They add: ‘Business as usual is not acceptable. Getting the job
done in Iraq is our highest priority, and our government needs to
treat it as such….The president knows that failure in Iraq is
intolerable. Now is the time to act decisively to prevent it.’”
I then wrote:
“The ill-timed ‘Mission Accomplished’ banner of May 1st may
yet be 5 years from fruition and it will require keeping a large
force on the ground there for longer than that, I presume.
“It’s frustrating to me, as a supporter of preemption and the
domino theory in the region, that shoddy implementation and
institutional arrogance, as best exemplified by Secretary of
Defense Rumsfeld, could keep us from accomplishing the goal.”
Week in Review…9/13/03
“We lost many of the hearts and minds in that critical first 60
days; including those who may have been tempted to turn on the
remnants of Saddam’s regime before it could gain a new
stronghold.
“There are all manner of apologists coming out with stories on
how well things are going in parts of Iraq and I don’t doubt this
is the case, but the Big Picture is nowhere near as good as it
should have been and I blame the White House for
miscalculating sentiment, let alone failing to come clean with the
American people until now as to the costs….
“I want the apologists to know it’s not just Democrats asking
questions, loyal Republicans such as yours truly, let alone the
likes of Senators McCain, Hagel, and Lugar are as well. I still
strongly believe this was a just war, brilliantly executed, but it’s
as if everyone in the White House sat back on April 9 and had a
cigar while patting each other on the back…all through May,
June, July and August. Thank God the American servicemen
and women continue to perform their duties in the best tradition
of this nation’s military. The same can’t be said of their civilian
leadership.”
And so we just had an election, a referendum on the war in many
respects; three long, bloody years later with our nation
continuing to pay a price for the utter incompetence displayed,
across the board, by the foreign policy apparatus in Washington.
For their part, rank and file Republicans are in an uproar over
President Bush’s belated maneuver to replace Donald Rumsfeld.
We’re now told Bush was contemplating this for months and
because of his inaction many good Republican candidates were
washed out with the tide. Others, thanks in no small part to
burgeoning corruption, deserved their fate.
But when I got to work on Wednesday morning, aside from the
scope of the GOP losses the first item I focused on was the
Israeli shelling in Gaza that claimed 18 innocent lives.
Understand my ire since the start of the Lebanese conflict last
summer has been directed not as much at the Israeli government
itself as at the Bush White House, because it is the U.S., alone,
that can get the warring parties to at least stop the shooting and
shelling. Just last week I graded the administration on its foreign
policy and said of the Israeli / Palestinian quagmire, “This
ongoing crisis has taken another decided turn for the worse and
the Bush administration refuses to question anything Israel
does.” Then Tuesday night’s horrific incident and what do you
see the White House doing in response? Nothing.
Give me one reason for cause for optimism. Because we totally
botched Iraq, we lost our leverage with Iran. Because we then let
Israel run roughshod over Lebanon and destroy its infrastructure,
we lost our leverage with Iran. Because we have zero credibility
left in the region, we can’t even assemble Egypt and Saudi
Arabia for the purposes of a serious dialogue. And it’s because
of this last bit that the United States has trouble going to both
Israel and the Palestinian leadership to demand a halt to
hostilities because there are few if any watching our back.
We are not the honest broker the Arab world has been crying out
for. Instead, thanks to the tragedy in Gaza, we have Hamas now
threatening U.S. interests, as well as an Iran that is increasingly
arming it (Hizbullah II) while the mullahs in Tehran continue on
their merry way to the bomb.
I’ve thought a lot about Ariel Sharon lately and how the situation
would have been different were he still functioning as head of
state. Many in Israel, of course, would quickly say he started it
all by handing Gaza over to the Palestinians. But Sharon had
evolved into a special kind of leader, and I remind you again of
the respect he had gained, including in the Arab world, in the
months before his stroke. I just can’t believe Hizbullah and
Hamas would have tested him like they have his successor,
though at some point both would have had to be confronted.
As for Israel and Lebanon, again, just how can the Israelis
continue to invade Lebanese airspace, in clear violation of the
ceasefire? Because the Bush administration lets it. This week it
was the French who warned Israel about buzzing French
peacekeepers. Earlier, Israeli jets had buzzed German warships.
So while America sleeps, the Middle East threatens to blow all
over again, far beyond Iraq, as the Arab street remains a seething
cauldron.
The moderate Daily Star of Lebanon ran the following editorial
on Friday, Nov. 10.
[Excerpts]
“The Arab League foreign ministers meeting in Cairo next week
to discuss the recent killing of 18 Palestinian civilians in a single
artillery barrage need to understand that their purpose will not be
well served by limiting their purview to a single event, or even to
the week-long offensive that preceded it: The Israeli military has
been bleeding Gaza for six years, long before and ever since the
laughable ‘withdrawal’ of August 2005. The massacres have
come at a slower pace than those in Lebanon this past summer,
but the victims have been just as brutally killed and have been
even more numerous. The ministers need to be fully cognizant
of this monstrous crime if they are to take what should be their
next step: an attempt to communicate the scale of the problem to
both the White House and the newly elected U.S. Congress.
“Washington, too, has much to gain – or at least considerable
losses to avoid – by drawing the appropriate conclusions from
the bloodletting in Gaza. More than 100,000 U.S. troops are
currently mired in the Iraq mess, and every act of injustice
committed by Israel with America’s blessing exposes those men
and women to the fury of Iraqis and other Arabs who have
resolved to stop turning the other cheek.
“The Middle East will not know stability unless and until Israel
finds something other than the profligate and indiscriminate use
of force to function as its foreign policy. But that can only be
made to happen by a U.S. government that finally understands
how misguided has been its traditional practice of unconditional
support for the Jewish state. That realization will not take place
of its own accord: It is therefore up to the Arabs to get much
better at articulating what should be an easy argument to make.”
My own frustration boils down to this. Without success in the
foreign policy sphere there will be no lasting success in the war
against the terrorists. We now have a lame-duck president who
can’t seem to grasp the complexities of the issues facing us. He
says he receives an intelligence briefing every morning, but one
wonders if he’s listening.
It’s also important to add that some of our staunchest allies, such
as Japan and Australia, are having serious post-election
misgivings for their unstinting support of this president. John
Howard and Junichiro Koizumi invested in the Bush presidency,
with Koizumi’s successor Shinzo Abe of like mind, and what do
they have to show for it? Can this White House be trusted to
honor its security commitments, for example? Is the U.S.
military, currently in severe disrepair, capable of a full response
should Kim Jong-il act up? China is busily modernizing its
military, focusing on sealift and an offensive capability. Our
Pentagon is warning of the threats, but what are both it and the
president going to do to address this over his remaining two
years?
Our response to 9/11 was Afghanistan and then Iraq. It’s been
five years already in the former and almost four in the latter.
Regarding Iraq, President Bush said on the campaign trail last
week “I want to assure you I see the danger, and that is why
we’ll stay and fight in Iraq.” Wednesday after the election the
president said “Iraq has not been going well enough or fast
enough.”
I’d love to be pleasantly surprised during the final days of the
Bush presidency, but instead we’re likely to see Iran with the
bomb. Some Republican candidates already received a surprise
of a different sort; Donald Rumsfeld being let go, three months
too late to save them.
Wall Street
I thought it was kind of funny that in a week where a number of
Republican congressional candidates were thrown out for
corruption, the latest survey on the topic by Transparency
International, best places in the world to do business, ranks the
United States 20th, down from 17th last year.
20th. Nice job, America. Of course after all the accounting
scandals of the post-Bubble era no one should be surprised, but
as I noted the other week our accounting standards are nowhere
near as clean as some of those being employed elsewhere, a fact
which the Big Four firms recognize as a hindrance that must be
corrected if we are to remain the world leader in commerce.
But in coming up with a corruption score that takes into account
the general cost of doing business, including government’s, here
we’ve been learning in greater detail than ever before that when
it comes to Washington it’s a cesspool. Frankly, it’s pitiful that
we, the supposed model of capitalism and free markets are
ranked so low. It’s also kind of embarrassing that Iraq is third
from the bottom of 163 nations surveyed, beaten out only by
Myanmar and Haiti. Maybe it’s a good thing most voters don’t
read stuff like this. The Republicans may have done even worse.
As for the post-election business environment with a new
Congress, let’s agree to apply my adage of wait 24 hours. It’s far
too easy to say that because of certain committee chairmanships
falling to the likes of Charles Rangel and Henry Waxman that
taxes are going up and drug companies are going to get whacked.
Or, should some of this prove to be the case, that it is necessarily
bad for America. The $trillion alternative minimum tax
conundrum, for example, should be foremost on most agendas
but the only way to fix it is to compromise in other areas.
In the meantime some of us are most concerned about trade
policy in a Democratic Congress and growing protectionism, but
we’ll have plenty of time to focus on issues such as that, in both
this space and other columns on the site I have something to do
with.
For now it’s a certainty the minimum wage is going up and it’s
about time. I prefer a country where the poor in our midst can at
least buy some pasta now and again. If I have to pay a dime
extra on a Big Mac, so be it; though I’d also hope our Federal
Reserve wouldn’t immediately panic and raise interest rates as a
result.
But regarding the overall state of the U.S. economy, I’ve been
talking about the haves and have nots when I just realized there
may be something more original.
Normally in our economic cycles all classes rise and fall at the
same time, albeit at far different paces.
But let’s start by dividing the nation into five classes:
Upper, upper middle, middle, lower middle, and lower.
I would submit that today there are really three different
economies.
Upper / upper middle…rising above a 2.5 percent rate on GDP
Middle…stagnating
Lower middle / lower…recession
It’s time for new models, after all, in an era where total CEO
compensation is increasing at a 15% to 20% rate, the average
worker’s at around 4% (so the current statistics say), and the
lower class below that level; in some cases actually declining as
they rotate into lower-paying jobs. And this doesn’t include
inflation; especially on those big-ticket items that truly matter,
such as for health care, tuition, and property taxes.
This isn’t your father’s economy (or society) anymore. The days
of management types like Ward Cleaver earning a solid living
but not significantly more than the workers below him are long
over and despite the steady growth of the past few years the polls
say a majority of Americans are uneasy about their economic
situation. This isn’t just about spikes in gasoline prices or
globalization. There is something else at work here.
So from time to time I may refer to my new proprietary model,
drawn up on a beer coaster in Deadwood, South Dakota, and
obviously not at the Univ. of Chicago or Stanford. Yes, no one
from Stockholm will be inviting me to accept the Nobel Prize in
Economics; I’d just argue the above is as good as any other
explanation I’ve seen as to why our country and economy is so
increasingly polarized.
Of course the biggest reason why the bottom three, or even four
of the five classes could be increasingly struggling is real estate.
This week the incredibly overrated former Federal Reserve
chairman Alan Greenspan reiterated “the worst is behind us” in
terms of housing’s effect on the economy, but then in typical
Greenspan fashion he added the downturn has “a way to go”
before it hits bottom.
Well I’m no Milton Friedman but if you tell me the downturn has
a way to go, I’m certainly not going to say the worst is thus
behind us. I mean do I have to find another coaster to prove this
to the chairman?
And you’ve gotta love Dallas Federal Reserve Bank president
Richard Fisher, who says what’s on his mind more often than
not and really doesn’t seem to care if he takes out a few targets
in the process. For example, in a speech last week he said that
during the Greenspan era, because of faulty price data, the Fed’s
benchmark funds rate, adjusted for inflation, was cut to a level
that “turned out to be lower than what was deemed appropriate at
the time, and was held lower longer than it should have been.”
Ergo, the Fed “amplified speculative activity in the housing and
other markets,” said the Fisher King. Today, he added, the
correction in housing is “inflicting real costs to millions of
homeowners across the country” and complicating the Fed’s task
of containing inflation. [Nell Henderson / Washington Post]
Greenspan, torqued off over such talk, blamed global financial
conditions for the excessively low short rates and then sulked
away to take a bath….which is what many who got into the real
estate game late are doing.
Separately, we learned this week that in the first six months of
2006, more money has been taken out of Americans’ homes
(such as for home equity lines) than all of 2005! While on the
developer side, Toll Brothers’ CEO said “recovery is not yet in
sight” in reporting new orders were off 56% from year ago
levels. Beazer Homes’ were off 58% and Hovnanian’s 36%.
Also, that old issue of ours, the actual land that developers
acquire to build their homes on, is coming back to bite them in a
big way. The developers are frantically trying to renegotiate
their positions with the banks, this as cancellations soar.
Lastly, the New York Time ran a piece on Tuesday addressing
the tumbling Phoenix market, which was very similar to
everything I observed while in Tucson the other week.
Cancellations are in the 40% range, home prices are down 10%
over last year, and builders are loath to buy new land at bubble
prices.
Street Bytes
–Equities shook off any negative implications as a result of a
Democratic Congress, with the exception of the drug sector, and
the major averages rallied anew after taking a one week respite.
The Dow Jones closed at 12108, up 1%, while the S&P 500
gained 1.2% and Nasdaq 2.5%; the latter to a new five-year high
of 2389. Early in the week, another Merger Monday, the
markets were helped by Abbott Labs’ purchase of Kos
Pharmaceuticals, while an investor group including Bill Gates is
going after the Four Seasons hotel chain. You know, the guys
who charge $600 a night for a room and still feel obligated to ask
for another $35 for Net service.
–U.S. Treasury Yields
6-mo. 5.14% 2-yr. 4.73% 10-yr. 4.59% 30-yr. 4.69%
There wasn’t any big economic news but bonds staged a rally
even as China said it would diversify its currency holdings away
from the dollar over time. The dollar itself continues to weaken.
We’ll get more clarity on the interest rate picture, ahead of the
Federal Reserve’s December meeting, with the release this week
of inflation data on producer and consumer prices, retail sales,
and housing starts.
–The issue of trade and China is about to heat up in a big way
with the change in Congress, helped along in no small part by the
latest data on China’s trade surplus with the U.S., $23.8 billion.
Premier Wen Jiabao has long recognized the coming crisis
himself, saying the swelling surpluses with the West are his
country’s biggest economic “problem” because of the
protectionist threat.
The New York Times’ Thomas Friedman commented on Friday:
“China, in other words, is inevitably going to move back to the
center of U.S. politics (with the change in power in Congress),
because it crystallizes the economic challenges faced by U.S.
workers in the 21st century. The big question for me is, how will
President Bush and the Democratic Congress use China: as a
scapegoat or a Sputnik?
“Will they use it as an excuse to avoid doing the hard things,
because it’s all just China’s fault, or as an excuse to rally the
country – as we did after the Soviets leapt ahead of us in the
space race and launched Sputnik – to make the kind of
comprehensive changes in health care, portability of pensions,
entitlements and lifelong learning to give America’s middle class
the best tools possible to thrive? A lot of history is going to turn
on that answer, because if people don’t feel they have the tools or
skills to thrive in a world without walls, the pressure to put up
walls, especially against China, will steadily mount.”
But in his piece Mr. Friedman says nothing about China
continually breaking the rules as dictated by its membership in
the World Trade Organization. You see who’s leading the fight,
not the U.S. (outside of a few senators), but Europe.
Take a look at my 11/10 edition of “Wall Street History” for
more comment on this topic, including a bit on the experience of
China in acquiring U.S. companies. The track record isn’t good,
as was proved yet again by word from China’s leading computer
maker, Lenovo Group, that its acquisition of IBM’s PC business
is going miserably with a 15 percent drop in profits due to higher
than expected integration costs. Chinese television maker TCL
Corp. is facing similar problems after recent acquisitions of U.S.
and European manufacturers.
–The U.S. and Russia are finally set to sign an accord on
Russia’s admittance to the WTO. Russia would become the last
major market to enter the group and despite a number of issues,
including piracy, let alone Russia’s treatment of its neighbors on
the energy front, it’s rather hypocritical not to have Russia in the
WTO when you have all sorts of bad characters already in it.
The agreement, to be signed this week, still must be ratified by
Congress.
–The International Energy Agency warned “the energy supply to
meet the needs of the world economy over the next 25 years is
too vulnerable to failure arising from under-investment,
environmental catastrophe or sudden supply interruption.” Of
course if Democrats come down too hard on the oil industry,
further much-needed investment will largely dry up.
Additionally, the IEA warns the increasing reliance on coal in
some parts threatens the environment unless the industry invests
heavily in technology to capture the carbon emitted by the black
stuff.
–FedEx canceled an order for Airbus’s A380 jumbo flying
wiener, citing production delays, and announced it will buy
Boeing 777s instead. Airbus is reeling and they are scared to
death that Emirates, which has orders for 45 of the passenger
model A380, will back off as well.
–You have to feel good for Cisco Systems CEO John Chambers
and the solid comeback he has engineered by having a vision and
sticking to a long-term plan (as he himself put it) despite all the
slings and arrows. And his much criticized, at the time,
acquisition of Scientific-Atlanta is looking terrific at this
juncture.
–While scandals at Enron, WorldCom, Computer Associates et
al garner the publicity, it’s easy to forget the size and scope of
the mess at Fannie Mae, mostly because leadership avoided
punishment, particularly former CEO Franklin Raines. This
week the mortgage behemoth announced the cost to clean up its
books has grown to over $1 billion. No doubt Raines, a former
Clinton hack, was partying down with the Democrats in
Washington on Tuesday.
–Bristol-Myers Squibb’s former CEO, who was fired for
incompetence, will nonetheless receive parting gifts of $10.7
million. This is criminal.
–Merck has major tax problems, both here and in Canada, as the
drugmaker admitted it has potential liabilities of $5.58 billion
over its accounting in four separate cases. It’s kind of confusing
so herewith is an explanation as reported by John Carreyrou and
Jesse Drucker of The Wall Street Journal.
“The dispute involves revenues Merck had in 1998 to 2004 on its
blockbuster asthma and allergy drug Singulair….Singulair was
originally developed by Merck’s Canadian subsidiary in
Montreal, entitling the Canadian government to tax revenue on
the drug….
“U.S. Patent & Trademark Office records show that, in
December 1998, Merck transferred patents associated with
Singulair to a Barbados subsidiary called Tradewinds
Manufacturing SRL. At the time, Barbados was considered a tax
haven because of a variety of favorable tax provisions it offered.”
Shares in Merck fell by week’s end, but more on fears of the
effect a Democratic Congress will have on the pharmaceutical
industry in general than this tax issue. I’d suggest the market
should focus as much on the latter. And why shouldn’t a Henry
Waxman look into this case if it’s out and out tax evasion?
–Republican Congresswoman Sue Kelly of New York was one
of those going down in flames on Tuesday, losing to Orleans
frontman John Hall. [“Still The One,” “Dance With Me”] The
reason why I mention this here is because while driving around
on Sunday I heard perhaps the stupidest campaign spots of all
time. To paraphrase, “John Hall says he’s for the environment,
but he invests in mutual funds that invest in Schlumberger, a
leading polluter. John Hall says he’s for the American worker,
but John Hall invests in mutual funds that contain Wal-Mart.”
Huh? And it was probably an American Funds position, with
like 300 stocks in it. Ms. Kelly, this is absurd, but thankfully
your constituents saw through it and sent you packing.
–In another sign of the impact of our computerized world, the
New York Stock Exchange will be laying off 500 due to its
acquisition of Archipelago Holdings, the electronic exchange.
–This is always a tough time of year for me, I have to admit, as
I’m reminded just how much money I left on the table when I
quit Wall Street almost 8 years ago. So if I seem a little more
cranky than usual these next few weeks, I hope you’ll
understand.
Not that I would have participated at the level of a managing
director at, say, Goldman Sachs or Morgan Stanley, where after
another record year bonuses are expected to rise 20 to 30 percent
to the level of GDP for most African nations.
Foreign Affairs
Pakistan: A Taliban-linked group claimed responsibility for a
horrific suicide attack on an army base, killing 42, in retaliation
for President Musharraf’s attack on the madrassa that killed 80.
The peace deal between the government and the tribal leaders is
history.
China: More tidbits…including some market-related ones.
China will surpass the United States in 2009 as the biggest
emitter of greenhouse gases, thanks to its reliance on coal, but as
a developing nation it’s exempt from the Kyoto Protocol’s
requirements for cuts in emissions. Just four years ago, the
government had predicted it wouldn’t surpass the U.S. until
2020. For selfish reasons I want China to adopt more wind
power, which benefits my carbon fiber holding.
A Chinese official warned that by 2030, the country faces an
acute water shortage. At that point, it’s estimated China will
consume between 700 billion and 800 billion cubic meters of
water annually, but only 800 billion to 900 billion will be
available. [South China Morning Post] Well, if the government
is as accurate as it evidently was with greenhouse emissions, the
crisis could hit far sooner. We already know the water is
increasingly polluted.
Bird flu has dropped off the radar screen, for now, but the U.S.
State Department is warning its citizens in Hong Kong to build
an emergency three-month stockpile of food, water and medicine
in case a pandemic yet emerges. Both Hong Kong and U.S.
scientists recently announced they had found a new strain of the
H5N1 virus, but Beijing disputes this.
And Bloomberg News reports a rabies outbreak in Beijing has
raised concerns, though the story starts out “Over-sized dogs and
those without photo identification…are being snatched by the
city police.” Yikes. It’s tough enough being a dog in China,
having freedoms restricted left and right, let alone having to
remember to get your passport and identification papers updated.
I mean this isn’t something most dogs think about, day to day.
Of course all of the above stories are tied in one form or another
to Beijing’s hosting of the 2008 Olympic Games. Any of them
could make for a huge embarrassment as the world press
descends on the place. And we’re not even talking about urban
unrest in one shape or another.
Meanwhile, over on Taiwan, embattled President Chen Shui-bian
spoke before the nation last Sunday to defend his conduct and
that of the First Lady in light of her being indicted on corruption
charges while the prosecutor said Chen faces indictment once he
leaves office.
Chen said he was willing to waive immunity to face his accusers
and he continues to insist he didn’t embezzle funds, as alleged.
But then he admitted submitting false receipts to claim expenses
from public funds and acknowledged misleading investigators;
though he defended his actions on the grounds of national
security.
I have been a defender of this man over the years because I
believed in his attempts to formally set Taiwan free as a fully
independent nation. But when the president goes before the
people and says, as he did, “I lied and I apologize. But they were
white lies, and it was all for the benefit of the country,” he’s lost
me. I don’t see how Chen survives…a big win for China.
Afghanistan: Two headlines, the same story.
USA Today
“Poll: Afghans express confidence in country’s direction,
security”
New York Times
“Afghans Losing Faith in Nation’s Path, Poll Shows”
So where’s the truth? In a survey of over 6,000 Afghans by the
Asia Foundation (financed by the U.S. Agency for International
Development), by a 44 to 21 percent margin they believe the
country is headed in the right direction rather than the wrong.
But, the optimists were down from 64 percent in a similar poll
two years ago.
77 percent said they were satisfied with the way democracy is
working in Afghanistan, and 85 percent said the government
should allow peaceful opposition. But then 64 percent said they
would not allow political parties they personally opposed to meet
in their areas. And so, sports fans, you have an example of
growing pains….and spinning the news.
Iraq: At this point I’m underwhelmed that Saddam Hussein is
being put to death. But it was interesting when Egyptian
President Hosni Mubarak, speaking for many in the region, said
it was unwise to hang Saddam. I agree with analysts, however,
who say Mubarak and his fellow autocratic Arab leaders are
simply afraid the same sentence could one day be meted out to
them.
Russia: Gazprom deputy CEO Alexander Medvedev, a Putin
crony and possible successor, warned Georgia that it better
accept Gazprom’s price increase to $230 per 1,000 cubic meters
of natural gas or Gazprom would cut off the supply. Medvedev
said the reason why Armenia, a Russian ally, was only paying
$110 was because it signed a contract to that effect a year ago.
Gazprom currently charges Belarus just $47, but is threatening to
hike its price to $200 unless Belarus grants Gazprom a stake in
the national pipeline company. Ye olde shakedown. [Moscow
Times]
Separately, David Satter has a depressing, and scary, story in The
Weekly Standard on the reaction of the Russian military at Beslan.
Satter concludes:
“The evidence that is now available makes it clear that, despite
Putin’s promise to protect the hostages, Russian forces attacked
the school in Beslan according to classic military doctrine for
destroying reinforced objects without the slightest regard for
innocent life. This was done although agreement had been
reached between the former Chechen president and local Russian
political authorities on negotiations that would have ended the
crisis. It is also possible that the ease with which the terrorists
took over the school was not solely the result of official
incompetence. The Russian authorities may have deliberately
allowed the terrorists to take over the school in order to have an
excuse to destroy them.
“The sad reality is that 15 years after the fall of the Soviet Union,
the role of the individual in Russia has not changed. He is seen
as a means to an end, not an end in himself. This is why the lives
of the children of Beslan were written off the moment the school
was seized, a fact to keep in mind lest we agree to give Russia
carte blanche in its own ‘neighborhood’ or look again into
Putin’s eyes and see something we think resembles a soul.”
Britain: The head of MI5, Britain’s security service, revealed her
bureau is now involved in 30 “Priority 1” plots against the
country. MI5 has also identified at least 1,600 people who could
be deemed a threat.
Dame Eliza Manningham-Buller:
“More and more people are moving from passive sympathy
towards active terrorism through being radicalized or
indoctrinated by friends, families, in organized training events
here and overseas. Young teenagers are being groomed to be
suicide bombers.” [London Times]
Dame Eliza added she is alarmed by the “scale and speed” of the
radicalization, which seemingly has intensified post-7/7 and the
London subway bombings. One can’t help but conjure up some
nightmares this holiday season. Police and security officials
agree that Britain has become al-Qaeda’s #1 target. Further
reports have all of Europe on guard.
Thailand: After seemingly making all the right moves in the
weeks following the coup, the new prime minister said Muslims
in the restive south should be allowed to adopt their own legal
system, Shariah law. Surayud Chulanont said since Muslims
have different beliefs from Buddhists in the north, they should
have their own laws.
Boy, this is incredibly stupid logic. Might as well just split up
the country, now. That’s where Nigeria is headed, by the way;
facing a similar issue, though in its case it’s between Christians
and Islamic fundamentalists.
Nepal: I can’t imagine I have one reader here and, as opposed to
Richard Gere, have little interest in the politics of Katmandu, but
it is a positive the recently installed government and Maoist
rebels have reached accommodation after a bloody 10-year
insurgency. In a new constitution, the role of the monarchy,
always a sticking point, will be reviewed.
France: This is going to be fun, unless you live in France. The
country is holding a presidential election next April and it
promises to provide more than a few fireworks. For starters, far-
right National Front leader Jean-Marie Le Pen has seen his poll
numbers soar to 17 percent on the back of the anti-immigrant
fervor sweeping parts of the country.
Nicaragua: Daniel Ortega is back, despite Washington’s best
efforts to prevent this, and following an election where Ortega
captured just 38 percent in a multi-candidate field (35 being
necessary to avoid a run-off), the former scourge said he would
work with his fellow leftists in Latin America, though he also
called for increased trade with the U.S.; Nicaragua being part of
the new Central American Free Trade Agreement.
Venezuela: While President Hugo Chavez has a 20-point lead
for December’s election here, the main opposition candidate did
turn out over 100,000 for a rally last weekend.
India: Not a good time to be a deadbeat. With only 4 percent of
the population paying taxes to the government, officials in the
city of Patna have come up with a way to humiliate those failing
to cough up the appropriate dough. Eunuchs are now being
employed to shame offenders into paying.
As reported by the London Times, “The castrated men,
hermaphrodites and transsexuals, caked in cheap make-up and
wearing garish saris, are being paid to stand outside the homes
and shops of repeat offenders and loudly sing ditties such as Issat
jatau, sohrat jatau, tax na debe ta gharwa nilaam hotau (Your
reputation will be tarnished, fame would be malice, if you do not
pay your tax your house would be auctioned).”
Aaghhhhhhhh! I’ll pay! I’ll pay!
Here in the U.S., the SEC et al should have just employed
eunuchs to get the likes of Dennis Kozlowski and Jeffrey
Skilling to fess up, thus saving us taxpayers a lot of money. In
fact, who needs waterboarding?
Uzbekistan: Gulnara Karimova, 33, is being groomed by her
dictator father Islam Karimov to be the next ruler of Uzbekistan.
The “glamorous” woman who goes by the name GooGoosha is
Harvard educated, a pop singer, and martial arts expert. A new
target for Borat.
Random Musings
–Donald Rumsfeld’s comments on Wednesday, standing
alongside the president and Robert Gates, were all you needed to
hear from this arrogant man as he belittled the intelligence of the
average American and the electorate by saying, in part, the war
in Iraq was far too complex for any of us to understand. I’m
proud of how tough I’ve been on the secretary from day one, and
I think it’s pretty clear I was right in doing so. As a learned
friend of mine noted upon the announcement that Rumsfeld had
been pushed out, “he has been consigned to the graveyard of
monumental failures in the history of American democracy.”
–To my fellow Republicans who don’t want hearings now that
the Democrats are in charge, I fail to understand how any
American wouldn’t want to know just what the heck has been
going on with their tax dollars when it comes to the
reconstruction effort in Iraq. I hope Senator Biden, Congressman
Waxman et al grill the heck out of the Pentagon and any
administration officials who may have been involved, but when
it comes to the vice president and president, I believe in the
principle of executive privilege. I also believe Speaker-designate
Pelosi when she says impeachment hearings are off the table.
–Election Bits:
How could I have ever thought George Allen was a solid
presidential candidate? I should fine myself over this goof.
Chris Shays (R-CT) has always been one of my favorites. Glad
he survived.
My congressman, Republican Mike Ferguson, only captured 50
percent of the vote this time (50-48) versus a normal 58-42
margin. Yes, I voted a straight Republican ticket. 2008 could
easily be different.
Hillary kicked butt…67-31. She’ll formally announce before
long.
John McCain is the Republican frontrunner, no doubt, and thus
far his tilts to the right are simple politics and not a sellout. I’m
waiting to see how tough on Iraq he’ll be, however. It certainly
helps he was long on record for dismissing Rumsfeld. McCain
announces in the next, oh, few hours.
Missouri’s amendment for increased stem cell research passed
51-49. South Dakota’s measure to ban all abortions failed.
–Exit polls [Wall Street Journal]:
Only 40% believe the country is headed in the right direction
(78% of Republicans)
31% believe they are getting ahead financially (63% of
Republicans). 68% believe they are merely maintaining or
falling behind
In the vote for House seats:
88% of Blacks voted Democrat
73% of Hispanics voted Democrat (vs. 53% just two years ago)
Independents voted 59-37 Democrat
Moderates voted 62-36 Democrat
In other words, the above trends spell a further disaster for the
elephants in 2008’s congressional races. John McCain at the top
of the ticket could soften the blow a bit.
–One thing congressional elections do every two years is remind
voters of the abomination that is gerrymandering. My own
congressman’s district, for example, basically spans the entire
state, east to west. It’s absurd. But as columnist Robert Novak
pointed out, Republican losses would have been worse had
gerrymandering not been in place.
–So much for acting UN Ambassador John Bolton. With the
change of power in Congress, Bolton’s nomination to be
permanent ambassador is dead in the water. It’s been said by his
supporters that he’s been effective. These days the ultimate test
is Iran (and to a lesser extent North Korea) and since he hasn’t
been able to convince Russia and China to acquiesce on strict
sanctions for Tehran, his tenure has to be deemed a failure, as
unfair as that may be.
–Just last week I wrote of my experience on the Pine Ridge
Indian Reservation in South Dakota and the next day the Star-
Ledger in New Jersey featured the place on the front page.
Nothing I haven’t written before over the years, but in discussing
the problems at Pine Ridge the story mentions my new favorite
spot, Whiteclay, “where some Indians drive to ‘case up’ for a
weekend of binge drinking.” It reminded me of something I
forgot to pass along last time; that being the staggering number
of markers along the road, designating where people had died in
drunk-driving accidents. [Which is another reason why in all
seriousness you’d never catch me driving through there after
about 3:00 p.m.]
–Traveling through some airports on my way home last Saturday
I got to musing. What if the Bush administration had uncovered
the 9/11 plot? Would we have understood the true scope of it?
Assuming the evidence was rock solid, would we have still gone
after the Taliban? Saddam? In other words, would we really be
safer today? Do you think airport security would have been
tightened for a year or two and then restrictions relaxed? Would
unfolding terrorist plots in Europe have been more easily or less
easily uncovered?
–Evangelist Ted Haggard: “The fact is I am guilty of sexual
immorality. And I take responsibility for the entire problem. I
am a deceiver and a liar.”
He lied about everything up until the second he made this
statement. I feel for his children.
–Ethel G. passed along an important notice about a Social
Security e-mail scam, titled “Cost-of-Living for 2007 update.”
The SSA has issued warnings. Don’t fill it out.
–You’ve gotta love this one. Teri Horton, 74, a retired truck
driver from Newport Beach, California, paid $5 at a junk yard for
a drip painting in 1991. Today there is growing evidence it is a
Jackson Pollock. Just last week I wrote of how a Pollock was
sold for a record $140 million.
From James Bone of the London Times:
“Ms. Horton…took it to a friend’s trailer home, where they
laughed at it. ‘We were going to throw darts at it, but we sat
there and drank beer and never did get around to it.’
“Ms. Horton then put it in storage. The first indication that she
might have something special came when, to clear out her
clutter, she offered it for sale to friends. An art professor at a
nearby university told her that he thought she might have a
Pollock, beginning a long quest to authenticate it.”
Now, some experts, like a former director at the Metropolitan
Museum in New York, believe there’s no way it’s the real deal.
But an art restorer says he has matched a fingerprint on the
painting to one on a paint can from Pollock’s studio in East
Hampton, New York. “Since Pollock was known to work alone
and had no assistants or pupils the probability of the fingerprint
on the blue paint can being Pollock’s is very high.” He then
matched the fingerprint on the painting in question with an
undisputed work of Pollock’s at the Tate Modern in London.
Teri Horton’s work could fetch as much as $40 million.
One of the better similar stories in recent years involved the
Philadelphia man who bought a weathered painting for $4 in
1989 because he liked its frame and upon removing it,
discovered an original copy of the Declaration of Independence
concealed behind. It sold at auction for $2.42 million.
–A UN survey has Norway at the top of a list for best places to
live when taking into consideration economic growth, education,
health care and life expectancy. This is outrageous. How can a
country where it costs $8 for a pint be #1?!
–On Nov. 7, Los Angeles smashed its all-time record high
temperature for the day by a whopping six degrees, hitting 97.
Recordkeeping goes back to 1877. Kind of disconcerting.
–We note the sudden passing of Ed Bradley. I can’t add
anything to what has already been said about this classy
gentleman, but as a loyal viewer of “60 Minutes” since inception,
it’s amazing the power the program has had over its 35+ years,
both for good and bad.
Just last week I noted the piece Bradley did on British Petroleum
and its culpability in the Texas City refinery fire, March 2005.
There’s no doubt in my mind the airing of it helped lead to a
settlement in the final lawsuit on Wednesday, BP recognizing it
was going to continue to get killed on the PR front unless it did
so. I’ll miss Mr. Bradley.
–Finally, from time to time a sporting event can provide a
special moment and such was the case Thursday night.
It’s hard for those not familiar with New Jersey to understand
just how much Rutgers University is ridiculed….the state school
without a state name. And there’s the history of Rutgers football.
Little has gone right since the first game ever, Rutgers–Princeton
in 1869.
But in true Cinderella fashion, Rutgers took a giant step in
completing one of the more improbable journeys in the history of
sports when it defeated #3 Louisville before 44,000 manic fans,
coming back from a 25-7 deficit to win 28-25 in the final
seconds.
I’m one of those sports fans who believes you can have only one
team and in my case it’s my own alma mater, Wake Forest; itself
having a pretty special season thus far.
But in the case of Rutgers, all of us in this state were Scarlet
Knight fans for this one special moment, and maybe a few more
to follow. I was inspired just watching the game, first and
foremost by the great coaching job as well as the amazing
discipline of the Rutgers athletes. And it sure was a welcome
respite after that dreadful political season of ours.
—
Pray for the men and women of our armed forces. We raise our
glass to all the Veterans of our great country on this their day.
God bless America.
—
Gold closed at $629
Oil, $59.60
Returns for the week 11/6-11/10
Dow Jones +1.0% [12108]
S&P 500 +1.2% [1380]
S&P MidCap +2.1%
Russell 2000 +2.2%
Nasdaq +2.5% [2389]
Returns for the period 1/1/06-11/10/06
Dow Jones +13.0%
S&P 500 +10.6%
S&P MidCap +7.4%
Russell 2000 +14.3%
Nasdaq +8.4%
Bulls 52.1
Bears 26.0 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Brian Trumbore
