[Posted 7:00 AM ET]
“A New Way Forward”
Look! The tagline for our new strategy for Iraq, now to be
unveiled after New Year’s instead of before Christmas.
Gerard Baker / London Times
“George Bush has wisely decided not to ruin everybody’s
Christmas by announcing his plans for a new strategy in Iraq
before the end of the year. It would have been preferable if the
White House had not added to the general impression of disarray
in Washington by saying initially that he would speak next week
and then saying he would wait. But in grand strategy as in
courtship, even when you are inclined to haste, it is better to be
right than quick. We will have to wait until the new year.
“It is unlikely that the delay is caused by President Bush’s desire
to ponder more deeply the findings of the Iraq Study Group.
Rarely in the history of the deliberations of great men has the
shrift accorded their views been shorter. Not that you would
know it from reading the world’s press.
“Outside the U.S. the Baker report was greeted with the kind of
hushed reverence with which the shepherds heard out the
Archangel that wintry night in Bethlehem 2,000 years ago. The
great and the good had deliberated for months and lo! from the
clouds there came a great host of the heavenly army with a
stunning rebuke for the Bush administration, pointing the way
forward, with stops at all the favorite travel destinations of
America’s critics. Simply invite the Iranians and the Syrians to
the White House for tea and pistachios, tell the Iraqis to solve
their political and religious differences and start shipping the
boys home. Oh, and while you’re at it, lean on the Israelis to
solve their differences with the Palestinians, and everything will
be fine. Next: the Baker report into The Cure For The Common
Cold. 79 Recommendations!”
What’s going on these days is really almost surrealistic. Two
polls, AP-Ipsos and NBC News/Wall Street Journal, have 71% of
Americans disapproving of President Bush’s handling of the war
in Iraq. I’m scratching my head and wondering why it’s not
100%. This has nothing to do with whether you’re Republican
or Democrat, whether you voted for the man (I did twice), or
whether or not you agreed with going after Saddam in the first
place; it’s about common sense.
Alas, this week I lost a ton of respect for First Lady Laura Bush.
In an interview on MSNBC she joined the dwindling chorus
blaming the media for not presenting the good side of what’s
going on in Iraq. Incredible.
And then I caught Sean Hannity interview Donald Rumsfeld in
Baghdad, and there was the outgoing secretary lying through his
teeth yet again; telling a suddenly less bombastic Hannity (when
it comes to the war) that all remains hunky-dory. The media
“isn’t using good metrics!” Rumsfeld implored. 14 or so of
Iraq’s provinces are fine! We’re winning! For the first time,
Hannity was speechless.
Just what are the president, Laura, Rumsfeld and the Deniers
looking at? Start with the ethnic cleansing and the reality that an
entire middle and professional class is disappearing at light
speed.
So is it any wonder that Republican Senator Gordon Smith went
to the floor a week ago Friday and said he was “at the end of the
rope when it comes to supporting our Iraq policy…it’s absurd; it
may even be criminal.”
Retired General Barry McCaffrey / Op-Ed Washington Post
“We have very few options left. In my judgment, taking down
the Saddam Hussein regime was a huge gift to the Iraqi people.
Done right, it might have left the region and the United States
safer for years to come. But the American people have
withdrawn their support for the war, although they remain
intensely committed to and protective of our armed forces. We
have run out of time. Our troops and their families will remain
bitter for a generation if we abandon the Iraqis, just as another
generation did after we abandoned the South Vietnamese for
whom Americans had fought and died. We owe them and our
own national interest this one last effort. If we cannot generate
the political will to take this action, it is time to pull out and
search for those we will hold responsible in Congress and the
administration.”
I like Gen. McCaffrey, one of those who advised the president
this week, but I’ve also said on more than one occasion that
where I’ve disagreed is with his fawning support of his fellow
generals. Everyone is “world class” in his book. They obviously
haven’t been.
But what now? What is President Bush possibly thinking about
in formulating his “New Way Forward,” even as he acts like
what we’ll see is more of the same?
This week Senators John McCain and Joe Lieberman were
among a group of congressional leaders in Baghdad.
McCain:
“The American people are disappointed and frustrated with the
Iraq war, but they want us to succeed if there’s any way to do
that.”
McCain is calling for 15,000 to 30,000 more troops to attempt to
secure Baghdad and buy the Iraqis time to work out some form
of workable government that doesn’t include Moqtada al-Sadr.
“In my view,” he added, without a troop increase “the results are
going to be inevitable.” Both McCain and Lieberman pressured
Prime Minister Nuri al-Maliki to break ties with Sadr and disarm
his militia.
But the Joint Chiefs of Staff are against more troops, as are many
on the ground in Iraq and the cause of McCain and Lieberman
isn’t helped by the testimony of Army chief of staff Gen. Peter
Schoomaker, who told a congressional panel that the Army “will
break” under the strain of today’s war-zone rotations; this also
being McCaffrey’s argument for over a year.
We know this. The president has known this. Rumsfeld has
known it. So where the heck is the leadership to rectify it? It’s
sickening…and it should break every American’s heart because
we have hundreds of thousands of brave men and women, many
of whom are being ripped from their families and jobs, whose
lives are impacted.
Friends, you shouldn’t be surprised I review the Middle East
every day, searching for reasons to be the least bit optimistic.
There are moments when I actually am, but they pass quickly.
I was sharing some notes with an old friend from college, Dr.
W., who did his own review, concluding “mankind is too stupid
and short-sighted to make decisions that will be truly beneficial
to the greater masses over time. And if the United States is far
from perfect, what possible hope is there for almost any country
in the Middle East? Unemployment is sky high, the percentages
of those that are educated in the traditional sense are abysmal,
and the culture of most countries in the region has not progressed
beyond the loyalty of the family-tribe-clan mentality for
hundreds of years.”
And I haven’t even mentioned Iran yet.
Iranian President Ahmadinejad, as his nation held a conference
on the Holocaust:
“Thanks to people’s wishes and God’s will the trend for the
existence of the Zionist regime is downwards and this is what
God has promised and what all nations want. Just as the Soviet
Union was wiped out and today does not exist, so will the Zionist
regime soon be wiped out.”
On the issue of Iran’s nuclear program, Foreign Minister Mottaki
warned:
“Iran does not welcome the escalation of tension in its relations
with other countries, but it is fully prepared to defend its national
honor if certain countries continue pushing for sanctions and
threatening the Iranian people and government in order to deny
Iran its nuclear rights.”
But this week, in a rarity, Ahmadinejad was heckled at a
university as he was giving a speech.
Anne Applebaum / Washington Post
“Ahmadinejad responded by calling the hecklers paid American
agents: ‘Today the worst type of dictatorship in the world is the
American dictatorship, which has been clothed in human rights.’
The American dictatorship, clothed in human rights and spouting
falsified history: It’s the kind of argument you can hear quite
often nowadays, in Iran as well as in Russia and Venezuela, not
to mention the United States.
“All of which is a roundabout way of saying that this particular
brand of historical revisionism is no joke, and we shouldn’t be
tempted to treat it that way. Yes, we think we know this story
already; we think we’ve institutionalized this memory; we think
this particular European horror has been put to rest, and it is time
to move on. I’ve sometimes thought that myself: There is so
much other history to learn, after all. The 20th century was not
lacking in tragedy.
“And yet – the near-destruction of the European Jews, in a very
brief span of time, by a sophisticated European nation using the
best technology available was, it seems, an event that requires
constant re-explanation, not least because it really did shape
subsequent European and world history in untold ways. For that
reason alone it seems the archives, the photographs and the
endless rebuttals will go on being necessary, long beyond the
lifetime of the last survivor.”
Senator McCain was in New York before heading to Iraq and
gave the convocation at Yeshiva University.
“The Iranian regime defines itself by hostility to Israel and the
United States….We are dealing with a possibly deranged and
surely dangerous state.
“We have a long way to go diplomatically before we need to
contemplate other measures. But it is a simple observation of
reality that there is only one thing worse than a military solution,
and that, my friends, is a nuclear-armed Iran.
“The regime must understand that it cannot win a showdown
with the world. And as Americans, we also need to reassure the
reformers and the millions of Iranians who aspire to self-
determination that we support their longing for freedom and
democracy.”
But when it comes to sanctioning Iran at the UN, it’s been nine
months since the first resolution calling on Iran to cease
enriching uranium, though now Russia has said it is amenable to
some provisions in a new draft seeking to stop Tehran’s
program; but only if it allows official travel and prohibits any
financial sanctions. Of course Russia wants its $800 million for
completing Iran’s Bushehr plant.
So is it any wonder that even if it was a true slip of the tongue,
Israeli Prime Minister Ehud Olmert had Iran on his mind when
he told a German television station what everyone knows, but is
never publicly acknowledged by the Israeli government; that the
state has nukes. [“(Iran) is working to get nuclear weapons like
the U.S., France, Israel and Russia.”]
Vice Premier Shimon Peres, who in the 1950s spearheaded
Israel’s nuclear efforts, defended Olmert.
“We didn’t build a nuclear option in order to create a nuclear
bomb. The very suspicion that we have one is enough. It’s
intended for deterrence and it has achieved its goal.”
Message received….even in Tehran. But will Ahmadinejad be
the first to truly cross the line anyway?
One final note. Civil war in the Palestinian territories is closer to
fruition than ever, especially after Prime Minister Haniya’s
attempt to bring $35 million in donations from the likes of Syria
and Iran across a checkpoint between Gaza and Egypt on
Thursday. One of his bodyguards was killed amidst the
confusion by forces aligned with Fatah.
Upon returning home late Thursday night, Haniya said “We
know the party that shot directly at our cars…and we also know
how to deal with this.” [As for the money, European monitors,
working with Israel, allowed it to be placed in an Egyptian
account, which Haniya will then undoubtedly access.]
—
Wall Street
Stocks around the world soared. No need to worry about
anything, market participants are saying. The future has never
looked brighter! Go forth and obtain a third mortgage, by gosh,
and plop it down on a bunch of blue chips; go on a cruise and
leave your troubles behind.
No doubt, some of the news was good. Retail sales came in
better than expected and the reading on November consumer
prices was unchanged, including the core rate, ex-food and
energy. Year over year, the core CPI is up 2.6%. You can
quibble with how the government comes up with the data, but the
number itself is tame.
Earlier in the week the Federal Reserve held the line on interest
rates again, as expected, but did admit there was a “substantial
cooling of the housing market.” Yup, there sure is.
But the Fed added, while core inflation remains elevated (above
its preferred 2% target), it expects economic growth to
“moderate” and, thanks to falling energy, coupled with the
slowing economy, inflation will then “moderate” too.
Only one problem with that….energy isn’t going to fall with
what I see going on in the Middle East. Plus OPEC is flexing
some muscles, and exhibiting a little discipline, in instituting
production cuts that are sticking, to a certain extent; “certain
extent” being better than their history of outright shoddy
compliance. And in one of the dumber moves in the history of
commerce, Angola sold its soul to the devil in agreeing to
become the first new member of the cartel since 1975, which
also means Angola will have to comply with OPEC’s wishes and
not necessarily develop its resources in its nation’s best interests.
But then when I’m up late at night, musing about the world and
which places I’d like to visit next, Angola isn’t part of the
equation.
One item on the energy front I forgot to bring up last time is a
tidbit I received from my friends at Pritchard Capital concerning
China. China is in the process of building its own petroleum
reserves, just like the United States and many European nations
have, but it’s only up to 4 or 5 days worth presently and the goal
is three months supply. Evidently China is buying any dips
below $60, so you can see the stabilizing impact this can have on
prices. [We closed this week above $63.]
And speaking of China, so much for a successful trip by
Treasury Secretary Hank Paulson and his posse which included
Fed Chairman Bernanke. Remember, the United States isn’t
exactly operating from a position of strength these days, for a
variety of reasons. You might say, as I have, that we are in fact
increasingly irrelevant.
On the power front, for example, it’s pretty tough to act like a
hard-ass, as Paulson tried to do, when you’re talking to a country
that holds about $675 billion in U.S. Treasuries.
Before the entourage arrived, China’s central bankers warned
that while they welcomed the visitors from the West, it would
not allow any outsiders to dictate currency policy. Then, upon
Paulson and Co.’s arrival, Vice Premier Wu Yi, looking quite
communist I might add in her spiffy red outfit, pledged to push
ahead with “reform,” including on exchange rates; but then she
criticized Americans for “not only having limited knowledge of,
but harboring much misunderstanding about the reality in
China.”
Ms. Wu explained how poor much of her country remains and
“To change the underdeveloped productivity remains a long term
and arduous historic task.”
Then Ben Bernanke, looking very capitalist, released a copy of
his remarks that branded China’s undervalued currency as an
“effective subsidy” that was distorting trade and providing an
unfair advantage to its exporters.
However, after someone pulled him aside and explained a public
forum probably wasn’t the place to confront China, on their soil,
he removed the passage before his speech to the Chinese
Academy of Social Sciences.
So what’s the bottom line? It’s certainly good to engage China
on the contentious issues of the day, but China really couldn’t
give a damn about us. As long as our economy is growing, even
at a slow clip, Americans will buy enough exports to continue to
keep China’s factories humming and a majority of the people
happy. But we aren’t as important as we once were to their
economic well-being, except in times of recession, as China is
broadening its influence and opening markets all over the world.
In other words, China is going to continue to operate at its own
pace and it will ever so slowly adjust its currency on its own
timetable, not ours.
U.S. manufacturers, though, are not likely to like the fact little
was accomplished by this expensive mission and soon again,
cries of protectionism will echo through the halls of a now
Democratic Congress.
What the U.S. needs to do a better job of is confronting China in
the World Trade Organization. The mechanisms are in place,
China has had an ample honeymoon since becoming a member,
and now, working with Europe, which is just as ticked off as we
are, if not more so, we can team up and gain some successes.
For all the grief the WTO gets, more often than not if you have a
case you win.
Street Bytes
–Observing a vast majority of market mavens these days on
television, one can easily detect more than a bit of swelling
around the brain. Yes, there’s a bit of hubris out there. But I’m
close to having used up all my ammo this year and I have to
leave some for my year-end review and look ahead to 2007. So
for now Goldilocks prevailed yet again as the Dow Jones
rocketed to another new high, finishing the week at 12445, or up
1.1%. The S&P 500 is now exactly 100 points from its all-time
mark of 1527, having tacked on 1.2% to 1427, and Nasdaq is
just shy of its own 6-year high at 2457. More merger news, plus
the outlandish earnings reports from the brokerage sector helped
propel equities, but the deteriorating housing industry also led
others such as Black & Decker, Illinois Tool Works and Stanley
Works, all dependent on new home construction to a large
extent, to lower earnings expectations; in the case of Black &
Decker severely as its shares fell 10% on Friday.
–U.S. Treasury Yields
6-mo. 5.05% 2-yr. 4.72% 10-yr. 4.59% 30-yr. 4.71%
The bond market barely responded to the Fed’s statement and
yields ticked up slightly on the stronger than expected retail sales
data. Otherwise, the dollar stabilized some and it’s tough to
envision too many fireworks in the bond pits before year-end.
Everyone is ready for a break.
–The Bank for International Settlements confirmed that Russia
and members of OPEC have been moving out of the dollar and
into euros, yen and sterling; reducing their dollar holdings from
67% to 65%. That may not seem like much, but OPEC’s dollar
deposits, for example, fell by $5.3 billion…in case you’re
looking for a reason for the greenback’s decline, this past week
notwithstanding.
–Goldman Sachs earned a post-Roman Empire record $3.15
billion for the quarter and $9.54 billion for its fiscal year on
revenue of $37.7 billion. So…$16.5 billion was set aside for
bonuses, which works out to something like $623,000 per
employee. 70% of Goldman’s revenues for the fourth quarter
resulted from trading and principal investments.
–Meanwhile, bonus numbers for Wall Street’s titans are
beginning to be released. Morgan Stanley’s John Mack is first
out of the gate at $40 million, which means the others are likely
to match or exceed it.
Then when they all get together for surf and turf in January, the
conversation will go something like this.
“What are you doing with it, John?”
“Chad. Buying Chad.”
“Chad? Why?”
“Buy low, sell high!”
–First it was US Airways and its bid for Delta. Now there is talk
of UAL’s United and Continental Airlines hooking up, while a
private investor group and Australia’s Macquarie Bank are
taking out Qantas. In the case of the first two, however, Delta is
still balking and a UAL-Continental match has to first placate
Continental’s alliance partner Northwest. Bottom line, airline
share prices have been rockin’ and rollin’ in 2006 and my
gloomy geopolitical outlook has prevented me from cashing in.
Me so stupid!
[By the way, a UN report estimates that airliners account for over
3.5% of all greenhouse gas emissions and by 2050 this will rise
to 5%.]
–The Financial Times and management consultant McKinsey
have completed the first study of the value of the world’s largest
unlisted companies and Saudi Aramco comes out on top with an
estimated value of $780 billion; far greater than the current
market capitalization of ExxonMobil, $450 billion.
–General Electric won its largest gas turbine order in five years,
$1 billion, to Saudi Arabia’s state power company. This is all
part of GE’s push to increase sales to developing countries from
$27 billion in 2006 to $40 billion by ’09.
Overall, GE is forecasting profit growth of between 10% and
13% in 2007, down from the expected 15% this year. But GE
hiked its dividend and CEO Jeff Immelt did a good job of
spinning the company’s prospects and presto! GE shares had
their best week in ages.
–David Streitfeld of the L.A. Times had a piece on “pay option”
loans that let the homeowner choose what he’ll pay.
For example:
“One of (Will Hertzberg’s) options is to pay $2,513 a month.
That would cover the principal and interest as if it were a
traditional 30-year loan.
“A second possibility is to pay $2,279, which would cover only
the interest.
“But each month he always takes the cheapest option: paying
$1,106 and promising to make up the shortfall later.
“Essentially, option loans are bets that good things will happen.
Maybe the mortgage holder will get a big raise, or sell a script to
Hollywood, or inherit a chunk of change. When the borrower
has to start paying off the loan in earnest in five years, the plan is
that he or she will somehow be able to handle it.”
If the housing market goes up enough, then the owner could
refinance again. Of course today that’s not necessarily the story.
And as Streitfeld points out, whereas in 2003 only about 8 of
every 1,000 people buying a home or refinancing a mortgage in
California chose the pay option loan, in 2005 this had soared to 1
in 5 applicants. Further, in the first eight months of 2006, nearly
1 in 3 chose them! Yikes.
–One thing that is working…hotels in New York City. Average
occupancy is a staggering 88% and average room rates are $260.
So with the condo market softening in the Big Apple, developers
are switching gears and turning projects into hotels.
–If the Pentagon has its way, spending on Iraq, Afghanistan and
other elements of the global war on terror will hit $170 billion in
fiscal 2007 as the military has requested $99.7 billion in
additional funding to go with $70 billion previously approved. It
will be up to the Democratic Congress to handle this.
–Remember when OPEC had a price band of $22-$28?
–Dubai’s DP Ports World sold its US interests to a unit of AIG,
thus ending the nightmare that began back in February when
Congress and the American people got all up in arms over DP
World’s acquisition of some five container terminals on the U.S.
east and gulf coasts, as well as other cargo and passenger-
handling businesses. The issue then was the Bush administration
not giving key congressional figures a proper heads-up on what
promised to be a controversial issue. I’m on record as having
supported DP World back then because of broader trade and
foreign policy implications. [See my current “Wall Street
History” piece for more.]
However, I do have to add that, separately, the White House is
now concerned about sensitive military technology finding its
way to Iran and Syria via Dubai. Dubai (United Arab Emirates)
has always been a key transit point, no doubt, and its financial
institutions are used heavily by suspected terrorists.
I just maintain that DP World, with extensive holdings around
the globe, is not the issue. It’s complicated, though, and I’ll have
further comment in weeks to come. I’ll also certainly admit if
perhaps I’ve been wrong.
–Antitrust authorities in South Korea, the United States and
Japan are looking into price-fixing by the two leading makers of
flat-panel displays, Samsung Electronics and LG Philips LCD.
The European Commission is undertaking its own investigation.
This comes at a bad time for the manufacturers because prices
are currently plummeting due to oversupply. The inquiries have
more to do with 2003 and 2004 when the sector was white hot.
–In one of his last acts before becoming governor of New York,
State Attorney General Eliot Spitzer has gone after the brokerage
industry again; this time UBS for putting clients into “wrap
accounts” when other options would be far less costly.
I imagine some of you may have faced this situation yourself and
I had extensive experience in this kind of thing when I was on
Wall Street.
It boils down to this. If you have a brokerage account with, say,
$100,000 in it and make three or four trades, max, a year, don’t
let a broker place you in a wrap account with a flat fee of 1.75%
to 2%, for instance. [Wrap fees used to be as much as 3% but
they’ve been coming down.] Just understand that the broker is
under pressure from management (big-time pressure!) to get
more revenue out of relatively dormant accounts and you’re a
target. It’s a dirty game and I fully back Spitzer on his move.
–Speaking of dirty games, when I mentioned GE and its gas
turbine contract, the #2 player in this market is generally thought
to be Germany’s Siemens. This week prosecutors have upped
their estimate of suspicious transactions at the conglomerate to
$556 million, roughly double earlier projections.
This is no small potatoes, sports fans. Recall a few weeks ago
that 200 police raided the offices and residences of various
Siemens employees and among those arrested thus far is a chief
financial officer of its telecommunications-equipment arm. In a
nutshell, the funds were used to bribe potential customers.
–BP faces yet another probe, this one by the Commodity Futures
Trading Commission (CFTC), which is alleging price
manipulation in unleaded gasoline futures. It’s the third time the
CFTC has come down on BP this year. Of course BP has also
faced investigations over the 2005 Texas City refinery disaster as
well as an oil spill in Alaska last March and the later closure of
Prudhoe Bay.
–Monster Worldwide, parent of job-search Web site
Monster.com, acknowledged officials “intentionally” backdated
option grants during a six-year period and the company is
restating earnings going back nine years by $272 million. What a
bunch of total dirtballs. It does need to be noted, however, that
the miscreants, about 60 executives and directors, have already
been shown the door over the course of this year and are now
posting their resumes on competing sites.
–Kathy Kristof of the L.A. Times had a good column on what to
watch out for if you have a 401(k) with a small company.
Unfortunately, there have been far too many instances of fraud
with these accounts.
What you can do to protect your money.
“Check the balance on your 401(k) account at least once every
three months and double-check it against your payroll
deductions. If you get statements just once a year, ask your
employer to issue quarterly reports. Watch for late or irregular
statements.
“Be alert for a sudden drop in your account balance that can’t be
explained by market conditions. Watch for investments in funds
that you did not authorize.
“Stay in touch with former employees. If they say they are
having problems getting access to their 401(k) assets, it could be
a sign of trouble.
“Stay abreast of your company’s financial health. If your
employer is experiencing difficulties, there may be a threat to
your retirement savings. Also be on guard if there are frequent
or unexplained changes in investment managers or 401(k)
consultants.
“If you have concerns, contact your employer or benefits
administrator.” [The Labor Dept. is another source, (866) 444-
3272.]
–China executed two former employees of the nation’s third-
largest bank for defrauding customers of millions of dollars; a
total of over $50 million worth in the 1990s. The two had fled
but were extradited. We’d just need one example here to do
away with 90% of the fraud cases in the U.S.
–The Census Bureau’s 2007 Statistical Abstract of the United
States reveals that 91 million individuals now own stocks and
mutual funds.
–Finally, the New York Times’ Thomas Friedman had a column
on Friday about wind energy. Perfect for my big stock holding,
the carbon fiber company that picks up most of its revenue these
days from selling its product to turbine blade manufacturers.
But you know how I’ve been waiting impatiently for this outfit’s
earnings, for the Sept. 30 quarter? In the dead of night on
Thursday they finally reported and once again missed on sales.
Plus they have this lawsuit that is a royal pain in the butt. So the
stock took another nosedive, after a strong rally the previous
week, and I sold some on Friday, though I wish I had actually
sold more until the company straightens itself out.
You may recall I visited the company’s facility in Abilene,
Texas, back in the spring of 2005 to get a better handle on the
process. Demand for carbon fiber is huge and growing, but it’s
not the easiest stuff to manufacture.
Additionally, I have never seen a better example where a change
in management could work wonders. The current crew is the
pits.
Foreign Affairs
Lebanon: Little to say this week except the stand-off enters a
third week as the Arab League has attempted to broker a
compromise between the anti- and pro-Syria coalitions. Arab
League chief Amr Moussa has proposed an increase in the
Cabinet from its current 24 ministers to 30, with Prime Minister
Siniora’s anti-Syrian partners getting 19, Hizbullah and its allies
10 and one neutral minister. It’s unclear to me exactly what is
needed for ‘veto power.’ The issue of the tribunal on the Hariri
assassination still hangs in the balance.
Russia: Big meeting in Moscow on Friday (results of which
aren’t known as I write) between Presidents Vladimir Putin and
Belarus’ Alexander Lukashenko, with the topic being, of course,
energy. Russia has decided to hold up its buddy just like it has
its new ‘enemies’, Ukraine and Georgia, in imposing full
customs duties on crude-oil exports to Belarus, along with hiking
natural gas to the same $200 per 1,000 cubic meters that it is
attempting to get out of the other two nations. The other week I
mentioned nat gas giant Gazprom was trying to gain control of
Belarus’ state-owned pipeline network, Beltransgaz, and these
other moves are related to this. Just a few months ago these two
countries were talking of a potential merger; now who knows
what will happen.
In the meantime, however, the story getting all the headlines is
Royal Dutch Shell’s cave-in to Gazprom and the huge $20
billion Sakhalin-2 liquefied natural gas project off the far east
coast of Russia. The Kremlin is sticking to form and forcing
Shell to give up its majority interest.
The London Times explained.
“The project is governed by a production-sharing agreement
(PSA) that allows the operator to recover all its costs from gas
sales before the allocation of profits, taxes and royalties. The
Russian Government now regards the PSA as too favorable to
Shell and has yet to agree to Shell’s new cost estimate. The
continuing harassment of the project, delays caused by
environmental inspections and the persecution of expatriate staff,
have taken their toll. Foreign workers in Sakhalin are being
prosecuted for visa violations. About 600 are being targeted and
several have appeared in court to pay fines.
“Sakhalin sources indicate that expatriates are becoming fearful
and concerned that the visa infractions leave them with criminal
records that allow the Government to revoke work permits at any
time. Some staff have been told to leave, while others have
stayed but cannot work. Shell said that there are problems with
converting visas to work permits.”
Sakhalin-2 remains the only large-scale energy project in Russia
that the Kremlin doesn’t have a big say in.
So from here on, foreigners will only be allowed to participate in
Russia’s energy sector from a subcontractor angle. As Putin
spokesman Dmitri Peskov told the London Times:
“Our companies have the opportunity to be owners by
themselves, to attract finance and certain technologies. This
changes the conditions for foreign investors….
“We understand that it is better to have a direct share but you
have to understand these are Russian resources. No country in
the world would want to give up its natural resources to
foreigners.”
Oh, we understand, Mr. Peskov.
James Harding / London Times
“Impatient with the slow pace of proletarian struggle in Europe,
Joseph Stalin in 1924 famously abandoned Leninist notions of
international revolution and instead decided to go it alone in
building a communist state. It was a strategy referred to as
Socialism in one Country.
“President Vladimir Putin, too, is in the business of nation-
building. While Russia has abandoned the failed communist
model, there are signs that President Putin appreciates the Soviet
policy of self-reliance. Russia’s treatment of Royal Dutch Shell
suggests that Mr. Putin operates an updated version of Stalin’s
Russia First policy: it could be dubbed Capitalism in one
Country.
“Free market isolationism is a nonsensical hybrid. Shell’s
decision to bow to pressure from the Kremlin and cede control of
the Sakhalin-2 project is a landmark, but backward step in the
development of the Russian economy….
“Shell may assuage its critics in the Kremlin if it concludes the
mooted deal to hand Gazprom a majority share of Sakhalin-2. It
should bring to an end the unpleasant harassment of Sakhalin
Energy by the environmental agency and it should regularize
Shell’s relationship with the Kremlin. But the deal needs to be
workable for both sides, allowing Shell to recover most of its
costs. It has to send a signal to foreign investors that Russian
capitalism is not a game with loaded dice.
“Shell’s experience of Putinisation reinforces the sense that
Russia is a gamble. Foreign companies have to work on the
principle that a contract with Russia is, these days, little more
than a memorandum of understanding.
“In time, Russians will discover that Muscovite capitalism is not
to their benefit either. No company, in Russia or anywhere else,
has sufficient management and technical expertise to build alone
the scale of infrastructure required to run a modern economy, let
alone meet the world’s expectations for Russian energy exports.
The Russians will end up paying for inefficient exploitation of
their energy assets.”
Editorial / Wall Street Journal
“The authoritarian drift of Russia continues apace. Yesterday,
the Kremlin managed to pull the rug out from under the largest
foreign investment in the country, Royal Dutch Shell’s $20
billion oil and gas project….You might call it the economic
version of Polonium-210….
“(But) Mr. Putin finds no shortage of defenders. After all, goes
the refrain, Venezuela, Saudi Arabia, Mexico and other
developing countries keep their oil and gas resources tightly held
in state hands, too. Vladimir Putin’s Russia certainly belongs in
that company. So, please remind us, what’s the country doing in
the G-8 club of the world’s leading industrialized democracies?”
John Vinocur / International Herald Tribune
“(If) Russia were somehow producing a Baker Commission
report this week on Putin’s fulfillment of major strategic goals
since 2003, from the point of view of Moscow’s nationalist
power politics, he would get straight A’s.
“Putin has pushed and bullied Ukraine and Georgia away from
NATO, established and deepened Europe’s dependence on
Russian energy sources, and elbowed the European Union into
near silence in the face of threatened boycotts and Russia’s
refusal to sign a charter of good conduct between energy
suppliers’ and their clients.
“Through the Security Council, and Bush’s current reliance on it,
Putin holds a Russian veto and a gatekeeper’s prerogatives in
relation to the West’s hopes to stop Iran. The war in Chechnya,
normally a minus-column entry, escapes serious censure because
the allies keep quiet about it. A democracy that’s flickered out, a
fleeting rule of law? To Putin, they’re nonproblems, as
disposable as paper hats and tinsel.”
Peter Finn / Washington Post
“On Nov. 15, the Russian Interior Ministry and Gazprom, the
state-controlled energy giant, announced three new senior
appointments. Oleg Safonov was named a deputy head of the
ministry. Yevgeny Shkolov became head of its economic
security department. And Valery Golubev was appointed a
deputy chief executive at Gazprom.
“All three men had something important in common beyond the
timing of their promotions: backgrounds as KGB officers and
experience working directly with President Vladimir Putin when
he was a KGB operative himself in Germany or later, when he
was a rising presence in the local government of St. Petersburg,
his home town.”
Finn cites a report by Olga Kryshtanovskaya, director of the
Moscow-based Center for the Study of Elites.
“Kryshtanovskaya recently analyzed the official biographies of
1,016 leading political figures – departmental heads of the
presidential administration, all members of the government, all
deputies of both houses of parliament, the heads of federal units
and the heads of regional executive and legislative branches. She
found that 26% had reported serving in the KGB or its successor
agencies.
“A more microscopic look at the biographies, she said –
examining unexplained gaps in resumes, unlikely career paths or
service in organizations affiliated with the KGB – suggests the
startling figure of 78%.”
Finally, I recently wrote that it was I, back in the fall of 1999,
who first raised the possibility Vladimir Putin was directly
involved in the Moscow area apartment bombings.
Holman W. Jenkins Jr. / Wall Street Journal
“Put yourself in Mr. Putin’s shoes. It’s hard to see how, except
by holding onto power and trying to use it to control his circling
enemies, he could hope to avoid becoming a target of political or
legal retribution sooner or later. He’s riding high in domestic
polls, thanks to a recovering economy, no small thing. But the
Litvinenko murder may have been the thread that begins the
unknitting. The real threat has always been Ryazan. That’s the
Russian city where on Sept. 22, 1999, a resident noticed men
unloading bags of ‘sugar’ into the basement of a large apartment
block. The sugar was the explosive RDX; the men were Russian
federal security agents. Moscow claimed the incident was a
training exercise, but the apartment bombings, which had killed
300 of Mr. Putin’s subjects, suddenly stopped.
“Western governments have been nothing if not resolute in
turning away from Ryazan and the evidence of the crime that
allegedly underwrote Mr. Putin’s rise to power. Western leaders
might prefer, all things considered, to see him remain in power
rather than deal with the consequences of Ryazan. But it is not
in the nature of the world that such a mystery can be concealed
forever, or its consequences ducked.”
India: The Senate voted unanimously to give India access to
American nuclear technology, while in return India will permit
inspection of most of its nuclear reactors for the first time.
President Bush deserves credit on this one and I view it as a
significant achievement in terms of the long-term relationship
between our two democracies. [The agreement still needs to be
put into formal treaty form and accepted by the Nuclear
Suppliers Group of 45 nations. Both are highly likely now.]
But critics of the deal say it will lead to the spread of nuclear
weapons, and there is no doubt Iran will use the agreement to the
fullest in arguing its case for a nuclear program. In other words
some worry there could be a “nuclear weapons domino effect.”
To which I’d simply argue, do you think Iran at this point is
going to be stopped? Let alone any others seeking nukes in the
region? And wouldn’t India just get the know-how elsewhere?
And isn’t Pakistan going to continue to deal with China with
regards to its own nuclear weapons program?
North Korea: Six-party talks on Pyongyang’s nuclear weapons
are slated to restart Monday, but only briefly, before breaking up
for Christmas and New Year’s.
The North has offered to shut down the main reactor at the key
Yongbyon plant, but only if the U.S. lifts all financial restrictions
for its alleged counterfeiting and money laundering. In addition,
the North insists on energy aid.
If we’ve learned anything it’s this. There will be no great
immediate breakthroughs and some of us will be highly skeptical
of any that are announced.
Remember, we have no clue what the North has been doing and
where. Verification will be a nightmare. And now China has
even more of an incentive to jerk the United States around with
all the pressure being exhibited on it by the Paulson entourage,
so don’t look for Beijing to do much to pressure Kim Jong-il.
China: The state-run Xinhua news agency issued a surprise
admission in a commentary recently. “The huge number and
broad scope of mass incidents (of social unrest) has become the
most outstanding problem that seriously impacts social stability.”
It’s all about the plight of the farmer and loss of land, corruption
and the dreadful pollution problem; all of which are contributing
to the widening gap between rich and poor.
Xinhua’s commentary went on to say:
“Whether we can actively prevent and properly deal with mass
incidents is a significant test of the party’s ability to govern. The
Communist Party – particularly local officials – must do its
utmost to help laid-off workers, landless farmers, displaced
migrants, peasant workers and the poverty-stricken populations
of towns and villages.” [Jane McCartney / London Times]
Turkey: The European Union agreed to partially suspend
Turkey’s membership talks because of its refusal to fully open its
ports and airports to Cyprus. But the ministers didn’t set a
deadline for compliance, so they left the door open a crack.
Turkey, though, was furious, arguing it is being punished for not
trading with Cyprus at a time when the EU has failed to fulfill a
2004 agreement to end a trade embargo on the Turkish Cypriot
north. Turkish Cypriots had backed a UN plan to unify the
island in 2004, but Greek Cypriots in the south rejected it. The
Greeks then became part of the EU and now have veto power
over Turkey’s accession.
But some EU members, such as Britain, maintain Turkey’s bid is
still on track. I say it derailed a long time ago.
Afghanistan: The Taliban killed two school teachers and three
other family members, bringing to 20 the number of educators
killed in attacks this year. The sisters had been warned to quit
teaching and if they didn’t they’d “end up facing the penalty.”
Chile: General Augusto Pinochet died and the nation was divided
on the matter with sporadic violence in Santiago immediately
after. So you might be wondering why there isn’t a consensus on
Pinochet’s dictatorial rule, 1973-1990. Over 3,100 were killed
under his regime and 29,000 tortured, with two-thirds of both
occurring in 1973 when he took power.
But Chile’s economy performed spectacularly in his latter years,
especially compared to the previous socialist/communist rule,
and he restored the country to civilian leadership under
democratic principles. So it shouldn’t be too much of a surprise
that he leaves the scene with his share of supporters.
Saudi Arabia: Prince Turki al-Faisal, the Saudi ambassador to the
United States, suddenly left his post and flew home after only 15
months on the job. The previous ambassador, Prince Bandar bin
Sultan, friend to the presidents (cough cough), was on the job 22
years. So wassup?
It appears that Turki’s brother, Prince Saud al-Faisal, the
influential foreign minister, is seriously ill and as the Washington
Post reported, Turki is rumored to be his brother’s replacement.
Turki is held in high regard. Then again this begs the
admonishment, watch your back.
Separately, on the issue of Saudi Arabia’s threat to back Iraq’s
Sunnis if the U.S. withdraws, Ralph Peters wrote the following
commentary in the New York Post, both on this issue and the
broader war.
“American diplomats and politically correct generals want to be
honest brokers in the Middle East, to achieve peace through
forbearance and negotiated compromises. It may be the most
hopeless dream in the history of foreign affairs….
“Although Israel’s existence is increasingly threatened, the
unavoidable struggle is between Sunni and Shia. Transcending
their internal fault lines – for now – these two competing forms
of Islam are already at war in Iraq. It’s only a matter of time
until the fighting spreads.
“The question isn’t ‘How can we stop it?’ We can’t. Even
delaying the confrontation may come at too high a price. The
right question is ‘How do we make sure we’re on the winning
side?’”
“Now the Saudis are threatening us: If we turn our backs on
Iraq’s Sunni Arabs, Riyadh says it will fund the insurgents.
“The threat might carry more weight if Saudis weren’t already
funding Iraq’s Sunni butchers. And note that Saudi Arabia
hasn’t threatened to intervene militarily – the playboy princes
know that their incompetent armed forces would collapse if sent
to Iraq.
“It’s time to call Riyadh’s bluff. Having made whores of
innumerable politicians on both sides of the aisle in Washington,
the Saudis still hope to steer American policy the way they did
before their citizens attacked us on 9/11.
“Now they demand American protection for those Iraqis who
have done their best to kill our troops, instigate a religious civil
war, slaughter the innocent and destroy any hope Iraq has of a
better future….
“The Saudis could have undercut the insurgency in Iraq in 2003.
Instead, they backed it – because they refused to give up the old
order in which the Sunni Arabs – less than 20% of Iraq’s
population – ruled in Baghdad. But Riyadh’s policy of
channeling funds through private donors didn’t fool anybody
who didn’t want to be fooled….
“Equating ‘Shia’ with ‘Iran,’ then writing off the Shia option
would be strategic idiocy. Instead, we need to ask ourselves how
we can wean the region’s Shia – including restive young Iranians
– from Tehran’s breast.
“Some Iraqi Shia do feel an affinity for Iran – but many don’t;
Arabs find Persians racist and condescending.
“Here’s the critical issue: How do we channel the unstoppable
rise of Shia power into a course that doesn’t threaten us?
“And if the terrified Saudis want us to rescue their nasty
backsides again, let’s ask just what they plan to do for us in
return – then let’s see them actually do it.
“But our response to any threat from Riyadh should be a public
smackdown. Without our support, the Saudis are defenseless.
Let’s stop pretending we’re the ones who need help.
“We have to shift onto the winning side of history. Increasingly,
that doesn’t look ‘Sunni side up.’ Yes, face down Iran. But do it
wisely, by cooperating with those Shia who fear Tehran’s
imperial ambitions – rather than alienating them for the sake of
Jim Baker’s Saudi friends.
“We’ve tried to be fair, and we failed. Now let’s concentrate on
winning.”
Zimbabwe: President Robert Mugabe, 82, has said he agrees
with a plan to extend his 28-year run until 2010. The national
security minister said “He has done so many wonderful things
for this country and its majority population and he is not showing
any signs of tiredness. So…why not?”
And just what kind of wonderful job has Mugabe, a two-time
StocksandNews “Dirtball of the Year” winner, done?
Well, let’s see. The basic needs of a family of six are four times
the average wage and even the government admits living
standards have declined precipitously over the past decade.
Inflation is running at about 1,000% and at least 65% are
basically starving. So with the lack of nutrition, the incidence of
AIDS is also skyrocketing.
But wait…there’s more! Unemployment is 70% and the average
life expectancy is 34 for women and 37 for men; the lowest in
the world these days. Freakin’ cavemen probably lived longer.
Sudan / Darfur: British Prime Minister Tony Blair has called for
a no-fly zone over Darfur if Khartoum doesn’t stop the violence
there and allow a UN-led peacekeeping force. U.S. officials
have said the Bush administration is working on military plans,
including airstrikes.
But opposition in the Pentagon is strong and the chances of this
happening, with everything else that is going on, would appear to
be nil.
Ethiopia / Somalia: Then you have the Horn of Africa, which is
threatening to blow at any moment…war between these two
specifically. Leaders of Somalia’s “Islamic Courts” movement
seem bent on creating a “Greater Somalia,” including portions of
Ethiopia, Kenya and Djibouti. Of course as I noted a while back,
al Qaeda is feathering its beds in Somalia; a perfect lair for
plotting and scheming.
Britain: For the first time in 90 years, a prime minister has been
questioned in a corruption inquiry. Tony Blair was interviewed
by police on Thursday (a convenient time as the Princess Di
report was being released the same day) on his role, if any, in the
“cash-for-honors” investigation.
This has to do with a burgeoning campaign finance scandal
investigation that started in March. Basically, Blair’s Labour
Party is accused by some of accepting loans/donations in
exchange for “peerages,” or seats in the House of Lords, a cool
little perk if you are so inclined. Four lenders are at the center of
the inquiry and among the issues, aside from Blair’s possible
role, is whether or not the loans were illegal. [It’s complicated
but boils down to whether a commercial lender would have
offered the same terms.]
At the same time, Blair’s government caved in to the Saudis and
their role in another scandal involving British defense giant BAE
Systems and ‘oil-for-arms’ contracts; i.e., bribery. In dropping
an investigation here, it, too, was revealed under the cover of the
Princess Di report.
BAE gets to keep its order for 72 Eurofighters, while Saudi
Arabia won’t see its reputation further besmirched. Blair denied
talking to Saudi King Abdullah about the issues being raised
before the investigation was squelched.
Poland: This is just too much. From Katya Andrusz of
Bloomberg News.
“The ‘moral revolution’ promised by Poland’s Kaczynski twins
when they came to power a year ago is foundering amid a series
of scandals surrounding allegations of sexual exploitation and
neo-Nazi links.
“The Kaczynskis’ three-party coalition has been rocked by
allegations that Deputy Prime Minister Andrzej Lepper, 52, and
members of his Self Defense party demanded sexual favors in
return for jobs – they deny the charges – and by reports that
associates of another deputy prime minister, Roman Giertych,
participated in a 2004 neo-Nazi rally.”
Remember, Lech Kaczynski is president and twin Jaroslaw is
prime minister. They came to office vowing to stamp out
corruption and reintroduce morality.
Now I’m just reporting what I read in Bloomberg and I can’t
help but add this line, from Krzysztof Bobinski of the Polish
Institute of International Affairs in Warsaw. “How can you have
a moral revolution if there are people going around screwing
their secretaries?” Good point.
Poland in many respects is totally dysfunctional these days,
which is one reason why tensions with Russia have been on the
rise. The government needs scapegoats (and Moscow is an easy
one no doubt) to take attention off its domestic shortcomings.
Belgium: And here’s another unbelievable one. Understand that
Belgium is split between Dutch-speaking Flanders in the North
and French-speaking Wallonia in the south and there has been a
separatist movement in the country since the beginning.
So on state television the other night, a program starts out with a
newscast, showing “fuzzy pictures that appeared to be King
Albert II and Queen Paola fleeing the country on an air force
plane as a clutch of pro-monarchy demonstrators waved Belgian
flags outside the royal palace. Then there was live footage of
trams blocked at Belgium’s new border.”
“Flanders, the report declared, had proclaimed its independence.
Belgium, a fragile federal country of 10 million people, was no
more.” [International Herald Tribune]
The broadcast rocked the nation…but it was a hoax. There was a
very cryptic disclaimer at the start and it wasn’t until a half-hour
into it that the minister for media affairs forced a message “This
is Fiction” onto the screen. Those responsible are idiots.
Mexico: Keep your fingers crossed. The new guy, President
Felipe Calderon, is trying. Within his first week he has launched
a broad-based crackdown on crime against both leaders of
violent protests in Oaxaca state as well as drug traffickers. At
least it sends a message. Whether Calderon will be able to keep
the pressure on, with the rampant corruption that is part of the
police and military’s DNA is another story.
Random Musings
–I’m not going to comment on Democratic Senator Tim
Johnson’s health except to say we wish him a speedy recovery.
But I do have to add I want the Democrats to maintain control of
the Senate for one reason. I want the hearings on Iraq to take
place. I want those responsible under the klieg lights, sweating,
uncomfortable. I want it to be the worst day of their lives.
–President Bush’s overall job approval rating ranges from 34%
(NBC News/Wall Street Journal) to 42% (Los Angeles Times/
Bloomberg). In the ABC News/Washington Post survey it’s
36% and I went back to look at some benchmarks in this one.
9/9/01…55%
10/9/01…92%
4/9/03…77%
–Incidence of breast cancer plummeted 15% from August 2002
to December 2003, as reported by researchers at the MD
Anderson Cancer Center and the National Cancer Institute.
While investigators cautioned further confirmation is needed, the
proposed reason is the abandonment of hormone treatment for
the symptoms of menopause. It was back in July 2002 that a
large clinical trail found that use of one menopause drug,
Prempro, led to slightly higher breast cancer rates, which in turn
led many to stop using such treatment.
–A formal British inquiry into the death of Princess Diana
concludes it was simply a tragic accident. Mohamed Al Fayed,
father of Di’s boyfriend Dodi, continues to claim it’s all a
“cover-up.” Princes William and Harry appealed for everyone to
accept the findings and move on.
–Goodbye Kofi. Long live Ban ki-Moon, the new UN Secretary
General. But in his final days Kofi launched a broadside against
President Bush.
On one hand he praised the U.S. for being historically “in the
vanguard of the global human rights movement.” But then he
said our nation’s leadership role “can only be maintained if
America remains true to its principles – including in the struggle
against terrorism. When it appears to abandon its own ideals and
objectives, its friends abroad are naturally troubled and
confused.”
Broadly speaking, Annan added “All civilization is at stake, and
we can save it only if all peoples join together in the task.”
Of course Kofi, who I’ve long maintained would be a nice next
door neighbor and one whose temperament is best suited to
watering flowers and not leading the world, failed to mention his
own shortcomings.
Bronwen Maddox / London Times
“Bush’s approach to the UN has been more mixed than Annan
allows; so was Clinton’s. Annan skates over Clinton’s
willingness to act alone in military action or trade, which his
rhetoric and foreign travel disguised.
“He also makes too little of the new complexity of striking deals,
given the assertiveness of some rapidly developing countries,
who sometimes appear to oppose anything the U.S. backs, for no
other reason. The U.S. can be blamed for aggravating those
clashes, but not entirely for causing them. Other Western
countries have been happy to hide behind the U.S., but have
shared its concerns – that they were granting a lot on the
development agenda but getting too little in return on security,
terrorism and the Human Rights Council. Annan blames these
clashes on Bush but they are also a phenomenon caused by the
fall of the Soviet Union and the rise of once-impotent countries.
“Annan chides the U.S. for failing abroad to hold to its
democratic ideals. If by this he means the U.S. prison camp at
Guantanamo Bay, and the justifications it has offered for holding
people there indefinitely, then he might as well say so, but he is
right. But if he means the Iraq invasion, then he is ignoring the
U.S.’s belief that toppling Saddam Hussein would promote
democracy across the region – and the UN’s failure to uphold its
own sanctions against Iraq. It is easier to accuse the U.S. of too
much idealism than too little – and even easier to accuse the UN
of confusion and incoherence.
“Annan, who shared the 2001 Nobel Peace Prize with the UN,
has had a difficult ride. His accusations against Bush would
have more weight if he had also turned some of the heat back on
the UN and its painful failures to change.”
Editorial / Wall Street Journal
“(The) larger problem of Mr. Annan’s approach is that, by
insisting that only through the UN could the world act to protect
vulnerable populations, he has made vulnerable people hostage
to predatory regimes with seats at the UN and made it all the
more difficult for the world to act. Compare the fate of the
Kosovars – rescued from the Serbs by U.S. military action
undertaken without UN consent – with that of the Darfuris, who
are still at the mercy of militias supported by the Sudanese
government in Khartoum, which has effectively blocked serious
international intervention.
“Likewise, Mr. Annan’s only serious post-Oil for Food reform
was in replacing a human-rights machinery that has consistently
avoided condemning the world’s worst human-rights abusers.
Mr. Annan asked for, and got, a new Human Rights Council to
replace the discredited Human Rights Commission. Six months
into its existence, the new council has succeeded in faulting only
one nation: Israel.
“Mr. Annan came to power at a moment when it was at least
plausible to believe that a properly reformed UN could serve the
purposes it was originally meant to serve: to be a guarantor of
collective security and a moral compass in global affairs. Mr.
Annan’s legacy is that nobody can entertain those hopes today.”
–I love upstart politicians and have voted for third-party
candidates for president twice since my first vote in 1976, but
I’m already really tired of Barack Obama. Like on Tuesday
when, first, on the “Today” show we were shown Obama’s
“Monday Night Football” bit. “He showed he’s got a real sense
of humor,” gushed Matt. Then, on NBC Nightly News, Brian
Williams closed his program with the same MNF clip.
John Podhoretz / New York Post
“If you love Barack Obama, as almost everybody interested in
U.S. politics does right now, ask yourself this simple question:
What do you know about his opinions on any subject?
“You probably remember he gave a masterful speech at the 2004
Democratic Convention. You recall he spoke and that it was he
who spoke: a poised and handsome black man with a deep voice
that’s reassuring and commanding at the same time.
“But what did he say? Admit it. You don’t really care.
“Obama is an uncommonly opaque rock-star politician, though
not through any fault of his own. He’s written and published two
wildly successful books, a memoir and a rumination on politics
and policy. But of the million or so people who’ve bought his
books, I’d wager only a tenth have sampled more than a few
pages. They don’t need to read Obama to love him. They love
that he writes and he publishes. They love how he speaks. They
love the fact that he exists. They love the way he makes them
feel.
“This is the key to his appeal, and it places Obama in a very
unusual position for an elected politician: He is now the semi-
official Rorschach Candidate of 2008.
“The Rorschach Candidate is the one who provokes enthusiasm
not because of the positions he takes but because of who he is.
He doesn’t seem like a politician; he seems to be better than a
politician – fresh, new, different.”
George Will / Washington Post
“New Hampshire was recently brightened by the presence of
Barack Obama, 45, who, calling the fuss about him ‘baffling,’
made his first trip in 45 years to that state, and not under duress.
Because he is young, is just two years distant from a brief career
as a state legislator and has negligible national security
experience, an Obama presidential candidacy could have a
porcelain brittleness. But if he wants to be president – it will not
be a moral failing if he decides that he does not, at least not now
– this is the time for him to reach for the brass ring. There are
four reasons why.
“First, one can be an intriguing novelty only once. If he waits to
run, the past half-century suggests that the wait could be eight
years…In 2016 he will be only 55, but there will be many fresher
faces.
“Second, if you get the girl up on her tiptoes, you should kiss
her. The electorate is on its tiptoes because Obama has
collaborated with the creation of a tsunami of excitement about
him….
“Third, he has, in Hillary Clinton, the optimal opponent. The
contrast is stark: He is soothing; she is not….
“Fourth, the odds favor the Democratic nominee in 2008 because
for 50 years it has been rare for a presidential nominee to extend
his party’s hold on the presidency beyond eight years. [Nixon in
1960, Ford in ’76, and Gore in 2000 failed, though all came
close.] Only the first President Bush, in 1988, succeeded,
perhaps because the country desired a third term for the
incumbent, which will not be the case in 2008….
“In 2000 and 2004, Bush twice carried 29 states that now have
274 electoral votes; Gore and Kerry carried 18 that now have
248. Not much needs to change in politics for a lot to change in
governance. And Obama, like the rest of us, has been warned,
by William Butler Yeats: All life is preparation for something
that probably will never happen.
“Unless you make it happen.”
–New York City Mayor Michael Bloomberg weighed in on the
state of education in America in a Journal op-ed.
“Only 18 out of 100 high-school freshmen will graduate on time,
enroll directly in college and earn a two-year degree in three
years or a four-year degree in six. Just 18!”
Good god.
“For much of the 20th century, the education level of America’s
work force was second-to-none. But others have caught up, and
even moved past us. Now, unless we take bold action, we risk
losing our competitive edge. The problem is not that America
doesn’t spend enough money on education – we spend enormous
amounts, far more than any other nation. But we’re not getting a
sufficient return on our investment. The fact is, our education
system looks like the U.S. auto industry in the 1970s – stuck, in a
flabby, inefficient, outdated production model driven by the
needs of employees rather than consumers….
“We recruit a disproportionate share of teachers from among the
bottom third of their college classes. Then we give them lifetime
tenure after three years, and we reward them based on longevity,
not performance. We fail to help struggling students in the early
years, when costs are lower, and then, in the upper grades, we
pay for expensive remediation programs which have very limited
success. And we allow vast funding inequalities to exist between
school districts, with poor students, who are disproportionately
black and Hispanic, paying the price….
“This means that politicians must show a willingness to stand up
to special interests, including unions. School administrators
must lead from the front in exploring more innovative,
performance-driven ideas. Teachers must be given the tools and
support they need to succeed – and be held accountable for
results in their classrooms. And parents must recognize that the
schools can’t do it by themselves; values and ethics begin in the
home.
“Nothing less is required to keep the American Dream
flourishing in the 21st century. It won’t be easy, but we can do it.
And to keep America at the head of the class, we must.”
Sounds like Mayor Mike could be a third-party candidate for
president, eh?
–Nice to know the Democrat chosen to head the House
Intelligence Committee is a real dope…one Silvestre Reyes. I
would suggest Congressman Reyes read this column from time
to time to get up to speed on current events. In case you missed
it, Reyes, when questioned by a reporter for Congressional
Quarterly, didn’t know al Qaeda is Sunni and Hizbullah Shia;
perhaps not common knowledge in the ‘hood, but mandatory if
you’re in Congress.
–Even the conservative New York Post can’t wait for Eliot
Spitzer to take over as governor and try his hand at cleaning
up yet another stinkpot, New York State government. This one
bozo, State Sen. Efrain Gonzalez Jr., was just charged with
conspiracy for skimming $423,000 meant for not-for-profit
groups. The funds are part of a $200 million state slush fund that
lawmakers can access for all kinds of goodies back home,
including, frequently, for themselves. As the Post concluded on
Thursday, “Happily, there are but 19 days left until Eliot Spitzer
shines a flashlight on the whole mob – and they skitter to their
cracks and crevices.”
–And then there’s Congressman William J. Jefferson of New
Orleans. The man that federal authorities captured on videotape
taking $100,000 in alleged bribe money, as well as having been
caught with $90,000 of it inside his freezer, just won reelection.
“This has to be seen as troubling,” said Brian Brox, a political
science professor at Tulane University. “I don’t think his victory
does any good for New Orleans as it presses its claims on the
national government.”
Jefferson’s opponent, state Rep. Karen Carter, pushed the
corruption scandal in her television ads, while Jefferson looked
into the camera and told voters: “I have never taken a bribe from
anyone.”
Peter Whoriskey of the Washington Post reported:
“Though both candidates in the runoff were African American,
voters generally split along racial lines.
“Jefferson won 57% of the vote to Carter’s 43%. He won 79%
of votes in largely black precincts, while she won 76% of votes
in largely white precincts…
“For some of Jefferson’s core black constituency, ‘they’ve heard
the news,’ about the allegations. ‘They just don’t believe it,’
Brox said.”
Jefferson picked up the endorsement of the two most influential
figures in the black community: Mayor Ray Nagin and Bishop
Paul Morton, a highly-popular minister.
“ ‘I just wish we could one day elect someone who wouldn’t
look ridiculous to the rest of the country,’ said Betty Holahan-
Smith, 45, a white voter from the Lower Garden District. ‘First,
we had ‘Chocolate City’ Nagin. Now we have ‘Dollar Bill’
Jefferson.’
“ ‘If the federal government really wanted to help New Orleans,
they would have indicted him and taken him out of the game,’
said Tom Gault, 50, who is white and a Democrat. ‘It amazes
me that people would vote for someone who may be indicted
soon.’”
For the other side, we have Sharon Williams.
“He hasn’t done anything the rest of the folks up in Washington
haven’t done – he just got caught.” Referring to Carter, Ms.
Williams said, “Sometimes when you are an African-American
and you get too high on yourself – well, Karen Carter thought
she was a Caucasian. You have to always remember where you
came from.”
So there you have it, folks. The Big Easy.
–Peggy Noonan on George H.W. Bush and son George W., in an
op-ed for the Wall Street Journal.
[Referring to the Iraq Study Group report and Bush 41’s recent
crying jag]
“Surely Mr. Bush knew – surely he was first on James Baker’s
call list – that the report would not, could not, offer a way out of
a national calamity, but only suggestions, hopes, on ways
through it. To know his son George had (with the best of
intentions!) been wrong in the great decision of his presidency –
stop at Afghanistan or move on to Iraq? – and was now suffering
a defeat made clear by the report; to love that son, and love your
country, to hold these thoughts, to have them collide and come
together – this would bring not only tears, but more than tears.
“And the younger President Bush, what of his inner world? He
has been shorn of much – his place in the winner’s circle, old
advisers. A man who worked for Richard Nixon reminded me
the other night that when Nixon fired Haldeman and Ehrlichman,
‘he lost his asbestos suit.’ He lost his primary protectors and
loyalists. President Bush is now without a similar layer. Old
staffers gone. Rumsfeld gone. Cheney marginalized. Condi and
Karen off representing. And the ISG. And the loss of Congress.
“And yet the president presents himself each day in his chesty
way, with what seems a jarring peppiness. A person who saw
him in the White House a few days ago described him as ‘perky,
seemed happy.’ At the modest dinner for outgoing UN head
Kofi Annan – one participant called it ‘stinting’ – the president
joshingly approached a guest. ‘I don’t see many friendly faces
here!’ he said, leaving the guest deadpanning later, ‘He mistook
me for a friendly face.’
“Unlike anguished wartime presidents of old, he seems resolutely
un-anguished. Think of the shattered Lincoln of the last Mathew
Brady photographs, taken just weeks before he was assassinated.
He’d gone from a bounding man of young middle age who awed
his secretaries by his ability to hold a heavy ax from his fully
outstretched arm, to, four years later, ‘the old tycoon.’ Or
anguished Lyndon B. Johnson sitting in the cabinet room by
himself, literally with his head in his hands. History takes a toll.
“But George W. Bush seems, in the day to day, the same as he
was. It is part of the Bush conundrum – a supernal serenity or a
confidence born of cluelessness? You decide. Where you stand
on the war will likely determine your answer. But I’ll tell you. I
wonder about it and do not understand it, either what it is or what
it means. I’d ask someone in the White House, but they’re still
stuck in Rote Talking Point Land: ‘The president of course has
moments of weariness but is sustained by his knowledge of the
ultimate rightness of his course…’
“If he suffers, they might tell us; it would make him seem more
normal, which is always a heartening thing to see in a president.
“But maybe there is no suffering.
“Maybe he outsources suffering. Maybe he leaves it to his
father.”
–Finally, Gwynne Dyer, appearing in the Jerusalem Post,
reported on a recent appearance by Stephen Hawking in
receiving Britain’s highest scientific award, the Royal Society’s
Copley Medal. Hawking used the opportunity to once again
warn that “the long-term survival of the human race is at risk so
long as it is confined to a single planet.” So “to the stars – and
beyond!”
The world’s most famous astrophysicist continued.
“Sooner or later, disasters such as an asteroid collision or nuclear
war could wipe us all out. But once we spread out into space and
establish independent colonies, our future should be safe. There
isn’t anywhere like the Earth in the solar system, so we would
have to go to another star.”
Ironically, while some such as Tom Friedman say President Bush
can still salvage some sort of legacy through an invigorated
energy policy, others such as yours truly believe that Bush’s
space initiative to return to the moon and then Mars may be the
real one he leaves.
There’s an obvious rejoinder to what I just wrote, but I’ll be
kind. It’s Christmastime, after all.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $619
Oil, $63.43
Returns for the week 12/11-12/15
Dow Jones +1.1% [12445]
S&P 500 +1.2% [1427]
S&P MidCap +0.0%
Russell 2000 +0.0%
Nasdaq +0.8% [2457]
Returns for the period 1/1/06-12/15/06
Dow Jones +16.1%
S&P 500 +14.3%
S&P MidCap +10.6%
Russell 2000 +17.8%
Nasdaq +11.4%
Bulls 59.6
Bears 21.3…low for ’06 [Source: Chartcraft / Investors
Intelligence]
Have a great week. I appreciate your support.
Brian Trumbore
