[Posted 7:00 AM ET]
Iran’s Pursuit
No surprise in the passing of the UN Security Council deadline
for Iran to suspend its uranium enrichment program and the
realization Iran is inching ever closer to changing the dynamics
of the Middle East forever. The International Atomic Energy
Agency concluded in its UN-mandated investigation that
Iran is close to installing a 3,000 centrifuge operation in Natanz
that would be more than sufficient to produce enough weapons-
grade material for a bomb or two a year. Beyond that, if Iran
were to then step it up to 54,000 centrifuges, the ultimate goal,
you’d be talking full-scale industrial production. The problem is
that for those trying to control the situation, the leap from 3,000
to 54,000 is nowhere near as complicated as that from 300 to
3,000.
What I’ve been arguing for years was also part of the disturbing
report; the IAEA really has no clue about other operations Iran
might have around the country because Iran refuses to cooperate
with the world community.
President Mahmoud Ahmadinejad said “The enemy is making a
big mistake if it thinks it can thwart the will of the Iranian nation
to achieve the peaceful use of nuclear technology.”
But it’s about far more than that, obviously, and now that Iran
has defied the UN, what next? On Monday, the U.S., Britain,
France, Germany, Russia and China are to get together to discuss
further sanctions and there is little reason to expect much
cooperation between the parties. Russia and China, in particular,
have their own economic interests to protect (as do Germany and
France, to a lesser extent) and while Russia is currently miffed at
Iran’s failure to keep up on its payments for Russia’s work on the
Bushehr nuclear facility, according to the Kremlin, I’d be
shocked if Russia did much more than pay any new restrictions
lip service. As for China, with them it’s about desperately
needed oil.
But while the pursuit of a bomb is a matter of national pride to
many Iranians, there is continuing uncertainty about the ability of
Ahmadinejad to hang onto power. For starters, the government
has to do something to limit the increasing consumption,
domestically, of Iran’s chief export…its oil. But to do that
would require drastically hiking the price of now heavily
subsidized gasoline and this would lead to major civil unrest.
At the same time, I noted a few weeks ago the comments of rival
Hashemi Rafsanjani on the privatization front, Rafsanjani being a
pragmatist in this area. Interestingly, Supreme Leader Ayatollah
Ali Khamenei echoed these thoughts on Monday.
From the Tehran Times:
“The Leader called efforts to realize the privatization policies a
kind of jihad, saying if officials make serious efforts, the
encouraging effect of the privatization plan can be felt in two or
three years.”
“ ‘The onus is on the three branches of government and all other
bodies to carry out the changes,’ he noted.
“He also said that the economic developments since the victory
of the Islamic Revolution in 1979 have not matched the deep
sociopolitical developments in the country.
“ ‘Of course, important measures have been taken in the
economic area, but we should have presented a successful
economic model to the world by increasing per capita income
and gross national product, eliminating poverty, and establishing
justice. We should have proven to the world the capability of the
country to boost economic development and establish justice.’
“Ayatollah Khamenei said that increasing national wealth and
establishing social justice are the main principles of an Islamic
economy, adding that every economic approach that would help
realize these two objective is ‘acceptable.’”
Khamenei, the ultimate decision maker, certainly knows it’s
Rafsanjani (or a younger version), not Ahmadinejad, who should
lead the charge into the modern world.
There has been an opening for dialogue for years and the Bush
administration has blown it. There was never a reason for the
likes of an Ahmadinejad to come into power in the first place, yet
there he is, poisoning the air.
But while it may be too late to prevent Iran from getting the
bomb, or reaching a point of no return in the weapons process, it
is not too late to prevent war.
—
The war in Iraq has taken another deadly turn with the
introduction of chlorine bombs, which you have to understand
makes it more apparent than ever that an actual dirty bomb will
soon be exploded. At least it’s clear to this scribe. And if you’re
a Sunni terrorist, where would you explode it? Basra, soon to be
largely abandoned by the British and a prime focal point of Iran’s
Shia-led efforts for influence.
It would also appear the U.S. military made a critical error in
arresting the son of Abdul Aziz al-Hakim, the powerful Shiite
political leader, as he crossed into Iraq from Iran. This is a
developing story in terms of the consequences as the son was
held for 12 hours before being released and Amar al-Hakim is
talking of how he was ‘roughed up,’ thus inflaming tensions. It
threatens to be a public relations nightmare.
Meanwhile, an issue I raised recently, Turkey’s concern over a
coming referendum on the city of Kirkuk and whose control it
should fall under is not going away. Turkey voiced its
displeasure over the prospects once again and Ankara will not sit
idly by while Kirkuk goes over to the Kurds as part of their
quasi-independent state.
On the Israeli/Palestinian front, it was another lost week as a
meeting between Palestinian President Mahmoud Abbas, Israeli
Prime Minister Ehud Olmert and U.S. Secretary of State
Condoleezza Rice went nowhere. Prior to the gathering, Abbas
had told a U.S. envoy that the “world must deal” with the Mecca
agreement and a coalition government including Hamas. The
U.S. says this isn’t acceptable. That set the tone for the
Abbas/Olmert/Rice confab and the ongoing conclusion. Unless
the new unity government of Fatah and Hamas explicitly
recognizes Israel’s right to exist, renounces violence, and honors
previous Israeli-Palestinian agreements, the Palestinian people
will continue to suffer and sanctions will remain in place.
Editorial / Daily Star (Beirut)
“It is no secret that the Palestinian humanitarian situation has
been in freefall since the international community callously
decided to punish an entire people for having exercised their
democratic rights in the legislative elections of January 2006.
The extent of Palestinian suffering has been made more clear this
week, though, by the release of the annual report by the United
Nations’ World Food Program. The comprehensive study
describes in sickening detail how hundreds of thousands of
people are resorting to increasingly desperate measures because
they are being slowly starved.
“Much of the responsibility for this appalling state of affairs lies
with the United States and those countries that have acquiesced
in its cruel strategy of seeking to bring about a government of
Palestinian quislings who will sign away their constituents’
collective birthright in exchange for a vague promise of eventual
statehood and a few scraps of food. But those governments are
not alone in deserving blame for the plight of the Palestinians:
Both the long-dominant Fatah party and the hard-line Hamas
movement that won last year’s elections have exacerbated
matters by putting partisan interests ahead of national ones and
therefore failing to maintain anything like a united front….
“It was inevitable that (Yassir Arafat’s) departure would open the
way for a period of considerable turbulence, and neither
President Mahmoud Abbas nor Prime Minister Ismail Haniyya
was ever going to fill Arafat’s boots. All that they and their
colleagues could hope to do was to maintain a semblance of
orderliness and keep their eyes on the prize of independence. In
this both Fatah and Hamas have been miserable failures.
“To understand how flimsy are the parties’ relationships with
reality, one need only compare the current ideological debate
with the situation on the ground. The issues revolve around
recognizing Israel, renouncing armed resistance against Israel,
and abiding by previous interim peace accords with Israel. The
results have been Palestinians denigrating the legitimacy of other
Palestinians, Palestinians making war on other Palestinians, and
Palestinians violating truces with other Palestinians. Arafat
never looked so good.”
Bet you had forgotten about the little rat.
Lastly, I present an editorial from the Daily Star, a moderate
publication, on the overall picture in the Middle East and the
latest views of the Arab World towards the United States. Much
of this is harsh and I do not necessarily endorse the opinions
therein, but it’s critically important we try to understand where
the other side is coming from, especially when we see new
opinion polls that show a continuing deterioration, almost across
the board, in the level of anti-American feelings.
“Washington’s latest salvo in the laughably named and
prosecuted ‘war on terrorism’ provides yet another example of
just how profoundly it misunderstands the issues at hand. On
Tuesday, the U.S. Treasury announced sanctions against Jihad al-
Binaa, a construction company affiliated with Hizbullah. On the
surface the tactic means very little since Jihad al-Binaa is
unlikely to hold substantial assets in the United States that can be
frozen under the sanctions. As a gambit in the battle for hearts
and minds that U.S. President George W. Bush joined by
declaring his intent to democratize the Middle East, however, the
Treasury’s move could not be more counterproductive.
“In July 1993, an Israeli military onslaught in South Lebanon
demolished or badly damaged more than 4,700 homes; Jihad al-
Binaa restored virtually all of them. Three years later, the
Israelis went on an even more destructive rampage that
completely or partially destroyed about 7,000 residences; Jihad
al-Binaa rebuilt or repaired 6,714. This past summer, Lebanon’s
wrathful neighbor to the south lost all sense of proportion and
damaged or destroyed at least 86,000 homes; Jihad al-Binaa sent
some 1,000 engineers and 5,000 volunteers to conduct site
surveys (although actual rebuilding has been delayed by the
current political impasse in Beirut). Leaving aside questions of
right and wrong, what can the Bush administration hope to
achieve with an empty statement of hostility toward an
organization that has done so much good for so many Lebanese
who have suffered so much heartache because of so many bombs
and shells supplied by the United States?
“Is America ready to take care of all those made homeless by the
munitions it has lavished on its troublesome ally? This is an
important question for any U.S. policymaker hoping to wean
great swathes of Lebanon’s population off affection for and/or
reliance on Hizbullah, and history is not encouraging about the
answer. Successive U.S. governments did absolutely nothing,
for example, to end the 1978-2000 occupation of South Lebanon.
And far from reining in the Israelis last summer, the current
administration actually rushed them extra bombs – and provided
them with diplomatic cover so they could extend a vicious
offensive that accomplished no important military goals…
“The bottom line is that Jihad al-Binaa provides people in need
with useful help. The United States arms the power that makes
them needy, pressures the organization that wants to assist them,
and provides riot gear to the security forces that are supposed to
keep them silent.”
The situation in Lebanon is about to explode again. For the first
time since the ceasefire in August, the Lebanese military fired at
an Israeli fighter jet for violating Lebanese airspace. Of course
Israel has been crossing the border for years, but don’t get me
started on that one. What’s inevitable, though, is a plane is about
to be shot down and then all hell will break loose yet again.
—
Wall Street
From the Bank of Japan’s Monetary Policy Meeting of
Wednesday as the BoJ hiked the key lending rate to 0.50%.
“Reviewing the outlook for Japan’s economy based on incoming
data and information, both on domestic and overseas economies,
the Bank judged that our economy is likely to continue its
moderate expansion with a virtuous circle of production, income,
and spending in place. Uncertainties over the future course of
overseas economies, including that of the United States, are
abating, and this is likely to reinforce the prospects of continued
increase in corporate profits and business fixed investment.”
Yup, that about sums up the current environment. In fact I’m
reminded of Ray Stevens’1970 #1 pop hit “Everything Is
Beautiful.” Whaddya say we all gather round, join hands, and
sing it together.
Everything is beautiful, in its own way
Like a starry summer night, or a snow covered winter’s day
Everybody’s beautiful, in their own way
Under God’s heaven, the world’s gonna find a way
To profits, that is. At least that seems to be what’s happening,
doesn’t it? That is unless you’re one of those who overstretched
in buying their home. For now Goldilocks prevails; moderate
growth, low inflation and low interest rates across the globe.
But while the global bull run in equities continues, you have to
wonder about excessive speculation in all assets. When does it
end, and how? Here in the U.S., for example, margin debt
reached an all-time high…the highest since March 2000. There
certainly is a herd mentality at play, as well, exacerbated by
hedge funds. When does that end? What changes perception?
Back to real estate, a sector that has seen its own global bubble,
the cracks have been appearing for some time here in the States.
Luxury homebuilder Toll Brothers’ CEO, in announcing profits
fell 67% in its fiscal first quarter, maintained “There are too
many soft markets at this stage of the selling season to call a
general upturn in the new home market. Demand varies greatly
from week to week.”
What we do know is foreclosures are soaring, while everyone
keeps saying, yeah, but that’s still only in the subprime market.
True, thus far.
But as I noted last time we are now in the part of the cycle where
growing job losses in the housing sector, broadly defined, should
begin to ripple through. Building supply king MASCO’s CEO,
in an appearance on CNBC Friday, said “the unemployment
impact has yet to hit the economy.” But it will.
Josh P. passed along some information from The Joint Center for
Housing Studies at Harvard University estimating that the
decline witnessed thus far has resulted in 100,000 job losses,
including from furniture, construction supplies, domestic
appliances, and plumbing, with potentially far more to follow.
But now there are rumblings in the mortgage bond market,
further exacerbated by awful earnings news from NovaStar, a
Missouri-based lender that is paying a price for rising
delinquencies. Credit default swaps, one of those securities
created by geniuses, have seen their value plummet 20% in just
about four weeks, and that’s for a particular class of them still
considered ‘investment grade.’ No doubt, until recently these
instruments have been home runs but there’s always a flip side.
Now someone is getting hurt.
Remember, when it comes to derivatives and interest rates, it’s
all about speed in measuring risk of the systemic kind that
represents a chief danger to the market. If the yield on the 10-
year Treasury, for example, were to rise from 4.50% to 5.00%,
but the move occurs over a number of months, traders can adjust
accordingly and should be able to minimize risk. If it happens in
the space of a week or two, however, look out. Speed kills, and
that’s what we’ve been seeing in the credit-default swap market.
No one knows what the damage is, as yet, and it’s possible it will
be limited. It just bears watching and is but another symptom of
the growing debacle in the subprime market.
Street Bytes
–Blue chips, as represented by the Dow Jones and S&P 500,
slipped the last three days with the Dow ending down 0.9% to
12647 and the S&P losing 0.4% to 1451. But for the life of me I
can’t figure out why Nasdaq rose 0.8% to 2515. Correct me if
I’m wrong, but what great news have we been receiving out of
the tech sector for weeks now? Then again, I was drinking
Casablanca Premium Lagers in Morocco part of the time so what
do I know?
One thing is for sure, geopolitics is back on the radar screen
mostly due to Iran, but also because of increasing violence in
Nigeria ahead of its elections. And wouldn’t you know, because
of these two the price of crude is suddenly $61 and your price at
the pump is headed back up to the $2.40 level, soon.
–U.S. Treasury Yields
6-mo. 5.15% 2-yr. 4.80% 10-yr. 4.68% 30-yr. 4.78%
Bonds were virtually unchanged, despite a little scare due to a
higher than expected core number for consumer prices in
January, up 0.3% and now up 2.7% over the past 12 months.
Yes, hotter than the Federal Reserve would like to see but to beat
a dead horse, there is no way the Fed is raising rates this year so
cut your losses if your bet is in that direction. They are too smart
to know that if they did hike, it would cause a recession, period.
–Remember… “Water…the new oil.” A report out of the
National Academy of Sciences concludes droughts will be longer
and more serious than previously assumed. This is of particular
concern to areas such as those that receive their water from the
Colorado River, where the population continues to soar and
private vs. agricultural uses collide.
–The Wall Street Journal reports spending on healthcare is
expected to double to $4.1 trillion by 2016, “consuming 20% of
the nation’s gross domestic product….By then, (a federal) study
predicts, the government will be paying 48.7% of the nation’s
healthcare bill, up from 40% in 1990.”
–The new management at Fannie Mae is withholding $44.4
million in long-term incentive pay due former and current
executives, including former CEO Franklin D. Raines.
According to Fannie’s regulator, the Office of Federal Housing
Enterprise Oversight, “The board concluded that the then-
management team did not meet the prescribed performance
standards.” Some of us still believe Raines should be in jail.
–Ford Motor Co. may seek an additional 20% in concessions
from its unions on wages and benefits in order to further lower
costs. During 2006, Ford spent $3,227 per North American-built
vehicle on labor, comprised of $2,592 for wages and healthcare
for active workers, and $635 for retiree health care. [General
Motors spent $3,289 per North American vehicle with $950 of
that for retiree healthcare benefits.]
–The U.S. receives 22% of its crude oil imports from both the
Middle East and Africa, with Africa’s supply slightly ahead of
the Middle East for the first time in 21 years; which is why you
hear so much talk on instability in key supplier Nigeria.
–JetBlue founder and CEO David Neeleman said he was
“humiliated and mortified” by the problems his airline had as he
went on to introduce a passenger bill of rights, including
discounts and free tickets depending on the amount of time a
plane is needlessly delayed by problems defined as within
JetBlue’s control. But the damage has already been done.
–Google continues to battle with the television industry over
content being displayed on the company’s YouTube site. 13 of
the 20 most-viewed clips on YouTube for the month ending Feb.
15 were professionally made, including late-night show clips and
local news reports. As the Journal reports, YouTube itself
responds quickly to complaints from the owners of the video, but
the next day YouTube users put it back up.
–New York City residents pay over $9 for every $100 of
“taxable resources” or 47% higher than the $6.16 average of the
other eight U.S. cities with populations over 1 million.
–Sirius and XM Radio are finally going to merge even as the
federal government threatens to block it on anti-trust grounds,
which is absurd. The Feds will eventually allow it.
However, if you are a subscriber don’t sweat it for quite a while
as obviously it’s going to take years to come up with compatible
technology and the companies aren’t about to shoot themselves
in the foot with regards to the fact many of us have invested
substantial sums in the equipment. Down the road, however,
we’re all going to have to pay more.
–Shares in Hewlett-Packard slipped on unease concerning the
company’s earnings guidance, but for the quarter ended Jan. 31,
revenues for HP’s PC division jumped 17% and rose 40% for
laptops as the computer maker continues to build on its leading
position in the industry at the expense of the likes of Dell.
–Alcatel-Lucent won the first of six patent lawsuits against
Microsoft, this one pertaining to the technology involved in the
digital MP3 file format going back to Lucent’s Bell Labs days.
Microsoft has been ordered by a federal district court to pay $1.5
billion. Microsoft will appeal.
[Separately, on the way home from the airport the other day I
noticed that the lawn at ALU’s U.S. headquarters was inundated
with geese doing what they do best; depositing toxic fertilizer for
that fuller, greener lawn come spring.]
–Real Estate tidbits: After mentioning my trip to Marrakech and
the real estate boom there, I saw a listing in the Financial Times
for a 5BR-5BA, 2.5 acre spread in the Moroccan city at $4.5
million. Gotta love those Saudi petrodollars.
But in the U.S., the Journal reports that Hulk Hogan has marked
down his Belleair, FL, estate by 28%!! Of course it still goes for
$17.9 million and 15 years ago Mr. and Mrs. Hogan paid just $2
million. I say they end up getting $14.3 million, brother.
–Two other corporate mergers of note. Vulcan Materials is
buying Florida Rock, with Vulcan’s CEO Spock emerging as the
leader of the new combined operation while Florida Rock’s Fred
Flintstone spends more time with wife Wilma.
And Whole Foods is acquiring competitor Wild Oats. Think
Disney taking over Sam Peckinpah.
–Equal Time: Business Week’s Mara Der Hovanesian wrote that
some of the rumors concerning former Citigroup CFO Todd
Thomson and CNBC’s Maria Bartiromo may have been trumped
up to divert attention from the pitiful job performance turned in
by CEO Charles Prince. I maintain where there’s smoke, there’s
fire. Or rather, follow the plane contrails.
–Goldman Sachs’ co-presidents, Gary Cohn and Jon Winkelried,
each received cash and prizes of $53 million for their efforts in
2006. It had been previously announced that CEO Lloyd
Blankfein earned $54 million. It’s gotten to the point where
these figures are almost no longer meaningful when you hear
about them day after day. What we do know is the battle
between Mrs. Cohn and Mrs. Winkelried must be a fevered one
as they play ‘can you top this.’
But along these lines, Robert Frank of the Journal had a story in
Friday’s edition that is quite telling. “According to a survey of
more than 200 Wall Street professionals who took home at least
$2 million in cash from their 2006 bonuses, respondents are
spending 11% of their payouts, on average, on watches and
jewelry. For even the lowest-paid bankers in the survey, that’s a
bling budget of more than $200,000.”
Frank adds, “Bankers’ spending – what they call their ‘burn rate’
– is growing as fast as their bonuses,” whether it is real estate, art
or other collectibles and, yes, mistresses.
“What surprised me is the low savings and investing rates for
people who are making millions of dollars a year,” says Russ
Alan Prince, president of Prince & Associates. “This says to me
that Wall Street expects the good times to continue.”
As for charity, respondents doled out only 4%. Said Mr. Prince,
“This is not an especially generous group.”
I’m tempted to say more than “ain’t that the truth,” having railed
about this sort of behavior for so long, but the above speaks for
itself. Suffice it to say it’s all further evidence that when the
crash comes, be it terrorism-related or a systemic financial
meltdown for whatever reason, it’s going to be uglier than most
can imagine.
Foreign Affairs
North Korea: Kim Jong-il turned 65, which must mean
something here in terms of benefits; like perhaps an extra grass
salad or a can of sterno. But as Vice President Dick Cheney said
on a trip to the region, the United States’ eyes are wide open
when it comes to the recent agreement to begin the
denuclearization process. North Korea will stonewall as much as
possible, of this everyone should be certain, and will put off
discussing topics it doesn’t care for as long as possible while
lying about some of its facilities.
And to those in the Bush White House praising China’s role, of
course China never has our interests at heart….just see Taiwan.
Gary Schmitt and John Tkacik had the following thoughts in a
piece for the Feb. 26, 2007, issue of The Weekly Standard.
“China continues its military buildup and is close to being able to
make good on its threats to coerce Taiwan into accepting its rule,
while fewer and fewer of Taiwan’s citizens – less than 5% in
recent polls – think of themselves as Chinese. And the ‘name
game’ Washington, Beijing, and Taipei are playing now is a
reflection of the tension generated by the inconsistencies and
contradictions in America’s ‘one China’ policy. We want a
peaceful resolution of the Cross-Strait dispute, but can do little to
stop the Chinese military buildup and shy away from doing all
we can to buttress Taiwan’s defenses. We want to promote
democracy globally, but find it problematic that a democratic
Taiwan has no interest in becoming unified with a despotic
China and wants, naturally enough, to be recognized by the rest
of the world as a legitimate self-governing state.
“At the moment, Beijing is dictating how Washington and, for
that matter, Americans think about Taiwan. In late January, the
New York Yankees signed an agreement with Chinese officials
to help support China’s fledgling baseball leagues in exchange,
they hope, for getting a leg up on marketing the Yankees in
China. At the press conference announcing the agreement,
general manager Brian Cashman referred to Yankee pitcher
Chien-Ming Wang, who last year tied for the most wins in the
American League, as coming from ‘Chinese-Taipei.’ While
doing so no doubt pleased his Chinese Communist hosts, it was
undoubtedly an embarrassment for Wang, a national hero in
Taiwan, to have his country tossed aside for the sake of the
Yankees’ commercial interests. Of course, the Yankees have not
been the only ones down this road. And the real issue here is not
whether the Yankees or Major League Baseball can sell a few
more baseball caps and shirts in China. The real issue is that by
playing this game we are not moderating Chinese ambitions
toward Taiwan but fueling them.”
Two issues tick me off more than any others when it comes to
this White House…Lebanon and Taiwan. Never listen to
President Bush and all his democracy talk without thinking about
how his administration has handled both of them.
Russia: The head of the missile forces, General Nikolai
Solovtsov, showed his true colors in needlessly ratcheting up the
debate over the deployment of missile defense components by
the United States in the Czech Republic in Poland.
“If the governments of Poland and the Czech Republic take such
a step…the Strategic Missile Forces will be capable of targeting
these facilities if a relevant decision is made.”
But we hereby name Czech Republic and Poland “Nations of the
Week” as Poland’s prime minister brushed off the Kremlin’s
“attempt to intimidate” and Czech Foreign Minister Karel
Schwarzenberg said, “The Czechs will now think the shield is
even more necessary. We have quite an experience with
Russians. You have to make clear to them you won’t succumb to
blackmail. Once you give in to it, there’s no going back.”
And I liked the thoughts of Roger Cohen of the International
Herald Tribune, who offered some of the following as a response
President Bush should have given to some of Russia’s renewed
Cold War talk.
“Vladimir, I’m pleased you have given me the opportunity to
speak my mind. You are angered by NATO’s expansion to
embrace the former vassal states of the Soviet empire. You see
in it ‘a serious provocation’ and the drawing of new dividing
lines across Europe. You suggest Russia is the target of this
maneuver.
“Russia is big, Vladimir, but memory and history are bigger.
Have you forgotten the Hungarian martyrs of 1956? Have you
overlooked the Prague Spring that followed a dozen years later?
Have the Soviet tanks and thought police that enslaved the
peoples of Central Europe slipped from your mind?
“Here was an overstepping of borders dedicated to the cementing
in the Central European soul of totalitarian fear. I know that I
have spoken in the past of the struggle between good and evil. I
guess what I meant to say is that the 20th century saw a battle
between the sanctity of the individual human being and the loss
of humanity caused by the ferocious certainties of Communist
and other armed utopias.
“A child of one of the new NATO members, Pope John Paul II
of Poland, was one of the leaders of this struggle in the name of
the individual against a dehumanizing system. In this lay his
lasting greatness.
“Next time you’re having problems with NATO expansion, try
seeing it as an act of prudence, a guarantee to people who needed
it that they will no longer be shaped and controlled against their
will, the repayment of a debt to Europeans whose humanity was
traded away at Yalta….
“There is an enduring school of thought that we have somehow
cornered you into belligerence through pushing NATO eastward
and establishing a military presence in Central Asia. I have a
different view.
“Could it be that your assertiveness, and recent rudeness, are no
more than the natural ploy of a once-great power with a declining
army and population, a looming election in which nationalist
muscle-flexing will play well, a diminished world influence and
a horde of petrodollars allowing it to dream of wielding a big
stick once more?
“You seem somewhat blind, dear Vladimir, to events in your
own country. You criticized the imposition on the world of one
state’s legal system – the American – but do not ask yourself
what legal system allows the killers of Anna Politkovskaya to act
with apparent impunity.
“And what of the slaying last year of Andrei Kozlov, the central
banker whose mistake, it seems, was to shut down banks
involved in money laundering?
“The ‘hyper-use of force’ of which you complain appears not to
apply to your own scorched-earth policies in Chechnya. Taking
as a measure the harshness of violence there, in the storming of
the Moscow theater in 2002, and at Beslan’s school in 2004, it is
legitimate to ask how Russia would have responded to a terrorist
attack that took not tens, nor hundreds, but thousands of lives in
two major cities. As you recall, Vladimir, we suffered just such
an attack.”
I would just add that with regards to Chechnya, if you want
further evidence (not that you should need it) of the direction the
Kremlin is taking under Putin look to the appointment of 30-
year-old Ramzan Kadyrov as acting president. Putin will quickly
formalize the move by decree (recall Putin abolished direct
elections of regional governors back in 2004), but what you need
to know is Ramzan Kadyrov is not only the son of a man who
was once Chechnya’s president and then assassinated in ’04, but
as I’ve noted before in this space, Ramzan has been basically
adopted by Putin. And who is this kid? He is an absolutely
horrible, vile, disgusting thug that’s a walking human rights
nightmare with his own private militia. This, comrades, is the
face of today’s Russia.
Kosovo: The UN has laid out a framework for ‘almost’
independence for the disputed territory, with the 90% majority
Albanian Kosovars to get their own flag, constitution and
national anthem, but not full independence as yet. However,
Serbia continues to vehemently oppose this in speaking for its
Serbian minority in Kosovo and as I’ve warned this is going to
be an increasingly big story. Maybe not a market mover, but
remember, any requirement for an increased NATO presence to
keep the two sides apart means a reduction in available resources
elsewhere, such as for Afghanistan.
Tunisia: I noted last time that North Africa has been the scene of
quite a bit of terrorist activity since 9/11, particularly in
Morocco, but for decades that’s already been the case in Algeria.
Now the Herald Tribune reports that once sleepy Tunisia is
emerging as a new potential haven for al-Qaeda. A brutal
Algerian group, linked to Osama bin-Laden, is organizing
extremist groups as part of its plan to cover this part of the
continent.
A French counterterrorist official told reporter Craig S. Smith
that the Algerian/Tunisian/Moroccan threat is the greatest one
facing France today.
“We know from cases we’re working on that the (group’s)
mission is now to recruit people in Morocco and in Tunisia, train
them and send them back to their countries of origin or Europe to
mount attacks.”
Somalia: Along the lines of the above, those hoping Somalia
wouldn’t become a safe haven for terrorists after Ethiopia’s
recent action to install a government more to the West’s liking
have to rethink their positions as an insurgency has now taken
hold, just weeks after the new government regained control from
the Islamists. 15 were killed in a mortar attack this week.
India/Pakistan: At least the governments here did not overreact
to the terrorist attack on an India-Pakistan train that killed 65.
Both immediately condemned it.
But the attack itself was chilling. Two men boarded the train
from the starting point in Delhi, after which they began arguing
with the conductor, saying they were on the wrong train,
according to the London Times. The train then slowed to allow
the two to jump off. 15 minutes later their bombs exploded.
“The train is supposed to head from the capital to Atari, at the
Pakistani border, without any stops, and the revelation that two
were allowed to get off appeared to highlight what many
passengers already say – that security on trains and at the stations
is cursory, at best.”
Pakistan had its own horrific act of terrorism this week when the
female minister for social welfare was assassinated by a fanatic
upset that she was not covering her head.
Philippines: A UN envoy has accused the army of being “in a
state of almost total denial” about a wave of political killings. As
reported by BBC News, one human rights group says 832 “extra-
judicial killings since 2001 can be blamed on the security forces.
Of these, it says 356 are left-wing activists.” This is separate
from the ongoing insurgency the government is fighting and
more than a bit disturbing.
Italy: Between 1945 and 2001, the average government in Italy
lasted about 9-10 months. This week Prime Minister Romano
Prodi resigned after a similar length of time in office when his
unwieldy nine-party coalition couldn’t agree on Prodi’s two chief
foreign policy objectives; keeping Italian forces in Afghanistan
and permitting the expansion of a U.S. military base in Vicenza.
A new governing coalition will probably still have Prodi at its
head.
Meanwhile, anti-U.S. rhetoric is soaring due in no small part to
the other issue here, the indictment of 26 Americans, mostly
CIA, for the rendition of the Egyptian man four years ago who is
claiming he was tortured.
Zimbabwe: $60,000 may not seem like a lot these days, but in
Zimbabwe it’s a ton and represents the figure spent on Robert
Mugabe’s 83rd birthday celebration, much to the consternation of
a rapidly growing number of opponents. When you have
inflation of 1,600% and an unemployment rate of 70%, after a
while you begin to finally wake up and the people here are. For
example, we are seeing the reemergence of opposition leader
Morgan Tsvangirai, whose supporters attempted to hold a court-
sanctioned protest last Sunday, only to see dozens arrested by
Mugabe’s goons. Three days later Mugabe banned all political
activity for three months.
When one looks back on the history of this crazy decade, I argue
that 9/11 would not have taken place (as I did in this space long
ago) had the United States and Britain taken out Mugabe and
installed the duly-elected Tsvangirai in 2000. Osama Bin Laden
saw the West’s inability to respond to the clearest breach of
international norms of behavior, and in our failing to act drew his
own conclusions. In so many ways the world has been paying a
price ever since. Maybe now, however, the people of Zimbabwe
will finally take matters into their own hands, storm the palace
and hang Mugabe.
Random Musings
–The U.S. Air Force’s top general, T. Michael Moseley, in a
recent speech said “Tomorrow, military threats will span all three
of our war-fighting domains: air, space and cyberspace.”
Moseley’s concern is that policymakers avoid tunnel vision in
focusing on dealing only with insurgencies because of the Iraq
experience. To do so would ignore increasingly lethal anti-
access systems, air defense systems, and enhanced surface-to-air
missiles, for example.
–The above was from Defense News, where I also learned the
Air Force has about 6,000 aircraft, more than 14% of which are
grounded or have mission-limiting restrictions due to age. In
fact, the Air Force buys only 60 new craft a year, meaning there
is a 100-year rate of recapture. So if you want to improve on
that, either global peace needs to break out or you’re talking
mega bucks.
–Senator John McCain let loose on former Secretary of Defense
Donald Rumsfeld.
“We are paying a very heavy price for the mismanagement –
that’s the kindest word I can give you – of Donald Rumsfeld, of
this war. The price is very, very heavy and I regret it
enormously….I think that Donald Rumseld will go down (as)
one of the worst secretaries of defense in history.”
McCain also said of President Bush’s record on global warming
that it has been “terrible” and his pursuit of the Iraq war “A train
wreck.”
Incredibly, though, in appearances in California, some reporters
continued to question how long McCain had been a critic on the
conduct of the war. This is infuriating to a supporter like myself,
one who has documented McCain’s thoughts every step of the
way.
Which leads me to something I’ve been raising the past few
weeks, though perhaps I haven’t been spelling it out clearly
enough. So, I promise, this is my last shot at it.
I have blasted Bill O’Reilly for his comments on Hollywood
drug use, in light of the Anna Nicole Smith fiasco, for the simple
reason that it is lazy commentary. Far too many in this game,
whether it is print, television or Internet-based pundits such as
yours truly, fall back on the same old hackneyed talking points
and myths.
The reason why I brought up drug use in bucolic Morris County,
N.J., last week, 44 deaths by drug overdose in 2006, is to prove
the point you can’t just issue statements like Sean Hannity did on
his program this week; “The celebs can get drugs anywhere.”
Look, I’m not a defender of Hollywood in the least, but the likes
of Hannity and O’Reilly are truly unimaginative blohards
incapable of original thought.
Name a Hollywood star that overdosed in 2006. Try zero. If
you include the music business….perhaps there was one wasted
rocker.
But yet there were 44 in Morris County, N.J., so, no, Mr. Hannity
and Mr. O’Reilly. It’s not that celebs can get drugs anywhere,
because they can; it’s the fact anyone can obtain drugs anywhere.
If you want to talk about Hollywood’s negative influence on our
culture and our kids, that’s a different matter.
And to circle back to the likes of John McCain, those who don”t
know he became a staunch critic of the post-war operation in the
summer of 2003 should keep their mouth shut. And that’s a memo.
–I hope you now know why I’ve basically ignored the Scooter
Libby trial. Unless there is some smoking gun beyond what we
already know concerning Vice President Cheney, this whole
exercise has been a total waste of time.
–It’s sickening that some of our brave men and women wounded
in combat have been living in despicable conditions at an annex
of Walter Reed Army Medical Center. Some heads need to roll,
a process already started by Secretary of Defense Robert Gates.
This could also be a big campaign issue if the Democratic
nominee is smart enough to make it one.
–I was in Paris as the story of the death of Vichy-era dirtball
Maurice Papon hit the headlines. In 1998, Papon was convicted
of ordering the deportation of 1,700 Jews, including 220 children
to Nazi death camps. But following World War II, Papon
reinvented himself, a la Kurt Waldheim, and held various high
positions, including that of Paris police chief for nine years
during the 1960s. Maurice Papon was later proved to be a truly
awful person, yet he had requested to be buried with his French
Legion of Honor medal. Thankfully, permission was denied.
But what also got me was the fact that at age 96, Papon
underwent heart surgery. What was the point of that? If I were
French officials I would have told him, ‘You’ve got to be
kidding. You, sir, are going straight to hell.’
–OK…some of the preceding items were a bit intense, I’ll admit.
But you know how last week I said it’s more dangerous to cross
the street than travel to some less traditional destinations, as I do
from time to time? On Sunday I saw in the Washington Post that
four pedestrians in D.C. had been killed by city buses in just a
three-day period. Case closed.
–The Washington Post reports Bill Clinton has made $40 million
in speaking fees the past six years. Chelsea is licking her chops.
–Hollywood mogul David Geffen to the New York Times’
Maureen Dowd.
“Everybody in politics lies, but (the Clintons) do it with such
ease, it’s troubling.”
–Is there a more detestable figure in politics today than Hillary’s
communications director Howard Wolfson? For starters,
someone tell him to shave. He won’t listen to me.
–We have a thousand people running for president, but on a
likeability scale I can count on one hand the number of
candidates I can stomach. I have no problem with Chris Dodd or
Bill Richardson, for example, but the three at the top of the Dem
polls thus far give me the willies.
–Yes! Another study, this one by Brooklyn College, found that
people who consumed four or more caffeinated beverages daily
had a 53% lower risk of death from heart disease compared to
those drinking less than half a serving daily. [New York Post]
–From the AP:
“A college ring lost more than 20 years ago by a former
undercover officer for the CIA has been found in an underwater
cave off the coast of Africa.
“Steve Ruic, a staff writer at Notre Dame College in Ohio,
received an e-mail two weeks ago from a professional diver from
Germany. Wilfried Thiesen wrote that he had found a class ring
bearing the college’s name while diving off Mauritius. The ring
was engraved with the year ’76 but was missing the thin portion
on the underside that carries its owner’s name.
“Mr. Ruic discovered that Clare Cavoli Lopez, a member of the
class of 1976, had been stationed at Port Louis, Mauritius, from
1983 to 1985. During a dive the ring slipped from her finger.
She has exchanged e-mails with Mr. Thiesen, who is arranging to
return the ring to her.”
–I fail to see what the big deal is with the reports out of Senegal
that chimpanzees have been observed making weapons. Wait till
we find out they’ve been enriching uranium, then you’ve got a
story.
What is disturbing, however, is the violence exhibited by some
of the chimps as researchers watched a kill.
“It was really alarming how forceful it was,” said Jill D. Pruetz
of Iowa State University, adding that it reminded her of the
murderous shower scene in the Alfred Hitchcock movie
‘Psycho.’ ‘It was kind of scary.’” [Rick Weiss / Washington
Post]
All the more reason to stay away from monkeys posing as organ
grinders.
–With their actions on Mt. Hood and a building collapse in
Istanbul, dogs may have wrapped up the “Animal of the Year”
award early in 2007. A dog aided in the rescue of climbers and
sniffer dogs helped find survivors in Turkey.
–And finally, as simply an observer from the other side of the
pond, I support the British monarchy; which shouldn’t be a big
surprise given the fact on more than one occasion I’ve expressed
some dismay George Washington didn’t declare himself king
when he had the chance to do so.
So I love the story of Prince Harry going off to war. Aside from
wishing him God’s speed, one also can’t help but note the Royal
Family is basking in this badly needed shot in the arm.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $685…highest since 5/06
Oil, $61.14…highest of ‘07
Returns for the week 2/19-2/23
Dow Jones -0.9% [12647]
S&P 500 -0.4% [1451]
S&P MidCap +1.0%
Russell 2000 +1.0%
Nasdaq +0.8% [2515]
Returns for the period 1/1/07-2/23/07
Dow Jones +1.5%
S&P 500 +2.3%
S&P MidCap +7.9%
Russell 2000 +4.9%
Nasdaq +4.1%
Bulls 50.0
Bears 22.2 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Brian Trumbore
