[Posted 7:00 AM ET]
The Saudis
While the Iranian hostage crisis unfolded, with little real news to
report thus far, the bigger story the past few days involves the
Saudis and their toying with the rest of us.
First, in his speech to the Summit of the League of Arab States,
Saudi King Abdullah said:
“In the beloved Iraq, blood is spilled between brothers under an
illegitimate foreign occupation and despicable sectarianism that
threatens civil war.” A none too subtle shot at the White House.
The same day, Saudi Foreign Minister Prince Saud told the Daily
Telegraph:
“If Israel refuses (the Saudi peace plan), that means it doesn’t
want peace and it places everything back into the hands of fate.
They will be putting their future not in the hands of the
peacemakers but in the hands of the lords of war.”
The prince went on to add, “It has never been proven that
reaching out to Israel achieves anything. Other Arab countries
have recognized Israel and what has that achieved? The largest
Arab country, Egypt, recognized Israel and what was the result?
Not one iota of change happened in the attitude of Israel towards
peace.”
Last week King Abdullah also abruptly canceled an invitation to
the White House for a state dinner in April. The Washington
Post’s Jim Hoagland has some unsettling thoughts on this snub.
“Abdullah’s bowing out of the April 17 event is…one more
warning sign that the Bush administration’s downward spiral at
home is undermining its ability to achieve its policy objectives
abroad. Friends as well as foes see the need, or the chance, to
distance themselves from the politically besieged Bush.
“Official versions discount that possibility, of course. Bandar
bin Sultan, the Saudi national security adviser, flew to
Washington last week to explain to Bush that April 17 posed a
scheduling problem….
“But administration sources report that Bush and his senior
advisers were not convinced by Bandar’s vagueness – especially
since it followed Saudi decisions to seek common ground with
Iran and the radicals of Hizbullah and Hamas instead of
confronting them as part of Rice’s proposed ‘realignment’ of the
Middle East into moderates and extremists.
“Abdullah’s reluctance to be seen socializing at the White House
this spring reflects two related dynamics: a scampering back by
the Saudis to their traditional caution in trying to balance
regional forces, and their displeasure with negative U.S. reaction
to their decision to return to co-opting or placating foes….
“A few months ago, Bandar was championing the
confrontational ‘realignment’ approach in Saudi family councils:
Iran’s power would be broken, the Syrians would have to give up
hegemonic designs on Lebanon, etc., etc. Now the Saudi prince
visits Tehran and Moscow regularly. He helped set the stage for
the Palestinians’ Mecca accord, which has caused Israel to
reduce what little cooperation it felt it could extend to Abbas….
“But the Saudis, too, know how to read election returns. They
see Bush swimming against a tide of scandal and stench that
engulfs his most trusted aides. In the traditional Saudi
worldview, this is a moment to hedge, not to indulge in the kind
of leadership needed to break the Israeli-Palestinian deadlock or
the deadly morass of Iraq.”
And then there is this. Jordan’s King Abdullah, according to
Hoagland, has let the White House know he can’t make his own
state visit discussed for September. “Can you do 2008? the king
asks instead.”
Ralph Peters, in an op-ed for the New York Post, has another
take on the Saudis.
“Abdullah…dragged out the Palestinian issue again, damning
Israel. Of course, the Saudis have always been willing to fight to
the last Palestinian, while keeping the people of the West Bank
and Gaza on starvation rations.
“Saudi money’s always available to spread hatred, but not to
build world-class universities, hospitals or industries for the
Palestinians.
“For good measure, our pal Abdullah deplored the violence in
Darfur – for which he blamed ‘foreign interests,’ suggesting that
the aid agencies and international observers, not the Khartoum
government, are to blame for the ongoing genocide. [It’s all
Angelina Jolie’s fault!] Meanwhile, the Egyptian regime is
reinforcing its despotism, while Syria’s looking at Lebanon and
salivating again.”
I wrote back on 12/30/06, in looking ahead to 2007:
“The United States will be increasingly irrelevant.”
That is certainly the case, at least today. And with the White
House in total disarray on a number of levels, most importantly
in terms of its foreign policy, and with a leader who simply
doesn’t have a grasp of the world, nor does he often seem to care,
it’s no wonder that moderates such as Lebanese professor and
opinion shaper Rami Khouri often come down along the lines of
the following, as Khouri wrote in his column for the Daily Star:
“I sensed something was slightly unreal about the Jordanian
capital Amman when I was there on Monday. The distorted
reality, I quickly discovered, reflected the presence in town of
U.S. Secretary of State Condoleezza Rice, whose Middle East
diplomatic efforts increasingly look like a self-deceiving world
of mirrors and make-believe. As she intensified the elusive
search for ‘moderate Sunni Arabs’ to share in her adventure,
Rice also launched a process of ‘parallel talks’ with Israeli and
Palestinian leaders who have gotten nowhere talking to each
other once every few months….It’s hard to decide if this is a
comedy or a horror show.
“The most galling thing about Rice’s and Washington’s approach
is its fundamental dishonesty. The Bush administration spent its
first six years avoiding any serious engagement in the Arab-
Israeli conflict, or decisively siding with the Israelis on most key
contested points, like refugees, security or settlements. Now –
with little time left for Rice, President George W. Bush on the
ropes, his administration in tatters, America’s army in trouble in
Iraq, Washington’s credibility shattered in the region and around
the world, and the Middle East slipping into greater strife and
dislocation – we are asked to believe that she will dedicate her
remaining time in office to securing the establishment of a
Palestinian state.
“Does Rice take us in the Arab world for robotic idiots – simply
another generation of hapless Arabs who have no options and
must go along docilely with every American-Israeli initiative, no
matter how insulting, insincere or desperate it may be?”
And so we now turn to Iran. Editorial / Washington Post
“Critics who lambasted the administration’s unilateral campaign
against an ‘axis of evil’ a few years ago ought to be applauding
the return to conventional diplomacy. We, too, think it’s worth
pursuing, especially when combined with steps short of a
military attack to push back against Iranian aggression in the
region. Still, two years after President Bush embraced the effort,
it has to be noted: The diplomatic strategy so far has been no
more successful than the previous ‘regime change’ policy in
stopping Iran’s drive for a nuclear weapon.”
Retired Lt. Gen. Thomas McInerny, Wall Street Journal
“(The) Middle East itself is no monolithic bloc of support for
Iranian President Mahmoud Ahmadinejad. Israel, of course, is a
natural ally in gaining intelligence and lining up support against
the Iranian regime. But Iran is bent on destabilizing and
dominating the Arabian Peninsula from Lebanon through Gaza
into Iraq with a stopover in Bahrain. That makes Saudi Arabia as
well as Jordan potentially strong – if not overt – allies in
countering Iranian influence. The situation has gotten so serious
that King Abdullah of Jordan called it a Shia crescent sweeping
across the Arabian Peninsula and King Abdullah of Saudi Arabia
summoned Vice President Cheney to Riyadh last fall.
“If we demonstrate that we are sufficiently serious in countering
Iran, we could form a coalition of the willing with Saudi Arabia,
Jordan, Egypt, the Gulf States, Turkey, Australia and those
European allies with the courage to consider what their region
will look like with a nuclear-armed Iran within missile range.”
With all due respect, it’s as if the general pulled this analysis off
Wikipedia. Don’t get me wrong, there is truth in what McInerny
wrote, but these are the talking points of an administration
official from last fall; not the reality of today as the earlier
discussion on Saudi Arabia shows. And as for the Post editorial,
there is nothing to be applauded in terms of administration
diplomacy whatsoever. Since last summer, Iran hasn’t been
stopped for a minute in its pursuit of nuclear weapons.
What all the debate this past week totally ignored is an event
coming up in May. I wrote the following three weeks ago,
3/10/07, which bears repeating.
“And if we play our cards right, remember this coming May 22;
the day the Iranian government will finally raise the price of
gasoline, fixed for the past three years at 9 cents a liter. As I’ve
been writing, Iran’s domestic consumption of oil has been
skyrocketing and it’s not only depriving the treasury of
potentially more export dollars, it’s costing the treasury dearly in
increased subsidies. The mullahs must bring down consumption
and raising the price is Econ. 101.
“But the people aren’t going to be happy. The economy isn’t
doing well to begin with and they have long viewed cheap oil as
a birth-right. Look for major protests, possibly bloody ones, if
the government follows through. The U.S. can benefit; but if you
knew this wouldn’t you be talking to the opposition today, as
I’ve advocated?”
There’s the rub. The White House and its lackeys haven’t a clue.
And so instead we find ourselves perilously close to an
accidental/intentional war. Conventional wisdom, as spelled out
by the Washington Post, would tell you the administration pulled
out all the stops and it still hasn’t worked. I’ve been writing
these times called for unconventional means and negotiations.
But I’ve also said with regards to Iran’s nuclear efforts, it’s
probably too late.
Also, look at the “Good Guys.”
President Bush…floundering and a lame duck.
British Prime Minister Tony Blair…floundering and a lame
duck.
Israeli Prime Minister Ehud Olmert…floundering and a lame
duck.
Not exactly FDR, Churchill and Sharon.
Lastly, with regards to Iraq, the Senate joined the House in
approving measures that set timetables for withdrawing most
U.S. forces; March 31, 2008, in the Senate version and Aug. 31,
2008, for the House bill. After returning from their recess, the
appropriations committees for both will convene to rectify their
respective pieces of legislation, at which point some sort of
deadline will be incorporated as Congress and the president
reconcile their differences (forget the threatened veto) and come
up with a compromise, or the military faces a real cash squeeze
on its operations in both Iraq and Afghanistan. The problem
with a veto, which would not be overridden, is the calendar.
President Bush can’t afford to send the final bill back to
Congress to start all over again because that would drag it far
into May. Funding of some sort has to be acceptable to all and
the Democrats have worked the timetable for withdrawal into the
legislation; much to the delight of our enemies.
In all the discussion, though, and I admit I don’t spend 24/7
watching or listening to talk shows, I didn’t hear one person state
the obvious:
If President Bush had fired Donald Rumsfeld in September,
Republicans wouldn’t be in such a box. There is no doubt that
the Democrats captured Congress, certainly at the very least
the Senate, because of Bush’s failure to act well before the
election and send our nation’s worst defense secretary packing.
—
Wall Street
Merrill Lynch chief economist David Rosenberg summed up the
current mood perfectly. “You either believe the housing story
has more chapters to be written or you think it’s over and done
with.”
I myself wrote on 12/30/06:
“Those who are trying to convince us housing has bottomed…are
nuts. There is absolutely no way housing, at least as expressed
by prices, has a good 2007.”
And so we’ve completed the first quarter of the year and I’ve
seen nothing to change my mind. This week the data on new
home sales for February was released and it was awful, down 4%
and a huge miss by analysts. Just as importantly, inventories
rose to another new high.
Josh P. sent in a note from San Diego County where defaults
were 3,150 for the fourth quarter of last year vs. 1,173 for the
fourth quarter of ’05; while in New York City, foreclosures are
on pace to more than double from two years ago, and this in one
of the more healthy markets around. Of course as you’d also
expect the foreclosure wave in urban areas is hitting minorities
particularly hard. As the New York Daily News adds; to make
matters worse “Loan companies are going out and bombarding
(subprime mortgage holders), many of them senior citizens, to
convince them to take home equity loans,” said a local official in
Queens. “How do you give someone a loan when the monthly
payment on that loan is higher than the person’s income? It’s a
disgrace.”
There’s a different issue that is now coming to the forefront; tax
revenues. In Florida, receipts are falling for the first time since
1975 amidst the slump in housing and construction, which in turn
results in less sales tax revenue, for starters. Other states are also
suffering and not only is this condition going to get much worse
(resulting in massive layoffs at the state level, of course), but it
comes at a time when states have been ramping up on the
spending side of the ledger.
But wait, there’s more! Mr. Bubble Popper, Yale economist
Robert Shiller, reiterated that home prices will decline on a non-
inflation adjusted basis by 20% to 30% over the next five to ten
years [Barron’s], while even Federal Reserve Chairman Ben
Bernanke told a Joint Committee of Congress prospects for
housing “remain uncertain.” This is a major pronouncement for
him as he had to finally admit housing would remain a drag on
growth for some time to come.
I was reading the Sydney Morning Herald, looking for something
on a totally different topic, when I saw this headline from
Tuesday’s edition.
“Home owners forced to cut spending to pay mortgage”
“Home affordability is at a bit of a tipping point,” said Fujitsu
Australia managing director Martin North. Of the 1,500 people
who were contemplating buying a property for the first time,
according to his research 30% said they could not actually afford
it, up from 17% at the same time last year. Recall that it was the
affordability issue of 2006 in the States that foretold the collapse
here. The real estate bubble is global, as I’ve repeated ad
nauseum.
But here’s a nifty twist on a mortgage. From the same article I
see that Adelaide Bank unveiled one that allows up to 20% of the
purchase value to be held by the bank in exchange for 40% of
any capital gain. The lender would absorb 20% of any loss. All
I’ve got to say is I’m just glad I purchased my current home with
the old 20% down and took out a 30-year fixed at an attractive
rate.
By the way, in a poll conducted by Bankrate.com, fully 34% of
American homeowners don’t have a clue as to what kind of
mortgage they have in the first place.
Meanwhile, it is still far from clear just what level of exposure
Wall Street, and its siblings around the country, have to CDOs,
or collateralized debt obligations that represent the repackaging
of bonds backed by mortgages. According to a survey by
Deloitte, as noted in the Financial Times, much of the banking
industry lags “behind the explosive growth of credit derivatives
and their attendant risks.” In other words, “Even the most
sophisticated participants in the markets find the risk
management challenges associated with these instruments
daunting. This raises the prospect of unanticipated losses,”
according to Timothy Geithner, president of the Federal Reserve
Bank of New York and a real expert on the topic from way back.
In fact, fewer than half of the respondents to the Deloitte survey
said they regularly “stress-test,” an attempt to measure what the
systemic risk is in a severe market disturbance……like a crash.
Former U.S. Treasury Secretary Lawrence Summers had the
following thoughts in an op-ed for the Financial Times.
“Three months ago I was able to write in this space that in
economics ‘the main thing we have to fear is the lack of fear
itself.’ This is no longer true today. With clear evidence of a
crisis in the subprime U.S. housing sector, risks of its spread to
other credit markets, sharp increases in market volatility,
reminders of the fragility of global carry trades and signs of
slowing economic growth, there is enough apprehension to go
around.
“While it would be premature to predict a U.S. recession, there
are now strong grounds for predicting that the U.S. economy will
slow down very significantly in 2007. Whether in retrospect
2007 will prove to have been a ‘pause that refreshed’ a nearly
decade-long expansion like the growth slowdown in 1986 and
1995 or whether it will see the end of the expansion is not yet
clear….
“Those in the rest of the world who have been insisting on the
global imperative of increased U.S. saving and a reduced U.S.
current account deficit should fear getting what they want too
quickly. So also should those U.S. observers who have insisted
that foreign countries stop artificially holding their currencies
down by purchasing dollar assets. While U.S. current account
adjustment is a medium-term imperative, an effort to bring it
about rapidly in the face of an already declining economy could
turn a soft landing into a hard one.”
Lastly, I do have to note that once again, the American consumer
stepped up and spent in February, twice the consensus estimate
of economists. Those of us who are bears and calling for a
spending slowdown, due to housing in particular, have to at the
same time acknowledge that there will be no recession (and I
didn’t call for one this year) until employment reverses. As long
as we have jobs we’ll continue to spend because the impact of
the slide in housing will take a while to sink in. If 34% don’t
even know what kind of mortgage they have, you can be sure
75% haven’t figured out the impact of their leading asset
stagnating, at best, for years to come. That day of self-revelation
will come, however. Rising unemployment will also eventually
work its way into the equation. Like they always say, trouble
comes to those who wait; he typed, tongue in cheek.
Street Bytes
–We’re in a new pattern of one week up, one week down. In
fact in the case of the three major benchmarks, we haven’t had
three weeks in the same direction since the start of the year.
[Nasdaq was up the last week in December and the first two in
January.] This time the Dow Jones, S&P 500 and Nasdaq all lost
1.0%.
When I made my predictions for the year I opted for an
admittedly wimpy plus or minus 3% for 2007 and with 90 days
on the books, the Dow, S&P and Nasdaq are all up or down less
than 1%. Of course I’m not going to be in the least bit surprised
if we are down 15% for the year at some point, it’s just that in
forecasting the stock market for 12 months, you’re really at the
whims of the end of the year dynamics and can go from bang on
to looking foolish in the blink of an eye around Christmas, as
we’ve learned the past decade or so.
That said, I also called for growth in the economy of 1.5% for
’07 vs. a consensus at the time of 2.6%. That consensus has now
drifted down to 2.4% according to the latest Wall Street Journal
survey of economists. My point has also been that this year is
more about setting the stage for 2008, when the impact of the
housing slump hits home from a wealth effect standpoint and all
manner of geopolitical events come home to roost, including a
rather important election, maybe, in Russia, let alone in the U.S.,
plus the impact, both positive and negative, of the Beijing
Olympics.
–U.S. Treasury Yields
6-mo. 5.06% 2-yr. 4.58% 10-yr. 4.64% 30-yr. 4.84%
It was another week with bonds ending up pretty much where
they started, this despite Chairman Bernanke’s rather hawkish
comments on the inflation front, plus economic data, outside
housing and durable goods, that was positive. Personal income
and consumer spending were both up 0.6% for February,
construction spending was up, and the Chicago Purchasing
Managers manufacturing index soared to 61.7 from a recession
like 47.9 the month before. Frankly, I don’t buy it; as in I think
it has to be a mistake because it was the biggest reversal in the
14-year history of this key economic barometer and just makes
zero sense.
–Oil shot up to $66 ($68 in an overnight flash of hysteria) on
fears Iran would do something stupider than it already has.
Gasoline futures also soared, to $2.11, which translates to a
national average of around $2.80-$3.00 in about 30 days. But
just as was the case last year, consumers don’t appear to be
letting this impact their spending in other areas.
–The administration, under increasing pressure from Congress,
announced it was imposing preliminary tariffs on Chinese sheet
paper ranging from 11% to 20%, thus protecting jobs, perhaps, in
the U.S. paper industry, while encouraging retaliation of some
sort on the part of the Chinese. As this happened on Friday, I’m
going to hold off on further comment until I see reaction from
China, which as yet is not forthcoming; but suffice it to say
protectionism has resulted in some of our nation’s worst
economic crises. One thing is for sure, the dollar will bear
watching.
–In a widely anticipated report out of the U.S. Dept. of
Agriculture, it is estimated the nation’s farmers will plant 90.5
million acres of corn this year, up a whopping 15% from 2006,
thanks to the ethanol bubble. [Just wanted to be the first to go on
record as calling it such.] In turn, corn on the futures market (as
opposed to corn on the cob) fell 5%, the daily limit, on fears that
Sen. Grassley of Iowa and his friends will flood our nation’s
highways and byways, let alone our grain elevators, with the
stuff. Nonetheless, it is still $3.70 a bushel, or almost double the
average of $2 for the seven years, 1998-2005.
The report does have major implications across a wide spectrum
of industries, aside from ethanol, including farm equipment and
seed suppliers. I’ll have more next week when we see where
corn settles out.
–One quarter into the year and we already have our “Corporate
Dirtball” award winner for 2007…ITT Corp.
ITT agreed to pay a $100 million penalty for illegally making
classified night-vision goggle technology available to the likes of
China. U.S. Attorney John Brownlee said “The criminal actions
of this corporation had threatened to turn on the lights on the
modern battlefield for our enemies and expose American soldiers
to great harm.” No individuals have yet been charged but we are
told the investigation is continuing.
China has been living off our secrets and yet it’s a story that isn’t
being told. I complained awhile back that when China knocked
down their aging satellite with a ballistic missile, it was
undoubtedly accomplished with much of our technology. I wrote
a journalist I’ve communicated with in the past, asking him to
write more on a topic with which he is very familiar, and he has
yet to do so. The New York Times’ William Safire used to be all
over this topic, but he’s semi-retired and for some reason refuses
to do a special op-ed. It’s frustrating. Night vision equipment is
the least of our worries.
–In a crucial study of over 2,200 heart patients dubbed Courage,
cardiologists have concluded that heart disease should first be
treated with cholesterol and blood pressure-lowering medicine
rather than with angioplasty.
In an interview with Bloomberg News, Judith Hochman, director
of cardiovascular clinical research at New York University
School of Medicine, said “Patients expect angioplasty to either
make them live longer or reduce the risk of heart attacks or
death, to fix them beyond just making them feel better. It didn’t,
which was a surprise to many people.”
Hochman suggests patients give intensive drug therapy three to
six months before undergoing an artery-clearing procedure.
Dr. William E. Bowden, director of the study, said “The data are
compelling. We do too many of these procedures.”
However, to be clear, researchers stress that if you are in the
throes of a heart attack or at a very high risk of one, angioplasty
is the first step. But once a patient is stable, medical therapy is
just as effective at reducing the major risks.
These findings are of course critical to the likes of Boston
Scientific and Johnson & Johnson, makers of the stents, and their
share prices declined on the news.
But on a related topic, I found an interview in the Star-Ledger
with the president of the American College of Cardiology, Dr.
Stephen Nissen of the Cleveland Clinic, to be quite telling.
Q: Since the advent of stents, what has become of bypass
surgery?
A: We need to think if we’ve moved too quickly away from
bypass surgery. There are so few today, medical schools have not
filled their surgery residencies in the specialty. There is a
shortage of students willing to go into a field they think is a dead
end.”
–What an increasing amount of students will be going into is
radiology, this much seems clear. Two reports were issued this
week, for example, that call for greatly expanded use of M.R.I.
scans in women who have breast cancer or are at high risk for it;
thus creating a demand that radiologists are not yet equipped to
meet. The cost, often ten times that of a mammogram, creates a
different obstacle.
Ironically, Paul C. Lauterbur, who shared the Nobel Prize in
Medicine for developing M.R.I. technology, died this week. Dr.
Lauterbur had worked at the University of Illinois for 22 years
and a colleague said “Paul’s influence is felt around the world
every day, every time an M.R.I. saves the life of a daughter or a
son, a mother or a father.”
–China is on track to become the second-largest consumer of
Venezuela’s oil next to the United States. By 2012, China is
expected to import one million barrels per day vs. a current tally
of 150,000. Venezuela currently ships about 1.5 mmbd to the
U.S. Venezuelan President Hugo Chavez told reporters that “as
a power, the United States is going down, while China is moving
up.”
–Because of drought, water levels in China’s Yangtze River are
at historic lows, raising concerns the Three Gorges dam will be
able to generate enough power for those it was built to serve. 10
million face an imminent water shortage as well.
–In an incredibly harsh move, consumer electronics leader
Circuit City announced it was replacing 3,400 employees who
are “paid well above the market-based salary range for their role”
with new workers “compensated in the current market range for
their role.” One analyst told the Financial Times she was
surprised at the decision to dismiss the staff because it was likely
to disrupt operations and threaten Circuit City’s competitive
position. It’s also got to be depressing as hell to work there.
–The owner of T.J. Maxx, Marshall’s and other stores in North
America, TJX Cos., disclosed that an identity theft issue first
disclosed in January was far broader than anyone was led to
believe….like try 45.7 million credit and debit cards stolen over
an 18-month period. However, if we are to believe the company,
75 percent of the compromised cards either were expired or had
data from their magnetic strips masked using asterisks rather than
numbers. Regardless, it’s “the biggest card heist ever,” in the
words of advisory company Gartner Inc.
–Dell once again delayed the filing of its annual 10-K report
because it has uncovered further unstated accounting
irregularities. The Feds continue to investigate as well.
–Internet-telephony outfit Vonage remains on life support,
though I don’t understand why its share price is still around $3
instead of zero. Even Citigroup, which just nine months ago
helped bring the company public, has issued a “sell” rating on
the stock; an unheard of event. Citigroup concludes Vonage
faces bankruptcy owing to recent Court rulings barring it from
using Verizon’s patents.
–More tidbits on The Blackstone Group and its coming IPO.
The 57 senior managing directors pocketed an average of $27.8
million in pay last year, according to the prospectus, while the
other 710 employees, including administrative staffers, received
an average of $350,000 in cash and prizes. I’m thinking of
applying for a job in the mailroom there.
“Here’s your copy of The Economist, Mr. Schwarzman.”
“Thanks, Bob.”
“It’s Brian.”
“Whatever.”
Two other items of note. Blackstone’s 770 employees generated
nine times more earnings per person in 2006 than their
counterparts at Goldman. And to those thinking of purchasing
shares in the private equity firm once it goes public, Newsweek’s
Allan Sloan brings up an important point.
Remember, you would be purchasing units in a partnership, and
Blackstone itself is already warning that unitholders would need
to file for an extension on their taxes each year because it won’t
get the information out before April 15. Those of you who have
purchased limited partnerships before know just what kind of
nightmare this can be.
–Citigroup may be laying off 5% of its employees worldwide, or
15,000; but this is somewhat deceiving in that 30,000-50,000
leave each year so the actual pain may not be that bad. The
banking giant also announced it wants to grow its international
revenues from 44% to 60%.
–According to Golf World and a local publication in Scotland,
home values on the narrow roadway adjacent to the Old Course
at St. Andrews are the highest in the country; like $3 million for
a modest place. Just 20 years ago, I bet it was under $100,000,
having seen firsthand what’s happened to values in similar spots
in Ireland.
–According to the New York Post, tuition, room and board (plus
books and such) at NYU will hit $49,996 next fall. NYU is as
popular as any school in the country and only 12% of applicants
are accepted. Parents are undoubtedly hoping their son or
daughter chooses DeVry Technical Institute instead….not that
there is anything wrong with this joint.
–Note to my farmer friends. Would some of you please grow
some wheat?! The price of my beer keeps going up. Thank you.
Foreign Affairs
Zimbabwe: On Tuesday, opposition leader Morgan Tsvangirai
said he would boycott a presidential election slated for next year,
unless the voting is carried out under a new democratic
constitution. The next day police stormed his party’s offices and
brutally arrested Tsvangirai and about 20 of his associates as
President Robert Mugabe defied international criticism.
Tsvangirai was later released but the others remain in prison.
What is sickening is that the 14 leaders of the South African
Development Community, meeting in Tanzania where Mugabe
was seen dancing joyously, amazingly reaffirmed their solidarity
with him. As reported by the London Times, Mugabe clapped
his hands gleefully and proclaimed “Excellent meeting” before
returning to his dead nation. What an incredible dereliction of
duty on the part of South African President Thabo Mbeki, a truly
pitiful leader.
Equally pitiful is this op-ed from the Washington Post by
Desmond Tutu and Madeleine Albright. In part:
“The crisis in Zimbabwe raises familiar questions about the
responsibilities of the international community. Some argue that
the world has no business interfering with, or even commenting
on, the internal affairs of a sovereign state. [Ed. Not me, mon.]
This principle is exceptionally convenient for dictators and for
people who do not wish to be bothered about the well-being of
others. It is a principle that paved the way for the rise of Hitler
and Stalin and for the murders ordered by Idi Amin. It is a
principle that, if consistently observed, would have shielded the
apartheid government in South Africa from external criticism
and from the economic sanctions and political pressure that
forced it to change. It is a principle that would have prevented
racist Rhodesia from becoming Zimbabwe and Robert Mugabe
from ever coming to power.
“We are not suggesting that the world should intervene to impose
political change in Zimbabwe. [Ed. I have!] We are suggesting
that global and regional organizations and individual
governments should make known their support for human rights
and democratic practices in that country, as elsewhere. We
should condemn in the strongest terms the use of violence to
prevent the free and peaceful expression of political thought. We
should make clear our support for the standards enshrined in the
African Charter on Human and Peoples’ Rights and in the
Universal Declaration of Human Rights. Given Mugabe’s
consistent unwillingness to respect the legitimate complaints of
his people, this is not the time for silent diplomacy. This is the
time to speak out. It is especially important that members of the
African Union and Southern African Development Community
raise their voices, for they have the most influence and can
hardly be accused of interventionism….
[Nice try…see above.]
“Presidential and parliamentary elections that are transparent and
considered to be legitimate by the people of Zimbabwe and by
local and international observers should be held….
“With crisis comes opportunity. This is the moment for political
and civic leaders in Zimbabwe to unify around a common goal: a
peaceful and democratic transition. Members of the opposition
would be well advised to overcome their differences and to speak
with a single, strong voice. In this way, reformers can
demonstrate to the people of Zimbabwe and to the world that
there is a viable and patriotic alternative to the repressive and
misguided leadership under which the country has suffered for so
long.”
Ah, Mr. Tutu and Ms. Albright? The opposition you speak of is
getting the crap kicked out of them. Don’t lecture them on how
to act!
Far be it for me to call a Nobel Peace Prize winner and a former
secretary of state, idiots, but this is just the kind of garbage that
has led to the predicament the people of Zimbabwe find
themselves in.
For some real truth telling, I refer you to something yours truly
wrote in this space five years ago, 3/16/02. Granted it’s harsh.
“Let’s be frank; if ever an assassination was warranted,
(Mugabe) is a worthy candidate. Having ‘won’ his 5th-term in a
fraudulent vote, Mugabe is now set to obliterate his opposition
and soon the civilized world will be crying for the victims.
“In case you missed it, vast numbers of good people in
Zimbabwe stood in line for up to 20 hours(!), if they ever even
got a chance to cast a ballot, as Mugabe shut down polling
booths in regions where he would lose a legitimate vote.
“The U.S. and the West have failed to recognize the election, but
what is most upsetting is the Organization of African Unity,
comprised of the likes of Kenya, Tanzania and South Africa,
labeled the vote ‘transparent, credible, free and fair.’
“Unbelievable. The leaders of southern Africa are nothing but a
bunch of corrupt cowards and it’s no wonder why many
Americans often just throw up their arms and say of the whole
continent, ‘the hell with them.’”
That was five years ago. Five years for the leaders of Africa,
including Bishop Tutu, let alone those in the West, particularly
former ruler Britain and the United States, to act. Of course it is
just like Sudan and Darfur.
What a worthless generation of so-called leaders we have in the
world these days. Just imagine the same cast of characters
during the time of Hitler. Actually, don’t. You’ll have too many
nightmares.
Russia: President Bush told President Vladimir Putin he wanted
to discuss the anti-missile shield in Europe, while a top U.S.
general, trying to alleviate Russia’s fears, said the shield could
cover western Russia as well as our European allies.
On the broader topic of today’s Kremlin, opposition leader Garry
Kasparov weighed in for the Journal in an op-ed.
“(For those continuing to invest their capital in the country), the
surprise will come when the investors find out their Russian
partners are cashing out as quickly as possible, ready to head for
the hills – or their mansions abroad – in the face of rising
political and economic uncertainty.
“Anyone trying to make a fast buck investing in Russian
President Valdimir Putin’s police state should first practice our
traditional triple kiss. That’s one for kissing off moral principles,
another for Mr. Putin’s backside, and the last to kiss their money
goodbye when a fresh government comes in and starts looking
into all (the) dirty deals. [Ed. Kasparov is referring to the
auctioning off of assets such as those belonging to former energy
giant Yukos.]
“While the Kremlin’s favorite oligarchs pack their suitcases
(doubtless full of cash), the former head of Yukos, Mikhail
Khodorkovsky, sits in prison for not bowing long enough in front
of the Kremlin throne. Yukos was only the biggest and best-
known example of what has become standard practice under the
Putin regime. There is no dividing line between bureaucrats,
gangsters and the police. Allegiance to the Kremlin is the only
thing that matters….
“The Kremlin’s policy has its supporters outside of Russia as
well. A recent editorial by Henry Kissinger called for
‘maximizing incentives’ and ‘removing frictions to active
cooperation’ between the U.S. and Russia. If Ronald Reagan had
had that mindset I would still be playing chess for the Soviet
Union! Was President Reagan ‘removing frictions’ when he told
Gorbachev to ‘tear down this wall’? The lack of Western
political will to stand up and acknowledge the true state of affairs
in Russia only encourages Mr. Putin and his gang to push
further.”
Lebanon: Unsurprisingly, this week’s Arab League summit
failed to come up with any kind of initiative to solve Lebanon’s
political deadlock. Even on the issue of the international tribunal
looking into the assassination of former prime minister Rafik
Hariri, the summit statement insisted “on having all Lebanese
agree on the tribunal’s final make-up…while stressing that the
tribunal not be used for any political or vengeance purposes.”
Which means that with the Syrian lackey, President Emile
Lahoud, still in power, the tribunal will go nowhere; and there
can be no lasting political solution without a resolution of this
issue.
Pakistan: The chief justice of the Supreme Court who was
suspended by President Musharraf gave his first address since he
was removed and he was showered with rose petals from an
audience of 2,000 lawyers who called for Musharraf’s ouster.
[No lawyer jokes allowed.]
China: Related to my above discussion on China and stealing
technology, Wendell Minnick of Defense News had a piece in
the March 26 issue asking the question just who (Hu?) is in
charge of the military.
“ ‘In recent incidents, like the ASAT [anti-satellite] test and P-3
incident [the midair collision of a Chinese fighter and the U.S.
surveillance plane], we have seen what appear to be disconnects
between the Chinese civilian and military leadership, and a
tendency among the military to portray the United States as some
sort of boogeyman and China as a nation besieged,’ said Andrew
Krepinevich, director of the Center for Strategic and Budgetary
Assessments in Washington.
“ ‘It appears that in doing so, the Chinese military leadership is
attempting to justify its importance to the country’s political
leadership,’ he said. ‘In any event, the military certainly has for
roughly a decade now received double-digit annual increases to
its budget. How independent is the Chinese military from the
party leadership? No one knows for sure. However, we do
know that the last Communist great power, the Soviet Union, and
other dictatorships historically purged their military to ensure its
subservience.’”
What we also know is that China continues to threaten Taiwan
and President Chen Shui-bian for his talk of independence.
China’s ambassador to the United States, Zhou Wenzhong,
called on the Bush administration to stop selling advanced
weapons to Taiwan that send “the wrong signals.” Addressing a
forum at Johns Hopkins University, Zhou reiterated China “will
never tolerate Taiwan’s independence or allow anyone to
separate Taiwan from the motherland…through any means.”
“The Taiwan question bears on the sovereignty and territorial
integrity of China, involves China’s core national interest and
touches upon the national sentiments of the Chinese people,” he
said, adding, “So what I am trying to say is that the question
needs to be handled with great care, great caution and the United
States has a commitment to China…and the essence of that is
one China.” [South China Morning Post]
To which I’d reply: Mr. Ambassador, you know Taiwan is no
threat to the mainland yet you continue to place medium-range
missiles across the sea, now over 700 strong, directly targeting
the island. Why not remove them? [Of course we know the
answer to this one, but if I were President Bush, this is what I
would first ask President Hu.]
Japan: Prime Minister Shinzo Abe offered up a new apology on
the issue of the sex slaves, the “comfort women,” during World
War II.
“I apologize here and now as prime minister,” Abe told a
parliamentary committee. That was it. Earlier Abe denied there
was any evidence the women had been coerced into sexual
service, the view of conservative academics and politicians. I
haven’t seen whether this will be enough for Beijing and Seoul;
both of which had decried the previous stance.
Colombia: According to the Los Angeles Times, the CIA has
obtained information alleging that the head of Colombia’s army
“collaborated extensively with right-wing militias that
Washington considers terrorist organizations, including a militia
headed by one of the country’s leading drug traffickers.” As
Colombia is currently the third-largest beneficiary of U.S.
foreign aid, this is going to be a big issue for Congress. Thus far,
the sweeping investigation that has also taken down numerous
politicians has not as yet implicated President Alvaro Uribe.
Northern Ireland: At long last, arch-rivals Ian Paisley and Gerry
Adams have agreed on a power-sharing deal after holding their
first ever direct talks. Paisley, leader of the Protestant DUP and
the face of the devil himself, and Adams, head of Catholic Sinn
Fein, will form a joint executive on May 8 to run the province.
The DUP has called for a continuation of British rule, while Sinn
Fein has long advocated a united Ireland. No doubt a very
important day here, but there will be many a tough road ahead.
Random Musings
–I’ve been thinking a lot about nukes these days. Don’t worry.
I’m OK. But with the recent debate in Britain over whether it
should continue to keep its nuclear weapons (parliament voted
‘yes’) and the fact the United States ceased testing nuclear
warheads by exploding them in 1992, the issue in Washington
has now become, do we allow the development of new weapons
with the recent blocking of funding for “bunker busters” and
low-yield “mini nukes.”
The National Nuclear Security Administration is attempting to
get started on a program, the reliable replacement warhead
(RRW) intended to overhaul existing ones and Congress is
balking; as the cost of a new weapon complex would be about
$150 billion (which means it would come in at $300 billion), to
be completed by 2030. When the public becomes more aware of
this, I can just imagine the hue and cry.
Clark Murdock, senior adviser at the Center for Strategic and
International Studies, in an op-ed for Defense News.
“Some critics have snidely dismissed the RRW initiative as a
‘make-work program’ championed by the nuclear labs and argue
that RRW would undermine U.S. efforts to roll back North
Korea’s nuclear weapons program and prevent Iran from joining
North Korea as the newest members of the nuclear club. This
view is based on a number of old canards….
“The argument that U.S. modernization of its nuclear arsenal will
cause others to seek nuclear weapons fails the simplest logic test
on several grounds. Unlike all the other nuclear powers, the
United States has not produced a nuclear warhead since 1992,
but this self-restraint has not stopped several nations – including
North Korea, which tested a nuclear weapon last October – from
pursuing nuclear status.
“The appetites of nations of concern, such as North Korea and
Iran, are not whetted by anything the United States does with its
nukes, but are driven by regional power dynamics and the desire
to offset U.S. conventional superiority….
“The United States will have nuclear weapons for the foreseeable
future. Not only are there significant nuclear stockpiles in
existence, including those of China and Russia, but more-
difficult-to-deter nuclear powers are emerging. The United
States needs a credible nuclear deterrent, if only as a safeguard
against nuclear blackmail by rogue regimes.”
–I haven’t been following the story surrounding Barack
Obama’s memoir, “Dreams From My Father,” which the
Chicago Tribune has picked apart for accuracy. But Richard
Cohen had this take in his column for the Washington Post.
Obama’s recollections of events from when he was 9 years old,
for example, aren’t exactly truthful, including his tale about how
when he was in Indonesia, he came across a Life magazine
article about a black man “who had tried to whiten his skin
through some sort of chemical process,” as Cohen writes. “The
child had, for the first time, confronted racism and its hideous
consequences.”
“Only there is no such issue of Life magazine.” Nor was there
one of Ebony, as Obama then claimed it must have been.
Cohen:
“This tendency to manipulate facts may bear watching in Obama.
[After all, we hardly know him.] But while his book is a warning
flag, it is also an astounding display of a supple, first-class mind
– not merely a bright fellow, but an insightful one, and the single
best piece of writing by a politician since John F. Kennedy’s
‘Profiles in Courage.’
“JFK, of course, is the politician to whom Obama is most often
compared – the wit, the physical grace, the eloquence, the youth.
That’s understandable, but superficial. The politician who really
understood that life should unwind like a movie – the arc, the
reveal, the back story, etc. – was Ronald Reagan. He always
starred in his own movie and so, it seems, does Obama.”
–Danish professor and author Bjorn Lomborg, in an op-ed for
the New York Post, comments on Al Gore and climate change.
“Global warming is indeed real, as has been pointed out several
times by the U.N. Climate Panel. Over the coming century,
temperatures will likely increase about 5 degrees F. The total
cost of global warming is anything but trivial, about $15 trillion.
Yet it is only one-half of 1 percent of the total net worth of the
21st century, about $3,000 trillion.
“Yes, the media often carry far more dire descriptions of
warming’s consequences. Gore, for example: ‘We have just 10
years to avert a major catastrophe that could send our entire
planet into a tail-spin of epic destruction involving extreme
weather, floods, droughts, epidemics and killer heat waves
beyond anything we have ever experienced.’ A fine phrase for
such talk is ‘climate porn.’: This kind of language makes any
sensible policy dialogue about our global choices impossible.”
–Update: Smithsonian Secretary Lawrence Small was shown the
door following all the revelations regarding his expenses.
–The number of tourists to the U.S. from the U.K., Japan,
Germany and France dropped 5% last year. But, thanks to rising
numbers from Canada and Mexico, the total number of
international visits nearly matched the record set in 2000.
However, those from our two neighbors tend to be shorter trips
and they spend far less money.
–If you’re thinking of taking a trip to New York City, though,
here’s some good news. The chances of being murdered are
really quite small. [Crossing the street is a different matter.]
In the first quarter of this year, thru 3/28, 84 were killed vs. 117
during the same period last year. In other words, at this pace less
than 400 would die vs. the all-time high of 2,245 in 1990 when
David Dinkins was mayor.
It’s also interesting to note that of this year’s victims, 82% knew
their attackers, while 70% of the suspects arrested for murder
have prior criminal records (as did more than half of the victims).
[New York Daily News]
–Researchers have concluded in a study published in the journal
Nature, that when dinosaurs were wiped out 65 million years
ago, it did not necessarily clear the way for mammals. As noted
by John Noble Wilford in the New York Times:
“In fact, ancestral branches of most mammals, including
primates, rodents and hoofed animals, emerged long before the
global extinction and survived it more or less intact. But it was
not until at least 10 million to 15 million years afterward that the
lineages of living mammals began to flourish in number and
diversity.”
I don’t know about you, but I’m not that patient.
–Speaking of mammals, I don’t know whether to believe this
story of the 2-year-old golden retriever giving his owner the
Heimlich maneuver when the woman was choking on some food,
but I saw a clip of Debbie Parkhurst of Calvert, Md., and she
certainly seemed believable.
Ms. Parkhurst was eating an apple at her home when a piece
lodged in her throat. She attempted to perform the Heimlich on
herself and after she began beating on her chest, the dog sprang
into action.
“The next thing I know, Toby’s up on his hind feet and he’s got
his front paws on my shoulders,” she recalled. “He pushed me to
the ground, and once I was on my back, he began jumping up
and down on my chest….
“I literally have pawprint-shaped bruises (there).” [AP]
–Here in New Jersey, we have a slew of very bad mammals,
namely politicians. This week, one of the more powerful state
senators, Democrat Wayne Bryant, was indicted on a bunch of
federal charges for bribery and fraud; the latest in a growing
scandal. And former long-time Newark Mayor Sharpe James, as
corrupt as they come, is soon to be indicted, it would seem.
Among the many items that are being investigated is the fact that
the 70-year-old James has a mistress 32 years his junior, who
supposedly made $hundreds of thousands on Newark property
with the mayor’s help. And she was a constant companion on
the road while Sharpe’s wife stewed back home. [Or so I
imagine.] Newark voters have always gotten what they
deserved, by the way.
–What more can you say about Attorney General Alberto
Gonzales? This is an incredibly dumb mess he finds himself in
and of course he has to go at this point. He’s been lying and he’s
the freakin’ attorney general, for crying out loud.
But as I said last week, the last thing the Bush administration
needs now is a confirmation hearing with a Democratic-
controlled Congress.
–Yes, if Fred Thompson announces I’d have to take a hard look
at him. This week’s revelations about Rudy Giuliani and his
association with Bernie Kerik will without a doubt hurt his
chances. This morning, the Washington Post reports Kerik is
about to be indicted.
–George Will noted on “This Week” that in watching John and
Elizabeth Edwards go through their situation, we are “witnessing
gallantry.” When you have George Will saying things like
that….
–“Hardball” had a report on the impact of the Internet on the
presidential campaign, way over blowing the importance. When
will everyone learn; the kids who make up the vast majority of
the viewers of these sites don’t vote….period.
–So I’m watching Tiger Woods the other day win at Doral, his
56th PGA Tour triumph, and saw that his career earnings now
exceed $68 million. Granted, he’s earned ten times that in
endorsements, but focus on the $68mm, earned over 10 years.
This is the greatest golfer ever in his sport, one of the two or
three best athletes of any kind over the last 100 years, a man who
has given tens of millions of spectators and viewers countless
hours of enjoyment, and yet we are still talking about a sum that
is often exceeded by some of the biggest dirtballs in Corporate
America, and in a single year. Now discuss amongst yourselves.
–Or speaking of Corporate Dirtballs, when thinking of the above
consider Dennis Kozlowski’s comment on “60 Minutes;” that
earning $100 million in compensation, as he did one year, was a
“way of keeping score.” Let’s see…Tiger…Dennis…Tiger…
Dennis….
–Back to global warming…Russia just experienced its warmest
winter in 126 years. In Moscow, snow didn’t cover the city until
Jan. 24, when normally it is Nov. 20. Snow lay on the ground
less than 50 days, or 80 less than normal. There were 70
consecutive days when temps were above freezing, Nov. 13 thru
Jan. 24.
So I’m reading this and thinking how the course of history could
have changed if in 1941, Hitler faced this year’s Russian winter
instead of the one his army had to deal with after invading the
Soviet Union. The Germans weren’t prepared for it, yet still
came within 20 miles of the Kremlin, let alone laying siege to St.
Petersburg. Just something else to ponder when you’re sitting
around playing “What If?”
–Finally, there was a terrible tragedy in New Jersey last weekend
when the University of North Carolina’s mascot was struck by an
SUV outside his hotel as he walked along a highway to get some
snacks. The driver immediately stopped and hasn’t been
charged, but 21-year-old Jason Ray died.
In death, however, he gave life. As reported in the New York
Post, doctors at Hackensack University Medical Center kept him
alive long enough to harvest his organs and tissues and they
estimated up to 80 people would receive parts of Jason’s body.
His heart was sent to Washington, D.C., and at least five other
patients were receiving his major organs.
Emmitt Ray, Jason’s father, said:
“This is a terrible blow to our family, but that he was able to do
this makes it tolerable. It’s really the only thing that has given us
any comfort.”
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $669
Oil, $65.87
Returns for the week 3/26-3/30
Dow Jones -1.0% [12354]
S&P 500 -1.1% [1420]
S&P MidCap -0.8%
Russell 2000 -1.1%
Nasdaq -1.1% [2421]
Returns for the period 1/1/07-3/30/07
Dow Jones -0.9%
S&P 500 +0.2%
S&P MidCap +5.5%
Russell 2000 +1.7%
Nasdaq +0.3%
Bulls 48.4
Bears 27.5 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
And to all you baseball fans out there…PLAY BALL!
Brian Trumbore
