[Posted 7:00 AM ET]
Your World
Iraq: It’s always dangerous to talk about good news when
addressing the war as you never know what the following day
will bring, but any unbiased observer has to agree the recent
news has been better. You don’t need to know that the death toll
among Iraqi civilians, 1,975 in August, dropped to 922 in
September, or that the U.S. toll, a still tragic 64 in Sept., was the
lowest in over a year.
All you have to do is watch or listen to the national newscasts.
On Monday morning I was listening to WCBS-AM national
news and there was nothing on Iraq, but there was about the New
York Mets’ collapse in the baseball pennant race. This is good,
friends; regardless of whether or not you agree the Mets warrant
national exposure on such a program. In other words, it’s a
pretty easy barometer for gauging the impact of the surge.
Don’t get me wrong, though. The above is merely stating a fact,
as is the fact we appear to be no closer to any resolution of the
ongoing crisis in the Iraqi government as measured by the lack of
success on any real policy front. And the life of the average
Iraqi, at least for those remaining in this hellhole, is still dreadful
and whereas Sunnis used to live in the same neighborhood as
Shia, this is obviously no longer possible.
But with the lowering of the level of violence, the American
public’s attitude is shifting. In the latest Washington Post-ABC
News poll, 43% want a quick exit of U.S. forces vs. 60% in July.
Meanwhile, Sen. Joseph Biden continues to push his federal plan
for Iraq, with 3/4s of the U.S. Senate agreeing to a non-binding
resolution; one that would divide Iraq into three states along
ethnic lines as the only long-term solution to the political crisis.
I was ambivalent about this before, wanting to give the Iraqi
government as much time as possible, but I can’t argue with
Biden these days. As he correctly points out, there is no central
government, it simply doesn’t function; let alone corruption is
rampant. Then again, corruption is rampant around the world, to
state the obvious, with few exceptions….the United States not
being one of them.
You also still have the looming issue in the north with the Kurds.
Just one day after a security agreement was signed by Iraqi Prime
Minister Maliki and Turkey’s Prime Minister Erdogan, Kurdish
rebels killed 12 Turks in an attack across the border. Turkey has
shown amazing restraint thus far, but its military is itching for a
fight.
Meanwhile, in the forgotten war in Afghanistan, the violence has
never been worse. Despite what appear to be gains by NATO in
taking out large groups of Taliban, the fact is there were three
horrific car bombings in Kabul within the past week, including
one today, that claimed over 45 lives. This just didn’t happen
before.
People compare Iraq to Vietnam, but I’m now of the belief that
the better analogy is Vietnam and Afghanistan. At least it has
the makings of such. I’ve written before of how on Sunday
evenings in the 60s and early 70s, I’d listen to the news on the
radio and hear the weekly casualty reports and think, ‘How can
we not be winning?’ It’s the same situation in Afghanistan these
days. NATO casualties are low, Taliban deaths, as reported, are
staggering, yet there is little to show for it in the way of progress.
It’s also apparent that President Hamid Karzai is not the answer.
The U.S. and its allies have made their share of mistakes, but the
robed one, by increasing accounts, is weak and highly corrupt.
Karzai started out as a large figure…now he’s small.
Iran: Thanks to the UN Security Council’s appeasement, Iran
now has until November and the submission of answers to the
International Atomic Energy Agency’s questions on its nuclear
program, which will then be forwarded to the Council on Nov.
22. Of course Iran was to have halted enriching uranium ages
ago, but now we have Foreign Minister Mottaki brazenly saying
“The U.S. is not in a position to impose another war in our
region, against their taxpayers’ (wishes).” More in a bit.
North Korea: What to make of this past week? By year end, Kim
Jong Il has agreed to fully disable the Yongbyon nuclear facility,
as well as provide a full accounting of other activities on the
nuclear front, including the disposition of its existing weapons.
Of course Lil ‘Kim was to have done this last February.
Should Kim comply this time, though, the U.S. would then
acquiesce to one of the North’s biggest goals; that being its
removal from Washington’s ‘state-sponsors of terrorism’ list.
Which is kind of curious since it was only yesterday, it seemed,
we were talking about an alliance between Syria and North
Korea; or are we to now believe the Israeli attack on the
suspected Syrian nuclear facility was more on the lines of
blowing up a pill factory in Sudan?
Confused? You should be. But imagine the discussion in South
Korea these days. On one hand there are some who might be
ecstatic at the thought of a formal end to the Korean War, as
South Korean President Roh and Kim called for at their summit
this week.
On the other, tens of millions of South Koreans are now
wondering just where the talk of reunification is taking them?
You thought the reunification of East and West Germany was
costly? You ain’t seen nothing yet when it comes to the potential
for a North-South agreement. And this scares the hell out of
South Koreans.
Which leads me to a thought I’ve had from time to time. North
Korea, if Kim Jong Il truly desires it, would become the new
low-cost provider in the world, much to the detriment of South
Koreans and Chinese, in particular, as South Korean
businessmen and their Chinese counterparts flood the North.
Remember when I wrote long ago of how Taiwan’s businessmen
did not have their country’s best interests at heart? That’s proven
to be true. Now multiply that by three- or four-fold in the event
Kim is serious. “Peace” will convulse the entire region, not that
the alternative is better.
Lastly, on a different issue, Peggy Noonan had some sage advice
in her Wall Street Journal op-ed on talking to one’s enemies; a
topic brought about by Iranian President Mahmoud
Ahmadinejad’s appearance at Columbia University in New York.
“If Jefferson had dined only with those who’d been a force for
good in the world, Jefferson would often have dined alone. If we
insist only good and moral leaders talk to us, we’ll wind up
surrounded by silence. In fact, if we insist we talk only to those
whose good deeds have matched their high aspirations, we won’t
always be on speaking terms with ourselves.
“Domestically, the Democratic presidential candidates appear
only before supportive groups. They don’t speak to anti-tax
groups and talk about their own assumptions regarding tax
policy. They don’t go to traditional values groups.
“It’s all very controlled. And it’s unworthy of a great nation.
When people say the campaign feels artificial, that’s what they
mean. It’s not John Edwards’ hairspray or Hillary Clinton’s
makeup. It’s that they give every sign of being afraid to speak
and listen to those who haven’t been patted down by thought-
cops for unacceptable views.
“The Republicans are the same. An invitation to debate on
Univision, the Spanish-language network? They have
scheduling conflicts. What about the Log Cabin Republicans?
No time right now.
“How unserious. If you, candidate A, have clear and serious
reasons for desiring the wave of millions a year illegally over the
border to stop, you should be able to talk to Hispanic groups and
audiences about it. You go straight to them and appeal to their
patriotism, fairness and common sense. Why? Because they’re
patriotic and fair and have common sense. It is a compliment to
show you know this.
“Will some of them boo? Yes, of course. So what? Too bad.
That’s the price you pay for being truthful at a tough time. And
in America it’s always a tough time.
“The staffs, gurus and handlers of all the candidates are always
afraid their guy will get booed. But do they realize how tired we
are of hearing the tepid applause that follows the predictable
pander?
“I know they’re all always eager to laud Ronald Reagan. But
Reagan began his fall 1980 campaign in the South Bronx, and
argued his case with people on the street. After he was elected,
he pleaded for peace in letters to Leonid Brezhnev. Too bad he
wasn’t tough enough. Oh wait.
“I think the problem is not coming from normal Americans but
from our leadership, our academics and political leaders. The
new fearfulness has resulted in new foreign policy: ‘Let’s not
speak to Buffy.’ Great. How’s that working for ya?”
Brilliant, Ms. Noonan. And speaking of Reagan, I was doing a
piece concerning former secretary of state James Baker’s
principles of foreign policy for my “Hot Spots” column and
uncovered this from the career diplomat and troubleshooter.
“We must be prepared to talk to our enemies. It is in our interest
to do so. This is why we maintained an embassy in Moscow
throughout the Cold War. And this is why even so staunch an
anti-communist as President Reagan was prepared to negotiate
with the Soviets. His motto ‘trust but verify’ remains an
irreplaceable injunction for any negotiations. Talking to a hostile
government, whether it was Moscow during the Cold War or
Damascus today, is not appeasement.”
We’ll see what happens in the case of Syria at the upcoming
Middle East talks in Annapolis. President Assad himself is
balking as of this date.
But what prompted me to write on this topic, aside from Peggy
Noonan’s column, was a call by an Iranian university for
President Bush to come address them. Why he wouldn’t do so,
I’ll never know. One of Ronald Reagan’s most famous speeches
was to students at Moscow University, May 31, 1988. Reagan
didn’t hold back as he talked about economic freedom and
democracy, and we saw the results just a short time later.
As for that university in Tehran that invited Bush, they were also
to have received President Ahmadinejad but he opted out at the
last minute. Why? Because he heard the students wanted a
question and answer session to air their grievances. It’s one
thing for Ahmadinejad to do a little tap dancing at Columbia.
It’s quite another for him to do so on his home turf.
What does all of this tell you? Iran is ripe for revolution, though
I’ve also argued we may have missed our opportunity last year to
end-run Ahmadinejad.
Dan Senor, a former foreign-policy adviser to the Bush
administration and a total tool when he was serving in Baghdad
under His Excellency, Paul Bremer, had an unimaginative op-ed
in the Journal concerning dealing with the Iranian regime.
Unimaginative because he referred to a man I’ve discussed often,
Rafsanjani. Senor brings up the terror attacks in Argentina of
1992 and 1994 in which the Iranian leader was implicated,
concluding this is a reason not to talk to him. I don’t doubt
Rafsanjani had something to do with them and I’ve stated that
previously.
But that’s 13 years ago. Rafsanjani is a $billionaire businessman
now who holds a grudge against Ahmadinejad because the little
one with the cheap suits defeated him in the last election. Talk to
the guy.
And to President Bush, you love to compare yourself to Ronald
Reagan, as does every other Republican of your ilk, so follow
his example.
Those students in Iran? Accept their invitation. Then watch
Iran’s government deny you access because they would be
deathly afraid of the consequences, and see the students begin to
march in protest.
—
Wall Street
Funny thing…that stock market. It’s not that Friday’s jobs report
for September was stronger than expected; it in fact was spot on
vs. expectations. But rather it was the huge revision upwards for
August, turning what had been a worrisome loss of 4,000 jobs to
a gain of 89,000. Of course these figures, witness the countless
revisions, are nothing more than garbage, but we still make a
market off these and other economic barometers, such as the
consumer price index; the latter reflecting absolutely no
correlation with reality but used, nonetheless, by the Fed when
coming up with its interest rate policy.
It’s also funny that the market hit new highs as Wall Street’s
investment banks and other financial institutions announced they
were writing down over $20 billion in losses as a result of the
credit crisis, largely due to marking-to-market their exposure to
collateralized debt obligations (mostly related to subprime
mortgages), leveraged-buyout loans on uncompleted deals, and
plain old trading losses.
The carnage was tough to stomach. UBS…$3.4 billion.
Citigroup…$5.9 billion. Deutsche Bank…$3.1 billion.
Washington Mutual…$1.38 billion…Merrill Lynch…an
estimated $5 billion, Merrill not having formally reported as yet.
But shares in all of the above rose. Why? Because the worst is
over, that’s why. At least this is what you are being told.
They’ve written off everything but the kitchen sink, as the old
saw goes. Smooth sailing from here, sports fans.
Problems with transparency? Clarity? Not an issue…it’s now
been addressed. Everyone has come clean because this is, after
all, the United States of America and when a Goldman Sachs or a
Merrill Lynch tells you the worst is over, gosh darnit, it probably
is. These are professionals, and are to be trusted at all times.
Oh, and by the way, Merrill’s chief economist, David Rosenberg,
who not only has zero to do with the above paragraph but has
been bang on in his analysis of the real estate debacle, says the
next four quarters will see weak economic growth and we are far
from being out of the woods on the housing front.
PIMCO’s Bill Gross, in his monthly outlook (pimco.com),
commented on whether the likes of Federal Reserve Chairman
Ben Bernanke, his fellow governors, and Treasury Secretary
Hank Paulson truly understand the complexity of today’s
financial complex, one that “has morphed into something
unrecognizable to many astute market veterans and academics.”
“Remember those old economics textbooks that told you how a
$1 deposit at your neighborhood bank could be multiplied by
five or six times in a magical act of reserve banking? It still can,
but financial innovation has done an end run around the banks.
Derivatives and structures with three- and four-letter
abbreviations – CDOs, CLOs, ABCP, CPDOs, SIVs (the world
awaits investment banking’s next creation; perhaps IOU?) – can
now take a ‘depositor’s’ dollar and multiply it ten or 20 times….
“I’m sure that Bernanke, Paulson, and their cohorts understand
this, but it isn’t yet clear how much they appreciate it. Alan
Greenspan admits in his newly published book that he didn’t
appreciate until recently the impact adjustable-rate mortgages
and their subprime character, accompanied in some cases by
outright fraud, would have on the housing market. If the Fed
was so slow to grasp the role that subprime mortgages played in
the housing boom and bust, do the Fed and the Treasury of today
totally comprehend what happens when the nonbanking private
system suddenly stops flooding the market with credit? Do they
recognize that such a shutdown puts spending for housing and
business investment at risk, and job growth as well? The Fed
will have to adapt its monetary policy, and the Bush Treasury
will have to adjust its fiscal policy to this brazen new world
dominated more and more by private rather than public policies
and proclivities. To overcome private-market caution, the Fed
may need to put on a bold face marked by even more decisive
cuts in short-term rates.”
Gross also addressed, perhaps presciently as only time will tell,
the employment report, five days before it rocked the market on
Friday.
“(We could see) false hopes of a housing bottom, fears of a
dollar crisis, or misinterpret one month’s signs of employment
gains and faux economic strength. The downward path of home
prices, however, will dominate Fed policy over the next several
years as will the lingering unwind of related financial structures
and derivatives that have yet to be discovered by the public, and
marked to market by their conduit holders.”
We are in the midst of one of those stretches in the market where
yours truly looks very foolish recommending 80% cash and 20%
equities. And this can last a while, a la late 1999 / early 2000.
But seeing as I didn’t forecast anything awful for 2007, and
instead have focused my attention on ’08, I feel like I still have
some time to be proven right.
One game that I play constantly, though, goes something like
this. Will we hit 15000 before we see 12500-13000 again? Will
we see 16000 and never again see 12000? 17000? A 20% bear
market from 17000, after all, takes you back to just 13600. In
the broad scheme of things, unless you were investing between
15000 and 17000, at that point a lot of folks would just say
“Whoopty-damn-do.” 13600 would certainly not mean the sky
was falling, necessarily, even if the trip down for those who
invested at the top made it feel like such.
For now, though, I’m sticking with my global real estate bubble
theme and the eventual impact on consumer spending, first and
foremost. Others can play with their inflation, currency and
derivatives toys; I prefer to focus on what represents the #1 asset
for 95% of homeowners throughout the world.
Lastly, not for nothing but growth is indeed slowing in much of
the world despite what the hucksters on CNBC and other forums
say. That doesn’t mean it’s not a good environment for stocks, I
hasten to add, it’s just the truth. And while the euro-zone
economy is still pretty solid, for example, the risks are to the
downside, as the European Central Bank’s Jean-Claude Trichet
offered this week in keeping the ECB’s key lending rate
unchanged at 4 percent. Trichet also mentioned a dirty word that
is finding its way into the dialogue more and more these days….
protectionism.
Street Bytes
–The S&P 500 closed at a new record high on Friday, while the
Dow Jones hit its record earlier in the week, part of a stretch
that has seen the major averages race higher for four weeks in a
row. The Dow finished up 1.2% to 14066, while the S&P rose 2%
to 1557. For its part Nasdaq gained another 2.9% to 2780.
–U.S. Treasury Yields
6-mo. 4.19% 2-yr. 4.08% 10-yr. 4.64% 30-yr. 4.87%
Yields on the short end rose on the relatively strong employment
data, particularly the upward revisions, with traders adopting the
posture that another rate cut at the Fed’s next meeting, Oct. 31,
isn’t a sure thing anymore. Next week brings data on producer
prices and retail sales, both of which could help shape the Fed’s
decision.
–Ford’s auto sales dropped for an 11th consecutive month in
September, with light vehicles off more than 20%. Toyota’s also
fell, 4.4%, while GM’s rose less than a point and Honda’s were
up 9%. Honda’s U.S. sales have grown 13 straight years and
despite the slip in September, Toyota’s is now 11.
–Conor Dougherty had an interesting story last weekend in the
Journal titled “Is Florida Over?”
“(For) Americans on the move, Florida has become a less-
appealing destination. Moving company Atlas Van Lines
brought 6,700 families into Florida last year and took 8,000 out,
the first time it has moved more out than in. Even with falling
home prices these days, it’s still about key issues such as
affordability. For retirees, the median home price for an existing
single family home is still $231,000, or up 64% from five years
ago, which has resulted in soaring property taxes for
newcomers.” [Florida has a two-tiered system that hits new or
part-time residents harder than long-time homeowners.]
–Manhattan’s commercial real estate market continues to
slide as leasing activity fell 23% in the third quarter – the fourth
consecutive period of decline according to a report by Cushman
& Wakefield (and Crain’s New York Business). But,
Manhattan’s residential market is still strong with the average
apartment rising 6.3% to $1.4 million in the third quarter from a
year-ago. But this is skewed by the cost of a three-bedroom
home soaring 18% to $4.4 million. 4 or more bedrooms? Try
$8.5 million. [I didn’t see the more accurate median price for the
quarter.]
–A follow-up to my discussion last week on global affordability
and Ireland, specifically. I brought home some real estate
listings from the Irish papers and just had a chance to glance at
them. In case you wonder how anyone can talk of a bubble
there, a very small one-bedroom apartment in a Dublin suburb,
new construction, goes for over $400,000 in one ugly complex.
In a similar setting, also outside Dublin proper, try $630,000 for
a two-bedroom. Young people there simply can’t afford
this…but they stretch anyway and take out their 100%
mortgages. This week one of Ireland’s banks cut its growth
forecast for the nation due to concerns over real estate.
–Back to Florida, Oren Dorell of USA Today had a story on
“citrus greening,” a disease that threatens the state’s entire
orange juice industry. First discovered in the Miami area in
Sept. 2005, it has already spread to 27 of Florida’s 32 counties.
“Citrus greening is an incurable disease that hits orange, lemon,
grapefruit and other citrus trees. It is spread by an aphid-like
insect, the Asian citrus psyllid.”
The citrus industry saw sales of $1.4 billion in 2006. Shares of
TANG soared on the news.
–This is not good news…According to Dr. Yoshihiro Kawaoka
of the University of Wisconsin-Madison, the H5N1 bird flu virus
has begun to mutate to infect people more easily, though there is
a ways to go before it is transformed into a pandemic.
“We have identified a specific change that could make bird flu
grow in the upper respiratory tract of humans,” said Dr.
Kawaoka. “The viruses that are circulating in Africa and Europe
are the ones closest to becoming a human virus.”
He is not trying to scare the public, just urging the scientific
community to remain very vigilant. [South China Morning Post]
–I bring up items such as bird flu because of the potential to
impact the economy, such as in the case of the travel industry.
But even without a pandemic, Marriott International’s third-
quarter profit report, for instance, may have been alright, but the
CFO warned that the current boom in the lodging cycle is
looking a little long in the tooth as the company lowered its full-
year profit forecast, while announcing revenue per available
room could drop 5 to 7 percent in 2008.
–I noted with interest the revenue figures for September out of
Macau and its casinos. While an increase of 55% may seem
high, it was far below expectations of 75%, with new casinos
such as Venetian Macau, owned by Las Vegas Sands, opening in
the past few months.
I wrote last spring after my second trip here in just a few years
that this was yet another bubble. I guarantee a year from now
they will be talking about Macau and the potential for sizable
losses for the likes of Las Vegas Sands and Wynn Resorts.
While the number of day trippers from the mainland could
continue to increase as China’s middle class grows, Macau needs
high rollers and, trust me, this place just isn’t that great, plus
soon Singapore and others in the region will offer far better
experiences.
And I can’t help but compare what I believe will transpire in
Macau with the New York Mets. ‘Huh?’ you might be musing.
You see, the Mets’ late-season, historic collapse has major
ramifications for ownership going forward that few have been
addressing. The team is moving into a new stadium in 2009 and
undoubtedly will sell out every single seat that first year, as
almost every franchise does when it opens up a new ballpark.
But Mets management can’t be sleeping well when it comes to
2010 and beyond. Strictly from a baseball standpoint, I look at
their division and see an awful lot of good, young talent in
Philadelphia, Florida and Washington, and by 2010, Mets fans
will not turn out in droves and spend $100 per person, all in, to
watch a .500 team. In essence, like Macau, the Mets are in the
process of overbuilding and in their case, the bubble may already
have popped.
–In an AP-Ipsos survey, only 34% approve of President Bush’s
handling of the economy.
–According to regulatory filings, Countrywide Financial CEO
Angelo Mozilo switched course in his stock options trading plan
twice in late 2006 and early 2007, lending credence to the view
his moves weren’t exactly as pristine as he wants us to believe.
Normally, when an executive adopts a plan it remains in place
throughout, unchanged, to avoid any appearances of impropriety.
This doesn’t appear to be the case with Mozilo and inside
information he was obviously privy to as he netted $138 million
during the period in question.
–Thanks to the plunging value of the U.S. dollar, particularly vs.
the Canadian dollar, or loonie, Toronto-Dominion Bank acquired
mid-Atlantic regional Commerce Bancorp; the latter best known
for extended branch hours and free services such as automatic
coin-counting machines. [I still have about 8 coffee cans of
coins in my home and remain too embarrassed to begin cashing
them in…afraid someone I know will see me and start rumors
that I’m homeless.]
It’s incredible to think that about five years ago the Canadian
dollar had plunged to 65 cents and today is at parity.
–New Jersey is estimating the cost to repair and upgrade 34% of
its 6,434 bridges will be $6 billion-$8 billion over the next
decade. Yikes. Better hold on to my coins…I’m going to need
that source of funds it would appear.
–Last week it seemed every major publication had a story on
how the ethanol industry’s party could already be over, thanks to
the fact there simply isn’t a distribution network to meet demand.
The glut in supply has caused prices to collapse as much as 30%.
What’s absurd is that while U.S. ethanol capacity is expected to
hit 12 billion gallons in 2008 thanks to the aggressive building of
new plants, demand could be less than seven billion gallons.
But what was most disturbing was an article by Michael Smith
and Carlos Caminada of Bloomberg News on Brazil and the
health crisis tied to the ethanol industry there.
500,000 workers toil in the sugar cane fields (sugar cane being
Brazil’s corn equivalent for the fuel), but 312 died on the job
from 2002 to 2005 and 83,000 suffered from accidents while
working in the fields and ethanol plants, according to Brazil’s
Social Security Administration.
It’s not only backbreaking work, with dehydration a major
danger in the boiling sun and humidity, but they are also inhaling
fibers, much like asbestos.
–Madison Square Garden, now known as the world’s most
‘infamous’ arena, and Knicks coach Isiah Thomas were found
guilty in a widely-followed sexual harassment suit that should
resonate throughout the workplace. Former Garden employee
Anucha Browne Sanders was awarded $11.6 million in punitive
damages.
–GE is closing seven light-bulb plants around the world,
including one in Brazil that employs 900, thanks to falling
demand for traditional incandescent bulbs. Personally, I think
I’m going to start stocking these like I do Chex Mix, water and
beer. I’ll find other ways to save the environment.
–Topps Meat Co., not to be confused with Topps Co.,
manufacturer of fine trading cards, closed after the second-
largest beef recall in U.S. history following word of possible E.
coli contamination in its product that sickened more than two
dozen people in eight states. Meanwhile, the baseball card
Topps is looking into whether or not it needs to recall all Barry
Bonds cards in light of Marion Jones’ admission of guilt in the
BALCO case.
–Speaking of baseball, did you see Friday’s game between
Cleveland and New York? Do you think the insects that invaded
the stadium from off the water, a Canadian amphibious landing,
had everyone outside Cleveland wishing they lived there? Do
you think the average lakefront property plummeted $100,000
overnight? At least when the Cuyahoga River caught fire back in
1969, the smoke and flames kept the bugs away from town.
–My portfolio: The China biodiesel play came back to earth this
week, but actually did better than I expected. And one of my
solar plays is way up since I purchased it in February, not a bad
thing, so it’s still premium beer in the fridge. [I also began to
take profits on this last one, Friday.]
–According to researchers at Elon University (a fine school in
North Carolina), “Extra time spent grooming has a positive and
significant effect on both men’s and women’s earnings, but the
effect is considerably larger for men,” as noted in a paper by
Jayoti Das and Stephen DeLoach. “For men, every extra 10
minutes of grooming increases their weekly wages by 6 percent.
However, women would have to nearly quadruple their daily
grooming time to receive that much in additional wages.”
[Matthew Lynn / Bloomberg News]
–Now I don’t know squat about pumpkins, but if you haven’t
already gotten yours for Halloween, you better do so quickly.
Due to weather conditions, many states are struggling this fall.
“Hot, dry weather causes pumpkins to produce too many male
blossoms and too few female ones.”
Huh, never knew this. Lots of males trying to show off in the
pumpkin patch, I imagine.
Foreign Affairs, part II
Russia: As Gomer Pyle would have said, “Soo-prize, soo-prize.”
It’s hard not to be cynical about President Vladimir Putin’s
decision to put his name forward as the leading candidate of the
official Kremlin party, United Russia, in the upcoming
parliamentary elections in December; thereby allowing him to be
prime minister after he leaves office next March.
Putin said he would do so, however, only if United Russia gained
an overwhelming victory, which of course it will, now, and if in
March a president is elected with whom he, Putin, can work
closely with. Seeing as how Putin handpicks the candidate to
succeed him, this is most humorous.
Putin’s approval rating, thanks to Russia’s oil riches, is in excess
of 75% these days, which could lead to United Russia gaining
more than 66% of the Duma vote, a percentage necessary to ram
through any legislation Putin desires, including that pertaining to
the office of the presidency, such as amending term limits.
What it all means is that suddenly 66-year-old Viktor Zubkov,
unknown until Putin just named him prime minister, could get
Putin’s nod to be president, thus making Zubkov a caretaker until
Putin, just 54, can legally run for president again in 2012.
Lastly, Garry Kasparov announced he will run for president as
head of ‘Other Russia.’ He doesn’t stand a snowball’s chance in
hell, but he’ll make it interesting.
Pakistan: I’ve given up trying to figure out what is going on here,
except we know there is an election for president taking place
today, though the country’s Supreme Court could later rule the
result null and void, because while it is allowing Musharraf to
run for reelection while remaining head of the military, it said it
could still decide later to say otherwise. Yup, confusing.
Meanwhile, Musharraf is to step down as military chief next
month and has appointed the head of the ISI, Pakistan’s
intelligence arm, a Lt. Gen. Kiani, to fill the void. Kiani has
been in charge of the investigations into the assassination
attempts on Musharraf as well as Pakistan’s anti-terrorism
efforts. So you could ask yourself, just how good has he been?
As for former prime minister Benazir Bhutto, she is still slated to
return to the country on Oct. 18 in time for the Nov. 15
parliamentary elections, and in the on-again / off-again
negotiations with Musharraf, he has elected to remove all
corruption charges against her as a first step in some sort of
power-sharing arrangement. Then again, the story could be
totally different by Sunday.
Burma: The generals appear to have successfully beaten back the
democracy movement amidst rumors that those arrested,
including the monks, are in a temporary concentration camp. Of
course the world community really can’t do anything about it,
especially since China wants to keep its vassal state just the way
it is.
But the Washington Post’s Fred Hiatt throws out a topic that
could gain some traction…boycott the Beijing Olympics. I do
not agree with his take, but it’s interesting.
“I understand the arguments against (boycotting the Games):
China’s rulers are gradually becoming more responsible in the
world; to threaten their Games would only get their backs up.
The Games themselves offer a chance to enhance international
understanding; if we let world affairs interfere, there will always
– every two years – be some cause. The athletes have trained for
years; they deserve their chance.
“And yet: Hundreds of thousands of Burmese have risked
everything – their homes, their families, their lives – to be free.
They have done so with nothing on their side but courage, faith
and the hope that the world might stand with them. And they still
have a chance to succeed.
“Whether they do depends mostly on decisions made inside
Burma. But people and countries outside can have some effect.
Burma’s neighbors in Southeast Asia could do more. The
world’s largest democracy, India, could do far more. China
could do more most of all.
“China’s Communist rulers have reasons not to help Burma’s
democrats. They enjoy privileged access to Burma’s timber and
other resources, for one. Even more fundamentally, dictators will
shudder when they see another illegitimate regime threatened by
people power.
“What could push them the other way? Their desire to be seen as
responsible players, maybe. Their desire to have their one-party
rule recognized as more sophisticated and legitimate than the
paranoid generals of Burma, maybe. And, maybe, their deep
desire to host a successful Olympics next summer.
“If a threat to those Games – delivered privately, if that would be
most effective, with no loss of face – could help tip the balance,
then let the Games not begin. Some things matter more.”
[I have a selfish interest in seeing the Games come off. On
Friday, the first day tickets became available, I snapped up a full
pass to the U.S. Olympic Track and Field Trials next June in
Eugene, Oregon. Guess I won’t see Marion Jones, however.]
Ukraine: More election chaos here as former prime minister
Yulia Tymoshenko would appear to be heading back to this post
as part of a coalition with President Yushchenko, both being pro-
West and EU. But the current prime minister, Yanukovich, who
is pro-Moscow, is saying not so fast. As for Yushchenko, he
offers on one hand that he wants a big tent with all parties
welcome, but Tymoshenko said, ‘No way, I won’t serve in a
government with Yanukovich.’
And as winter approaches, it’s time for another potential standoff
with Russian energy giant Gazprom. Gazprom says Ukraine
owes it $1.3 billion. A Ukraine official then supposedly agreed
to pay this off by Nov. 1, per Gazprom’s request. But other
government officials, including Yushchenko and Tymoshenko
said, ‘Not so fast!’ Gazprom could of course at any time cut off
the natural gas supply.
Turkey: The European Union is disappointed at the slow pace of
reform in terms of Ankara’s application for membership. The
EU is slated to issue its annual progress report in November and
it won’t be good.
One major obstacle remains, divided Cyprus. The EU wants
Turkey to open its ports and airports to traffic from EU-member
Greek Cyprus, but Turkey refuses to do so before the EU lifts
sanctions on the Turkish Cypriot state, recognized only by
Ankara.
Lebanon: President Bush met with anti-Syrian majority leader
Saad Hariri in Washington and warned Syria not to interfere in
Lebanon’s political process. “I am deeply concerned about
foreign interference in your elections. We expect Syria to honor
that demand.”
Well this is truly laughable, seeing as Bush has been totally
clueless about the missed opportunity here going back to the
spring of 2005, as I’ve documented extensively in these pages.
Kind of like the way Bush was clueless for over three years as to
what was needed in post-Saddam Iraq.
Russia, part II: Back here for a little tidbit. President Putin
traveled to Sochi, site of the 2014 Winter Olympics, and said,
“We unfortunately have to admit that at this point, in a city of
half a million people, there is no proper sewage system,
electricity supply or infrastructure.” Doesn’t exactly make me
want to visit the place beforehand, if you catch my drift.
Random Musings
–On the 2008 election front, according to a Washington Post-
ABC News survey, nationwide, Hillary Clinton leads Barack
Obama 53-20 among Democrats and Democratic-leaning
independents. For Obama it’s his lowest figure since he entered
the race.
Among women Clinton’s lead over Obama is 57-15, and among
blacks she still has a 51-38 edge. Clinton also raised $27 million
last quarter to Obama’s $20 million.
But among likely Iowa caucus-goers, Obama leads Hillary 28-
24, with John Edwards still at 22. [Newsweek]
On the Republican side, the same Post-ABC poll has Rudy
Giuliani ahead with 34 percent to Fred Thompson’s 17, John
McCain’s 12, and Mitt Romney’s 11. In Iowa, however, the
Newsweek survey has Romney at 24, Thompson 16, Giuliani 13,
Mike Huckabee 12, and McCain 9.
Bits and pieces: Newt Gingrich is not running for president,
while New Mexico Republican Senator Pete Domenici
announced he is retiring due to a progressive brain disease.
Then there is foot-tappin’ Sen. Larry Craig, who declared, “I
have seen that it is possible for me to work here effectively,” so
he’s staying, though he said he will not run for a new term in
2008. Nonetheless, the Republicans’ long national nightmare
continues.
–John McCain ticked off non-Christians with his statement “I
admire Islam. There’s a lot of good principles in it. But I just
have to say in all candor that since this nation was founded
primarily on Christian principles, personally, I prefer someone
who I know has a solid grounding in my faith.”
Oops. McCain tried to backtrack, saying he wouldn’t “rule out
under any circumstance” someone who wasn’t Christian, but
added “I just feel that that’s an important part of our
qualifications to lead.”
–Fencing along the U.S.-Mexico border is now up to 145 miles.
One line in Arizona is 32 miles long, or more than double the 14-
mile fence that separates San Diego from Tijuana.
–President Bush’s overall job approval rating was 33% in the
Post-ABC survey and just 31% in an AP-Ipsos poll. Congress,
though, continued to fare even worse, 29 and 22 percent,
respectively.
–Check out my “Wall Street History” column for a piece on the
50th anniversary of Sputnik.
–Very, very dumb statement on “Desperate Housewives” last
week when Teri Hatcher’s character asked of the person
attending to her during a medical consultation “Can I check those
diplomas, because I want to make sure that they’re not from
some med school in the Philippines.”
I can’t speak to the doctors, specifically, but I do know that
Filipino nurses are the best in the world, and it’s why
American hospitals are crying for them. [Don’t ask me how I
know this.]
–This week’s Sign of the Apocalypse.
Sports Illustrated polled 278 NFL players and asked the question
“Would you let your child wear a Michael Vick jersey?”
54% said ‘Yes.’
Nearly 63% age 24 and younger said ‘yes.’ But two thirds of
quarterbacks said ‘no.’
–Thomas Sowell, in an op-ed for the New York Post on the
Duke lacrosse case.
“At the very bottom of page 28 of last Sunday’s New York
Times, right opposite the obituaries, was a news item almost
exactly the size of a 3-by-5 card.
“It was a fraction of an Associated Press dispatch about Richard
Brodhead, president of Duke University, apologizing for ‘not
having better supported’ the Duke lacrosse players last year
when they were accused of rape.
“When this story first broke last year, it was big news not only
on the front page of the Times but on the editorial page as well.
“The way things were discussed in both places, you could hardly
help coming away with the conclusion that the students were
guilty as sin. But now that the Duke president apologizes for the
way he handled the case, that gets buried on page 28 at the
bottom, opposite the obituaries….
“In the full Associated Press dispatch, including the part left out
by the Times, Richard Brodhead said that he regretted the
university’s ‘failure to reach out’ to the players under indictment,
‘causing the families to feel abandoned when they were most in
need of support.’
“Brodhead got a standing ovation after this speech at the Duke
law school – but to call what he said ‘spin’ would be much too
charitable.
“The issue was never his failure to ‘support’ the students or their
families. Universities aren’t equipped to determine guilt or
innocence. That’s why trials are held in courts instead of on
campus.
“It was none of the university’s business to ‘support’ either the
students or those who were accusing the students.
“What Brodhead did was join the campus lynch mob by firing
the lacrosse coach, canceling the rest of the team’s season and
suspending the students.”
[On Friday, the three Duke players filed a federal suit against
former DA Mike Nifong, the city of Durham, and police
detectives involved in the case.]
–Robert D. Kaplan in an op-ed for the Wall Street Journal on the
treatment of U.S. troops.
“Let’s review some recent history. From Sept. 11, 2001, until
the middle of 2003, when events in Afghanistan and Iraq
appeared to be going well, the media portrayed the troops in an
uncomplicated, positive light. Young reporters who embedded
early on became acquainted with men and women in uniform, by
whom they were frankly impressed. But their older editors,
children of the ‘60s often, were skeptical. Once these wars
started going badly, skepticism turned to a feeling of having been
duped, a sentiment amplified by the Abu Ghraib prison scandal.
“That led to a different news cycle, this time with the troops as
war criminals. But that cycle could not be sustained by the facts
beyond the specific scandal. So by the end of 2004, yet another
news cycle set in, the one that is still with us: the troops as
victims of an incompetent and evil administration. The irony is
that the daily actions of the troops, now living among Iraqis,
applying the doctrines of counterinsurgency, and engaged
regularly in close-quarters combat, are likely more heroic than in
the period immediately following 9/11….
“Rather than hated, like during Vietnam, now the troops are
‘loved.’ But the best units don’t want love; they want respect.
The dilemma is that the safer the administration keeps us at
home, the more disconnected the citizenry is from its own
military posted abroad. An army at war and a nation at the mall
do not encounter each other except through the refractive
medium of news and entertainment.
“That medium is refractive because while the U.S. still has a
national military, it no longer has a national media to quite the
same extent. The media is increasingly representative of an
international society, whose loyalty to a particular territory is
more and more diluted. That international society has ideas to
defend – ideas of universal justice – but little actual ground. And
without ground to defend, it has little need of heroes. Thus,
future news cycles will also be dominated by victims.
“The media is but one example of the slow crumbling of the
nation-state at the upper layers of the social crust – a process that
because it is so gradual, is also deniable by those in the midst of
it. It will take another event on the order of 9/11 or greater to
change the direction we are headed. Contrary to popular belief,
the events of 9/11 – which are perceived as an isolated incident –
did not fundamentally change our nation. They merely
interrupted an ongoing trend toward the decay of nationalism and
the devaluation of heroism.”
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $747
Oil, $81.22
Returns for the week 10/1-10/5
Dow Jones +1.2% [14066]
S&P 500 +2.0% [1557]
S&P MidCap +3.3%
Russell 2000 +4.9%
Nasdaq +2.9% [2780]
Returns for the period 1/1/07-10/5/07
Dow Jones +12.9%
S&P 500 +9.8%
S&P MidCap +13.6%
Russell 2000 +7.3%
Nasdaq +15.1%
Bulls 56.5
Bears 25.0 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Brian Trumbore
