[Posted 7:00 AM ET]
Turkey, Iraq and the Kurds
Relations between Turkey and the United States took a decided
turn for the worse this week and this becomes as serious a
foreign policy issue as Washington has faced in years.
For starters, though, I’ll let others debate whether the 1915
killings of over a million Armenians, as the Ottoman Empire was
collapsing, was genocide. But today, the fact is the decision by
the House Foreign Affairs Committee to define it as such in a 27-
21 vote could not have come at a worse time.
I’ve written quite a bit about Turkey over the years, traveled
there twice in 2001 and 2002, studied its history, and I’ve
been warning that the U.S. better get its act together in
preventing the Kurdish rebel militia, the PKK, from continuing
with its campaign of violence against Turkey from its safe
havens in Iraqi Kurdistan. Recently, the violence has been
ratcheted up and in but one of many attacks, last Sunday at least
13 Turkish soldiers were killed by the PKK in an ambush.
Some of you have written me over the years, defending the PKK
as being freedom fighters. What’s clear is that the Bush
administration, having just liberated the Kurds in Iraq, thus
allowing them to set up the only success story in the nation, has
failed when it comes to getting Kurdish leaders to rein in the
PKK and keep them on the Iraqi side of the border.
So the PKK keep jumping across, attacking patrols, setting off
bombs, and then like cowards fleeing back across the border,
knowing Turkey wouldn’t pursue them because it was an ally of
the United States and had supported the removal of Saddam.
In fact Turkey isn’t just an ally, they are a member of NATO, for
those who’ve forgotten, where an attack on one is an attack on
all. The U.S. has critical air bases in Turkey, such as at Incirlik,
and 70% of the air cargo destined for Iraq transits through
Turkey. Turkey maintains key roads entering Iraq through which
the U.S. transports further material and personnel. And Turkey
is a highly critical ally of Israel, their only one in the Muslim
world.
So this was the worst possible time for the House resolution, the
Turkish people (not just some politicians) are incredibly upset,
and a proud military keeps asking their civilian leader, Prime
Minister Erdogan, why it is they are not allowed to go into Iraq
to take out the bases. You want a simple analogy? See what
would happen if a terrorist group, using Canada as a base,
crossed the border and attacked some villages in Minnesota or
upstate New York. Do you think for a second that the U.S.
would hesitate in going after them, any fallout in relations with
Canada be damned? Now picture that for the entire time since
the fall of Saddam, Turkey has held its fire.
Following is part of an editorial in the moderate Daily Star of
Lebanon. I don’t necessarily agree with the opinion expressed
herein, but we need to understand where each side is coming
from.
“This renewed tension is fueled in part by the consequences of
the American-led attack against Iraq, and the fact that U.S. and
allied Iraqi forces seem unable or unwilling to bring an end to
cross-border attacks by PKK or other militants. Iraq and the U.S.
both counsel non-violent diplomacy and a recently signed
Turkish-Iraqi security agreement as the answer to Turkey’s
concerns. However, there is something brazen and bizarre about
the U.S. government’s warning Turkey against making an
incursion into northern Iraq by saying, in the words of State
Department spokesman Sean McCormack, ‘If they have a
problem, they need to work together to resolve it, and I am not
sure that unilateral incursions are the way to go.’ For the U.S. to
caution against unilateral military action in Iraq after itself
undertaking unilateral militarism on a gargantuan scale in Iraq is
perplexing to the point of incredulity. The U.S. is correct to
discourage military action, but hypocritical not to abide by its
own advice. The American-led war against Iraq has ignited all
sorts of new tensions in the region.”
Next week, as early as Monday, Turkey’s parliament will give
Prime Minister Erdogan approval for cross-border incursions,
while the full U.S. House will pick up the genocide resolution
before year end. Regardless of the outcome, the damage has
been done.
In Iraq itself, General David Petraeus strongly accused Iran of
inciting violence, Petraeus normally leaving such talk to others,
specifically citing Tehran’s ambassador to Baghdad as being a
member of the Revolutionary Guards’ elite Qods force.
Meanwhile, Iraqi President Talabani, a Kurd, endorsed the plan
of Senate Democrat Joseph Biden to divide Iraq into three
separate zones along ethnic lines, saying that a recently passed
Senate non-binding resolution (by a 75-23 vote) to do so “is a
very good one. It is insisting on the unity of Iraq, of the security
of Iraq, of the prosperity of Iraq, of national reconciliation and
asking our neighbors not to interfere in the internal affairs of
Iraq.” [Bloomberg News]
And along sectarian lines, two Shia rivals, Abdul Aziz Hakim
and Moqtada al-Sadr, have announced a peace agreement,
though no one seems to know exactly what this means; as it
could be anything from combining militias to wreak havoc, to a
true political alliance.
What’s apparent, as a Washington Post story had it, is that true
reconciliation isn’t obtainable. The Post interviewed a deputy
prime minister, a Kurd, who said “I don’t think there is
something called reconciliation.” Of the cabinet members in the
Maliki government, for example, half have dropped out, in case
you had doubts as to whether the government is dysfunctional or
not.
Lastly, as I go to post I see that the former top commander in
Iraq, Lt. Gen. Ricardo Sanchez, who retired in 2006, is blaming
the Bush administration for a “catastrophically flawed,
unrealistically optimistic war plan,” adding “there has been a
glaring and unfortunate display of incompetent strategic
leadership within our national leaders.” Sanchez made his
comments before a group of military reporters and editors on
Friday.
Well Sanchez is right. But Sanchez was himself a disaster. The
administration should have dismissed him early on.
Iran…I nailed it
French President Nicolas Sarkozy traveled to Moscow for his
first summit with Russian President Vladimir Putin, urging Putin
to put more pressure on Iran and its suspected nuclear weapons
program. Sarkozy was unsuccessful.
At a news conference, Putin said, “We don’t have information
showing that Iran is striving to produce nuclear weapons. That’s
why we’re proceeding on the basis that Iran does not have such
plans.” At least Vlad, who is making a trip to Tehran this week,
added “We share the concerns of our partners that all of Iran’s
programs be made absolutely transparent.” Of course Russia has
more than a passing interest in a successful nuclear energy
program, seeing as it has been building the controversial plant in
Bushehr.
But last week, in a discussion that I know raised a few eyebrows,
I urged President Bush to accept a Tehran university’s invitation
to address the students, saying that Bush should do so because
“Iran is ripe for revolution.”
I posted that Saturday morning. Two days later we learned, as
reported by Reuters, “Dozens of students scuffled with hard-line
supporters of Mahmoud Ahmadinejad on Monday on the Tehran
University campus and chanted ‘Death to the dictator’ ahead of a
speech there by the Iranian president.”
The London Times: “In scenes rarely witnessed in Iran, scores of
students chanted anti-Ahmadinejad slogans, clashed with pro-
government militia and made public a highly critical letter
addressed to the Iranian leader. The authorities responded by
firing teargas canisters into the campus.”
One student told a reporter that there were 2,000 opponents on
each side of what was like a boxing ring. The student group had
presented a letter with a list of 20 questions, challenging
Ahmadinejad’s rule and authority. And so I repeat what I wrote
last week of President Bush.
“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
The slide in the housing sector is having an impact on the overall
U.S. economy, certainly as witnessed in the statements out of
Ryder Systems Inc., the largest truck-leasing company. Ryder
said “Economic conditions have softened considerably in more
industries beyond those related to housing and construction.
Consequently, freight and shipment levels have weakened to a
greater extent than previously anticipated.” As third quarter
reports pour in, we’ll see if Ryder’s comments are echoed by
others. GE reported on Friday and while the numbers were solid,
as well as its outlook, it didn’t exactly say there was going to be
improvement in its global operations beyond what has been
already forecast.
According to the Liscio Report, an economic research firm, and
the New York Post, 25 states are seeing disappointing sales tax
revenues, which seems to be an obvious harbinger of tougher
times ahead.
And it’s still largely about real estate, as S&P’s chief economist
David Wyss garnered some press for his remark at an
international conference that “(U.S.) housing prices won’t
bottom until next summer and the losses won’t peak for another
two years, until 2009. We are not halfway through this crisis
yet.” Wyss added “We underestimated the extent to which fraud
was occurring in the industry,” with both lenders and
homebuyers to blame.
The Wall Street Journal had a page one story titled “The United
States of Subprime” and the explosion in high-interest rate
mortgages from 2004-2006. It’s been about the large number of
Americans who are stretching beyond their means, with losses of
all kinds continuing to pile up, such as in Thornburg Mortgage’s
announcement it lost $1.1 billion in selling bonds backed by
adjustable-rate loans, far worse than expected. Homebuilder
Beazer Homes, which admittedly has some unique problems due
to various legal investigations, nonetheless said its cancellation
rate for the quarter ending Sept. 30 was a whopping 68%, almost
double the rate of the prior quarter.
But some say we are nearing the bottom, choosing to look at the
fact foreclosures for September were down from August’s level,
though up 99% over a year ago. On the other hand,
Countrywide Financial said delinquencies increased to 5.85% in
September from 4% a year earlier, while foreclosures more than
doubled. It also said new loans fell 44% in the month. Another,
St. Joe Co., Florida’s largest private land owner, announced it
was eliminating 75% of its workforce, selling off 100,000 acres
and scrapping the dividend. This hardly looks like a bottom.
I’ve argued, however, that the housing bubble and its aftermath
is global, with some nations still in the process of peaking even
as others take on gas.
One example of a bubble still on the ascent is China. There was
an item this week about the number of $billionaires on the
mainland jumping to 108, according to a new study, up from just
15 last year, thanks to both the soaring stock market and property
prices. The government is trying to curb real estate speculation
but to no avail. It’s no different than in the U.S. Rising prices
lead to more construction (and overbuilding).
The China real estate market is producing some outrageous
riches. Take Yang Huiyan. Reports have her at 25 or 26 years
of age, yet she is now said to be the richest person in China,
being the largest shareholder in her daddy’s company, Country
Garden, a real estate developer. Yang is worth a cool $16
billion.
Of course this isn’t sustainable and the government in Beijing, let
alone everywhere else in the world, is learning the lesson that
while some strike it rich, for the middle class in all nations it’s
still about affordability. I’ll give you one more…Qatar…where
according to the finance minister there, “Rent has increased
168% in the past two years.” [Daily Star]
Lastly, on the issue of the securities industry, which packaged all
the mortgages now turning into junk, I hope everyone took the
recent earnings pronouncements, and others to follow, with a
grain of salt. Ellington Capital Management, a $5.2 billion
hedge fund that is temporarily suspending withdrawals from two
of its offerings because of the turmoil in the credit markets, told
clients in a Sept. 30 letter:
“There is no way to determine net asset values that would be
simultaneously fair both to investors redeeming from these funds
and to investors remaining in the funds.” [Wall Street Journal]
In a regulatory filing on Wednesday, Goldman Sachs said the fair
value of retained interests in its collateralized debt and loan
obligations dropped from $3.79 billion three months earlier to
$1.77 billion at the end of August, though Goldman did not
disclose whether the holdings had shrunk because the firm
marked them down, sold them or both.
So it’s still about transparency, or lack thereof. We remain in an
era where portfolio managers can get away with marking
securities any which they want. Without knowing more
specifics, I at least give Ellington Capital credit for coming
clean in theory, even as it struggles to figure out just what is on
its books.
Street Bytes
–Equities rallied for a fifth straight week, though they were the
smallest gains in terms of the major averages during this streak.
The Dow Jones tacked on 27 points, 0.2%, to close at 14093 after
earlier hitting another new high, 14164. And the S&P 500 hit a
new record of its own, 1565, before finishing at 1561, up 0.3%.
Nasdaq added 0.9% to 2805, but the Russell 2000 lost 0.4%.
Stocks were helped by renewed merger and acquisition activity,
but the Street remains way too optimistic on corporate profits.
The trailing price/earnings ratio is 18 on the S&P, far from
cheap; especially seeing as the ‘e’ is expected to grow only about
2% in the third quarter and forecasts for the fourth will be
coming down.
–Oct. 9 marked the five-year anniversary of the low for the
2000-2002 bear market, 776.76 on the S&P 500. Or, if you
prefer, the fifth anniversary of the subsequent bull market. [For
you market junkies out there, March 11, 2003, was another key
low, 800.73. Just eight days later the S&P hit 895.79.]
–U.S. Treasury Yields
6-mo. 4.29% 2-yr. 4.22% 10-yr. 4.69% 30-yr. 4.90%
Yields on the short end rose on the strength of stronger than
expected retail sales and the feeling, at least for a few hours, that
the Fed may not feel compelled to lower interest rates further.
European Central Bank governor Axel Weber shook up the credit
markets when he suggested the ECB may need to raise rates
given the “expected acceleration in euro-region inflation over the
coming months.”
But the Federal Reserve’s minutes from its Sept. 18 meeting, the
one in which it slashed the funds rate 50 basis points, seemed to
put inflation on the back burner and instead expressed concern
that should the slide in housing continue, it would “feed back on
employment and income.” Not that this is an earth-shattering
revelation, seeing as it’s been my own mantra all year, but the
issue is if the ECB decides to hike rates at a time when the Fed
needs to lower them again to keep the U.S. economy afloat, that
spells further trouble for the dollar. The Fed next meets on
Halloween.
–I continually get a kick out of discussions on the shrinking
budget deficit, a good thing, because of the failure to address one
simple fact. The picture would be nowhere near as rosy without
$60 to $80 oil. While the earnings may have peaked for Big Oil
(for a variety of reasons), the revenues are still humongous and
that means humongous federal income taxes. Just a reminder. In
the first six months of 2007, Exxon Mobil and Chevron,
combined, paid over $20 billion to the federal government. It
was about $22 billion in the first half of 2006. My point being
it’s not just low tax rates and the entrepreneurial spirit of
America, as Bush likes to tout. The facts speak of another rather
large contributor that is always left out of the talking points,
wouldn’t you know.
–Same store sales figures for the month of September at the big
retailers were putrid, up around 1%, the slowest pace in years.
Wal-Mart’s were up a less than expected 1.4%, but the shares
rose on a higher earnings forecast due to increased margins and
cost controls. Rival Target’s were up 1.2%, while JC Penney
saw its same store sales fall 4.6% and Macy’s declined 2.7%.
For once blaming the weather was truthful. It was too warm for
all of us to feel compelled to buy fall and winter apparel.
Personally, being almost 50 and seeing as the earth is warming
four degrees each quarter, I feel like I purchased the last winter
coat of my life three years ago.
–In the Journal piece on the subprime market, there was a table
of selected metropolitan areas with the highest proportions of
high-rate mortgages for the period 2004-06. Topping the list was
the McAllen-Edinburg-Mission, Texas, area with 39.1%.
Detroit-Livonia-Dearborn was next at 32.1%, followed by
Miami-Miami Beach-Kendall, Fla., 31.6%.
–A report by the Carnegie Endowment for International Peace
concludes corruption costs China as much as 3% of its economic
output, or $86 billion in 2003, and poses a “lethal threat” to the
country’s economic development.
The author of the study, Minxin Pei, “says the sums of money
expropriated by corrupt officials have risen ‘exponentially’ since
the 1980s and cost more than last year’s entire education
budget,” as reported by Richard McGregor of the Financial
Times.
Mr. Pei said: “Even after adjusting for inflation, the sums of
money looted by government officials today are astonishing – a
relatively low-level official can amass an illicit fortune in tens of
millions of yuan.”
The odds of a corrupt official going to jail, though, are estimated
to be just 3 in 100, as Mr. Pei concludes corruption is not just a
stage of development but a failure of political reform.
–Russia’s Gazprom said it reached an agreement with Ukraine
on what is now being called $2 billion in debt the natural gas
giant says it’s owed. Just a week ago the figure was said to be
$1.3 billion. There was no explanation for the increase, though it
should be noted that outgoing Ukrainian Prime Minister Viktor
Yanukovich, a friend of the Kremlin, signed the deal for his
government.
–For the record, the price of crude oil has fallen 13 of the past 20
years in the fourth quarter due largely to slower demand vs.
summer’s peak levels.
–The latest IRS figures show that the wealthiest 1% of
Americans earned 21.2% of all income in 2005, up from 19% in
2004. The bottom 50% earned 12.8% of all income, down from
13.4% in 2004. As Greg Ip’s Journal piece was titled, “Income-
Inequality Gap Widens.” While comparative data isn’t available,
academics conclude the rich last had this high a share in the
1920s. Great Gatsby II continues.
–Big goings on in business software land this week. Oracle
made a hostile bid for BEA Systems, just two days after chief
rival SAP announced it planned to buy Business Objects.
Coincidentally, both potential acquisitions were valued, at least
initially, at $6.7 billion.
–Morgan Stanley revealed that its quantitative strategies group
lost $480 million during the quarter ending Aug. 31, but in an
SEC filing admitted its quant traders lost $390 million on a
single day in August during the mini-panic.
Securities firms talk about their “trading value-at-risk
calculation” to reassure investors that they have a handle on risk
management, but MS revealed that in its case it exceeded this
calculation six days during the quarter. So much for effective
“stress-testing.”
–What an embarrassment…Boeing pushing back delivery of the
first 787 Dreamliners at least six months. The company said the
delay wouldn’t impact earnings, but after convincing us all it
wouldn’t face the same production issues that rival Airbus has, it
proved it’s no different. The big issue is with the suppliers, such
as for carbon fiber. They are having a tough time keeping up
with demand these days. [I long sold my carbon fiber holding,
but that was a nice idea that continues to work well for those still
in it.]
–Two years ago Sprint merged with Nextel and this week
chairman and CEO Gary Forsee was dismissed. In a word, the
merger has been a disaster. As an example, Sprint warned the
same day that it expects to lose another 337,000 monthly
customers in the current quarter.
Kim Hart / Washington Post:
“Some analysts and business school professors cite the marriage
of Sprint and Nextel as a case study of a poorly conceived
merger. Their wireless networks were largely incompatible, and
the companies’ cultures were worlds apart. Sprint was more than
a century old and had a legacy in the local and long-distance
telephone business. Nextel was barely a decade old, a scrappy
up-and-comer that had cobbled together its network out of cab
companies’ walkie-talkie licenses.”
Hoped for $multi-billions in savings never materialized as
combining the operations cost far more than either company
projected, thanks in no small part to Forsee’s $5 billion
commitment to build out a new high-speed wireless network
using largely untested WiMax technology.
–Since I slammed Internet-telephony company Vonage on more
than one occasion, I note it settled its patent dispute with Sprint
Nextel, agreeing to pay $80 million to license Sprint’s
technology. The stock finished the week up nearly $1 to $1.85,
though its long-term viability is still very much in question.
–Shares in Google closed at $637. You know, the latest earnings
estimate for 2008 is $20 and with its growth rate it’s tough to say
the company is way overvalued, even by my conservative way of
thinking.
–Inflation Watch: Argentines are protesting the rising cost of
tomatoes by launching a boycott of supermarkets and the
product. This is part of the public’s outrage over the
government’s official inflation data that put it at just 0.8% for
September. It’s a big issue in the upcoming presidential election.
According to the BBC, official statistics list tomatoes at 4 pesos
a kilo, but vendors sell them for 18 pesos, putting them out of the
reach of many in the country.
–Inflation Watch, Part Deux: In the latest Zagat’s survey of
New York City Restaurants, the average tab at the 20 priciest
restaurants is up 69% over the past five years. But the good
news is the overall city average is basically unchanged over the
same period.
–Molson Coors Brewing Co. and SABMiller announced they
will merge their U.S. operations in a joint venture. The new
MillerCoors will take advantage of its clout to compete with
Anheuser-Busch, including in its ability to negotiate better
placement on the advertising front, such as for major sporting
events. But I’m just wondering if this means Miller will be able
to access Coors’ Rocky Mountain spring water. Maybe Coors
could dig a little channel and divert some of the good stuff over
to Miller.
–My portfolio: The China bio-diesel holding continues to hang
in there at higher levels after the big run-up, but I’ve become
quite the weatherman, seeing as how the region where the
company is located (Fuzhou, Fujian) has been hit by one typhoon
after another and I’m constantly worrying about production
delays. [I can virtually guarantee I am the only U.S. investor
who sees a typhoon develop and then follows it all the way
across.] This last one, Typhoon Krosa, caused $1 billion in
damages. In all seriousness, I will take the weather into account
when I decide to exit this position, though hopefully not for
another 1 ½ years or so. At some point there is likely to be a
major storm-related disappointment.
Foreign Affairs
North Korea: This week Kim Jong Il celebrated the one-year
anniversary of his nation’s nuclear test. James Schoff, associate
director of Asia-Pacific studies at the Institute for Foreign Policy
Analysis, had a good description of the current situation in the
South China Morning Post.
“Contrary to South Korean President Roh Moo-hyun’s confident
statement that ‘the North Korean nuclear issue will rapidly arrive
at a complete resolution,’ we are better off keeping expectations
in check because, upon opening this gift, we are likely to find
that more assembly is required….
“In short, Pyongyang agreed [at six-party talks going back to
2005] to disable its most important nuclear facilities and to
provide a complete declaration of its nuclear programs by the
end of the year. In return, the U.S. committed itself to begin
removing North Korea from its list of state sponsors of terrorism
and lifting economic sanctions. It also agreed to work with other
six-party members to provide Pyongyang with significant
economic, energy and humanitarian assistance.
“The agreement says the disablement of the North’s nuclear
facilities will be recommended by the nuclear expert working
group. The problem is that we don’t know what ‘disablement’
means. Does a written description of these disablement
procedures exist, and has it been formally approved by the six-
party negotiators? In the absence of more information, we can
only assume that there is less here than meets the eye.”
For example, Schoff notes it gets down to details such as whether
in disabling the plants, could the North easily acquire critical
parts to restart them, or would it entail Pyongyang undertaking
“an expensive and very visible year-long effort to rebuilt its
nuclear capabilities. That’s a big difference.”
Separately, columnist Jim Hoagland of the Washington Post says
some in the intelligence community believe North Korea has far
fewer nuclear bombs than most believe; as in six vs. 12-15.
Could this be one reason why Kim has at least publicly appeared
to want to cooperate as his nation starves? Is this why the White
House is seemingly ignoring the reported North Korea-Syria
connection because Pyongyang’s nuclear program just isn’t that
substantial and is controllable?
I think as big a question could be an old one…just who is behind
Kim as his health deteriorates? Are there reformists in the midst,
or more likely, a bunch of corrupt business types who want to
cash in a la Russia’s first oligarchs in the Yeltsin era? Or, while
Kim has tabbed a son to take over, could there still be a coup by
hardliners?
On the business angle, one place to watch is the North-South
joint venture at Kaesong, an industrial zone inside North Korea
that was designed to instill cooperation between the two.
Currently, 19,400 North Koreans are employed here, with
another 800 South Koreans in 26 factories, but Seoul envisions
450 companies employing 700,000 by 2012.
China: The 17th National Party Congress is slated to begin this
week, during which President Hu Jintao is expected to anoint a
successor for 2012.
For its part, the United States is frustrated over the lack of
cooperation between the two on issues such as Burma, Sudan and
Iran, though it’s really no surprise since China is focused on
energy security in the case of all three. China instead wants
Washington to negotiate directly with Tehran.
And as China expert Cheng Li notes, “China’s view on non-
interference differs dramatically from U.S. goals on democracy
and human rights,” adding “the Chinese want bargaining power
with the Americans over their own vital interests in Taiwan.”
Ah yes, Taiwan. This past week during National Day
celebrations in Taipei, Taiwan displayed the latest in military
technology, including two locally developed advanced missiles,
as President Chen Shui-bian used the event to reiterate that his
island’s identity was tied to use of the name “Taiwan” rather than
the Republic of China, especially when pressing for UN
membership.
“The problem in the Taiwan Strait today does not rest with
Taiwan,” said Chen. “Rather it is with China’s totalitarianism,
authoritarianism and dictatorship.” [South China Morning Post]
Well…Beijing was none too pleased to hear this, while on the
mainland two leading democracy activists have gone missing
amidst an intensified crackdown by the communist government.
And then we have China’s lack of cooperation on the topic of
Burma, as alluded to above. President Bush deserves his share of
criticism too.
William Kristol / op-ed Washington Post
“[Regarding the president’s address in September to the UN
General Assembly, Bush] remarked that ‘the ruling junta remains
unyielding.’ So he took the opportunity to announce ‘a series of
steps to help bring peaceful change to Burma,’ including tighter
economic sanctions on the regime’s leaders and their financial
backers and an expanded visa ban on the worst human rights
violators. He urged ‘the United Nations and all nations to use
their diplomatic and economic leverage to help the Burmese
people reclaim their freedom.’ National security adviser Stephen
J. Hadley explained to the New York Times that Bush wanted
Burma’s government to ‘understand that there is a time now for a
political transition’ and to send a warning against harshly
suppressing the protests.
“That night, Burma’s dictators announced a curfew in major
cities. The next day, the bloody crackdown began. Within a few
days, scores (at least) of peaceful protesters had been killed, and
hundreds – maybe thousands – of Buddhist monks and
democratic activists had been rounded up and taken away; their
fates are unknown. Monasteries were occupied and ransacked by
Army troops.
“So much for Bush’s warning against harshly suppressing the
peaceful protests for freedom and democracy….
“In his second inaugural address, President Bush, quoting
Lincoln, put ‘the rulers of outlaw regimes’ on notice: ‘Those who
deny freedom to others deserve it not for themselves; and, under
the rule of a just God, cannot long retain it.’ Couldn’t the Bush
administration do more to give that just God a helping hand?”
Editorial / Washington Post…on the role of China and India:
“The strangest statement [at a recent UN meeting] came from
China’s ambassador, who noted with satisfaction that the
situation in Burma was ‘calming down thanks to the joint effort
of all parties.’ If by ‘joint efforts’ he meant the decision by one
side to shoot and bludgeon, and by the other to submit to
shooting and bludgeoning, that was true. But even stranger,
perhaps, has been the silence emanating from India, the world’s
largest democracy and the birthplace of Buddhism. As long as
India and Southeast Asian democracies put commercial interests
ahead of principle, progress will be slow.
“The Nobel Peace Prize is due to be announced today, 16 years
after Aung San Suu Kyi herself was the recipient. In all those
years, spent mostly under house arrest, she has remained true to
the ideals of democracy, reconciliation and nonviolence.
Perhaps, in the midst of celebrating this year’s winner, global
leaders will pause to think about whether they could do a bit
more to support her and her unspeakably courageous comrades.”
Alas, instead we learned this week that a key ally of Suu Kyi was
tortured and cremated, according to a rights group. You learn of
such things when the body isn’t returned to the family. And in a
scene reminiscent of the Holocaust, locals speak of seeing trucks
covered with tarpaulins heading into the municipal crematorium
late at night, with continuous smoke from the furnaces; an effort
no doubt designed to cover up the true death toll.
If knowledge of this last bit becomes widespread in the world
press, look for China to not only come under increasing pressure,
but for calls for a boycott of the Beijing Olympics to gain
traction.
Afghanistan: NATO faces a crisis by end of 2008 as Canada and
the Netherlands talk of pulling their significant forces…3,000 in
the former; 1,700 in the latter…due to higher casualties, protests
at home, and the stress on reserve levels.
NATO’s force is currently 41,000 strong, including 15,000 U.S.
troops aligned with it. [The U.S. has an additional 11,000 in a
separate counterinsurgency mission.] The UK is the 2nd-largest
with 6,700.
Pakistan: Heavy fighting in North Waziristan, on the border with
Afghanistan, has claimed over 250 lives as President Musharraf
has sent in tens of thousands of troops to combat the tribal chiefs
who reneged on the peace deal brokered last year. You’ll recall
that there was much skepticism at the time when the government
and tribal leaders agreed on a plan to expel al-Qaeda and non-
Pakistani gunmen. The deal fell apart in July, violence has
ratcheted up big time in the cities, Pakistani forces have killed a
large number of innocents in the current fighting, and the
extremists have everything they need to sow further terror and
unrest.
Amidst this, Musharraf won reelection, though he now awaits a
Supreme Court ruling (around Oct. 17), on whether he was
allowed to run for president while heading the military.
Musharraf had pledged to step down as army chief by Nov. 15
were he to win reelection.
But then on Friday, to compound matters, Musharraf said he
does not want former prime minister Benazir Bhutto to return
from exile as she has long planned, Oct. 18.
Israel / Syria: There remain serious questions about just what the
Sept. 6 attack by the Israeli Air Force on a site in Syria was all
about. Within the White House itself there is a battle between
Vice President Cheney and Secretary of State Condoleezza Rice;
with the former expressing full confidence in Israeli intelligence
that North Korea was aiding Syria in a nuclear program of some
sort, while the State Department questions the intel and whether
the attack was warranted based on existing tensions in the region
and concerns over escalation, as well as the ramifications for
nuclear disarmament talks over North Korea.
For its part Turkey assured Syria it would not allow Israel to use
its airspace to strike Syria. The rumor was that four Israeli
planes flew along the Syrian-Turkish border before striking
inside Syria on September 6. Turkey’s Foreign Minister Ali
Babacan told Syrian President Bashar Assad, “Turkey will not let
Turkish territory or airspace be used in any activity that could
harm the security or safety of Syria.” [Daily Star]
Russia: Last week I said Vladimir Putin was 54 years of age.
Well I didn’t know that the next day, Sunday, he turned 55.
Anyway, there is much talk around the Kremlin that when Putin
becomes prime minister, as now seems certain, he will change
the constitution to lengthen the term of president from four to
five years, maybe even seven. Meaning if he were to run for
president again in 2012, as current law allows, he could then be
in power until 2022, or longer. Then again, he could become
president in 2010, let’s say, due to an “emergency.” In 2022, by
the way, he’d still just be 70.
Britain: Prime Minister Gordon Brown is in hot water over his
failure to call for an early election; this as polls show his Labour
Party trailing the Tories by six points.
Random Musings
–Al Gore won the Nobel Peace Prize, sharing it with the UN’s
Intergovernmental Panel on Climate Change. A Gore-Obama
combination would have been the lay-up ticket of the century,
but the former veep seems content to be a superstar among the
intellectual and Hollywood types.
–The latest Des Moines Register poll of likely Iowa caucus-
goers shows Hillary with 29% to Edwards’ 23% and Obama’s
22%. On the Republican side, Romney leads with 29% to
Thompson’s 18% and Huckabee’s 12%. [Rudy Giuliani is at
11%.]
As for Huckabee, how can you not help but like the guy? He has
emerged as the perfect #2 on the ticket, the #1 slot just not being
realistic it would seem.
–But frontrunner Rudy Giuliani faces more embarrassment as
former New York City police commissioner Bernard Kerik is
expected to be indicted in November on a variety of charges,
according to the New York Daily News.
–I must say I agree with this sentiment of Thomas Friedman in
the Times. After a trip visiting various college campuses:
“I can report that the more I am around this generation of college
students, the more I am both baffled and impressed.
“I am impressed because they are so much more optimistic and
idealistic than they should be. I am baffled because they are so
much less radical and politically engaged than they need to be.”
Of course Friedman went on to approach the topic from a liberal
standpoint (not that I don’t agree with a few of the stances), but
on the kind of activism required by young people today he
correctly says: “(They can’t just) e-mail it in, and an online
petition or a mouse click for carbon neutrality won’t cut it. They
have to get organized in a way that will force politicians to pay
attention rather than just patronize them.”
And this is a good one:
“Martin Luther King and Bobby Kennedy didn’t change the
world by asking people to join their Facebook crusades or to
download their platforms. Activism can only be uploaded, the
old-fashioned way – by young voters speaking truth to power,
face to face, in big numbers, on campuses or the Washington
Mall. Virtual politics is just that – virtual.”
One thing Friedman doesn’t discuss, however, is a rather simple
concept that today’s Generation Whatever could follow through
on…it’s called voting!
–Commentator George Will on the effort to define the classes
these days, including the new “plutonomy,” a phrase originally
coined by Citigroup’s Ajay Kapur to describe “America’s richest
1 percent of households that own more than half of the nation’s
stocks and control more wealth ($16 trillion) than the bottom 90
percent.”
“[This is part] of a fascinating psychological phenomenon: Envy
increases while – and perhaps even faster than – wealth does.
When affluence in the material economy guarantees that a large
majority can take for granted things that a few generations ago
were luxuries for a small minority (a nice home, nice vacations, a
second home, college education, comfortable retirement), the
‘positional economy’ becomes more important.
“Positional goods and services are inherently minority
enjoyments. These are enjoyments – ‘elite’ education,
‘exclusive’ vacations or properties – available only to persons
with sufficient wealth to pursue the satisfaction of ‘positional
competition.’ Time was, certain clothes, luggage, wristwatches,
handbags, automobiles, etc., sufficed. But with so much money
sloshing around the world, too many people can purchase them.
Too many, in the sense that the value of acquiring a ‘positional
good’ is linked to the fact that all but a few people cannot acquire
it.”
–The Los Angeles Times reported that there is a brewing
controversy over the upcoming Rose Parade next New Year’s
Day. Parade committee officials okayed a float celebrating the
Beijing Olympic Games and now human rights groups are up in
arms.
–Needless to say, the seeming explosion in child-porn cases,
worldwide, is more than a bit disconcerting. 44 arrests were
recently made in my state of New Jersey, for example, and in the
past few days, hundreds have been charged in France.
–Then you have the three suspects in Newark who the other day
stole a car, careened around a corner, went up on the curb, hit a
66-year-old minister a few feet from the steps to his church,
killing him, and then fled on foot, leaving his crumpled body on
the walk.
Or the three teenagers in New York who this week set a
homeless man on fire, critically injuring him (if he didn’t die
since I first saw the report).
Where is the outrage over this behavior beyond the day’s
headlines? Is there anyone out there who believes any of these
six can be rehabilitated, at least those most responsible and not
the one or two that a future jury will no doubt rule were just in
the wrong place at the wrong time?
Along these lines you all have an assignment, at least those
reading this Saturday. Watch Bill Cosby on Sunday’s “Meet the
Press.” Or allow me to summarize it for you next time, as I no
doubt will. I’m assuming, in touting a new book of his, that
Cosby will speak the truth on some of the issues facing our
society and the black community, specifically.
–In those days when you feel a tinge of optimism about the
world scene (how could you?), consider the endangered
mountain gorillas in Virunga National Park on the border with
Congo, Rwanda and Uganda. Not only have they been
slaughtered by poachers and rebels fighting in the endless
conflict in that region, but now it would appear a rebel group has
totally taken over the park as WildlifeDirect reported this week.
The rangers, who have performed heroically all these years, were
finally forced to flee. The remaining 700 gorillas could be wiped
out in months.
I’ve argued for years, particularly in another of my columns, that
in matters such as this it seemed to be a natural for the
international community, working through the UN, to set up a
mercenary force to protect the animals. This is the kind of duty
I’ve got to believe thousands of professional soldiers would sign
up for in a heartbeat.
But now it’s too late. So ask me if I’m optimistic about our own
future.
–But to end on a more upbeat note, you’ll have to indulge me a
bit. Last Sunday I ventured to Fordham University in the Bronx
to attend the 50th ordination celebration of a dear friend of mine,
Father Bill Scanlon of the Jesuits.
Back in 1995, I was looking for a cause to support, my own
church in Summit, N.J., couldn’t meet my needs, and I was
directed to the Jesuits in Manhattan. I met Father Bill, one thing
led to another, and we tackled the church project on the island of
Yap in Micronesia that I’ve written of before. Over the years,
I’ve since traveled to Yap three times and as I noted about six
months ago, the church is finished and they had their first Mass.
But as I sat in church last Sunday, listening to Father Bill
describe one of his experiences in Nigeria, where he spent years
building a school, among other endeavors, I couldn’t help but
think about all the stories he’s told me during our lunches and
dinners together, and I also couldn’t help but tie it to our culture
today and its rampant, out of control materialism.
After all, Father Bill has dedicated his life to service, such as in
ministering to the mentally disabled in France, lepers, and the
poor in Nigeria. An incredible man, as are so many in the Jesuit
order.
There was a touching moment at the end when Father Bill’s
brother-in-law kind of put us all on the spot and asked if anyone
wanted to say a few words about him. A few did, it appeared all
were finished, and then a woman in the very back said, “I have
something.” We turned around and it was the only black person
who had attended the service.
“I just want to thank Father Bill for what he did for my people.
That’s all.”
The simplicity of it was beautiful, especially knowing the man
and some of what he has experienced, including being chased by
a tank in Nigeria, while at the same time I couldn’t help but sit
there and muse about the current situation in the world…so much
good, and so much evil.
I told Father Bill I would be writing about him and no doubt he is
a bit amused with some of the anger (and pessimism) expressed
in my columns. We have our philosophical disagreements, that’s
for sure.
But thank you, Father, for guiding me to Yap in what at the end
of my life will probably be my most rewarding experience and
my legacy. And to all the Jesuits, and the good people of all
faiths who serve in such a fashion, thank God we have you. May
the meek inherit the Earth.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $753
Oil, $83.69
Returns for the week 10/8-10/12
Dow Jones +0.2% [14093]
S&P 500 +0.3% [1561]
S&P MidCap -0.2%
Russell 2000 -0.4%
Nasdaq +0.9% [2805]
Returns for the period 1/1/07-10/12/07
Dow Jones +13.1%
S&P 500 +10.1%
S&P MidCap +13.4%
Russell 2000 +6.8%
Nasdaq +16.2%
Bulls 60.2 [uh oh….]
Bears 21.5 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Brian Trumbore
