[Posted 7:00 AM ET…Kansas City, Mo.]
Wall Street
“In issuing its earnings report, Merrill Lynch said its subprime
mortgage positions were ‘appropriately marked.’ Ha!”
–Week in Review, 7/21/07
Nailed that one, it’s safe to say. This week Merrill finally fessed
up, at least partially, to having some rather severe issues when it
comes to its books. Like up to $8.4 billion worth, or another
$3.4 billion more than it had preannounced just three weeks
earlier. It remains all about the housing sector and efforts to
securitize same; as in with Merrill, its many bets on subprime
mortgages and collateralized debt obligations didn’t exactly go
as planned. They might have been better off going to the casino
and putting all their chips on ‘red.’
Merrill’s problems, which as I go to post reportedly will cost
CEO Stan O’Neal his job, are related to two common themes
around here, as espoused for years in this space.
“These guys don’t know what they own, and, they aren’t as smart
as you think.”
The word ‘transparency’ has also become part of our lexicon
once again, just as it did at the height of all the Enron-type
accounting debacles, and it is a huge black mark on America’s
reputation.
Even I used to say, how could you possibly want to invest in
many of the hot overseas markets when there is no transparency?
Well you know what? Wall Street has been the biggest offender.
And when it comes to smarts, in the same “Week in Review”
cited above, 7/21/07, I discussed Federal Reserve Chairman Ben
Bernanke’s congressional testimony, wherein he was asked his
estimation for the total losses in the mortgage sector and he
replied $50 billion to $100 billion. I made fun of the chairman
then because I knew exactly where he got that answer. He was
just parroting what he read in the Wall Street Journal and on
Bloomberg. I myself said it would exceed $200 billion. Now it
turns out it’s probably going to be closer to $400 billion.
But to those who keep saying this is an isolated event, they’re
nuts. This isn’t a stock we’re talking about, where the pain can
be swift and sure; it’s real estate. It takes time before the negative
wealth effect seeps into the psyche of homeowners, at which
point it will finally impact consumer spending. Morgan
Stanley’s Stephen Roach, who admittedly has been too bearish
for far too long when it comes to Americans’ penchant for
spending, said this week the “American consumer is toast.”
While on the other side of the debate, economist Ed Yardeni
points to the fact any negative wealth effect has been offset by a
positive one from stocks. I can’t deny this, plus, critically, the
jobs picture is still solid, but you shouldn’t be surprised I remain
in the Roach camp.
After all, anxiety is building. I’m not a big proponent of the
sentiment indicators, but when a Bloomberg / Los Angeles
Times survey has Americans expecting a recession in the next
year by a 65 to 29 margin, at some point it’s meaningful.
The New York Times’ Vikas Baja and Edmund Andrews had a
story on the broader implication of the mortgage debacle, aside
from the gigantic hits the financial firms are taking. State and
local governments could face a loss of $917 million in lost
property tax revenue, for example, just off the number of
foreclosures. For the hardest hit states like Florida, California,
Michigan and Ohio, that’s significant. In many it’s certainly not
a great time to have a government job.
This past week we had more data on home sales that was far
from encouraging, for those desperately searching for a bottom.
Existing home sales for September fell more than expected,
while new home sales came in exactly as estimated. [This fact
was misreported, incidentally.] But what made the new home
figure worse was a huge downward revision for the month of
August.
On the overall health of the economy, outside real estate, the
news isn’t much better. Durable goods, big-ticket items, fell for
a second consecutive month when a rise was forecast, and even
when the likes of DuPont and Dow Chemical had something
good to say, growth in their overseas businesses continues to be
offset by softening in the U.S. One company after another in the
industrial sector has said the same thing for three weeks now.
Outside of China, as well, growth is slowing and I had to grin
when on Monday the Wall Street Journal ran the headline:
“Europe Feels Pinch As Housing Boom Slows”
“The housing boom was a global phenomena, affecting virtually
every developed country outside of Japan during the past 10 to
15 years.”
Nothing you didn’t already read here, going back years. And in
a separate piece for the Journal, David Wessel correctly
reminded everyone that today’s recessions, more often than not,
“are triggered more by collapsing asset prices – the bursting
tech-stock bubble in 2001, for instance – than by the old cycle of
retailers and factories reacting to rising inventories of unsold
goods by curtailing orders and production.”
Lastly, as if we didn’t already have enough problems, we have
this other bogeyman out there, oil. Last week I said I wasn’t too
concerned until gasoline futures began to run, specifically to the
$2.30+ level which would over time translate into the
psychologically important $3.00 at the pump in most parts of the
country. Gas futures did indeed begin to advance and are now at
$2.27. Yes, $90 oil grabs the immediate headlines, but, again, if
the price at the pump climbs above $3.00 this holiday season,
score one for the Grinch.
Street Bytes
–The market managed solid gains after the previous week’s
debacle, particularly in the area of tech with great earnings
reports from heavyweights Apple and Microsoft leading the way,
bookending the week as it turned out. But am I allowed to rain
on even this parade? Or rather, am I the only one bemused by
the fact that we aren’t inventing anything great these days, but
we consume a lot of gadgets and new versions of old products
that were pretty effective in their own right; Microsoft Vista
being an example of the latter.
And of all stocks, Countrywide Financial added to the mirth and
merriment on Friday when it reported a $1 billion plus loss for
the quarter, but added the mortgage giant would not only return
to profitability in the fourth quarter, but it would be profitable for
all of 2008. So some took this to mean the worst is over in
housing. Well bless their misguided souls.
Back to oil, it closed at a record high of $91.86 yet the Street
rallied in the face of it. But the price wasn’t just the result of
speculators, as has been the case some weeks recently. The
inventory picture simply isn’t good and global demand, thanks to
China and India, as you all know by now, has yet to decline.
Plus tensions on the Iraq-Turkey border don’t help any. More on
this in a bit.
For the week the Dow Jones regained 2.1% to 13806, the S&P
500 added 2.3% to 1535, and Nasdaq rose 2.9% to 2804 on the
heels of Microsoft and Apple.
–U.S. Treasury Yields
6-mo. 4.03% 2-yr. 3.76% 10-yr. 4.39% 30-yr. 4.69%
Rates were largely unchanged as the market waits for the Fed’s
decision on how far to lower, Wednesday, as well as Friday’s
always key employment report.
–To our friends in southern California, you were in our thoughts
and prayers all week. The damage estimate now exceeds $2.5
billion. It also goes without saying there is a special place in
Hell reserved for those who may have been involved in arson.
–China’s economy is going to continue to run at an 11.5% clip
for the foreseeable future, especially with the Olympics around
the corner. But consumer inflation is running above 4%, of
major concern. Also, pollution was so bad in Beijing the other
day that visibility was reduced to zero and every flight in the
region was delayed.
–Warren Buffett addressed the China bubble. “We never buy
stocks when we see prices soaring. We buy stocks because we
are confident of the company’s growth. People should be
cautious when they see prices rising as they are here.”
–But Bear Stearns and China’s Citic Securities inked an historic
deal to invest $1 billion in each other. Both sides, though, should
scan all the bills involved and make sure it’s not Monopoly
money being exchanged for securities in Baltic Ave.
–Bank of America said it was eliminating 3,000 jobs after its
miserable earnings release of the prior week. CEO Kenneth
Lewis added “I’ve had all of the fun I can stand in investment
banking at the moment.”
–Heating oil futures continue to hit record highs on the back of
soaring crude prices, thus creating major concerns for consumers
this winter, though the forecasts I follow for the key Northeast
and Midwest regions say it will be a warm one.
–Congressman Charlie Rangel has proposed to eliminate the
alternative minimum tax but in return he would levy a surcharge
on incomes of over $150,000 ($200,000 for couples). The
corporate tax rate would be reduced, however, under his plan.
But while there is much discussion of this, we are still at the
talking point stage; so it’s far from hitting the floor for a vote and
I’m not going to spend too much time on it until then.
–Inflation is such a concern in Russia, especially ahead of
December’s parliamentary elections, that the government and
food retailers have agreed to freeze prices on some types of
bread, milk, cheese, eggs and vegetable oil until the end of the
year. China is doing the same with certain products, while other
governments have been increasing subsidies. Inflation in Russia
is now approaching 10%. The price freezes hearken back to
Soviet-era solutions.
–Bird flu claimed an 89th victim in Indonesia, out of 110 infected
with the H5N1 virus there. But here in the States, as my brother
commented the other day, who would have thought staph would
suddenly become so much of a concern? In the New York area,
we have had a number of children die from it, similar to other
parts of the country. Very scary.
–Apple Inc. once again blew away expectations as it announced
fiscal fourth quarter profits soared 67% on the heels of record
Mac sales, up 34% over a year ago, as well as iPods (up 17%)
and iPhones. Regarding this last one, Apple says it has sold 1.39
million since the product introduction June 29.
–Microsoft acquired a 1.6% stake in social networking site
Facebook for $240 million, beating out Google and placing a
$15 billion valuation on the startup. Microsoft is concerned that
sites such as Facebook will become the new portal used by
consumers to access the Web and is determined not to miss out.
–Prior to its earnings release, Countrywide Financial had agreed
to rework some $16 billion in home loans, a move that could
affect 82,000 borrowers. The focus is on those with adjustable-
rate mortgages that were slated to reset after the initial two- and
three-year teaser rates.
–Research In Motion has shipped its first BlackBerry to China, a
big breakthrough as it struck a Chinese distribution deal with
Alcatel-Lucent. Obviously, with its booming mobile phone
market, China could contribute millions of subscribers to RIM
and its shares soared anew on the announcement.
–Wal-Mart announced it was reducing capital spending and
scaling back its superstore expansion plans for a second time this
year.
–Amazon reported strong sales and profit growth, but after
hitting $100, the stock dropped below $90 over concerns the
gross margins were slipping. But there is another reason why
profit takers finally entered the market. Amazon is grossly
overvalued! I can’t make that statement about Apple or Google,
given their success, but here? I mean for crying out loud,
Amazon is still trading at about a 60 multiple off of next year’s
profit forecasts.
–Once again, college tuition and fees rose at twice the rate of
inflation, up 6.6% this year at public colleges and up 6.3% at
private institutions. I also have to note I received more feedback
on my bit last time on endowments than on any topic in quite a
while. Yes, it’s outrageous that the dollars aren’t being spent to
reduce the tuition burden.
–Crain’s New York Business reported that the number of
personal bankruptcy filings in New York City soared 70% in the
past year.
–Scientists have concluded carbon dioxide levels are increasing
much faster and will be harder to control. An international team
reports that since 2000, the rate at which CO2 has entered the
atmosphere is 35% greater than models called for. The chief
culprit is of course China and its soaring number of coal-fired
power plants. [One is built every five days on average!]
Germany’s Foreign Minister Steinmeier said “Climate change is
not a faraway problem. It’s dramatic and our window to act is
even smaller than we thought just a few weeks ago.” Steinmeier
also spoke of a Cold War at the North Pole that must be
prevented. “We have to make sure that Arctic treaties are
respected and upheld.”
But back to China, there is another school of thought, this one
out of Sussex University, that concludes:
“A focus on emissions within national borders may miss the
point. While the nation state is at the heart of most international
negotiations and treaties, global trade means that a country’s
carbon footprint is international….
“Without this demand, China would not have developed so
rapidly, and its emissions would not have risen so sharply,” the
study said, proposing that so-called imported carbon be included
in national emission calculations. [South China Morning Post]
And this, sports fans, is why they’re called think tanks.
Foreign Affairs
Iran: Secretary of State Condoleezza Rice, in setting the stage
for a new round of sanctions on Iran, including the designation of
the Revolutionary Guard Corps as proliferators of weapons of
mass destruction, told the House Foreign Affairs Committee:
“The policies of Iran constitute perhaps the single greatest
challenge for American security interests in the Middle East, and
possibly around the world, because the combination of Iranian
terrorism, Iranian repression at home and the pursuit of nuclear
weapons technology – technologies that could lead to a nuclear
weapon – is a very dangerous mix.”
In his first major speech since leaving office, former British
Prime Minister Tony Blair talked of Iran and Islamic extremism
in general.
“Out there in the Middle East, we’ve seen…the ideology driving
this extremism and terror is not exhausted. On the contrary it
believes it can and will exhaust us first.
“Analogies with the past are never properly accurate, and
analogies especially with the rising fascism can be easily
misleading but, in pure chronology, I sometimes wonder if we’re
not in the 1920s or 1930s again.
“This ideology now has a state, Iran, that is prepared to back and
finance terror in the pursuit of destabilizing countries whose
people wish to live in peace….
“There is a tendency even now, even in some of our own circles,
to believe that they are as they are because we have provoked
them and if we left them alone they would leave us alone.
“I fear this is mistaken. They have no intention of leaving us
alone. They have made their choice and leave us with only one
to make – to be forced into retreat or to exhibit even greater
determination and belief in standing up for our values than they
do in standing up for theirs.” [London Times]
[Blair these days heads up the Quartet of the U.S., Europe,
Russia and the United Nations on the Middle East.]
Of course many read the above and say, we’ve been down this
road before, and such an argument by detractors certainly can’t
be dismissed out of hand. But it’s not as if the Bush
administration hasn’t been giving negotiations a chance. I would
just add, as I’ve written before, that the foreign policy of the
White House has been both unimaginative (as in not talking to
the right people, as well as not cutting some old-fashioned dirty
deals) and almost criminal (as in our treatment of Lebanon right
after the Hariri assassination in Feb. 2005 and then the war in
‘06).
But the facts are Iran is bound and determined to get the bomb
and the U.S. and its few allies are running out of time. It was
indeed worrisome when President Ahmadinejad fired his chief
nuclear negotiator, Ali Larijani, and replaced him with someone
even more conservative.
It’s complicated, though, even on this last issue. Over 180
members of Iran’s parliament signed a letter signaling support
for Larijani, including Rafsanjani’s brother, a former vice
president; Rafsanjani being the man I thought the White House
should have been conversing with all these years in an end-run of
Ahmadinejad.
And I saw another report, an intriguing one at that, that Ayatollah
Khamenai, who has the ultimate say in all matters, is actually
trying to isolate Ahmadinejad so he can blame him for the new
sanctions; thus his allowing the president to fire Larijani. The
majority, though, says that Khamenai is simply supporting
Ahmadinejad. I kind of like the other theory.
But here’s the bottom line. You either believe Iran is close to
obtaining the bomb, or you fall into the International Atomic
Energy Agency / CIA camp that says Iran is still another 3-8
years away. I believe they are closer than this, but I do not
associate myself as yet with the bombs away crowd.
Then there is Russian President Vladimir Putin, who said of the
new U.S. moves against Tehran, “Why worsen the situation and
bring it to a dead end by threatening sanctions or military action.
Running around like a madman with a razor blade, waving it
around, is not the best way to resolve the situation.” Vlad has
always been a most helpful sort, hasn’t he?
Iraq / Turkey: From an editorial in the Washington Post on the
standoff between these two over the disposition of the PKK, the
Kurdish insurgents that keep crossing the border to wreak havoc
in Turkey.
“What Turkey really wants is to pressure the United States and
Iraq into taking action against the PKK. Diplomats argue that
the regional government of Iraqi Kurdistan and the U.S. military
are responsible for curbing the Kurdish insurgents and have the
means to do so. The first part of that argument is certainly true,
and some U.S. officials concede that the Bush administration has
probably not put enough pressure on its Iraqi Kurdish allies to
move against the PKK. Unfortunately, the second part of the
Turkish argument is questionable. It’s not clear that Kurdish
forces in northern Iraq are strong enough to take on the PKK
guerrillas, and U.S. commanders in Baghdad are understandably
loath to divert hard-pressed American units from operations
against al-Qaeda and Shiite militias to yet another front.”
It’s so frustrating. The U.S. has had years to get in the Kurds’
faces and say, ‘Enough. We’ve helped you attain your
autonomy, now behave and we’ll continue to protect you. Over
time we can all work on the politics of the region.’ Instead it’s
been hands off, just as it was in Lebanon.
And because the White House hasn’t been putting any pressure
on the Kurds, you get Iraq’s president, Jalal Talabani, a Kurd,
saying “We will not hand any Kurdish man to Turkey, even a
Kurdish cat.” But, incredibly, Turkey remains patient outside of
a few bombing runs along the border, and Prime Minister
Erdogan said he will not launch a full-scale invasion until his
visit with President Bush, November 5.
On the issue of Iraq itself, former national security adviser (under
Jimmy Carter), Zbigniew Brzezinski, told the Financial Times
“There has been an effort to change the subject. It is not so much
that Iraq has been replaced by Iran as that the Bush
administration has successfully broadened the Iraq debate to
include Iran.”
Maybe so, but the facts on the ground in Iraq continue to at least
speak of an improved security situation. Maj. Gen. Rick Lynch
told the AP’s Steven Hurst, “I’ve never been more optimistic
than I am right now with the progress we’ve made in Iraq. The
only people who are going to win this counterinsurgency project
are the people of Iraq. We’ve said that all along. And now
they’re coming forward in masses.”
Lt. Col. Val Keaveny said his unit has lost only one soldier in the
past four months despite intensified operations against both
Shiite and Sunni extremists.
“People are fed up with fear, intimidation and being brutalized.
Once they hit that tipping point, they come to realize we truly do
provide them better hope for the future. What we’re seeing now
is the beginning of a snowball.”
We pray he’s right.
Pakistan: Benazir Bhutto is no saint and far from someone to be
admired, despite the glowing press coverage accorded her on
what turned out to be a bloody return after eight years in exile.
Of more import these days is the security of Pakistan’s nuclear
weapons and weapons grade material. For now, President
Musharraf has been doing all he can to reassure the U.S. that the
safeguards are in place, even as the Taliban and al-Qaeda solidify
recent gains.
China: President Hu Jintao unveiled a new leadership lineup at
the just concluded national party congress and of the four new
faces on the Politburo Standing Committee, two are in their 50s
and the frontrunners to succeed Hu in 2012…a Mr. Xi and Mr.
Li, if you must know. But in the televised appearance of the new
order, it was Xi who walked ahead of Li…which is your first
clue as to Hu’s on second?
Meanwhile, in the latest census data, 56% of China’s population
still lives in rural areas, or 737 million. As recently as 1990, this
figure was 74%.
But as the research chief at the World Bank noted the other day,
China has seen “the most dramatic increase in inequality that
I’ve seen in any data anywhere,” said Dr. Ravallion. In a piece
for the Sydney Morning Herald, a 57-year-old factory worker
told the paper her pay had risen from 46.50 yuan a month to
1300 yuan in 20 years. “But all that extra money was worthless,
she said.”
“ ‘When I used to make [dumplings] everyone in the building
would smell the fragrance and want to come over,’ she said.
‘But these days the meat you buy smells and tastes bad.’
“She said modern furniture was junk and she was too scared to
go to hospital because it cost too much. ‘So we are actually very,
very poor.’”
And over on Taiwan, the government denied rumors it was
developing nuclear weapons or cruise missiles with nuclear
warheads.
Russia: The Bush administration may delay activation of its
missile defense shield in Europe until it has “definitive proof”
that Iran poses a missile threat in an effort to appease Russia.
The bottom line, though, is that the White House has not really
gained approval from both the Czech Republic and Poland; the
latter where there has been a change in government. Russia
insists North Korea poses a fundamental threat, Iran does not, as
put forth by Foreign Minister Sergei Lavrov. Then on Friday,
Putin said if the U.S. deployed the shield it could precipitate a
situation similar to the Cuban missile crisis. I’ll reserve further
comment for today.
Lebanon: Troops fired on Israeli warplanes invading Lebanon’s
airspace for the first time since the August 2006 cease-fire, as is
their right. No damage was done.
Israel / Syria: As reported by the Washington Post, satellite
imagery of the area bombed by Israel last month “shows
buildings under construction roughly similar in design to a North
Korean reactor capable of producing nuclear material for one
bomb a year,” according to experts. Syria has since bulldozed
any remaining evidence.
India: Not only has the government of Prime Minister
Manmohan Singh been unable to gain approval for the joint
U.S.-India nuclear cooperation agreement, but now Washington
is upset India appears ready to build an oil and gas pipeline in
Iran [which would pass thru Pakistan.]
Switzerland: The anti-immigrant Swiss People’s Party won a
record 28.8% of the vote in parliamentary elections – the largest
share any party had won since proportional voting came into
being here in 1919. The People’s Party claims foreigners, which
make up 20% of the 7.5 million in the country, are the source of
much of the surge in crime. The party is also against joining the
European Union.
Cuba: President Bush blasted the leadership here, saying the
administration would not accept a political transition from Fidel
to Raul Castro. But the fact is the transition to Raul thus far has
been smooth, and U.S. policy, under every president since JFK,
has been truly pitiful.
Colombia: At least 21 politicians have been killed during the
run-up to Sunday’s regional and municipal elections.
Zimbabwe: Inflation here has reached 8,000 percent. Were this
the case here in the U.S., next week the Federal Reserve would
be hiking the funds rate from 4.75% to 83.50%…thus roiling
markets somewhat.
Random Musings
–The Dalai Lama, in an op-ed for the Washington Post.
“From the Velvet Revolution in the former Czechoslovakia to the
popular pro-democracy movement in the Philippines, the world
has seen how a nonviolent approach can lead to positive political
changes. But the genuine practice of nonviolence is still at an
experimental stage. If this experiment succeeds, it can open the
way to a far more peaceful world. We need to embrace a more
realistic approach to dealing with human conflicts, an approach
that is in tune with a new reality of heavy interdependence in
which the old concepts of ‘we’ and ‘they’ are no longer relevant.
The very idea of total victory for one’s own side and the total
defeat of one’s enemy is untenable. In violent conflicts, the
innocent are often the first casualties, as the war in Iraq and
Sudan’s Darfur crisis painfully remind us. Today, the only
viable solution to human conflicts will come through dialogue
and reconciliation based on the spirit of compromise….
“When I first saw a photograph of Earth taken from outer space,
it powerfully brought home to me how small and fragile the
planet is and how petty our squabbles are. Amid our perceived
differences, we tend to forget how the world’s different religions,
ideologies and political systems were meant to serve humans, not
destroy them….
“Today, more than ever, we need to make this fundamental
recognition of the basic oneness of humanity of the foundation of
our perspective on the world and its challenges. From the
dangerous rate of global warming to the widening gap between
rich and poor, from the rise of global terrorism to regional conflicts,
we need a fundamental shift in our attitudes and our consciousness
– a wider, more holistic outlook.
“As a society, we need to shift our basic attitude about how we
educate our younger generation. Something is fundamentally lacking
in our modern education when it comes to educating the human heart.
“To promote greater compassion, we must pay special attention
to the role of women…I believe that the time has come for
women to take more active roles in all domains of human
society, in an age in which education and the capacities of the
mind, not physical strength, define leadership. This could help
create a more equitable and compassionate society….
“The 20th century became a century of bloodshed; despite its
faltering start, the 21st century could become one of dialogue,
one in which compassion, the seed of nonviolence, will be able
to flourish. But good wishes are not enough. We must seriously
address the urgent question of the proliferation of weapons and
make worldwide efforts toward greater external disarmament.
“Large human movements spring from individual human
initiatives. If you feel that you cannot have much of an effect,
the next person may also become discouraged, and a great
opportunity will have been lost. On the other hand, each of us
can inspire others simply by working to develop our own
altruistic motivations – and engaging the world with a
compassion-tempered heart and mind.”
Oh yeah, Beijing, the Dalai Lama is real dangerous.
–Great story in Louisiana as 36-year-old Bobby Jindal, the son
of Indian immigrants, won the governor’s race, thus becoming
the state’s first non-white leader since Reconstruction. The
Republican also becomes the youngest governor in America.
–Thousands of black men are heeding the call to take back the
streets of Philadelphia from the thugs and killers that terrorize
whole communities. Almost as many die in Philadelphia as in
vastly larger New York.
–Which leads me to more from Bill Cosby and Dr. Alvin
Poussaint, authors of “Come on People: On the path from victims
to victors,” and their recent interview with Tim Russert on “Meet
the Press.” The topic is drugs and sentencing.
Bill Cosby: Drugs work. There’s a domino effect that the dealer
feels, “Well, what else can I do? I might as well do that.” But I
don’t think people draw enough to the reality that “I sell you, you
use it.” That knocks you out of any wanting to become anything
other than a user. If I give it to a woman, that knocks her out of
doing anything other than being a user. She also can become
pregnant, and this goes to her child, better known as crack
babies. There’s something that’s still going on when the child is
born, in the physiological part…But the more we see it in
neighborhoods, the more we will accept it that we can’t help it.
And what we need to do is give people more of a confidence that
they can. They must realize that the revolution is in their
apartment now.
Dr. Poussaint: [One] other thing about this systemic problem, in
the incarceration rate, you know that the United States has the
highest rate in the world? And that the prison population has
gone up for black men particularly because of disparities in the
sentencing laws around crack and cocaine?
Russert: Well, this is a very important point. If powder cocaine,
80 percent of those arrested are white; crack cocaine, 75 percent
arrested are black. And you need 100 times more powder
cocaine to get the same mandatory sentence that you would get
with crack cocaine. There’s a disparity.
Dr. Poussaint: That’s right. And these mandatory sentences are a
problem. Five year mandatory sentence for carrying five grams
of cocaine. So a lot of the increase in the prison population has
been because of these mandatory sentences, three strikes and
you’re out type of thing, revoking parole, because you tested
positive for drugs. And this is creating a disaster for the black
community, and we have to put much more into what happens to
these young men and women when they come out of jail.
[I couldn’t agree more that drug sentencing is a huge issue in
America.]
Finally, Cosby discussed the criticism he has faced within the
black community.
“I get an awful lot of ‘yeah, buts.’ ‘Yeah, but the systemic, when
it’ – well, we know. If you really understand what (I’m) saying,
if you really listen, it’s ‘Get an education. Drive your children
with love and care, and they will feel confidence when they go to
school. Build a confidence about yourself and what you can
control, and then you will be able to fight the systemic and the
institutional. You will care more about what you do and what is
done to you.’
“I’ve also said our children are trying to tell us something, and
we’re not listening. You’ve got to listen to these children.”
And as Cosby and Dr. Poussaint both agree, on this topic in
general it’s also about personal responsibility. Dr. Poussaint
adds, “You have to go out and make demands, you have to get
involved, you have to vote!” [Emphasis on this last point, mine.]
–So what am I doing in Kansas City? It was a spur of the
moment deal, as is next week’s trip to Philadelphia for a few
days.
When I was going to Summit High School in New Jersey, two
years ahead of me was one Willie Wilson, a man whom many
experts on such matters regard as the greatest football player my
state ever produced, let alone anyone privileged to watch him
knows he was the best athlete, period, any of us have seen. But
Willie made his name in baseball with the Kansas City Royals,
where he became an All-Star, won a batting title, picked up a
World Series ring, and stole 668 bases along the way. When my
friends and I get together, such as at last fall’s 30th reunion,
invariably talk turns to Willie at some point. Growing up was all
the better because us sports fans got to see someone truly special.
This week, as part of Willie’s foundation, he held an event on
Thursday at the Negro Leagues Baseball Museum featuring the
1977 Royals and New York Yankees, with the theme being their
playoff encounter. I ended up helping to sponsor the evening
and it was a lot of fun. Willie and I then had dinner on Friday
(with former Phillie/Cub Bob Dernier, another great guy), which
is why this week’s column is perhaps a bit disjointed.
Granted, most of what transpired is for baseball and sports
junkies, and for another link on the site, but what shined through
in the questions the public got to ask the players was the love the
citizens of Kansas City have for their team, especially the golden
years when they were consistent winners. Very cool to see. Of
course in New York, when things don’t go well we aren’t quite
as understanding. Or you could say us Mets and Yankees fans
about now could use a little Dalai Lama!
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $787
Oil, $91.86
Returns for the week 10/22-10/26
Dow Jones +2.1% [13806]
S&P 500 +2.3% [1535]
S&P MidCap +1.9%
Russell 2000 +2.8%
Nasdaq +2.9% [2804]
Returns for the period 1/1/07-10/26/07
Dow Jones +10.8%
S&P 500 +8.2%
S&P MidCap +11.3%
Russell 2000 +4.3%
Nasdaq +16.1%
Bulls 56.5
Bears 22.9 [Source: Chartcraft / Investors Intelligence…as you
can see a big drop in the number of bulls after peaking at 62.0 the
week before, following the big swoon.]
Have a great week. I appreciate your support.
Brian Trumbore
