[Posted 7:00 AM ET]
Wall Street
The sounds of “Camelot” are still on my mind these days. Like
from “Fie on Goodness.”
“It’s been depressing all the way (derry down, derry down)
And getting glummer every day (derry down, derry down)
“Ah, but to burn a little town or slay a dozen men
Anything to laugh again!”
But what of George W. Bush? To paraphrase from “I wonder
what the king is doing tonight”:
You wonder what George Bush is wishing tonight?
He’s wishing he were in Crawford, fishing tonight.
What occupies his time, whilst on his exer-bike?
He’s searching high and low for some place to hide.
And oh, the expectation,
The sublime anticipation
He must feel about the exit day to come.
Well, I’ll tell you what George Bush is feeling tonight:
He’s………………………………………..actually, I have no
idea what Bush is feeling or thinking. Much of the time it
appears as if he’s like Homer Simpson when Homer’s brain shuts
down.
But as crude oil suddenly rocketed from the $122 level Thursday
morning to close the week at another new high, $138.50, up a
record $10 alone on Friday, we’re left to wonder just what the
heck the president is going to do about it? Obviously, George
Bush can’t do anything to immediately impact prices outside of a
reaction to any comments he may make, taking away the Iran
aspect of our story for now, covered in detail below, but more
than a few of us Americans have been screaming for leadership
on the energy front for years, nay, decades. And what does Bush
say in a brief appearance on Friday? Congress must make his tax
cuts permanent. You can either just throw up your arms, or
throw up.
I told you the other day I have very selfish reasons for desiring
action, foremost being good-sized equity positions in the
alternative energy sector. I’ve also written of how I always
thought extension of the tax credit for the solar industry, due to
expire at year end, was a no-brainer. For starters, aside from the
fact it’s good public policy, it’s a jobs program to save some of
those who lost work in the construction industry during the
housing bust. But President Bush is threatening to veto any
legislation under his newfound religion of holding the line on
spending (after six+ years of letting the cost of government soar
before he finally issued a veto last year), unless it pays for itself.
But then I learn that my geothermal position is also threatened
because Congress hasn’t approved an extension of a key credit
for that industry.
This is absolutely nuts. As I keep saying, we must do everything
…drill as well as fund viable alternative energy programs and
certainly solar and geothermal fall under this category. So where
is Bush?
He is supposedly as concerned about his legacy as any other
president, despite his denials to the contrary, but you just want to
go down and shake the guy and say, “Will you freakin’ lead, for
crissakes!”
Forget the fact we are paying $4.00 a gallon for gasoline (and
with gasoline futures now at $3.50, headed higher), we are in the
process of destroying a key industry, our airlines, who despite all
the whining on the part of the flying public has provided
generally flat out cheap transportation to places once
unaffordable to the masses. I had long ago made reservations for
upcoming trips through August, but this week I scrambled to
lock in fares for one this fall, though I’ve already resigned
myself to the fact that my final schedule may not look anything
like what I have now as the airlines are forced to feverishly alter
their fleets and routes. Many smaller cities in America will no
longer be served at all, dealing huge blows to local economies.
This week UAL and Continental announced massive layoffs and
mothballing of their more inefficient aircraft, while the
International Air Transport Association cut its forecast for airline
earnings in 2008 from a profit of $4.5 billion to a loss of $2.3
billion, solely based on the soaring cost of jet fuel. The problem
is the estimate is based on the average price of oil for the year
being $105. You wouldn’t believe the losses if we ended up
averaging closer to $115 or $120, but I’ll tell you anyway. Try
another $20 billion. Two-zero.
Between energy and real estate, it’s certainly no surprise that the
latest USA Today/Gallup Poll finds 55% of those surveyed say
their families are worse off financially than they were a year ago,
the highest number since Gallup first asked the question in 1976
and a whopping jump of 11% just since February. You know
what that spells, don’t you? Big time trouble for Republicans
come November, for starters.
I’m actually surprised the figure isn’t closer to 70%. After all,
the Federal Reserve just released its survey of household net
worth for the first quarter and for the second quarter in a row it
was down, off 2.9%, or $1.7 trillion. Forget the relatively
sanguine retail sales figures from the likes of Wal-Mart for the
month of May, as released this week, probably aided in some
respect by the rebate checks, the consumer will be stuck in the
mud for months.
The housing market isn’t helping any. Forget the talk in some
circles that we’re near a bottom. Just reminder what I’ve said for
years now. When we do finally bottom, we’ll just sit there…for
a long time. Remember, affordability was at the heart of the
problem and when talking nationwide averages, a drop of 10 to
20 percent amidst a now putrid economy is not enough to change
this picture overnight. It will take time.
Josh P., managing director of a large investment outfit on the
West Coast, and I have long shared notes on housing from
opposite ends of America, and two of the wealthier regions as it
turns out, and we both keep talking of the increasing pain we see.
At least in much of California and New Jersey, we haven’t
bottomed.
Josh passed along a note that one San Diego developer is
offering a “buy one, get one free” deal, pairing million-dollar
homes with less expensive ones. I have a short seven-minute
drive from my office to home and not a week goes by when I
don’t notice another homestead in trouble. Grass is the first
giveaway, as we all know, and more than a few lawns are
beginning to look like tall grass prairies. It’s also disconcerting
when you don’t see a For Sale sign plopped onto these same
properties. Or when you can look straight through a house
because there is no furniture blocking the view. The Wall Street
Journal ran a headline this week:
“Housing Pain Hits Prime Borrowers”
“As the downturn in the housing market deepens, more
borrowers who had higher incomes and good credit are getting
swept up by the undertow.”
It’s increasingly about negative equity, across the board, as
foreclosures rise to new records from subprime to prime.
[Officially, 8.8% of home loans are past due or in foreclosure,
according to the Mortgage Bankers Association.] The FDIC
keeps warning of growing problems with the banking industry,
and it’s no wonder as the banks are stuck with boatloads of
construction loans, for example. I’ve been telling you of the
massive development going up down the street from me, where
the builder has to have at least a $15 million loan out (I’m being
conservative) and there is no visible cash coming in. A realtor
neighbor of mine said she believed a few units had been sold, to
which I replied ‘they’re nuts.’ They’ll be living in an empty
complex. That’s what happened where I live now. The
developer went bankrupt around 1987 and the units lay vacant
for years before the economy turned and some of us moved in in
1993 and ‘94.
But back to the net worth figure for the first quarter, off $1.7
trillion, former senior White House economic adviser Lawrence
Lindsey has a piece in The Weekly Standard where he estimates
“A 30% drop in prices would shrink household assets by about
$6.5 trillion. Under normal economic rules of thumb that would
permanently lower household spending by $200 billion to $300
billion, or between 1.5 and 2 percent of GDP. Not enough for a
recession by itself, but the collateral damage to the financial
system would likely be sufficient to induce a downturn similar to
those in the 1970s and early 1980s.”
I myself am not prepared to say on a nationwide basis we see a
30% drop, but Mr. Lindsey isn’t talking about the knock-on
impact of $130 oil and $4.00+ gasoline on top of the decline in
the average American’s number one asset.
Is there any good news out there? Nope. In a speech, Fed
Chairman Bernanke said he was worried about self-fulfilling
inflation expectations leading to higher long-term inflation rates,
and then he said he doesn’t want the dollar to weaken further
because of inflation risks, which was incredibly rare for a Fed
chairman to comment on the dollar at all.
But Bernanke didn’t actually talk about raising interest rates, as
the ECB’s Jean-Claude Trichet did (for next month), and
investors quickly realized Gentle Ben’s jawboning was nothing
more than that, so the dollar, after a rally of about fifteen
minutes, declined all over again (thus exacerbating the rise in the
oil price).
Bernanke did say one thing that was right. “Until the housing
market, and particularly house prices, show clearer signs of
stabilization, growth risks will remain to the downside.” Of
course this is the same man who took about a year to recognize
housing was a problem in the first place.
Lastly, all the evidence this week points to confirmation of my
theory the global economy is now tipping over . European
Union nations are seeing punk retail sales and falling home
prices, with the prospect for rate hikes amidst inflation concerns,
while in Asia, Japan has now seen reduced capital spending for
four straight quarters and Malaysia and India are two that had to
bite the bullet and hike the price of oil they charge their citizens
because they simply can’t afford to continue to subsidize the
price of crude at these levels. There has already been major
unrest as a result. Waiting in the wings is China. The
government there has wanted as much as possible to hold off on
major economic decisions until after the Olympics but it has to
increase the allowable price for gasoline because the state-owned
operators are getting killed.
Alas….
Don’t let it be forgot
That once there was a spot
For one brief shining moment that was known…as…Ca-me-lot.
Street Bytes
–For the week, the Dow Jones plummeted 429 points, 394 of
them on Friday, down 3.4%, while the S&P 500 dropped 2.8%
and Nasdaq a less chilling 1.9%. Friday’s employment report
saw the nation’s labor force in May lose jobs (49,000) for the
fifth month in a row, while the unemployment rate spiked from
5.0% to 5.5%, an increase not seen in 22 years.
–U.S. Treasury Yields
6-mo. 1.98% 2-yr. 2.41% 10-yr. 3.94% 30-yr. 4.65%
Rates fell for two main reasons; a flight to safety at week’s end
as well as the realization the Fed can’t possibly hike rates amidst
the economic turmoil, even if the Fed would prefer to do so to
help stem the inflation threat.
–In Senate testimony, investor George Soros said record oil
prices are the result of a “bubble…superimposed on an upward
trend in oil prices that has a strong foundation in reality….The
rise in oil prices aggravates the prospects for a recession.”
But Soros laid some of the blame on recent price spikes on
commodity index funds, which only buy oil contracts, helping to
push the price higher.
“Commodity indexes are not a legitimate asset class.”
Fellow billionaire T. Boone Pickens, when asked to comment on
whether the oil markets are being manipulated, said any probe
into such activity is a “waste of time.”
–Richmond Federal Reserve Bank President Jeffrey Lacker
blasted the Fed’s policies related to backing the securities firms.
“The danger is that the effect of the recent credit extension on the
incentives of financial-market participants might induce greater
risk taking.” That “in turn could give rise to more frequent
crises.”
Lacker is urging the Fed to set clear boundaries on its help to the
financial markets, and that the limits “aren’t going to be credible
unless we let somebody fail in a costly way that is beyond that
scope.”
–Wachovia Corp. ousted CEO Ken Thompson for a number of
disastrous moves, chief among which was his acquisition of
Golden West Financial for $25 billion at the height of the real
estate bubble. His crosstown rival in Charlotte, N.C., Ken Lewis
of Bank of America, also remains under fire for his acquisition of
Countrywide Financial. Regarding the latter, BofA might be
forced to write down $12 billion in Countrywide’s bad assets.
–Shares in Lehman Brothers were under pressure this week
before recovering some following an intense negative campaign
by hedge fund operator David Einhorn. Lehman may now
release its second-quarter earnings a week early, tying it to an
announcement it was raising additional capital of up to $5 billion
to bolster its balance sheet. CEO Richard Fuld has denied the
investment bank needed further cash, but, similar to the raid on
Bear Stearns, sentiment is driving events. In total the world’s
banks and securities firms have been forced to raise over $282
billion since the start of last year.
–Back to the ongoing debacle in the airline industry. Official
government statistics show that one of every four flights was late
by at least 15 minutes in 2007, the worst performance in 13
years. But as a George Mason University study shows, that only
begins to tell the story. The average delay was actually nearly
two hours, while those whose flights were cancelled were
delayed an average of 11 hours, because once a flight was
scratched, with planes being 80% full these days it’s obviously
tough to just get on the next one.
And on the issue of fares, which are soaring, those carriers who
face little competition on non-stop routes are hiking them up a
Zimbabwean-like 300% or more. For example, a year ago a
Detroit-Providence roundtrip could be had for $128. Today the
cheapest ticket is $595. Philadelphia-San Diego, once as low as
$239, is $780. You can also say we were spoiled big time.
–Then there’s the auto industry. Check out these declines in
sales for May over a year ago.
General Motors…down 28%. Ford off 16%. Chrysler down
25%. Even Toyota’s were off 4%. But Honda bucked the trend,
up 16%.
GM’s market share is now below 20%, once unthinkable and the
lowest in at least 50 years. Toyota is up to 18.4%. Also, total
U.S. SUV sales were off 36%.
–Verizon is seeking to acquire privately held Alltel for $28
billion, which would transform the combination into the largest
U.S. mobile phone operator with more than 80 million
subscribers, ahead of AT&T Wireless. [Britain’s Vodafone owns
45% of Verizon.]
–UBS may be forced to reveal the names of up to 20,000
wealthy Americans as a federal investigation into tax evasion
heats up, according to the New York Times. Authorities believe
many of the clients used offshore bank accounts to hide as much
as $20 billion in assets from the IRS, enabling them to evade at
least $300 million in federal income taxes. [U.S. taxpayers can
use offshore accounts but it is illegal to hide income in
undeclared ones.]
–Investment partner David P. passed along this scary note from
Credit-Suisse research.
“AIG: We remain cautious and highlight a new concern:
They’ve loaned out $77 billion of their bond portfolio to banks in
order to make incremental yield. And they’ve invested the cash
collateral mostly in Alt A and subprime RMBS. This has created
an asset/liability duration mismatch. Now the value of the assets
are $13.5 billion in-the-hole vs. the liabilities – so if
counterparties were to start unwinding the portfolio, AIG could
end up taking more sizeable losses.”
[Following release of the Credit-Suisse note, we learned the feds
are investigating AIG’s accounting for its derivatives positions.]
–The New York Times reported the Federal Trade Commission
has opened a formal antitrust investigation of Intel. This could
be a rather interesting development, to say the least.
–Poor Ed McMahon, now 85. Somehow he squandered a
personal fortune, once estimated at $200 million, and now faces
being evicted from his Beverly Hills mansion following a series
of court judgments, as well as a default notice filed by
Countrywide Financial saying McMahon owed over $600,000 on
a $4.8 million mortgage. While McMahon has been out of work
for 18 months due to a broken neck, everyone is still trying to
figure out just what the heck happened to all his cash?
–McMahon isn’t the only celebrity in trouble amidst the housing
crisis. Boxer Evander Holyfield’s $10 million Atlanta estate is
under foreclosure and will be auctioned off on July 1. If you’re
interested the 54,000-square-foot home has 109 rooms, including
17 bathrooms, three kitchens and a bowling alley. Personally,
I’m not going to participate because I really don’t feel like
cleaning a place that size, but the idea of a bowling alley is
intriguing. [Holyfield, like McMahon, also faces a slew of other
judgments against him.]
–Australian home prices fell the most in five years in the first
quarter.
–One of the true dirtballs in Corporate America, Broadcom co-
founder Henry T. Nicholas III, was indicted on a slew of drug
charges, including:
“Defendant Nicholas spiked the drinks of others with MDMA
(ecstasy) without their knowledge, including without limitation,
the drinks of technology executives and representatives who
worked for Broadcom’s customers.
“Defendant Nicholas hired prostitutes and escorts for himself and
customers, representatives and associates of Broadcom and other
business entities with which he was affiliated and supplied such
prostitutes and escorts with controlled substances.
“In or around 2001, defendant Nicholas distributed and used
controlled substances during a flight on a private plane between
Orange County, Calif., and Las Vegas, Nev., causing marijuana
smoke and fumes to enter the cockpit and requiring the pilot
flying the plane to put on an oxygen mask.
“Defendant Nicholas used threats of physical violence and death
and payments of money to attempt to conceal his unlawful
conduct.”
The above pertained to one indictment. Also unsealed on
Thursday was a second one, accusing Nicholas of conspiracy,
securities fraud and other violations relating to his excessive
backdating of stock options while he was CEO. Nicholas was in
custody after turning himself in to FBI agents.
–Yet another dirtball, Mel Weiss, co-founder of the securities
law firm Milberg LLP, was sentenced to 2 ½ years in prison for
illegally paying clients to file shareholder suits that prosecutors
said earned $251 million in lawyer fees. Weiss, 72, must also
forfeit $9.75 million. Earlier, Weiss’s ex-partner, Bill Lerach,
received a similar sentence.
–UN Secretary General Ban Ki-moon told a food summit that
production will have to rise by 50% by 2030 to meet demand.
There’s a pretty simple solution, though, as he pointed out.
Eliminate export restrictions and import tariffs, while the
developed nations do more to help farmers in developing ones
gain access to fertilizer and seeds.
–And lastly, I agree with my buddy Jimbo that there was indeed
some good news this week. After months of negotiations, the
voices behind “The Simpsons,” the best show of all time, have
agreed to a pact that will pay them up to $400,000 per episode,
an increase from their existing $300,000 per. Hey, it’s not my
money.
Foreign Affairs
Iraq: Editorial / Wall Street Journal.
“This spring, the Iraqi army routed insurgents in three of their
most important urban strongholds. These gains follow the
success of the surge in crushing al Qaeda in the Sunni triangle,
meaning that we are at last on the verge of winning in Iraq and
securing a strategic victory in the Middle East. Question: Is this
emerging victory – achieved at a cost of more than 4,000
American lives – something we are prepared to abandon after
November?….
“It’s crucial for Americans to understand that, apart from the
Sadrists [followers of Moqtada al-Sadr], all factions of Iraqi
politics now support some kind of U.S.-Iraq status of forces
agreement to succeed the U.N. mandate that expires later this
year.
“We are winning in Iraq. Indeed, we can now say with certainty
that we will win, as long as we don’t repeat our earlier mistakes
and seek to draw down too soon. This is the improving Iraq that
the next U.S. President will inherit, and it is the heart of the Iraq
debate Americans should have in November.”
Editorial / Washington Post
“While Washington’s attention has been fixed elsewhere,
military analysts have watched with astonishment as the Iraqi
government and army have gained control for the first time of the
port city of Basra and the sprawling Baghdad neighborhood of
Sadr City, routing the Shiite militias that have ruled them for
years and sending key militants scurrying to Iran. At the same
time, Iraqi and U.S. forces have pushed forward with a long-
promised offensive in Mosul, the last urban refuge of al-Qaeda.
So many of its leaders have now been captured or killed that U.S.
Ambassador Ryan C. Crocker, renowned for his cautious
assessments, said that the terrorists have ‘never been closer to
defeat than they are now.’….
“If the positive trends continue, proponents of withdrawing most
U.S. troops, such as Mr. Obama, might be able to responsibly
carry out further pullouts next year. Still, the likely Democratic
nominee needs a plan for Iraq based on sustaining an improving
situation, rather than abandoning a failed enterprise. That will
mean tying withdrawals to the evolution of the Iraqi army and
government, rather than an arbitrary timetable; Iraq’s 2009
elections will be crucial….When Mr. Obama floated his strategy
for Iraq last year, the United States appeared doomed to defeat.
Now he needs a plan for success.”
Iran / Israel: Ayatollah Ali Khamenei said “No wise nation
would be interested in making a nuclear weapon today. They are
against rational thought.” Right. Khamenei then went on to call
President Bush, “mentally ill.” This was at the same time that
President Mahmoud Ahmadinejad once again reiterated he
expects Israel “to disappear off the map.”
So it should be no surprise that President Bush and Sen. John
McCain called Iran “an existential threat to peace” and Israel in
addressing the American Israel Public Affairs Committee.
[Senators Barack Obama and Hillary Clinton used similar
language.] Israeli Prime Minister Olmert, in addressing AIPAC,
said the Iranian nuclear threat must be stopped “by all possible
means” and called for “dramatically increased sanctions.”
I have argued all year, and indeed wrote the following back on
12/29/07:
“As for Israel, Iran and the latter’s nuclear weapons program,
Israel will launch a strike at some point in 2008.”
There have been an increasing number of reports, including from
an Israeli minister on Friday, that in his words such a move is
“unavoidable.”
But I’ve also been writing that such a strike does not also mean
the world will explode in a spasm of terrorism. Yes, we would
all be put on high alert, and there would be some incidents, but
I’ve argued we can not discount the attitude of the Iranian
people, most of whom are pro-American, believe it or not, and
that they could rise up against their regime for putting them in
such a predicament. [I grant you this is thinking outside the box,
as the standard expectation is that the people would circle the
wagons in a nationalistic fervor.]
Understand, inflation in Iran is out of control (24%) and the
average Iranian is suffering immensely, despite the oil riches
flowing into Ahmadinejad’s coffers. And this week I also read
that Iran is facing massive power failures (on top of current
three-hour outages) as a result of a severe drought that has
drastically reduced output from hydroelectric plants.
So I want you to read the comments of Azadeh Moaveni, who
covers Iran for Time magazine, from an op-ed he wrote for the
Washington Post last Sunday.
“Yet another issue helping restore Iranians’ regard for the United
States is the withering relevance of Iran’s suspected nuclear
program. At the height of his popularity, Ahmadinejad
successfully rallied public support around the program with
catchy slogans (at least in Farsi) such as, ‘Nuclear energy is our
absolute right.’ But that defiance failed to win Iran much more
than the disagreeable whiff of global-pariah status, moving many
Iranians to reconsider the costs of nuclear enrichment. Today, a
scrawl of graffiti on my old street mocks the slogan: ‘Danish
pasty is our absolute right.’ [Authorities ordered the city’s
Danish pastry shops to rebrand themselves after a Danish
newspaper ran cartoons of the prophet Muhammad in 2005 that
were deemed offensive.]
“Of course, a minority of Iranians – perhaps the 10 percent of
society that sociologists estimate is hard-line – still hate the
Great Satan. But the strain of anti-Americanism in Iran is more
mellow than the rage found elsewhere in the Arab and Muslim
world. The Palestinian cause is less deeply felt here, making it
easier for even Washington’s critics to view relations
pragmatically. Most Iranians belong to generations with
compelling reasons to admire the United States. Those old
enough to remember the shah’s era are nostalgic for the
prosperity and international standing Iran once enjoyed; those
born after the revolution see no future for themselves in today’s
Iran and adopt their parents’ gilded memories as their own.
These longings have young and old Iranians alike following the
U.S. election…..
“Strolling down Revolution Street, a wide avenue in the polluted
heart of Tehran dominated by murals of war martyrs in
outmoded glasses, I stopped to chat with a young man selling
bootleg DVDs of American films and TV series such as ‘Lost.’
‘Before the revolution, we had relations’ with the United States,
he noted. ‘Was that bad for us? We were at the top of the
region, the world.’
“Many Iranians make this point. But the mullahs in power still
can’t figure out how to stop being U.S.-hating revolutionaries.
Until they do, most people here will consider the ‘Great Satan’
just great.”
So friends, be not afraid. I’ll have far more on a potential strike
on Iran next week, as I’m sure I will in succeeding ones as well.
But I do want to add a note on all this happy talk from the White
House and its acolytes that the war on terror is being won. I
want to be a cheerleader as much as the next guy and you see on
a weekly basis that I present all sides. I want us to stay in Iraq to
win, for example.
Talk of victory, though, when we were correctly led to believe
that this is supposed to be a decades long battle, is unnerving,
especially when just one dirty bomb attack, especially in today’s
economic environment, could send us spinning into Depression
in the blink of an eye.
One columnist I read regularly, Peter Brookes of the Heritage
Foundation, wrote some of the following in his June 3 piece for
the New York Post.
“The good news is that al-Qaeda’s in bad shape; the bad news is
that the terrorist threat is evolving. If we don’t adapt, the tide
could turn back….
“Consider some trends that worry U.S. planners.
“First, al-Qaeda’s Internet propaganda machine is working
overtime to spread its extremist message, looking for recruits and
funding and pushing terrorist acts to overcome its setbacks on the
ground in places like Iraq.
“Terror groups prize the Web, releasing a torrent of products –
from print manifestos to online terror encyclopedias to videos –
for digestion by their supporters around the world.
“Al-Qaeda’s online mouthpiece is a media-production entity
called as-Sahab (‘the clouds’). Using that and other outlets to
push the party line of violence and hate, the terror groups seek to
win support from sympathetic audiences and to project an image
of power and prestige….
“This isn’t amateurish stuff. These outlets are feverishly
improving their quality – and achieving ever-more-impressive
message conformity, a key to propaganda warfare.
“They’re targeting younger audiences and women – and
translating their extremist screeds into other languages,
especially English. Production levels are at all-time highs, say
analysts….
“Which leads to the next worry: Homegrown terrorists.
“Al-Qaeda has long sought to recruit operatives already in-place
in the West – foot soldiers who don’t need a passport or
transportation to slaughter innocents here.
“Europe has a real problem. [Director of National Intelligence
Michael] Hayden told Congress this year of an ‘influx of
Western recruits’ into Pakistan since 2006, which suggests rising
radicalizing across the Pond….
“But it’s not just Europe. We’ve also had terror attempts here,
too – by ‘self-radicalized’ people who were inspired by, but had
no physical contact with al-Qaeda at all. Such homegrown, self-
radicalized ‘lone wolf’ terrorists are a particular worry for the
FBI….
“The blood and sweat of brave Americans – plus international
cooperation – has brought great strides in tackling terrorism. Al-
Qaeda’s been its own worst enemy, alienating fellow Muslims
with its brutal violence.
“But this is no time to rest on our laurels. Al-Qaeda and its
affiliates continue to adapt their means and methods to our
security measures – meaning we must evolve to the twists and
turns in their terror tactics.”
Lebanon: Editorial in the Daily Star. [A harsh opinion.]
“Israel’s latest violations of Lebanese airspace on Thursday had a
quality of outrageous appropriateness to them. The overflights
and mock air raids were a timely reminder of the highly
destabilizing role Israel has played in this country, especially
since they came on the eve of the 26th anniversary of the Jewish
state’s bloody 1982 invasion. The provocation was also a
deliberate poke in the eye of British Middle East envoy Michael
Williams because it came on the very day that he and
Ambassador Frances-Mary Guy toured South Lebanon. The fact
that President Michel Sleiman* had asked Williams on
Wednesday to help end Israel’s serial violations of Lebanese
sovereignty – and its continuing occupation of the Shebaa Farms
and other areas – cannot have been lost on Israeli commanders.
“All this would be bad enough on its own, but Israel’s scofflaw
behavior also depends on a long tradition of working against the
interests of even those few Arab countries that have been willing
to engage it on some level….
“This is not the first time Israel has conducted insulting,
impetuous and/or intimidating activities of this sort. Its military
has been harassing and even endangering foreign dignitaries –
including ambassadors and even cabinet secretaries from the
United States, Israel’s number one ally – during their visits to
Lebanon for decades. Very likely, it will not be the last, either.
With a little luck however, Williams will go home with a deeper
appreciation of the pressures to which this country is subjected
on a daily basis by the Israelis – and of the contempt with which
they regard his own.
“Many of the Middle East’s myriad problems stem from
indigenous factors like awful governance, but many others are
due to the impunity with which Israel is able to break all the
rules. From the occupation and colonization of Palestinian land
to threats of aggression against Iran for allegedly violating a
nuclear treaty that they have neither signed nor obeyed, the
Israelis are openly dismissive of the international community and
the principle of collective security. Perhaps if they were not
coddled in return, if they were instead taken to task for their
irresponsibility, they might change their ways. Your move, Mr.
Williams.”
*New Lebanese President Michel Suleiman has become
“Sleiman,” according to the Daily Star. I didn’t see a reason for
the change in spelling, but this screws up my archives.
Nonetheless, as is the case in the spelling of Hizbullah, which I
employ vs. the Western version of Hezbollah, I leave it up to the
local experts, as everyone else should.
Russia: President Dmitry Medvedev will have the stage to
himself at the St. Petersburg International Economic Forum this
weekend, his first major international appearance. Earlier, he did
a little soft shoe with Germany’s Chancellor Merkel; this as
NATO demanded Russia withdraw hundreds of new troops from
the breakaway republic of Abkhazia. This was Putin’s doing and
the Kremlin says the 750 soldiers are merely ‘working on the
railroad.’
Meanwhile, as new head of state, Prime Minister Putin raised
wages and benefits amidst 15% inflation, even though this could
only lead to a further spiral in prices.
Turkey: The nation’s highest court said that a vote by the
Islamist-majority parliament to ease a ban on headscarves in
universities violated the constitution’s secular principles. The
secular establishment has long seen the move to permit
headscarves as allowing Islam to become more entrenched in
public life.
At the same time, the high court is close to reaching a decision
on a far bigger issue, that being the fate of the ruling AK Party
itself, which could be banned for anti-secular activities. The
AKP counters that the court “is interfering with both democracy
and parliament’s legislative authority,” as a spokesman said.
Venezuela: President Hugo Chavez, in overhauling his
intelligence agencies, has decreed that people are now required
to assist the agencies, including the secret police. Failure to do
so can result in prison terms of up to four years. A justice on the
nation’s top court called the measures “a threat to all of us,” in a
rare display of public dissent. [Simon Romero / New York
Times]
Zimbabwe: I really should have placed this first in order of
importance for at least this week, but I’ll conclude with it.
It may have seemed reckless when over the last six years or so I
called for “taking out” President Robert Mugabe, but I ask you,
is there any doubt, any, that having done so would have been in
the best interests of millions of people? This isn’t a case like
Iraq and Saddam, which in hindsight is debatable because of the
botched post-war strategy. Whereas the case to invade Iraq was
built on eliminating perceived weapons of mass destruction and a
threat to the United States and western interests, i.e., oil, the case
against Mugabe can be boiled down, simply, to solving a
humanitarian crisis. I have argued that following the rigged 2002
election, British and U.S. commandos should have gone in, taken
out Mugabe, and installed the legitimate victor, Morgan
Tsvangirai.
Alas, we didn’t, and this week as we approach a June 27 runoff
between the 84-year-old tyrant and the amazingly resilient
Tsvangirai, the latter was detained on the campaign trail for a
spell, at least twice, while both U.S. and British diplomats were
attacked as they tried to investigate political violence, with a U.S.
Embassy staffer beaten. U.S. Ambassador James McGee said of
Mugabe’s thugs:
“The (so-called) war veterans threatened to burn the vehicles
with my people inside unless they got out of the vehicles and
accompanied the police to a station nearby.”
The U.S. State Department called the action “absolutely
outrageous.” Mugabe then suspended all action by international
aid groups to help his starving people, and at last word has
banned opposition rallies.
Earlier, Mugabe was allowed to attend a United Nations world
food summit in Rome due to problems with the rules governing
attendance at U.N. meetings by world leaders. [Such as in the
case of Iranian President Mahmoud Ahmadinejad, who was also
there, it’s an issue of diplomatic immunity.]
Of Mugabe’s appearance, British Foreign Minister Lord
Malloch-Brown said, “This is like Pol Pot going to a human
rights conference.”
Editorial / Washington Post
“The United Nations, which ought to be intervening to rescue
Zimbabwe’s people, instead allowed Mr. Mugabe to cynically
mock his victims. This week the 84-year-old strongman used the
occasion of a U.N. food conference to skirt a European Union
travel ban, check into a luxury hotel in Rome and deliver a
speech in which he accused the international aid groups of using
food to undermine the government – a monstrous lie.
“Zimbabwe’s neighbors, beginning with South Africa, could stop
this humanitarian tragedy. Shamefully, they have failed to do so,
largely because lame-duck South African President Thabo Mbeki
has dedicated himself to protecting Mr. Mugabe. Consequently,
Mr. Mbeki will share the responsibility for the atrocities being
committed in full view of the world – the murders and beatings,
the blocking of food for orphaned children. Like Mr. Mugabe
himself, Mr. Mbeki deserves to be condemned and shunned by
the democratic world.”
Random Musings
–McCain vs. Obama
Finally, it’s over and we now move on to the main event,
though we’re left wondering about the impact of racism in
November, and whether Hillary’s white women will vote if she’s
not on the ticket. In the case of Barack Obama, he was forced to
leave his church after the latest comments made from the pulpit
there, but will the performances of Rev. Wright and Rev.
Michael Pfleger be an issue? Why did Obama stay at Trinity
Church for so long in the first place? Will the guilty verdict for
long-time Obama supporter Tony Rezko on 16 of 24 counts for
fraud and money laundering impact the vote in any way? In the
case of John McCain, he has major ties to lobbyists, the very
group he has railed against, with many having to leave the
campaign as soon as their names came up. Is he just another
hypocrite? Will the seemingly indefatigable McCain yet become
a victim of his age as the campaign wears on, such as in the big
debates this fall?
For his part, McCain opened up the general election campaign
with the following salvo on Obama.
“He is an impressive man who makes a great first impression,
but he hasn’t been willing to make the tough calls; to challenge
his party; to risk criticism from his supporters to bring real
change to Washington. I have.”
Obama is being labeled by McCain as a “retro-liberal.”
[Certainly the Illinois senator’s voting record thus far bears this
out.] McCain also claims that because of his own track record,
attempts to link him to President Bush won’t work. [But here his
recent voting record shows him following Bush, virtually in
lockstep.]
–I came upon this editorial from Arab News (Saudi Arabia) on
Obama’s victory, which concludes:
“From the point of view of the Middle East, Obama looks to be
good news. He is one of the few U.S. politicians who always
opposed the Iraq invasion, even in the few heady days after
Saddam’s ouster when Bush’s policy appeared triumphant. He is
committed to a phased withdrawal of U.S. forces from Iraq but,
more importantly, he is likely to start over with a clean sheet on
the plight of the Palestinians. Therein lies his greatest political
danger. If he is overexplicit in the degree to which he is
prepared to require essential concessions from Israel, he will find
the powerful U.S. Zionist lobby against him and dyed-in-the-
wool Democratic American Zionists will swing their support
behind Republican neocons and their fundamentalist Christian
right backers. Their power to disrupt and discredit is
considerable and dangerous and Obama is surely already in their
sights.”
That’s just an opinion, folks, though let’s face it, Sen. Obama
surely changed some of his views when he spoke to AIPAC this
week.
–I have to say Maureen Dowd crystallized the impact of Scott
McClellan’s book when it comes to Democratic talking points
this fall.
“W.’s dwindling cadre hit back hard. In Stockholm, Condi –
labeled ‘sometimes too accommodating’ by the author – scoffed:
‘The president was very clear about the reasons for going to
war.’
“She’s right. He was very clear about it being because of
W.M.D. Then he was very clear about it being to rid the world of
a tyrant. Then he was very clear about it being to spread
democracy. When that didn’t work out, he was very clear about
it being that we can’t leave because we can’t leave.
“He was always wrong, but always very clear.”
–Back to Hillary, many of you have written of your support for
her campaign. But I get a kick out of the charges of ‘sexism,’
and the failure of the media in the postmortems to mention my
chief issue, her handling of the Bosnia incident. Again, this
wasn’t just some political spin, it was as much of a bald-faced lie
as I’ve ever seen, at least since her husband’s finger-wagging. I
simply do not understand why this isn’t deemed important, when
as I’ve put it numerous times, Hillary was treating us all as
nothing more than a bunch of chumps.
–George Will sums up the topic of Hillary being on the ticket in
his Washington Post column thusly.
“An axiom: When voters watch a presumptive presidential
nominee considering this or that running mate, they think: What
if the president dies? When the presumptive nominee considers
this or that running mate, he thinks: What if I live?
“Which brings us to the dotty idea that Barack Obama should
choose to have Hillary Clinton down the hall in the West Wing,
nursing her disappointments, her grievances and her future
presidential ambitions while her excitable husband wanders in
the wings of America’s political theater with his increasingly
Vesuvian temper, his proclivity for verbal fender benders and his
interesting business associates.
“That this idea survived her off-putting speech Tuesday night,
after Obama won the right to choose a running mate, is evidence
that many Democrats don’t fathom the gratitude that less-
blinkered Americans feel for Obama because he has closed the
Clinton parenthesis in our presidential history.”
–You have to give Barack Obama a ton of credit for the way his
campaign has been run, separating this aspect from Obama’s
own handling of issues such as Rev. Wright. For starters,
campaign manager David Axelrod, of all the people in his
position that you see on the tube, comes off as a highly likeable
fellow. If you don’t think Hillary was hurt by her counterparts,
the detestable Mark Penn and Howard Wolfson, think again.
–Like many of you, I watched the speeches on Tuesday night
and I thought Jimbo summed it up well.
“One had content and no energy. The other had no content and
high energy.”
Advantage…Obama.
–Defense Secretary Robert Gates ousted Air Force Secretary
Michael Wynne and the service’s chief of staff, Gen. T. Michael
Moseley, over the mishandling of nuclear weapons and
components; part of a systemic problem in the Air Force.
“Mistakes are not acceptable when shipping and controlling
sensitive, classified parts” of the United States’ nuclear arsenal,
Gates said.
According to reports, what most upset the defense secretary, who
I admire more and more with each passing month, was that the
Air Force hierarchy didn’t seem to take their mistakes seriously.
Gates has made several gutty decisions since replacing Donald
Rumsfeld.
–On Friday, in introducing the new HUD secretary, ol’
whatshisname, President Bush praised departing secretary
Alfonso Jackson. Good grief. The guy was nothing but a dolt,
and by some accounts a corrupt one at that.
–I’m so disgusted with the political process in my state that for
the first time in 20 years I didn’t vote in the primary this week,
even though we had contested congressional and senate races.
What really ticked me off was coming home after work and
finding about seven long voice messages on my answering
machine, each day, for three weeks. A mailing is one thing. You
can just toss it. Campaign calls, though, are an intrusion and
should be eliminated. Anyway, the idiots in my state on the
senate side opted to send 84-year-old Democratic incumbent
Frank Lautenberg into battle against Republican Dick Zimmer. I
may send Zimmer one of my coffee cans of coins to help him
out. [He’s going to get crushed.]
–As I drive a Honda Accord, with fewer SUVs these days I can
see more of the road. Thank you, OPEC and market
manipulators!
–After posting my column last week, I flew out to Kansas City
to participate in an event I was co-sponsoring, Willie Wilson’s
annual charity baseball game, and the former Royals star allowed
me to hit twice and play the field. While I detail the experience
elsewhere on this site, for the purposes of this column I just have
to say I struck out twice, on six pitches, but I fouled off three and
didn’t embarrass myself at second base. And, hey, the two
hurlers I faced, Dave Stewart and Dennis Leonard, won a
combined 312 games in the big leagues. I just wanted to thank
Willie again for a great time.
–Lastly, we honor the 4th Medal of Honor recipient from the Iraq
War, Army Private First Class Ross McGinnis. This week,
McGinnis’ family was presented with the posthumous award for
their son’s courage in combat.
On December 4, 2006, Private McGinnis saw a grenade fly
through the opening of his Humvee as he was in the gunner’s
hatch. He shouted a warning and jumped on the grenade with his
body to shield his four comrades, all of whom were at the White
House ceremony with President Bush.
The others to receive the Medal of Honor for Iraq are Paul Smith,
Michael Monsoor, and Jason Dunham. Let us all do our best to
remember them for their selfless spirit and heroism. I recognize
the way I end this column, each week since 9/11 for you newer
readers, may seem a bit trite at times, but it’s not only a prayer,
it’s a plea. And so….
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $899
Oil, $138.54…on 12/10/1998, crude oil traded at $10.72, or less
than Friday’s gain of $10.75.
Returns for the week 6/2-6/6
Dow Jones -3.4% [12209]
S&P 500 -2.8% [1360]
S&P MidCap -0.9%
Russell 2000 -1.1%
Nasdaq -1.9% [2474]
Returns for the period 1/1/08-6/6/08
Dow Jones -8.0%
S&P 500 -7.3%
S&P MidCap +1.8%
Russell 2000 -3.3%
Nasdaq -6.7%
Bulls 44.8
Bears 31.1 [Source: Chartcraft / Investors Intelligence]
Congratulations to our Lamb in Command creator, Harry
Trumbore, for winning yet another 1st prize for editorial
cartooning in the New Jersey Excellence in Journalism Awards,
weekly newspaper division.
Have a great week. I appreciate your support.
Brian Trumbore
