I’m going to keep my opening remarks brief since I’ll be throwing everything at you, including the kitchen sink, next time as I look back and then ahead to 2009. For now, it was kind of funny how some pundits tried to paint a positive picture on one economic indicator, consumer spending for November, which was down 0.6% but up a smidge on an inflation-adjusted basis. This inflation-adjusted garbage always cracks me up. Remember how when oil was soaring you still had those saying, “Yeah, but on an inflation-adjusted basis crude isn’t yet at an all-time high,” as if you and I in making our spending decisions do a mental calculation about what the inflation-adjusted price of a loaf of bread, or a new washer/dryer is before purchasing it.
Anyway, the news on personal consumption and durable goods (down 1% for November) was slightly better than expected, though the latter figure is the most volatile in the entire data chain and was hardly the kind of good news we should be looking for as a sign the economy is bottoming. Certainly the housing data didn’t supply any hope. In fact it was worse than ever.
New and existing home sales for November cratered, with not only sales at multi-decade lows, but the median price on an existing home dropped 13.2% year over year (25.8% in the west) for the steepest decline since they’ve been keeping track of such things and undoubtedly the worst since the 1930s. Distressingly, inventory levels in the case of the far larger ‘existing’ category rose anew, 11.2 months worth. You can’t talk of a bottom in housing until this figure comes down substantially.
Then you had retail sales. It always takes until about mid-January before you get a true picture of just how good or bad the holiday shopping season was, but the data out of MasterCard’s SpendingPulse had retail sales down 5.5% to 8% for the period Nov. 1 to Dec. 24. [Ex-gasoline, meaningful because of the huge decline in the price of gas at the pump, sales were off 2.5% in November and 4% in December according to SpendingPulse.] These are major declines and unprecedented. It’s been decades since we had holiday sales tumble like this, though obviously shouldn’t be a surprise to anyone except the shills who put out that Black Friday hype I always write of.
And did you buy any gift cards this year? I didn’t, for the first time since they became available. Retailers love them because when they’re redeemed, they usually get another sale out of it, so this doesn’t bode well for January and February, to say the least. In fact the next few months are going to be more depressing than the last few as store closures mount, tossing hundreds of thousands more out onto the streets.
My friend Jimbo wrote of his own shopping experience on Route 10 here in New Jersey which is home to a lot of box stores. Circuit City was closing its location last weekend, as was Linen & Things. Jim went into both looking for a particular item and needless to say the few remaining employees were more than a bit depressed, recognizing the prospects of finding another job in the space aren’t good. It’s not like Best Buy and Bed, Bath & Beyond are going to fill the void on the employment front, though when things inevitably turn around they’ll do well with less competition. [But they’ll keep their staffs as lean and mean as possible without impacting service.]
Globally, focus this week fell on Japan, as it reported exports for the month of November were down a staggering 27%, while factory orders were off 8%, the worst performance in 55 years. Understand something when it comes to factory orders/industrial production. Normally these numbers are up or down 1%, max. These days we’re getting figures of 8% or higher declines from all over the world. That spells layoffs.
Even Toyota now says it will report its first operating loss in history for the fiscal year ending in March, this after the previous one was a record year for profits. The CEO said there is no way of knowing how the current “unprecedented emergency” would cut global demand in 2009.
China reduced interest rates a 5th time in three months as the government moves aggressively to hit an 8% growth target for ’09 that would in turn stem mass joblessness and unrest. University graduates are now a key focus of some of the mainland’s stimulus programs.
Home prices in the U.K. are expected to fall another 10% in 2009. Ireland was forced to bailout three of its largest banks after an accounting scandal. Euro nations saw factory orders plunge 15% in October (if you thought 8% was bad). And the Governor of the Bank of Spain said the world faced a “total” financial meltdown, adding, “The lack of confidence is total.”
Yes, restoring confidence is what it’s going to be about next year, around the globe. Many are hoping it starts with Barack Obama’s inaugural address on Jan. 20 and the stimulus package that it appears he will be signing that same day.
Lastly, Jim Hoagland, in his Washington Post op-ed, had some interesting thoughts on the world scene, beginning with the Bernie Madoff scam.
“Bernie Madoff had his fun with the $50 billion entrusted to him by investors. Now the media have their fun chronicling the downfall of the financier once affectionately known as ‘the Jewish T-bill’ for his ability to generate guaranteed returns – until his Ponzi scheme collapsed.
“Bernie isn’t the story, or the Madoff, that interests me the most. Andrew and Mark, his sons and business associates, are. They reportedly went to the prosecutors after their dad confessed to them what he had done. If that version is accurate, the younger Madoffs’ reactions, and emotions, might tell us a lot about a huge problem the entire world now confronts.
“That problem is the awakening of the world’s youth to the raw deal their parents and grandparents – my generation, in toto – are handing them, and the growing anger the young feel about the fetid stables of debt, scandal and corruption they are being left to clean….
“We have taken the greatest financial, technological and political opportunities the world has ever offered and abused them for our own pleasures, greed and ethos….
“(In) his own special way, Bernie was one of all of us who wasted energy in myriad forms, kept on consuming imported goods even when it meant going into debt to foreign lands that do not wish us well, and cut budgets for regulatory and law enforcement agencies even in the fat years.
“So we got what we didn’t pay for, too. And so will our children. They are awakening to this grossly unfair state of affairs….
“The fuse of anger is already lit in Europe, where young people are more accustomed to taking to the streets to play out family and generational conflicts in political terms and the police are accustomed to responding forcefully.
“Two weeks of student riots and protests in Greece have left at least 70 people injured and hundreds of businesses and shops vandalized. Sparked by the police killing of a 15-year-old protester, Greece’s wave of unrest certainly reflects immediate local causes as well as deeper concerns about jobs and political fecklessness. It is hard to know just what to make of protesters hurling Molotov cocktails at the national Christmas tree, as occurred in Athens. Nothing good is my guess.
“But the same dry kindling of the Greek uprising is scattered around Europe, where youth unemployment rates are double or triple those of the population over 24, according to the Organization for Economic Cooperation and Development, and retirement benefits are politically untouchable. Similar tensions are rising in China as the global recession deepens, in oil-producing countries such as Russia and Iran that are caught in the whiplash of rising and falling prices, and most of all in developing countries with broken governments and economies that punish the educated young disproportionately.
“Last week, France, which knows a thing or two about youth riots, dropped a controversial education reform plan rather than risk student unrest now. It then unveiled new efforts to ease access to jobs for minority groups. And in a quietly terrifying speech in Madrid, Dominique Strauss-Kahn, the head of the International Monetary Fund, warned in only slightly veiled terms that violent protests may erupt on a global scale if governments continue to provide inadequate or confused responses to what could quickly become ‘a global depression’ in 2009.
“There was also a whiff of alarm in the Federal Reserve’s slashing of interest rates last week. Such alarm is not misplaced. Americans as a group are slow to show mass anger or despair. But the Madoff case – and the callous insulting of the future that it exemplifies – has lit a global fuse that policymakers must take into account, urgently.”
–Stocks fell across the board in the first of two deathly quiet weeks for traders. Everyone just wants the year to end and attempt to move on, but that’s not likely. [A veiled hint of what I’ll be writing next time.] Unless you were trading the short side of the markets in 2008, you are battered, bruised and weary and simply not ready to get back into the game. You’re more likely still shell-shocked. This week the Dow Jones fell 0.7% to 8515, its 4th straight weekly decline, while the S&P 500 lost 1.7% and Nasdaq 2.2%.
Some on Friday got all giddy over Amazon’s pronouncement it had its best holiday season ever, but the company gave zero specifics on the numbers and in the end the stock had hardly moved.
Just three more trading days left in a year that will go down as the worst for equities since the 1930s. It’s been a year best categorized by the purchase of domestic over premium beer for most market participants such as yours truly.
–U.S. Treasury Yields
The yield on the 3-month T’bill is still at 0.01%. That tells you everything about the environment we remain in.
–Former Federal Reserve vice chairman Alan Blinder ripped Treasury Secretary Paulson for his handling of the TARP in an op-ed for the New York Times.
“It pains me to say this, because I was among the first to call upon Congress to create two institutions to deal with the financial crisis: one to buy and refinance home mortgages, the other to buy what came to be called ‘troubled assets.’ The legislation signed in October empowered the TARP to do both. Sadly and amazingly, it has done neither….
“Instead, taxpayer money has been used mainly to recapitalize ailing banks. To be sure, this use of the TARP is perfectly legal. The legislation gives the secretary broad authority to buy ‘any other financial instrument’ that he deems ‘necessary to promote financial market stability.’ That certainly includes buying bank stock.
“The question is not one of legality, but of judgment. Old-fashioned believers in democracy may recall that a reluctant Congress was sold on the idea of buying troubled assets, not on injecting capital into banks. No wonder members are crying foul.
“In fairness, Mr. Paulson was not alone in advocating capital injections. Many economists and financial experts agreed. But I doubt that many of them intended for the government to buy preferred stock with no control rights, at above-market prices and with no public-purpose strings attached. The automakers are not being treated this way in their $13.4 billion loan….
“Fortunately, the TARP legislation authorized a first tranche of $350 billion but wisely gave Congress a mechanism for blocking release of the second $350 billion. With the first tranche now committed, Mr. Paulson said he would soon request release of the second. Based on his performance to date, Congress should reject that unless he agrees to spend most of the next installment on TARP’s two stated purposes.
“Failing that, we can wait a month for the new Treasury secretary, Timothy Geithner.”
–With potential job losses in 2009 of an additional 3-4 million, the Obama economic team is raising its stimulus targets to attempt to keep pace on this front. The focus is to be on already approved projects (such as roads and bridges) that can be rolled out quickly.
–Three plants that manufacture full-size SUV’s have closed in the past week; GM facilities in Moraine, Ohio and Janesville, Wis., as well as Chrysler’s factory in Newark, Del. Sales of big SUV’s are off 40% in 2008.
–The spotlight will be on GM and Chrysler after the holidays as negotiations commence with the unions and bondholders. The government could end up with 20%, the unions 25%, and bondholders 50%, with the remaining 5% going to the rats left behind…or common shareholders in the case of GM who would see their equity essentially wiped out (a fact many still don’t seem to get). Regardless, when you’re talking about a March 31 deadline to prove the automakers are financially viable, amidst a still deepening slump, I don’t see how they can do it, especially when Ford, in February, says, “Ah, you know that bailout cash we said we didn’t need? Well, we were thinking, maybe we could use $5 billion just in case. And can you pay us in gold?”
[Then again, right after negotiations begin the new administration comes in and has a chance to reshape the bailout.]
–There is more and more evidence the energy industry is drastically cutting back on projects for oil and natural gas, this as the International Energy Agency says the steep rate of decline in output from conventional oilfields means new fields must constantly be discovered to keep production simply at existing levels; all of which tells you supplies will be super tight when the global economy finally recovers. I keep repeating this to give oil bulls some hope.
–Very much related to the above, Exxon Mobil has postponed the scheduled start-up next year of a $1 billion natural gas import terminal because of recently uncovered damage due to Hurricane Ike. This not only keeps a lot of gas off the market longer, but it is a big hit to future revenues for Exxon and its partners. [Exxon was to have received its supplies from Qatar. Granted, short term any extra supply would have helped push prices lower still, but the implication for the future is that you’re not likely to have the needed supply when demand returns.]
–12 of the world’s leading exporters of natural gas met in Moscow on Tuesday to create a producers’ group modeled after OPEC. Vladimir Putin chaired the meeting in Moscow, though no one really expects any new organization to have much clout. What remains of concern, however, is Russia’s control over 42% of Europe’s natural gas and the ongoing dispute with Ukraine, which should come to a head next week. Russian President Medvedev warned Ukraine must pay off $2.1 billion owed Russia or face stiff sanctions, if not a shutoff. Ukraine has said it will not pay.
–Caterpillar is cutting executive compensation by up to 50% for 2009, with senior managers seeing reductions of 5% to 35%. Deflation.
–Wal-Mart is ponying up at least $352 million to settle 63 federal and state class actions claiming the company cheated hourly workers and forced them to work through breaks. The total could end up exceeding $640 million.
–The SEC is going to be indicting the management of the Reserve Primary Fund, the money market fund that “broke the buck” back in September which helped set in motion the collapse in the credit markets. President Bruce Bent (the founder of money market funds in general), Bruce Bent II and Arthur Bent III are all under the gun, as is the parent company. You might say SEC investigators issued the cry “Get Bent!”
–Not for nothing, but regarding money market funds they could be going the way of the dodo bird with short-term interest rates approaching zero. Think about it. After fees and operating expenses, some are already losing money. The average yield on a Treasury fund, for example, was 0.34 percent, compared with 2.9 percent last December. The operating expense is normally 40 to 50 basis points (0.40-0.50 percent), plus you add fees, and doh! You just can’t operate them; yet another unintended consequence of Fed policy and the crisis in confidence that has dropped Treasury yields so low. [Credit Suisse quit managing money market funds in the U.S. and liquidated $8bn in assets across its three offerings.]
–Toyota issued a recall for 120,000 cars in China to fix a problem that could result in loss of steering control, a problem just about anywhere in the world except the Bonneville Salt Flats.
–Six senior investment officers who manage Harvard’s endowment are splitting $26.9 million in compensation, even though the fund lost over $8 billion since the summer. Nice work if you can find it.
–With all the talk of how Wall Street has cut back on bonuses of its own, I’ve been writing of the hit to New York City and New York State finances. This week Gov. David Paterson said that the decision by Goldman Sachs executives to forgo bonuses is costing the state $178 million alone. It’s a bit ironic that it was New York’s Attorney General Andrew Cuomo who urged those benefiting from federal bailouts to defer from paying out the bonuses, thus hurting his own state. That said, Paterson agrees it was the right thing to do. Wall Street taxes accounted for 30 percent of state revenue in the last fiscal quarter.
–But wait…there’s more. New York State Comptroller Thomas DiNapoli warned that New York City faces budget gaps of $3.5 billion and $8 billion in the next two fiscal years, a sharp increase from the $1.3 billion and $5 billion deficits Mayor Bloomberg projected last month in his budget plans for fiscal 2010 and 2011.
–I have a copper broker on my floor in the office building where I operate out of and every now and then I hear “Aaaghhhh!” emanating from down the hall. It’s been a tough year for him, and this week copper hit a four-year low. Like with all the other commodities it’s about the macroeconomic picture.
–Speaking of natural resources, most of the time you wouldn’t give a darn about a takeover in Guinea, but after the longtime strongman died a group of military officials declared they were in charge, while the prime minister said, no, he is. The junta says they will hold elections, but the PM is appealing to the world to prevent the coup from going through. Some aluminum producers, including heavyweights Rio Tinto and Alcoa, care what happens here because Guinea is rich in bauxite, which is used to make the stuff.
By the way, the per capita income in Guinea (on the west coast of Africa) is about $400 and life expectancy is 56.
–Orange juice futures tumbled to a four-year low the other day. Even demand for this product is drying up. [Orange juice concentrate in cold storage had surged earlier, adding to already ample supply levels.] Florida will produce 165 million boxes of oranges this season, down from 170mm last year. [Bloomberg]
–Some scientists and consumer groups are raising concerns that the industrial chemical melamine isn’t just in Chinese-produced milk, but it’s also in fish there, China being the world’s largest producer of farm-raised seafood. I’m on record as saying years ago you’d have to be an idiot to buy farm-raised product from here. [Then again, I’ve also long said that none of us really knows anything about the fish we eat. When you read ‘wild caught’ in the Atlantic, do you really believe it?]
The Los Angeles Times reports that “industry experts and businesspeople in China say that melamine has been routinely added to fish and animal feed to artificially boost protein readings.”
–Rather than cash bonuses, Google is handing out mobile smartphones this year. In the past, Google has given all its employees a year-end cash present which sources told the Financial Times was usually $1,000; on top of the normal performance-related bonuses in the form of restricted stock and cash.
–Federal Express is not advertising on the Super Bowl for the first time in 12 years, believing in tough times, and with an already established brand, spending $3 million for a 30 second spot doesn’t make a helluva lot of sense, nor does it send the right message to employees after you’ve reduced their salaries as FedEx did the previous week.
–The only billionaire I’ve ever had drinks with, Roger McNamee, and his Elevation Partners fellow investor Bono have hiked their contribution in Palm to 39 percent. Roger’s hanging with this one, even though Palm reported a loss of $506 million in its most recent quarter. [Roger’s been too successful in his career for him to fail. I may have to stick Palm on my idea board for 2009, which is rather empty right now.]
–The Belgian government collapsed as King Albert II was forced to accept the resignation of the ruling coalition following accusations officials had tried to influence an appeal court ruling blocking the dismantling of Fortis, the troubled financial services group.
The state had initially taken control over Fortis’ Belgian banking and insurance operation in October, hoping to sell it quickly, but then the court froze the transaction until February and it was this decision that government officials tried to influence. You could say they were pulling a Blago. Sort of.
[Belgium has all kinds of other problems these days, particularly the split between the Dutch-speaking Flemings and French-speaking Walloons.]
–Speaking of influence peddling, the Washington Post reported that a senior federal banking regulator helped IndyMac Bank cook the books back in May in order to keep the California company in business, only two months before it collapsed. Basically, Darrel Dochow, a regulator in the Office of Thrift Supervision, was found by the Treasury Department’s inspector general to have helped IndyMac count money it took in in May towards its financial condition end of March, which allowed the bank to say on May 12 that as of March 31 it was “well capitalized” when in fact it did not meet the appropriate definition of same.
–I subscribe to a number of inside Wall Street type publications and I noticed in one that Merrill Lynch was increasing broker payout on “transactional business” while lowering the payout on “fee-based business.” After my experience in the industry this cracks me up. In the years before I left, the big push, especially at Merrill, was to bring in fee-based business, like in wrap accounts or certain mutual funds. Now, seeing those revenues decline (because they are based on assets that have in most cases taken a severe hit in ‘08), it’s back to the old transaction route, so says management from on high.
–And the latest on the Bernard Madoff debacle. Hedge-fund manager Doug Kass lives in the Palm Beach, Fla., enclave that took a big hit and commented to the New York Post’s Mark DeCambre that “he expects inter-family warfare to break out any day as families who were late investing money with Madoff and lost millions in the alleged Ponzi scheme start suing friends and neighbors who already cashed in their Madoff profits.”
“There’s a growing recognition that [Madoff’s scandal] is going to create a schism in the Palm Beach community,” Kass said. “Because those [investors] who redeemed money before the news of the fraud emerged will be involved in lawsuits from those who didn’t get out in time.”
“This incredulous feeling is permeating the town,” Kass continues. “It’s not like everyone gave their money to a money manager in absentia or someone who was distanced socially – this man was immersed in the community. His role in particular as it relates to the Jewish community was profound in scope and in depth.”
“For sale” signs are popping up all over town and country club memberships are being canceled.
The case took a tragic turn this week when 65-year-old money manager Thierry de La Villehuchet, who may have lost $1.4 billion with Madoff, committed suicide in Manhattan. Much of the money was raised from wealthy European investors, including the L’Oreal family.
We are also learning that Madoff’s misconduct may have stretched back to the 1970s, this as the victims have learned that the maximum cash they are eligible for is $100,000 from a plan laid out by the Securities Investor Protection Corp., the receiver of Madoff’s now-defunct brokerage. Anyone seeking more will have to pursue separate lawsuits or join class-action claims.
So many of the tales that have emerged are truly tragic, like the widow whose husband had recently died. She turned over her life savings to Madoff just weeks before his arrest. That’s pure evil for him to have accepted it.
Or the case of 95-year-old Carl Shapiro, a pillar in the Jewish community and one of its leading philanthropists. He lost $545 million to a man he used to call his “son.”
But now it’s no longer just the victims who will suffer, as the courts have ruled in a previous Ponzi scheme case that even those who pulled all or some of their money over the past six years (the statute of limitations) could be sued on behalf of other victims to return profits and even principal, the so-called ‘clawback.’ It’s pretty simple. Bankruptcy laws authorize the trustee to recover money anywhere he can find it, which includes monies distributed as part of a fraud.
–During World War II, Sir Winston Churchill used to say, “In victory we deserve it, and in defeat we need it,” referring to his customary champagne. But the latest figures today from France’s champagne wine board show a 23% fall in the number of bottles sold in October compared with a year earlier. Exports to the United States declined 17%. Said a spokesman, “You need to feel good, to feel happy to drink champagne. When the environment is not so good, people perhaps don’t feel quite like drinking as much.” I’m not so sure about that.
–You know what I think of when I see the Subway commercials advertising their $5 foot-long sandwiches? I think of how low the margins must be, especially after corporate takes their huge cut, and how this is the last possible franchise I would want to own.
–For you CNBC junkies out there, Newsweek featured anchor Erin Burnett as one of five figures of influence for their “Power of Money” feature.
“Knowledgeable, politely opinionated anchor managed to maintain a smile as Wall Street melted down. Wall-to-wall crisis coverage vaulted the Bailout Babe into the rarefied air formerly occupied by ‘Money Honey’ Maria Bartiromo.”
Afghanistan: The U.S. is looking to increase the level of troops by 20-30,000 over the next 12 to 18 months. Gen. David Petraeus, now overseeing Afghanistan as well as Iraq and Pakistan as part of his Central Command duties, is seeking to replicate his success in Iraq by recruiting local tribesmen in Afghanistan. Meanwhile, the violence here continues and among the dead this past week were three Danish soldiers killed by a roadside bomb, bringing Denmark’s total to 21. We honor the significant sacrifice this ally has made. [The Netherlands also lost a soldier, bringing their number killed to 18.]
Iran: Russia admitted it is supplying Iran with defensive weapons, though it’s not clear if these include the highly sophisticated S-300 surface-to-air-missile. The U.S. and Israel are extremely concerned the S-300 could be used to protect suspected nuclear weapons sites.
Iranians go to the polls next year and with crude oil accounting for 80% of the nation’s revenues, the plunge in the price of it is having a devastating impact on the economy and has led to increasing divisions. Even parliament broke ranks with President Ahmadinejad in torpedoing his latest reform plan, and inflation is now running at 25%. The headline in one paper read “What has the government done with $200 billion in oil revenues?”
There are some who believe that as it becomes increasingly vulnerable, Iran’s leadership may agree to shelve its nuclear weapons program if given the right package of incentives, such as the lifting of sanctions. I’ll have more on this next week.
Israel: The government is warning of a new military offensive* against Hamas in the Gaza Strip in retaliation for a series of rocket attacks after Hamas announced an end to a six-month ceasefire that had, for the most part, been pretty effective. Any offensive, though, would of course impede peace talks between Israel and the Palestinians.
The attacks come about six weeks before Israel’s critical Feb. 10 parliamentary election when a new prime minister will emerge. Foreign Minister Tzipi Livni, one of the two main candidates, is seeking last minute help from the likes of Egyptian President Hosni Mubarak before launching an offensive, while rival Benjamin Netanyahu, the front-runner, is calling for Israel to go into Gaza immediately.
[The latest polling shows Netanyahu’s Likud party losing support, but still best able to cobble together a ruling coalition out of Israel’s messy party system….however, as I went to post, I just saw another one giving Livni\’s Kadima party a one seat lead.]
*Update 6:00 AM ET…Israel did launch a massive airstrike on Gaza, killing scores.
Russia: The people are seeing a growing disconnect between economic realities and Prime Minister Vladimir Putin’s public posture as the nation’s savior. There are increasing signs of unrest and for the first time since Putin stepped down as president in May, Duma deputies have called on Putin to explain why the country posted such a sharp decline in industrial output in November. And the once unthinkable is happening…Putin is being criticized openly in print, radio and online media, this as the number of people who believe the country is headed in the wrong direction has jumped to 40% in December from 24% in September.
When he was president, Putin was able to control state media and could distance himself from problems owing to the fawning coverage. But now, as the financial crisis hits home and the average Russian, Putin has been spending much of his time criticizing the United States, which he has accused of causing the global meltdown through irresponsible policies.
In fact last weekend, Putin warned “Any attempts to weaken or destabilize Russia, and harm the interests of the country, will be toughly suppressed.”
What concerns many observers, such as yours truly, is the fact Putin’s old buddies in the KGB (now the FSB) could help fuel a crackdown on dissent, which is why many fear the new treason law where a single judge can rule on guilt or innocence…a judge who owes his position to Vladimir Putin in one form or another. Human rights organizations are appealing to President Medvedev to scrap the new law.
I would just add that there are really three power blocs operating in Russia today; Putin’s, Medvedev’s more moderate wing (at least for now), and a shadowy third one comprised of ex-KGB types who aren’t necessarily allied with Putin. I’ve written this before, but one shouldn’t be in the least bit surprised to wake up one morning to the news that there has been a change in power with the elevation of a new figure that will cause all of us to go, “Who the hell is he?”
And on a somewhat related topic, Alex Rodriguez of the South China Morning Post had a story on the burnishing of Josef Stalin’s image.
“Stalin, the brutal Soviet dictator responsible for the deaths of millions of his citizens, has been undergoing a makeover of sorts in recent years. Russian authorities have reshaped the Georgian-born dictator’s image into that of a misunderstood, demonized leader who did what he had to do to mould the Soviet Union into the superpower it became.
“In Russian classrooms, history teachers are guided by a new, government-approved textbook, Alexander Filippov’s ‘Modern History of Russia; 1945-2006,’ which hails Stalin as an efficient manager who had to resort to extreme measures to modernize the Soviet Union’s lumbering, agrarian economy.
“There were, writes Filippov, ‘rational reasons behind the use of violence in order to ensure maximum efficiency.’
“A museum commemorating Stalin as a national hero opened in 2006 in the southern city of Volgograd. The following year, a 40-episode television drama broadcast on a state-controlled network whitewashed Stalin’s crimes and portrayed him as Russia’s savior.”
For his part, Vladimir Putin has always been careful not to lavish praise on Stalin, but has added “We have had fewer (mistakes) than other countries, and they were less terrible than in other nations. We can’t allow anyone to impose a sense of guilt on us.”
The human rights group Memorial had been researching and documenting Stalin’s crimes for 20 years, building one of the world’s most complete archives of one of the darkest chapters in Russia’s history. But Alex Rodriguez writes:
“These archives are now in the hands of Russian police.” A representative of Memorial says the raid on their offices reflects a government desire to remake history so Russians believe “all of the difficulties of the past were needed for the glory of Russia.”
Ukraine: On top of the natural gas rift with Moscow, Prime Minister Yulia Tymoshenko has called for her rival, President Viktor Yushchenko, to resign after accusing members of his inner circle of profiting from bets against the currency, specifically citing $1.2 billion in emergency central bank funds that went to a troubled Ukrainian institution. Tymoshenko claims the money was then used for placing speculative bets.
China: Beijing is contributing three naval vessels to the effort to secure the Gulf of Aden and the coastal waters off Somalia from pirates. This is China’s first naval operation beyond the Pacific. Japan is also now considering a mission there. There have been seven attacks this year on Chinese vessels in the area.
Zimbabwe: Archbishop Desmond Tutu said of the situation in Zimbabwe and South Africa’s timidity in dealing with its neighbor, “I want to say that I have been very deeply disappointed, saddened by the position that South Africa has taken at the United Nations Security Council in being an obstacle to the Security Council…
“And I have to say that I am deeply, deeply distressed that we should be found not on the side of the ones who are suffering.”
Ralph Peters / New York Post
“No country in our time has plummeted so far so fast with so little engagement by the rest of the world. Why? Dictator Robert Mugabe was a hero of the global left for decades, so today’s leftists avoid discussing his crimes. Better to let Africans die than admit that ‘We were wrong.’…
“If the world wants to alleviate the misery of millions in Zimbabwe, we must sideline South Africa and act directly to remove Mugabe and his ruling clique.
“We won’t, and the world won’t. Black Africans serve wonderfully for charity appeals, but no competent state will lift a finger to save their lives.”
Mexico: 12 troops were the latest victims in the drug war…all decapitated.
–President-elect Barack Obama was interviewed by federal prosecutors, along with two of his top advisers, as part of the alleged corruption investigation by Illinois Gov. Rod Blagojevich. The Obama transition team, in releasing its version of any exchanges, denies any wrongdoing or improper communication, while prosecutors have said no one on the Obama team is a suspect, though incoming chief of staff, Rahm Emanuel, did have a number of conversations with Blagojevich and his staff to discuss the Senate seat. The merits of Obama adviser Valerie Jarrett were discussed, though, supposedly as captured on the wiretaps, Emanuel and Blagojevich or his chief of staff didn’t discuss any potential appointment for Blago to the cabinet or a political nonprofit organization in exchange.
Jarrett’s conversations, however, are a little troubling in that while she expressed an interest in Obama’s seat, she didn’t seem to understand the quid pro quo involved, and, let’s face it, we’ve really only heard the Obama team’s sanitized version of things.
–According to a USA Today/Gallup survey, for the first time a president-elect is the man Americans admire most. Barack Obama received 32% as the first or second choice for most-admired man, while President Bush is second but with just 5% (down from his high of 39% following 9/11). On the female side, Hillary Clinton led, with Sarah Palin second. Personally, I’d go with Michael Phelps and Jennifer Aniston, but then no one asked me.
–Having described for you my recent time in Hong Kong’s great airport, as well as transportation into the downtown area from my hotel there, I couldn’t help but note Thomas Friedman’s column on Wednesday.
“I had a bad day last Friday, but it was an all-too-typical day for America.
“It actually started well, on Kau Sai Chau, an island off Hong Kong, where I stood on a rocky hilltop overlooking the South China Sea and talked to my wife back in Maryland, static-free, using a friend’s Chinese cellphone. A few hours later, I took off from Hong Kong’s ultramodern airport after riding out there from downtown on a sleek high-speed train – with wireless connectivity that was so good I was able to surf the Web the whole way on my laptop.
“Landing at Kennedy Airport from Hong Kong was, as I’ve argued before, like going from the Jetsons to the Flintstones….
“The next day I went to Penn Station, where the escalators down to the tracks are so narrow that they seem to have been designed before suitcases were invented. The disgusting track-side platforms apparently have not been cleaned since World War II. I took the Acela, America’s sorry excuse for a bullet train, from New York to Washington. Along the way, I tried to use my cellphone to conduct an interview and my conversation was interrupted by three dropped calls within one 15-minute span.
“All I could think to myself was: If we’re so smart, why are other people living so much better than us? What has become of our infrastructure, which is so crucial to productivity? Back home, I was greeted by the news that General Motors was being bailed out – that’s the G.M. that Fortune magazine just noted ‘lost more than $72 billion in the past four years, and yet you can count on one hand the number of executives who have been reassigned or lost their job.’….
“John Kennedy led us on a journey to discover the moon. (Barack) Obama needs to lead us on a journey to rediscover, rebuild and reinvent our own backyard.”
–I’ve glanced at articles concerning former President Bill Clinton’s donor list and to me there is little out of the ordinary, as scummy as it all is. Republicans can’t exactly claim innocence on matters of this kind, after all. Everyone is dirty.
But I do have to note a few observations from Martin Peretz, editor of The New Republic, in an op-ed for the Wall Street Journal.
“(The) scrounging operation seems to have dug down very deep to pull in thousand-dollar gifts [ed. on top of the ‘shakedown of the sheikhs’.]
“There were four United Way contributions, one from the national outfit, three from local branches. Since when is the Clinton Foundation one of the approved charities of the United Way?
“Then there are the more serious questions about operating charities. What was the purpose of a contribution by the National Opera of Paris?….
“The University of Cambridge and Liverpool University in the United Kingdom threw into the pot from the other side of the pond. American universities like Tufts, Columbia, Georgetown, Iowa State, Texas, Brown…Do these educational institutions have such deep pockets to share with Bill Clinton’s ego?….
“He took money from poor countries like Jamaica, and more prosperous countries like Italy. He dipped into the Irish Aid Fund and the Swedish Postal Lottery for big money, and for small money from the Social Economic Council of the Netherlands….
“So where did all this fund-raised money go? Wouldn’t you want to know to which philanthropic undertaking the King of Saudi Arabia and the Custodian of the Two Holy Mosques committed himself? This information is not in the report – and it doesn’t look like President-elect Obama has any interest in pushing for further disclosure. Maybe the king just gave to general expenses.”
–Despite the uproar among some on the Far Left, I still say the selection of Pastor Rick Warren to deliver the invocation at the inaugural was a great move by the president-elect. There is no doubt, though, that the Obama camp didn’t expect the backlash in some circles, particularly from the gay community. Congressman Barney Frank called it a “mistake.”
In his Christmas Eve sermon, Warren focused on the importance of faith when plans are upended (and not the invocation flap).
“You may be going through a change in plans right now,” he said. “You hadn’t expected to be laid off or to be financially tight. And when that happens, you’re asking, ‘Why me, why now?’ Jesus said you don’t understand now what I am doing, but you will understand later. That’s the…thing you have to learn when God changes your plan. You have to learn to trust him.’”
–There is no way Caroline Kennedy gets the nod to fill Hillary Clinton’s senate seat. Governor David Paterson has done the right thing in waiting until Hillary is confirmed to be secretary of state and, with time, we are learning that Caroline leaves a lot to be desired if you are a New York Democrat. For example, the Daily News reports that thus far in the decade, Caroline has donated a whopping $1,000 to New York Dems, that being to City Council Speaker Christine Quinn; that’s it…no one else in City or State politics. [Ms. Kennedy is said to be worth more than $100 million. Nationally, she donated to both Hillary’s and Obama’s presidential bids, with Hillary returning the $2,300 after Caroline endorsed Barack.]
And as I mentioned last week, her voting record is spotty. Said a professor of public affairs at Baruch College, Doug Muzzio, “Voting is the minimum thing you can do, and she hasn’t done that. The next thing you can do is you could donate money, and she hasn’t done that. It calls into question her commitment to politics and to government.”
[Caroline’s first interviews on Friday were most unimpressive and I maintain Paterson will select Andrew Cuomo.]
–For the third year, Karl Rove feels compelled to tell us how many books President Bush reads in their ongoing competition to see how many each can digest in the course of a year. It started back on New Year’s Eve 2005, we’re told, when the two challenged each other.
“At year’s end, I defeated the president, 110 books to 95….The president lamely insisted he’d lost because he’d been busy as Leader of the Free World.”
“The reading competition reveals Mr. Bush’s focus on goals. It’s not about winning. A good-natured competition helps keep him centered and makes possible a clear mind and a high level of energy. He reads instead of watching TV. He reads on Air Force One and to relax and because he’s curious. He reads about the tasks at hand, often picking volumes because of the relevance to his challenges. And he’s right: I’ve won because he has a real job with enormous responsibilities….
“For two terms in the White House, Mr. Bush has been in the arena, keeping America safe and facing down enormous challenges, all the while acting with dignity. And when on Jan. 20 he flies from Washington to Texas one last time, he will do so as he arrived – with friends and a book nearby.”
–Talk about embarrassing. President Bush issued one of his pardons to a Brooklyn, N.Y., man, Isaac Robert Toussie, who had been convicted of making false statements to the Housing and Urban Development Department and of mail fraud. But after learning in news reports that Toussie’s father had donated tens of thousands to the Republican Party a few months ago, the White House said the president was reversing the decision so as not to “create an appearance of impropriety.” No one can remember a reversal like this.
“This holiday season is a time to examine who’s been naughty and who’s been nice, but I’m unhappy with my findings. The problem is this: We liberals are personally stingy.
“Liberals show tremendous compassion in pushing for generous government spending to help the neediest people at home and abroad. Yet when it comes to individual contributions to charitable causes, liberals are cheapskates.
“Arthur Brooks, the author of a book on donors to charity, ‘Who Really Cares,’ cites data that households headed by conservatives give 30% more to charity than households headed by liberals. A study by Google found an even greater disproportion: average annual contributions reported by conservatives were almost double those of liberals.
“Other research has reached similar conclusions. The ‘generosity index’ from the Catalogue for Philanthropy typically finds that red states are the most likely to give to nonprofits, while Northeastern states are least likely to do so.
“The upshot is that Democrats, who speak passionately about the hungry and homeless, personally fork over less money to charity than Republicans – the ones who try to cut health insurance for children….
“Of course, given the economic pinch these days, charity isn’t on the top of anyone’s agenda. Yet the financial ability to contribute to charity, and the willingness to do so, are strikingly unrelated. Amazingly, the working poor, who have the least resources, somehow manage to be more generous as a percentage of income than the middle class.
“So, even in tough times, there are ways to help. Come on liberals, redeem yourselves, and put your wallets where your hearts are.”
–Sherry Johnston, whose son Levi is engaged to 18-year-old Bristol Palin, was busted on felony drug charges in connection with OxyContin. Levi has described himself as a “f—ing redneck” on his MySpace page and no date has been set for his marriage to Bristol, who is bearing their child. It’s a very beautiful story this holiday season.
–Homeless shelters in New York City are packed more than ever before, at least in the 25 years since records were first kept. 9,720 families are using emergency shelters, up 13% in just the past six months. Others are trying to get in. [Mayor Bloomberg defends his administration by saying the City has done a great job in taking care of as many as it is these days.]
–Overall crime in New York City was down for the 18th consecutive year, but murders were up slightly compared to last year’s total, though Mayor Bloomberg was quick to point out the murder rate is the second lowest in nearly five decades.
–And now my selection for “Week in Review Person of the Year.” For my purposes it must go to a political figure; the consequences of governance, or lack thereof, being central to what we explore in this column. As you can see below, if there is no obvious choice, I’m not naming one.
True, I’ve stretched my definition slightly in naming the general, but Petraeus and Gates continue to deserve credit for the significant progress in Iraq. This coming year it’s about taming Afghanistan as much as any further political progress in Baghdad.
As for not picking Barack Obama, he hasn’t done anything yet. Post-Jan. 20, though, the stage is all his and I sure as heck hope I’m selecting him for 2009 “Person of the Year.” That would be a great sign.
If you’re new to StocksandNews, each December I also select a “Dirtball of the Year,” awarding this to the one person who has most negatively impacted the lives of millions.
I guess it’s time to rename it the “Robert Mugabe Dirtball of the Year” award. What the above proves, however, is how I correctly identified him as a major issue going back to 2000, and the world has done zero about it since then. What a pitiful planet we inhabit. Don’t preach to me about all the good in the world when at the same time, we’ve allowed this two-bit dictator to ruin millions of lives when he could have easily been taken out years ago…plus, remember, the man stole two elections that also should have ended the suffering and misery. He does not deserve to live another day. Period. At least Bishop Tutu has recognized this, even if leaders in Britain and the United States, let alone South Africa, haven’t.
–But to end on a lighter note…I follow national weather forecasts as closely as any amateur and those I read and listen to, including the Old Farmer’s Almanac, nailed December and just how brutal it would be. Most of these same folks, though, say January and February will be far more temperate and as one who is in charge of his townhouse development’s snow removal budget, I’m keeping my fingers crossed.
The Star-Ledger’s (N.J.) Mark DiIonno had a super piece the other day on how we let the weather control our lives.
“The winter romance is dead. The Weather Channel, and every other ‘real-time’ traffic and weather media outlet killed it.
“It is no longer God’s magical blanket, that quilted white cover of peace and quiet that forces us to stop our clocks and reflect from the warmth of our homes. Now it’s just one big, snarling inconvenience. A commuter’s nightmare, a school-closer, a power outage waiting to happen.
“Snow. Kids sledding? Nope. Cars skidding.
“And this is how yesterday’s very typical winter storm was presented to us. Not like ‘Walking in a Winter Wonderland,’ but like a rampaging, howling monster, tracked first by a ‘Winter Storm Watch,’ then upgraded to a ‘Winter Storm Warning.’
“Here’s the point. Clearly, weather information is valuable, for our convenience and safety. But a hysteria has crept into weather reporting that makes us think that unless skies are sunny and temperatures seasonal, nature is our enemy. Storm warnings, heat advisories, flood watches, it’s all Armageddon.
“Very typical storms – rain, sleet or snow – are ‘tracked’ like man-eating animals or serial criminals. And in all the 24/7 storm-tracking, which began Wednesday (12/17) for yesterday’s storm, the words ‘White Christmas’ never came up.”
Mark DiIonno then discusses the lyrics to songs we’ve all grown up with, like “Let It Snow,” written by Sammy Kahn and Jule Styne in 1945.
Oh the weather outside is frightful,
But the fire is so delightful,
And since we’ve no place to go,
Let It Snow! Let It Snow! Let It Snow!
Sleigh bells ring, are you listening,
In the lane, snow is glistening.
A beautiful sight,
We’re happy tonight.
Walking in a winter wonderland.
Mark adds, “Later in the song, the words ‘to face unafraid, the plans that we made’ and ‘we’ll frolic and play, the Eskimo way’ say venturing into the snow can be a delightful adventure. Contrast that to yesterday’s News 12 Traffic report at around noon. Within a span of one minute, came the adjectives ‘horrific…horrendous…horrible.’ These are not the words of delightful adventure.
That’s it. Next big snowstorm I’m going for a walk, or enjoying the beauty from inside. Ever watch cardinals in a snowstorm? At least they’re having fun.
But I\’d be remiss in not acknowledging those who have been stranded in the wicked weather this holiday season, particularly out west. Hang in there. This too shall pass.
Gold closed at $870
Oil, $37.70
Returns for the week 12/22-12/26
Dow Jones -0.7% [8515]
S&P 500 -1.7% [872]
S&P MidCap -1.6%
Russell 2000 -2.0%
Nasdaq -2.2% [1530]
Returns for the period 1/1/08-12/26/08
Bears 38.3 [Source: Chartcraft / Investors Intelligence…huge, unusual moves in both directions this week.]
Next time, the forecast for 2009. Have a great week and let’s all pray the coming year somehow at least finishes on a good note. We already know the start will be rough in terms of the economic fundamentals.
And a Happy Birthday to our own Dr. Bortrum, who turns 81 this weekend.
