For the week 4/20-4/24

[Posted 7:00 AM ET…Reykjavik, Iceland]

 

 

I don’t know. I just read the news about the swine flu potential outbreak in Mexico, and some resulting cases in the U.S., so maybe I’ll stay in Iceland for a few months just to be on the safe side. It took 50 years for the Black Death to reach here in the Middle Ages, after all.

 

Last November, after reading of how the currency had collapsed in Iceland as part of their economic crisis the previous two months, I went online and, sure enough, there were bargains to be had. It’s all relative, of course, but I was able to snap up a nice hotel room for about $140 a night when just a few months earlier it would have been over $300. No, Iceland isn’t cheap, but the collapse does mean you can get a bottle of beer for about $5 vs. $10 before.

 

Ah yes, the Icelandic economy. I was curious how everyone was making out here after their crash, which literally unfolded faster than even our own did and with more devastating results. I have details below, but I was also hoping that in viewing the people here, maybe I’d find a clue or two to how we’ll come out of it in the States.

 

But is it me or was this past week a real lousy one? I have to admit I felt disorganized the whole time and had difficulty getting into my normal travel routine. It didn’t help that my new friend Gordon from Columbus, Ohio, and his wife, Becky, share my passion for beer, but that’s a tale for another day, if ever.

 

The news on the global front was largely depressing, if you care about what happens in Pakistan, and certainly the past few days in Iraq haven’t been real encouraging, either, plus the International Monetary Fund could not have issued a more dire forecast for both the banking system and prospects for global growth. So let’s start there.

 

The IMF said that financial institutions, including insurance companies as well as pension and hedge funds, have $4.1 trillion in bad loans and other assets still on their books, $2.7 trillion of which is in the United States, the latter up from an earlier projection of $2.1 trillion. That’s a bummer, seeing as how the banks have found it exceedingly difficult to raise private capital because who would give it to many of the bigger names when you still don’t know what the final exposure is? So it’s left up to governments around the world to help out…some do, some don’t…some don’t seem to care how many $trillions in debt they go, some do.

 

The IMF also said the global economy would fall 1.3%, the “deepest global recession since the Great Depression.” Now that shouldn’t be news to anyone by now, but when you look at some of the individual figures it is kind of staggering.

 

For example, the IMF projects that the U.S. will see GDP decline 2.8% in 2009 (the worst since 1946), while Japan will fall 6.2%, Russia 6.0%, Germany 5.6% and Britain 4.1%.

 

By contrast, China will grow 6.5% and India 4.5%, but this is compared to rates of 10%+ and 8%, respectively, so of course in these two it feels like recession to most folks living there.

 

And you keep seeing almost cartoon-like numbers, such as an unemployment rate in Spain these days of 17.4%, or the 45.6% decline in March exports for Japan…just horrid. But regarding this last one there is perhaps a little glimmer of hope. Some say we should take comfort in the fact that Japan’s exports to China declined ‘only’ 31.5%, a slowing pace of decline. It’s a stretch, but it’s the best we’ve got these days it would seem.

 

Actually, China itself continues to express optimism it will be soon growing again at the all-important 8% clip, and not for nothing but it just struck me; you haven’t seen a lot of stories of social unrest over there recently, a very good sign. 

 

I actually saw a little evidence of hope in China myself upon learning my China biodiesel company obtained a $3 million line of credit without too much trouble.

 

And you know what? Business confidence in Germany is rebounding a bit and a figure on eurozone manufacturing hit a six-month high in April, though at 40.3 it is still very much in contraction mode. [50 being the dividing line.]

 

So if you stretch, you can see a green shoot or two. Then again, ECB official Axel Weber said he sees none, which caused a bit of a stir this week. And we had comments from our own officials, such as from Treasury Secretary Geithner, that credit is still very tight as the banks await the results of the stress test, which they learned to a certain extent on Friday, though the findings are to be officially released May 4. The government did say, through an anonymous spokesperson, that most of the 19 banks being examined had adequate capital, which helped stocks overall at week’s end, but more capital was nonetheless needed to rebuild reserves.

 

Geithner also added, at a G-7 finance ministers meeting, that it would be “wrong to conclude that we are close to emerging from the darkness that descended on the global economy early last fall.”

 

On the housing front, the battle between the pessimists and optimists continues. The level of existing home sales in March was below estimates, with the median home price falling to $175,000 or 12% off year ago levels.

 

But new home sales surprised to the upside and the median price here, $201,400, is now the lowest since December 2003. How much lower can prices really go, especially if the Fed can keep mortgage rates as low as they currently are? It’s why I’ve been maintaining that the bottom in home prices will be hit in April-May. After all, the Federal Housing Financing Agency said home prices rose 0.7% in February (its latest data point) over January. Of course foreclosures are fueling the recent activity, but any activity is better than the alternative you might say.

 

We’re also in the middle of earnings season and by my back of the beer coaster calculation, of 23 companies of import that I jotted down earlier to follow, 12 beat estimates, 8 fell short, and 3 were on target. The problem is that without my having delved into the numbers too deeply, not one raised their guidance for the full year, though some, like IBM, reaffirmed (even after ‘missing’ for the first quarter in their case).

 

Yes, it’s not a great sign when the likes of Caterpillar, UPS, DuPont, and 3M all lowered their outlooks further, seeing as this is a good cross section of global activity.

 

And you keep going back to the banks. Bank of America and Wells Fargo, for instance, significantly beat their numbers but all the banks continue to take hefty charges, in the case of BofA, $13.4 billion worth, for future loan losses as credit quality deteriorates further, including for commercial real estate.

 

But I’ll stick with my belief that in the May-June time period, you’ll hear a favorable comment or two from these same CEOs. Just a glimmer of hope that by year end the environment will be looking distinctly up.

 

Lastly, you have this disturbing situation involving the government, Bank of America CEO Ken Lewis, and shareholders being misinformed and/or lied to as to the state of the Merrill Lynch acquisition.

 

The Wall Street Journal obtained a transcript of Ken Lewis’ testimony to the New York Attorney General’s office which is investigating the payment of those huge Merrill bonuses in December.

 

Lewis testified that then-Treasury Secretary Paulson and Fed Chairman Bernanke told him not to discuss the problems BofA was having in completing the Merrill acquisition, which later triggered the bailout of the bank.

 

The key is Lewis was told not to disclose the scope of Merrill’s losses, which, had he done so, may have led to shareholders rejecting the merger, thus causing the collapse of Merrill.

 

But this is flat out failure to disclose material information. That’s illegal. You can see why Paulson and Bernanke didn’t want to cause another panic, like in the collapse of Lehman Brothers, but, again, it’s basically fraud. And now the SEC is investigating Lewis as part of its own look into the case. I can’t imagine Mr. Lewis is sleeping well these days. I would also hope that Paulson and Bernanke are tossing and turning a bit, too.

 

 

–After an awful start on Monday, stocks ended the week mixed with the Dow Jones and S&P 500 falling fractionally, thus breaking their six-week winning streak, and Nasdaq picking up over 1%. The S&P is still up 28% from its closing low of March 9 as stocks continue to show amazing resilience.

 

–U.S. Treasury Yields

 

6-mo. 0.29% 2-yr. 0.95% 10-yr. 2.99% 30-yr. 3.88%

 

The yield on the long end of the curve rose as the Treasury announced $101 billion in auctions this coming week. That’s a lot of paper seeking a buyer. It’s also a bit disconcerting that the yield on the 3-month is back down to 0.10%. Here this is more a reflection of a flight to safety a la last fall.

 

–President Obama ordered his Cabinet to identify $100 million in budget cuts over the next 90 days, in a totally phony effort to signal the administration’s determination to cut spending and reform government; this after Congress passed a $3.6 trillion budget outline for 2010, including an anticipated $1.2 trillion deficit. Final votes in both houses are slated for early this week, with Obama’s healthcare initiative the centerpiece.

 

–The FDIC seized four more banks and a credit union on Friday, bringing the total this year to 29. The process here is working seamlessly. Your deposits are safe…up to insured limits, of course.

 

–In just a few days we’ll know the fate of Chrysler as the Obama administration is helping the automaker and the unions prepare for a bankruptcy filing, it would appear, while Fiat waits in the wings to take an ownership interest, even as the Italian car giant says it’s also interested in General Motor’s Opel division.

 

As for GM, not only did we learn the government slipped another $2 billion into its pockets during the week, but GM is eliminating the Pontiac division and is idling plants for two months this summer, rather than the normal two weeks, because it has a 113-day supply of cars and a 123-day supply of trucks. It also appears that GM won’t make a $1 billion debt payment due on June 1. The U.S. taxpayer is now on the hook to the tune of $15.4 billion.

 

And then there is Ford, which reported a much smaller than expected loss of $1.4 billion for the quarter and said it had significantly reduced its cash burn rate while maintaining it would not need federal assistance. Ford shares, $1.02 in November, finished the week at $5.00. We’re pulling for you, guys!

 

–After IBM dropped its bid for Sun Microsystems, Oracle swooped in to acquire Sun in a deal valued at $7.4 billion. Oracle is convinced Sun will add 15 cents to its adjusted earnings in the first year. There is also little overlap between the two companies so the antitrust concerns that inhibited IBM should not be an issue now. Oracle makes database software, while Sun’s operating system is the leading platform for the software.

 

–Microsoft’s sales dropped 6% in the first quarter, its first quarterly decline in its 23 years as a public company, but investors took heart in the statement that the latest version of Windows is on schedule. The company’s CFO, though, did say any recovery in its business would be “slow and painful,” as opposed to an earlier Intel statement that the PC market had bottomed.

 

–Apple sold 3.8 million iPhones vs. 1.7 million a year ago as sales spread globally. The company also issued a statement that Steve Jobs hoped to return from medical leave, though no date was set.

 

–The head of China’s sovereign wealth fund (CIC) said he was looking forward to investing in Europe after avoiding a slew of mistakes by not being allowed to invest in 2008 due to the fund’s seeming lack of transparency. Lou Jiwei said, “I have to thank these European officials. They saved me a lot of money. Now they come to me without conditions and I am beginning to consider making investments in Europe again.” Comical.

 

–A Chinese court handed down a death sentence to a top official linked to Shanghai’s multi-billion dollar pension fund scandal. Wang Weigong took $1.9 million in bribes from 1995 to 2006. But Mr. Wang’s sentence, however, could be commuted to life in prison because he returned all the cash.

 

This is how Bernie Madoff et al should be treated. You return all the cash, your life is spared. Otherwise….

 

–News Corp., owner of MySpace, booted the founders as social-networking sites struggle to generate revenues and earnings that can sustain them as businesses. MySpace had 70.1 million unique visitors in March, while rival Facebook is catching up at 61.2 million.

 

–Hartford Financial is looking to sell its 199-year-old property and casualty unit, possibly to Travelers, but if the government steps in with aid (per AIG), Hartford would likely stay whole. Losses have been staggering at the P&C division. 

 

–Texas is looking to become a leader in solar power, as the legislature is set to approve a program involving large subsidies for the industry.

 

–I just found this hard to believe, but the CEO of the New York Times Co., Janet Robinson, is due to make $5.58 million in total compensation this year vs. $4.14 million in 2008; this while the company exacts all kinds of pain on its employees due to plunging ad revenue. Then again, I’m reminded of a rather famous line. “Are you trying to seduce me, Mrs. Robinson?”

 

–Freddie Mac’s acting CFO committed suicide.

 

–Congressman Barney Frank is slowing down efforts to reform the financial services industry, a good thing. Get it done right the first time.

 

–Iceland receives 75% of its energy from renewable sources, primarily geothermal, and hopes to increase the percentage to 80-90%. I toured a huge geothermal operation outside Reykjavik and the company, Orkuveita Reykjavikur, is looking to bore holes some 5,000 meters underground, something that’s never been done before.

 

–Heineken saw its global volume drop 6.3% in the first quarter as consumers, such as moi, switch to cheaper brands; i.e., we’re buying domestic, not premium. In Iceland, both Gull and Viking Beer are rather tasty. And I just learned it’s pronounced “Vee-king” here.

 

Pakistan: Secretary of State Hillary Clinton, in an extraordinary move, said that the situation in Pakistan not only poses a “mortal threat” to world security, as the “Pakistani government is basically abdicating to the Taliban and the extremists,” but she also called on the Pakistani people to speak out against their government, a rarity in the diplomatic world.

 

This week the Taliban for a time had taken its offensive to within 60 miles of Islamabad, extending their grip beyond the Swat Valley that the inept government had handed over to the evil ones as part of some ill-conceived peace offering. At week’s end, though, the Taliban was withdrawing from Buner, having proved its point; that it can act with impunity virtually anywhere in the country. This nightmare just gets worse and worse, and is, indeed, a mortal threat. You get the idea that if the Taliban moved on one of Pakistan’s nuclear weapons facilities, the vaunted security forces posted there would simply open the doors.

Iraq: Violence has surged, despite the Iraqi government having captured a man believed to be a key leader of al-Qaeda. At least 150 were killed on Thursday and Friday alone. Separately, the parliament chose a new speaker on Sunday after months of infighting, a Sunni Arab lawmaker who does not get along with Prime Minister Maliki. [The speaker slot is reserved for a Sunni.]

 

Back to the violence, one of the more brazen acts, as reported by the New York Times, “came in a series of robberies in the Tobchi neighborhood of Baghdad,” the work of one group of gunmen. “The men, using pistols with silencers, broke into several jewelry stores…killing seven and ransacking the shops.”

 

Meanwhile, Christopher Hill was finally confirmed as ambassador, though many senators rightfully have serious misgivings about Hill and his past performance, such as in his role as point man for North Korea where he proved to be not only totally worthless, but also disloyal to his superiors. This is not a good guy.

Israel: Relations between President Obama and Israeli Prime Minister Netanyahu have not gotten off to a good start. One correspondent for the Jerusalem Post went so far as to call it a duel.

 

“Almost every day brings news of another sore point, blighting the once warm relationship between the two countries.”

 

It also seems, to most Israelis, that the Obama administration is using the Iranian nuclear threat as a bargaining chip for forcing Israel to give up control of the Palestinian West Bank.   Chief-of-staff Rahm Emanuel basically said last week that if Israel wants U.S. help in defusing the Iran issue, it will have to start dismantling or evacuating its settlements there. Obama has also made no secret of a change in policy whereby he will not just meet with the Israeli leader anytime he is in town, which past presidents have always done.

 

Personally, I agree with President Obama’s demand that new settlement activity cease, but to tie it to support on dealing with Iran is nonsensical. Just cut the level of aid sent to Israel as I’ve urged for years. They’ll quickly get the message.

 

For its part, the Israeli Air Force is fully prepared to attack Iran’s nuclear facilities at several hours’ notice, according to the London Times. “The message to Iran is that the threat is not just words,” said an Israeli security official. But Israel will find it exceedingly difficult to act without U.S. approval.

 

Pentagon officials say the raid is problematic on a number of levels, not the least being expected Iranian retaliation, and that at best it would only set back Iran’s program 2 to 4 years.

 

Israel is slated to hold its largest-ever civil defense drill next month.

 

As forIran itself, President Ahmadinejad expressed concern over the jailed American, Roxana Saberi, saying her rights must not be violated. In a letter to the court that handed down an 8-year sentence, Ahmadinejad said “fairness, justice and regulations (must be) observed.” So release her, Mahmoud.

 

Then at a UN anti-racism conference, Ahmadinejad said Israel is a “paragon of racism” founded on “the pretext of Jewish suffering” during WWII. Upon hearing this, several European diplomats walked out, while the U.S. was already boycotting the sham confab.

 

Back to Saberi, some believe hardliners in the government are using her as a way of sabotaging any reconciliation with the United States. Since Obama has been reaching out, many in Tehran are confused as to the appropriate response. Supreme Leader Ayatollah Khamenei has suggested there is no difference between Obama and George W. Bush.

 

South Africa: The big election was held Wednesday and at last word, the ruling African National Congress, led by Jacob Zuma, is garnering 2/3s of the vote. The hopes of the centrist opposition, including a new bloc of middle class blacks joining whites and other minorities, appear to have been shattered. Nelson Mandela, now 90, attended rallies for Zuma, which didn’t hurt. [66.7% is required to change the constitution here so the ANC may not have a total blank check as the final tally could come in below that.]

 

But the fact is that since apartheid ended in 1994, the ANC has been running the government in a most corrupt fashion. In fact many say the ANC can’t run anything and is totally inept. The hospitals are a mess, as is the infrastructure (witness all the power failures), crime is rampant (more than 50 murders a day), 1/3rd live on $2 a day, and a staggering 1,000 die of AIDS, daily.

 

A famous recent example of the chaos here took place in Johannesburg, where a worker fell off a roof in an upscale neighborhood, the owner called for an ambulance, and it took five hours for someone from emergency services to respond.

 

So good luck, Jacob Zuma. Zuma is trying to assure everyone he will be a conciliator and listen to all sides, but some of us can’t ignore the images of him in Zulu garb and wonder how much worse this place can get. We also wonder how the heck they are going to host the World Cup?!

 

North Korea: Pyongyang is putting the two American journalists arrested five weeks ago on trial for being spies. Separately, Russia’s foreign minister, on a visit to the capital, saw little hope for resolving the nuclear weapons issue, and on Saturday, the North said it was restarting the Yongbyon nuclear reactor to process more spent fuel rods for further bombs.

 

India: The month long elections continue amidst sporadic violence perpetrated by Maoist rebels, who the prime minister says represent the nation’s prime threat these days, more so than Pakistan. The Maoists, who are attempting to unite the rural poor, took 700 hostages the other day in commandeering a train, but then released them all.

 

Turkey: The government agreed with its counterparts in Armenia to a roadmap for normalizing relations and reopening the border closed since 1993, a highly positive development. 

 

China: Years ago, I shared a cab in Taipei with some Americans who were in Taiwan for a Jackie Chan fan fest. They couldn’t stop raving about the guy and how he treated them. In Asia, Jackie Chan is a mega-star.

 

But this week, speaking at an actors’ forum of some sort, he went off on China, Taiwan and Hong Kong, all at once, as he said, “I’m gradually beginning to feel that we Chinese need to be controlled.” Too much freedom, Chan offered, could lead to chaos “like in Hong Kong and Taiwan.”

 

So he proceeded to tick off everyone, as the mainland People’s Daily editorialized, “How can you talk without thinking?”

 

Chan, who lives in Hong Kong, also blasted the quality of Chinese products. “If I need to buy a television I’ll definitely buy a Japanese TV. A Chinese TV might explode.” If you’re a trader, you might want to ‘short’ him.

 

Meanwhile, Taiwan’s President Ma is meeting with his Chinese counterparts this weekend in yet another sign of a thaw between the two, but China is furious that Japan’s Prime Minister Aso went to the Yasukuni war shrine, which to China and South Korea, in particular, shows a lack of contrition since Yasukuni honors some convicted of war crimes during WWII.

 

Somalia: General David Petraeus urged maritime shipping companies to arm themselves because the world’s navies can’t be counted on to protect them.

 

Britain: The Labour Government of Gordon Brown is proposing that the top income tax rate be moved from 40% to 50% as part of a new “fairness agenda” to help those less well off. Needless to say, this caused quite a stir but Labour is trying to distinguish itself even more clearly from the Conservatives as Brown and Co.’s poll numbers plummet through the ground.

Venezuela / Cuba: Much was made of the Summit of the Americas, but two things are clear. Relations between the United States and Cuba are not about to be normalized because Fidel Castro, not brother Raul, still calls the shots and he isn’t about to give in on the issue of political prisoners, a precursor to any serious discussions.

 

As for Venezuelan President Hugo Chavez, way too much was made of his handshake with President Obama.   But I was startled to see nary a word about the real fear I’ve expressed for years now; the fact that Venezuela is becoming a base of operations for Iran.

 

And as Mary Anastasia O’Grady of the Wall Street Journal pointed out, “Today millions of Latin Americans live under tyranny. As the leader of the free world, Mr. Obama had the duty to speak out for these voiceless souls. In this he failed.”

 

As Ms. O’Grady also adds, Obama failed to push for ratification of the U.S.-Colombian Free Trade Agreement.

 

Iceland: I’m going to do this in two parts as I’ll be here another two days and am still trying to piece things together. For starters, today, Saturday, is their emergency election, as part of the ongoing financial crisis, but while I’m one block from parliament, scene of major demonstrations last fall and in January, the only thing I saw Friday was students celebrating the end of exams. 

 

For now, though, understand that before the collapse, Iceland had the highest per capita income in the world. What had been a simple country of 320,000 with a focus on fishing, and to a lesser extent tourism, had become a banking giant.

 

But by early 2008, the three banks (that’s all) had grown to the point where they accounted for 3/4s of the total value of the stock market. Their loans and other assets equated to 10 times Iceland’s gross domestic product! [Think about it…our economic stimulus program in the U.S. was all of 5% of GDP.]

 

Today, GDP is slated to shrink 8 to 10 percent, and inflation is soaring. The average Icelander’s savings are in ruin.

 

Iceland built its banking empire on high interest rates. But with only 320,000 people, the three banks had to look elsewhere for capital and so they established offices throughout Europe, for one, and attracted savers from all over with rates at, say, 7% on one-year deposits.

 

The currency, the krona, stayed strong with all the money flowing in and with a strong krona, the prices of imported goods, including SUVs, of which you see quite a few, were low. So Icelanders went on a shopping spree.

 

Charles Forelle of the Wall Street Journal noted last December:

 

“What makes Iceland different (is) it tried to build a global banking center on top of a tiny currency. So when foreign investors tried to pull out – converting kronur back into dollars or euros en masse – its currency fell like a rock, spurring more withdrawals.”

 

Robert Jackson, a British journalist, lives in Reykjavik and last fall wrote the following analysis for the Financial Times.

 

“Think of Ireland. Rotate it 90 degrees clockwise, make it a third bigger and hang it like a pendant from the Arctic Circle. Crack open the earth’s crust below to release limitless supplies of geothermal steam, then fill its territorial waters, all 200 miles of them, with an abundance of cod. Give it a population of 300,000, about the same as the English city of Coventry. Endow these people with industry and ambition. Give them their own language, free universal healthcare and education and close to zero unemployment. Give this country a consistently high ranking in the world standard-of-living charts and you have the Iceland of the recent past. Not a bad place, all in all.

 

“Now allow this country’s banks – virtually unregulated – to borrow more than 10 times their country’s gross domestic product from the international wholesale money markets. Watch as a Graf Zeppelin of debt propels its self-styled ‘Viking Raiders’ across the world’s financial stage, accumulating companies like gamblers hoarding chips. Then sit on the sidelines as the airship flies home and explodes, showering its blazing wreckage over this once proud, yet tiny, nation.

 

“There you see the Iceland of today – one of the very few places in the world where the words ‘financial meltdown’ can be used without fear of exaggeration.”

 

Jackson relates how he suffered along with the rest, losing 60% of his net worth overnight.

 

At the height of the crisis, the prime minister, Geir Haarde, appeared before the nation and said some of the following.

 

“Fellow countrymen…If there was ever a time when the Icelandic nation needed to stand together and show fortitude in the face of adversity, then this is the moment. I urge you all to guard that which is most important in the life of every one of us, to protect those values which will survive the storm now beginning. I urge families to talk together and not to allow anxiety to get the upper hand, even though the outlook is grim for many. We need to explain to our children that the world is not on the edge of a precipice, and we all need to find an inner courage to look to the future….Thus with Icelandic optimism, fortitude and solidarity as weapons, we will ride out the storm.

 

“God bless Iceland.”

 

The day was October 6. The nation was in tears. The tears then turned to anger. More next week.

 

 

–I haven’t watched any television while here, and I think I only have CNN anyway so I really am not up on the chatter concerning the Obama administration’s handling of the detainee abuse issue. I did see a Wall Street Journal editorial, though, that noted while the president absolved CIA agents who may have acted after receiving legal background from Bush administration officials, those very officials (and judges who approved of the policies) could potentially be prosecuted. How high would you then go? I see where a Senate report says then-National Security Adviser Condoleezza Rice approved waterboarding. Do you prosecute her? Do you go after President Bush himself?

 

The Journal opines that “President Obama has injected a poison into our politics that he and the country will live to regret” in encouraging investigations that would be nothing more than show trials.

 

Now we have more photos being released, though I’m not naïve to think, as Secretary of Defense Robert Gates said the other day, that it would all come out eventually anyway.

 

But if the Obama White House thinks it can go forward with its agenda, while allowing the Left to seek retribution, it’s over, and these next four years will be hell, far more than some may believe otherwise.

 

Consider the latest polls. In surveys for the AP and Pew Research, President Obama has an overall job approval rating of 64% and 63%, respectively. But among Republicans, the approval ratings are 23% and 30%. Those could very well be peak figures from here on, meaning fat chance the president will accomplish anything close to what he sought when he took office.

 

And as many a Republican in Congress has observed, this whole issue is a bit absurd when you consider that leading Democrats such as Nancy Pelosi herself knew of, and approved, the policy at the time.

 

Also, sadly, for our country, John McCain wasn’t in the White House in lieu of President Bush…but I’ll leave it at that.

 

–In the AP survey, for the first time since January 2004, more Americans feel the country is headed in the right direction than the wrong one, 48-44. That’s kind of startling to me. Maybe it’s the Bo Factor…The First Dog being a positive presence.

 

–Democrat Scott Murphy won the House seat vacated by Kirsten Gillibrand when she was selected to fill Hillary Clinton’s Senate perch. Murphy defeated Republican Jim Tedisco by just 401 votes in a recount. Republicans had high hopes of sending a message on this one. Us elephants are just wandering around in the wilderness these days, searching for a leader.

 

–You know, this just needs to be said, but the family of the Rev. Martin Luther King Jr. is little more than a bunch of thieves and charlatans. If you think that is a harsh assessment, consider the AP piece I saw that the family has charged the foundation responsible for building a monument to Dr. King on the National Mall about $800,000.

 

David Garrow, who won a Pulitzer for his biography of King and is a Cambridge University historian, said “I don’t think the Jefferson family, the Lincoln family…I don’t think any other group of family ancestors has been paid a licensing fee for a memorial in Washington.” King, said Garrow, would have been “absolutely scandalized by the profiteering behavior of his children.”

 

This is far from the first time the kids have been involved in questionable acts involving money and their father’s legacy.

 

–Speaking of rats…the rat population is exploding in England, now at least 50 million strong as they feast on uncollected garbage and take over abandoned buildings during the economic crisis. It could be the return of the Black Death! 

 

–In Iceland, I was told there is one murder every two years. No revolvers are allowed, just hunting rifles. I have yet to see a policeman, which made the recent protests here all the more unusual as tear gas was fired for the first time in 50 years. But in a long walk last night, I did see more than a few pitiful looking characters, victims, I’m assuming, of the crash. That’s what I need to get more of a handle on these next two days.

 

–I went to see the Hofdi House, site of the historic 1986 summit between Reagan and Gorbachev. There is a beautiful view of the water and the mountains from here, though as you know from the tension at this meeting, where Reagan refused to give up SDI, one wonders if they had any real chance to admire it. Reykjavik did prove, however, to be the true beginning of the end of the Cold War.

 

–Some of the women here are, shall we say, rather attractive. Iceland is also home to the world’s first lesbian prime minister (I’m assuming she remains in control following today’s vote, though I really have no clue, nor do the locals). There seem to be quite a few here, not that there is anything wrong with that. Us guys have done nothing but screw up the world the past few thousand years, after all.

 

–On an all-day tour, Wednesday, I experienced snow, ice, driving rain and winds of at least 90mph. But no one got hurt!

 

–If you’re a duck lover, you should see the lake one block from my hotel…filled with every species imaginable. I’ve interviewed a few but it’s been tough getting useful information.

 

–And now…some words on Twitter, since I kind of opened up a can of worms the other day.

 

For starters, you’ve probably heard of the “Twitter Revolution” in Moldova, where a 25-year-old, Natalia Morar, is said to have fashioned a crowd of 20,000 through Twitter. Turns out this wasn’t the case. As Anne Applebaum wrote in the Washington Post, there are only “a handful of Twitter accounts” in Moldova to begin with and the crowd was far from 20,000. While there was a little violence in a post-election protest, much of the story was just plain made up.

 

Here are some thoughts on Twitter from Virginia Heffernan in the Sunday Times Magazine.

 

“Twitter is no longer new. It’s nearly three years old. Early enthusiasts who used it for barhopping bulletins have cooled on it. Corporations, institutions and public-relations firms now tweet like maniacs. Google has been rumored to be interested in buying the company. The ‘ambient awareness’ that Twitter promotes – the feeling of incessant online contact – is still intact. But the emotional force of all this contact may have changed in the context of the economic collapse. Where once it was ‘hypnotic’ and ‘mesmerizing’ (words often used to describe Twitter) to read about a friend’s fever or a cousin’s job complaints, today the same kind of posts, and from broader and broader audiences, seem…threatening.    Encroaching. Suffocating….

 

“If I’ve come to be wary of social networks, which I once embraced with zeal, maybe it’s because I take my cues from those very networks. In the old days, Facebook updaters and Twitterers mostly posted about banal stuff, like sandwiches. But that was September. It’s spring now….The vibe of Twitter seems to have changed: a surprising number of people now seem to tweet about how much they want to be free from encumbrances like Twitter.”

 

In an interview with Twitters founders, Biz Stone and Evan Williams, interviewer Michael S. Malone of the Wall Street Journal notes:

 

“The real Twitter revolution may prove to be much more everyday. When I stop for a latte at Peet’s Coffee on the way to the interview, the manager tells me that he plans to start sending out tweets to let regular customers know when a table is open. He isn’t alone. A Manhattan bakery twitters when warm cookies come out of the oven. ‘It’s those small stories that really inspire us,’ says Mr. Stone. ‘Those are the things that transform people’s lives.”

 

I guess I’m missing something here. I mean I love warm cookies, but…

 

I was amazed how many articles there were on Twitter in all the publications I peruse between last Saturday and Tuesday. In one I saw that Starbucks has more than 140,000 followers on it. In case you haven’t noticed, Starbucks, some would say, is dead. 

 

But I hope not to discuss the topic further because I should have learned the lesson long ago, never bite the hand that may one day feed you.  

 

—

 

Pray for the men and women of our armed forces, and those who have fallen.

 

God bless America.

 

—

 

Gold closed at $914

Oil, $51.60…though the stocks continue to significantly outperform…more on this next week

 

 

Dow Jones -0.7% [8076]

S&P 500 -0.4% [866]

S&P MidCap +0.0% [0.02]

Russell 2000 -0.1%

Nasdaq +1.3% [1694]

 

 

Dow Jones -8.0%

S&P 500 -4.1%

S&P MidCap +2.2%

Russell 2000 -4.1%

Nasdaq +7.4%

 

Bulls 39.1

Bears 34.5 [Source: Chartcraft / Investors Intelligence]

 

Have a great week. I appreciate your support.

 

Brian Trumbore