Next Friday, Aug. 7, Congress goes on recess! [Actually, the House already is.] And, thankfully, beforehand it doesn’t appear as if too much will happen on the health-care front save for a committee vote or two, one of which did occur in the House, yesterday. The main thing for those of us who would like to see some changes, and for our leaders to take their time and do it right, is that full floor votes in both the House and Senate won’t be held until September at the earliest, each body with entirely different versions that, should they be approved, would still have to be reconciled.
A NBC News / Wall Street Journal poll confirmed that attitudes across the land have changed and that by a 42-36 margin, people are souring on Obama’s reform agenda for health-care, thanks in no small part to fears over the impact any program could have on the deficit, as well as the version that has the government making personal medical decisions. A vast majority is also in agreement that, as I first raised a few weeks ago, everything is moving too fast, and, separately, a New York Times / CBS News survey revealed a whopping 69% are concerned their own health-care will decline if the government creates a plan covering everyone. And back to the deficit issue, the same NBC / WSJ poll said the number one problem in America today is dealing with the explosion of red ink, with ‘boosting the economy’ a distant second.
Robert Samuelson / Washington Post
“The most misused word in the health care debate is ‘reform.’ Everyone wants ‘reform,’ but what constitutes ‘reform’ is another matter. If you listen to President Obama, his ‘reform’ will satisfy almost everyone. It will insure the uninsured, control runaway health spending, subdue future budget deficits, preserve choice for patients and improve quality of care. These claims are self-serving exaggerations and political fantasies. They have destroyed what should be a serious national discussion of health care.
“The health-care conundrum involves a contradiction that the administration steadfastly obscures: In the short run – meaning four to eight years – government cannot both insure the uninsured and rein in health spending. Here’s why. The notion that the uninsured get little or no care is a myth: They now receive about 50 to 70 percent as much health care as the insured. If they become insured, they would use more health care, possibly as much as today’s insured….
“Until health-care costs are better controlled, expanding insurance coverage will be expensive. The president talks endlessly about the need to limit spending and eliminate waste. These are worthy goals. But changing the way medical care is delivered and paid for would take years and involve disruptive and unpopular measures….
“Evaluations of proposals reflect this reality. The Congressional Budget Office judges that the legislation in the House would, through expanded Medicaid and subsidies for private insurance, reduce the uninsured from 46 million in 2007 to 17 million in 2019. But the cost would be $1 trillion over a decade; of that, $239 billion would add to the budget deficit….
“But Obama sees all blue sky: ‘Here’s what reform will mean for you,’ he said at a recent rally. ‘It will mean lower costs and more choices and coverage you can count on. Health insurance reform will save you and your family money,’ he said. (Note: Except for subsidies, it’s doubtful families will experience savings anytime soon.) And later: ‘We’ll also change incentives so that our doctors and our nurses can finally start providing patients with the best care and not just the most expensive care. And if we do that, then reform…will lower our deficits in the long run.’….
“But what helps many Americans as individuals may hurt society as a whole. That’s the paradox. Unchecked health spending is depressing take-home pay, squeezing other government programs – state and local programs as well as federal – and driving up taxes and budget deficits. The president has said all of this; he simply isn’t doing much about it. He offers the illusion of ‘reform’ while perpetuating the status quo of four decades: expand benefits, talk about controlling costs. The press should put ‘reform’ in quote marks, because this is one ‘reform’ that might leave the country worse off.”
Martin Feldstein / Washington Post
“For the 85 percent of Americans who already have health insurance, the Obama health plan is bad news. It means higher taxes, less health care and no protection if they lose their current insurance because of unemployment or early retirement….
“(A) key goal of the Obama health plan is to slow the growth of health-care spending. The president’s budget calls explicitly for cutting Medicare to help pay for the expanded benefits for low-income individuals. But the administration’s goal is bigger than that. It is to cut dramatically the amount of health care that we all consume.
“A recent report by the White House Council of Economic Advisers claims that the government can cut the projected level of health spending by 15 percent over the next decade and by 30 percent over the next 20 years. Although the reduced spending would result from fewer services rather than lower payments to providers, we are told that this can be done without lowering the quality of care or diminishing our health. I don’t believe it….
“The administration’s health planners believe that the new ‘cost effectiveness research’ will allow officials to eliminate wasteful spending by defining the ‘appropriate’ care that will be paid for by the government and by private insurance. Such a constrained, one-size-fits-all form of medicine may be necessary in some European health programs in which the government pays all the bills. But Americans have shown that we prefer to retain a diversity of options and the ability to choose among doctors, hospitals and standards of care….
“There is much that can be done to improve our health-care system, but the Obama plan is not the way to do it. One helpful change that could be made right away is fixing the COBRA system so that middle-income households that lose their insurance because of early retirement or a permanent layoff are not deterred by the cost of continuing their previous coverage.
“Now that congressional leaders have made it clear that Obama will not see health legislation until at least the end of the year, the president should look beyond health policy and turn his attention to the problems that are impeding our economic recovery.”
Charles Krauthammer / Washington Post
“Yesterday, Barack Obama was God. Today, he’s fallen from grace, the magic gone, his health-care reform dead. If you believed the first idiocy – and half the mainstream media did – you’ll believe the second. Don’t believe either….
“Yes, Obama’s aura has diminished, in part because of overweening overexposure. But by year’s end he will emerge with something he can call health-care reform. The Democrats in Congress will pass it because they must. Otherwise, they’ll have slain their own savior in his first year in office.
“But that bill will look nothing like the massive reform Obama originally intended. The beginning of the retreat was signaled by Obama’s curious reference – made five times – to ‘health-insurance reform’ during his July 22 news conference.
“Reforming the health-care system is dead. Cause of death? Blunt trauma administered not by Republicans, not even by Blue Dog Democrats, but by the green eyeshades at the Congressional Budget Office….
“(Among the blows), on June 17, the CBO determined that the Senate Finance Committee bill would cost $1.6 trillion over 10 years, delivering a sticker shock that was near fatal….
“To win back the vast constituency that has insurance, is happy with it, and is mightily resisting the fatal lures of Obamacare, the president will in the end simply impose heavy regulations on the insurance companies that will make what you already have secure, portable and imperishable: no policy cancellations, no preexisting condition requirements, perhaps even a cap on out-of-pocket expenses.
“Nirvana. But wouldn’t this bankrupt the insurance companies? Of course it would. There will be only one way to make this work: Impose an individual mandate. Force the 18 million Americans between 18 and 34 who (often quite rationally) forgo health insurance to buy it. This will create a huge new pool of customers who rarely get sick but will be paying premiums every month. And those premiums will subsidize nirvana health insurance for older folks.
“Net result? Another huge transfer of wealth from the young to the old, the now-routine specialty of the baby boomers; an end to the dream of imposing European-style health care on the United States; and a president who before Christmas will wave his pen, proclaim victory and watch as the newest conventional wisdom reaffirms his divinity.”
“This is big, what’s happening. President Obama appears to have misstepped on a major initiative and defining issue. He has misjudged the nation’s mood, which itself is news….
“His news conference the other night was bad. He was filibustery and spinny and gave long and largely unfollowable answers that seemed aimed at limiting the number of questions asked and running out the clock. You don’t do that when you’re fully confident. Far more seriously, he didn’t seem to be telling the truth. We need to create a new national health-care program in order to cut down on government spending? Who would believe that? Would anybody?
“The common wisdom the past week has been that whatever challenges health care faces, the president will at least get something because he has a Democratic House and Senate and they’re not going to let their guy die….
“I think the plan is being slowed and may well be stopped not by ideology, or even by philosophy in a strict sense, but by simple American common sense. I suspect voters, the past few weeks, have been giving themselves an internal Q-and-A that goes something like this:
“Will whatever health care bill is produced by Congress increase the deficit? ‘Of course.’ Will it mean tax increases? ‘Of course.’ Will it mean new fees or fines? ‘Probably.’ Can I afford it right now? ‘No, I’m already getting clobbered.’ Will it make the marketplace freer and better? ‘Probably not.’ Is our health-care system in crisis? ‘Yeah, it has been for years.’ Is it the most pressing crisis right now? ‘No, the economy is.’ Will a health-care bill improve the economy? ‘I doubt it.’”
So for this week, this is where we stand. The public mood, once it learned more, shifted and while something will get done by year end, of this you can be sure, it won’t be the massive change some sought, which is a good thing. No mention of tort reform yet, of course; that should have been at the top of the list, and COBRA should be extended to get through this tough stretch, which may yet happen (though many can’t afford it), and there should be an emphasis on wellness programs. This last bit is back in the news with the results of a study that revealed obesity cost us $147 billion in 2008, an 87 percent increase in the past decade. Perhaps we can get light beer vouchers, for starters.
Turning to the economy, we learned on Friday that the gross domestic product fell 1.0% in the second quarter, slightly better than expectations, but that the first quarter’s figure had been revised downward to a decline of 6.4%. That’s what you call falling off a cliff when coupled with a similar decline in Q4. When you throw in Q3 2008, the American money-machine has seen four consecutive down quarters for the first time since the Great Depression. No wonder we’ve all been down in the mouth.
But there is now almost total consensus that we’ve hit bottom. The question being do we begin to see positive GDP the second half of the year, or do we just scrape along the surface for another quarter or two and head back down in 2010? I’m in the camp that says we have respectable growth in Q3 and Q4, though I’m still not ready to discuss what follows that.
I saw a strategist on CNBC, Friday, and he was complaining that the stupendous rally in stocks wasn’t warranted because the fundamentals haven’t turned up as yet, and since I know the guy, personally, I wanted to call him and say, ‘How could you blow it so badly? You looked like an idiot! With your experience you don’t know that stocks trade as much on sentiment as fundamentals?’ Alas, he’s a good guy but he’s on his own.
But what of the fundamentals? June durable goods orders were worse than expected, down 2.5%, but that’s the second quarter, we’re now in the third. Recent readings on consumer confidence haven’t been that great but these aren’t taking into account the spectacular recent leg of the bull run of the past few weeks and Wall Street weighs heavily on our psyches, for good and bad, so I look for the sentiment numbers to improve substantially, soon.
And then you have housing. Last week I noted how the median price on existing homes appeared to bottom in the April-May time frame, which was my prediction from last year, and this week the S&P/Case-Shiller index for 20 major metropolitan areas showed a slight 0.5% rise in the median price from April to May, Case-Shiller being a month behind in its data points. Even economist Robert Shiller, the man who correctly called the tech bubble and the bubble in housing, said “The change in momentum here is very significant.” Partner Karl Case added, “If you’re looking for a bottom, there’s a lot of good stuff here.” Distressed sales, for one, now account for 31-33 percent of all existing home sales vs. 50% earlier in the year. And, separately, you also had the latest data on new home sales for June and they were way up…further light at the end of the tunnel. Heck, one of my loyal readers, E.C., passed along news that is just as critical as any formal survey. He has seen a distinct pick-up in housing activity in his extensive postal route here in New Jersey (though also an increase in benefits checks).
So have we truly hit bottom in housing? I believe so, but there is the issue of the high-end market, those with jumbo mortgages, where there are no relief programs, nor is the credit window reopening as yet. Foreclosures here will continue to rise even as the lower-end of the housing market firms. I’ve just always said that the only way I can judge myself is by the national median price data and in another month or so I’ll know if I stuck it like a Chinese gold medalist in platform diving.
On the earnings front, the reporting season for the larger companies is basically over and for the most part it continued to be the same story; beat on the bottom line, earnings, and fall short on the top line, revenues. Dow Chemical’s CEO summed up the environment. “The U.S. economy has found bottom, but will be slow in recovering as unemployment continues to be a drag on consumer spending.” It’s still about housing and employment. Next week’s labor report for July is critical in setting the tone for the rest of the summer, I imagine.
Globally, just a few items. There are signs the government in Beijing is increasingly worried about the amount of bank lending there these days and some of the major banks are beginning to slow down their activity, though late Friday the government announced the purchasing managers index for July was 53.3, the fifth straight month above the 50 dividing line between growth and contraction. In Japan, industrial production was up a 4th consecutive month, though retail sales fell for a 10th month in a row as unemployment hit a six-year high. In Europe, the UK saw further signs that housing there has stabilized and in Germany, consumer confidence and retail sales were both up. But just like in the U.S., around the world the story is the same. We’ve bottomed, but just how sustained and robust will the recovery be?
–What a month. For the Dow Jones up 8.6%, the best performance since October 2002. The S&P 500 finished ahead 7.4% and Nasdaq 7.8% as all three were up close to 1% on the week, extending the 3-week run to 12%. The S&P is now up 46% from the March 9 closing low while Nasdaq is up 25.5% on the year.
The big story at week’s end, though, was the ‘cash for clunkers’ program that is threatening to run through its initial $1 billion in less than a week. So the House hurriedly approved an additional $2 billion and the Senate is likely to follow, though we’ll see what happens over the weekend. Even detractors have to admit that of all the stimuli (and this is part of the $787 billion original stimulus program), at least it’s working and creating activity. Recall I thought it was a good idea when first proposed.
–U.S. Treasury Yields
Despite uncertainty over another series of Treasury auctions, in excess of $200 billion, bonds rallied strongly on the heels of GDP data that, while a little better than expected, still reflected a struggling consumer.
The Federal Reserve’s beige book, or survey of regional activity, showed that 4 of 12 regions saw signs of stabilization, while one, Minneapolis, continued to worsen; the best report in some time.
–In a town-hall meeting, Fed Chairman Ben Bernanke was asked about all the taxpayer-funded bailouts of big financial companies.
“Nothing made me more frustrated, more angry, than having to intervene” when companies were “taking wild bets,” he said. But Bernanke added: “I was not going to be the Federal Reserve chairman who presided over the second Great Depression. I had to hold my nose…I’m as disgusted as you are…I absolutely understand your frustration.”
[Meanwhile, in disclosure forms, Bernanke appears to have lost about 25% on his portfolio, thanks to a large-cap stock variable annuity that he holds. Bernanke’s salary is just $191,300, in case you are sitting around a campfire this weekend playing 20 questions.]
–While the U.S. (and some European nations) introduced the “cash for clunkers” program, Beijing has its “cars down to the village” policy, and July is expected to be the fifth consecutive month in which sales hit 1.1 million units, or a record 12 million+ annual rate from an earlier forecast of 10 million. Last year sales were 9.38 million. Villagers receive a government subsidy of up to 10% of the price of a car. One company taking advantage of this is GM, with GM China selling a record 841,000 cars in the first half.
–Royal Dutch Shell warned it would need to make “substantial” job cuts in order to restore earnings. CEO Peter Voser added, “Conditions are likely to remain challenging for some time, and we are not banking on a quick recovery.” Rex Tillerson of Exxon Mobil said, “Global economic conditions continue to impact the energy industry both in the volatility of commodity prices and reduced demand for products.” Exxon’s net income fell 66% to $3.95 billion, the steepest decline in more than a decade, while Shell’s fell 70% to $3.24 billion. Chevron’s profits fell 71%. [Reminder: this also means lower tax receipts, sports fans.]
–The Commodity Futures Trading Commission will be issuing a report this month that concludes speculators play a significant role in crude oil’s price swings. No kidding. But here’s what drives me crazy, as I noted when this topic came up last year as oil was surging to its all-time high of $147. There is a difference between speculation and those who simply seek to manipulate and this distinction is never drawn in the discussions we all see. I can speculate all I want, in any market. If you want to set limits on the amount of my trades so be it. I either win or lose. But if I blatantly just seek to manipulate the price (including traders getting an early look at a firm’s upcoming research call), rather than let the market decide, that’s an animal of a different sort.
–New York Attorney-General Andrew Cuomo compiled a study of bonuses paid out by the major investment banks and Citigroup and Merrill Lynch, despite losing a combined $55 billion in 2008, paid more than $1 million each to a total of 1,400 employees. JPMorgan Chase and Goldman Sachs paid the most $million-dollar bonuses (1,626 and 953, respectively). Cuomo commented, “There is no clear rhyme or reason to the way banks compensate and reward their employees. Compensation for bank employees has become unmoored from the banks’ financial performance.” Yup.
–Of course the big individual comp story of the week involved Citigroup energy-trader Andrew Hall, who could see his package total $100 million in 2009, equaling his 2008 pay. His unit has churned out immense profits and this is just part of his deal. But these days the Treasury Department has a pay czar, Kenneth Feinberg, and seeing as Citi has received $45 billion in bailout money and we, the people, own 34% of this sad shop, it will be interesting to see what Feinberg rules later.
–Back to JPMorgan Chase, it is raising salaries and cutting bonuses for more than 12,000 bankers in an attempt to defuse public anger at excessive pay, though there will be little actual change in total compensation.
–If you are wealthy and have been evading taxes by using UBS accounts in Switzerland, you may not be sleeping well these days because the U.S. and UBS have reached an agreement on the release of thousands of names. Heh heh.
–According to a report by the AP’s Brett Blackledge and Matt Apuzzo, the portion of the $787 billion stimulus program that was to be earmarked for “crumbling bridges” is instead being spent “on spans that are already in good shape or on easier projects like repaving roads.” Many of the 2,476 bridges slated to receive stimulus money received passing inspection grades, but there are others, clearly unsafe, that are not getting needed repairs.
–Verizon continues to deal with a changing telecom landscape and will lay off an additional 8,000.
–The top metropolitan area in foreclosures in the first half of the year was Las Vegas, with 7.5% of households receiving a default or auction notice, followed by the Cape Coral-Fort Myers, Fla. region. Six of the top ten metro areas for foreclosures, however, are in California.
–Reader Josh P. and I were talking about the San Diego high-rise condo market, where from 2001 to 2008, over 8,000 condo units were built downtown, far more than, say, Los Angeles which is three times the size. Median prices peaked at $647,500 and flipping was the name of the game. Today the median is down to $370,000, with 400 units on the market and another 450 in some stage of foreclosure.
So I said to J.P., hey, I see where there are condos going for as low as $160,000 (a studio), across from Petco Park, home of the Padres. Why that would be pretty cool, I mused. I can do this job anywhere! Then he told me about all the homeless in this particular area and I kind of lost interest.
–Bill Gates has had it with Facebook because he was overwhelmed by the fact “10,000 people” wanted to be his friend. “It was just way too much trouble so I gave it up,” Gates told a business forum in New Delhi, where he was being honored for his philanthropy. Gates added that while the information technology revolution had been “hugely beneficial…All these tools of tech waste our time if we’re not careful.” [Sydney Morning Herald]
–But fear not, Facebook fans. 1-800-Flowers.com is opening up a retail store on the site, evidently the first major retailer to do so. The company first went online in 1991 and three years later became AOL’s first merchant.
–10,000 more rooms are coming online in Las Vegas between this year and next. The average room rate on the Strip for the first five months of 2009 was 27% below the same period last year.
–In every community in America these days, you are seeing your local postal operation cut back on services. The post office in Summit, N.J., where my office is, is slashing services constantly, including a big change in hours of operation. Five days of delivery rather than six seems a fait accompli, and no one will complain. And the Washington Post editorializes that maybe four is enough. But one thing is for sure, the USPS needs a bailout of some sort to get out from under its estimated pension obligations, part of which are to be used to pay health benefits, per congressional legislation working its way through the system. The deficit for this year is slated to be a record $7 billion. Of course we all hope mail volume picks up substantially as the economy recovers.
–Microsoft and Yahoo finally reached an agreement for an Internet search engine after years of jerking each other around, to the detriment of Yahoo shareholders in particular. Yahoo will adopt Microsoft’s new Bing search technology and market it, retaining 88% of the revenue from all search ad sales on its site. But it was back in May 2008 that Yahoo could have sold its whole operation to Microsoft for something like $34 a share and today the stock is down to $14.50.
–Tonghua Iron & Steel is a traditional Chinese state enterprise, employing 50,000, that is struggling to make consistent profits, so it was going to be privatized for the purposes of restructuring the company. Not happenin’, said 30,000 of the workers, who protested out of fear of losing their jobs, and, for good measure beat to death an executive. It seems retired workers, for example, were receiving a whopping $29 a month for living expenses. The privatization will not go through.
–Lithuania’s economy shrank 18% in the first six months. Not good…not good at all.
–Property prices in Moscow have tumbled 35% since last October. Separately, Russia and Cuba have signed contracts allowing for Russia to search for oil in Cuba’s part of the Gulf of Mexico.
–Emerging markets guru Mark Mobius of Templeton Asset Management said, “Emerging markets will be the first to climb out of the crisis, and Russia will be one of the leaders.” China remains his top pick, however, though Mobius said Russia could account for as much as 20% of his revamped portfolio.
–Speaking of China, as much as there is talk of its 7.9% rise in GDP in the second quarter, and a stimulus program that is clearly working, there are also growing concerns that consumers are becoming overleveraged and the banks have been taking on too much risk. Ordinarily I wouldn’t care too much except, besides the fact China is key to our own recovery, I have this rather significant investment there that has been acting much better of late. Part of me thinks it’s a race against time to get the share price I’ve targeted before there’s a negative event, including drastically reduced global trade owing to H1N1.
–Regarding swine flu, there were conflicting reports this week as authorities in England said H1N1 was leveling off (though still 27 deaths compared to 26 the week before), while in Ireland there were 500 new cases. The CDC in the U.S. said 40% of all Americans could get it if vaccines and proper care aren\’t in place. But it\’s really all about the opening of school in a few weeks. Ah yes, schools…germ factories. Look for a drumbeat of stories from here on in the major media. Caution should be the watchword…not panic.
Iran: On Thursday, security forces clashed with protesters yet again across Tehran after opposition leader Mir Hossein Mousavi was not permitted to visit the graves of those killed in protests, another sign that the anger left over from the disputed presidential election is still at a boil. Earlier, the government claimed it had released some of the protesters detained in initial roundups, but an estimated 2,000 remain behind bars and there are extensive tales of prisoner abuse, with at least two dying in custody.
President Ahmadinejad attempted to sack four ministers who opposed his choice for vice president, but others in the cabinet objected and he was allowed to boot just one in yet another test of his authority. It’s safe to say the reformist movement has legs.
On the nuclear weapons program front, Defense Secretary Robert Gates said Iran must respond by September to U.S. overtures for substantive negotiations or far harsher sanctions will be levied on the regime.
But at the same time, Secretary of State Hillary Clinton talked of having a “defense umbrella” in the Gulf; strongly intimating that the United States was prepared to live with a nuclear-armed Iran. Not exactly what Israel wants to hear, to say the least.
Former U.N. Ambassador John Bolton in an op-ed for the Wall Street Journal.
“There’s no reason Iran would suddenly now bow to Mr. Obama’s diplomatic efforts, especially after its embarrassing election in June. So with diplomacy out the door, how will Iran be tamed?
“Mr. Gates’ mission had extraordinary significance. Israel sees the political and military landscape in a very inauspicious light. It also worries that, once ensnared in negotiations, the Obama administration will find it very hard to extricate itself. The Israelis are probably right. To prove the success of his ‘open hand,’ Mr. Obama will declare victory for ‘diplomacy’ even if it means little to no gains on Iran’s nuclear program.
“Under the worst-case scenario, Iran will continue improving its nuclear facilities and Mr. Obama will become the first U.S. president to tie the issue of Israel’s nuclear capabilities into negotiations about Iran’s.
“Israel understands that Secretary of State Hillary Clinton’s recent commitment to extend the U.S. ‘defense umbrella’ to Israel is not a guarantee of nuclear retaliation, and that it is wholly insufficient to deter Iran from obliterating Israel if it so decides. In fact, Mrs. Clinton’s comment tacitly concedes that Iran will acquire nuclear weapons, exactly the wrong message. Since Israel, like the U.S., is well aware its missile defense system is imperfect, whatever Mr. Gates said about the ‘defense umbrella’ will be politely ignored.
“Relations between the U.S. and Israel are more strained now than at any time since the 1956 Suez Canal crisis. Mr. Gates’ message for Israel not to act on Iran, and the U.S. pressure he brought to bear, highlight the weight of Israel’s lonely burden.
“Striking Iran’s nuclear program will not be precipitous or poorly thought out. Israel’s attack, if it happens, will have followed enormously difficult deliberation over terrible imponderables, and years of patiently waiting on innumerable failed diplomatic efforts. Absent Israeli action, prepare for a nuclear Iran.”
I expect Israel will strike by Nov. 1, assuming Iran does not respond satisfactorily to Washington’s overtures in September.
Israel: The government also has its hands full with Lebanon, where the fallout continues from recent explosions in a suspected Hizbullah arms depot in the south, an area near the border that was not to have Hizbullah activity. At least progress is being made in forming a Lebanese cabinet following the June election.
Iraq: There are continuing concerns over the Kurd issue and a growing conflict between them and the Arab-dominated government in Baghdad where Prime Minister Nouri al-Maliki, a Shiite, has formed an alliance of convenience with the leading Sunni in Anbar province, both of whom favor a tough line on the Kurds ahead of the national election in December or January.
But the Los Angeles Times’ Liz Sly had an interesting piece the other day concerning the environmental disaster in Iraq having to do with the dust storms that are hitting with growing frequency.
“Decades of war and mismanagement, compounded by two years of drought, are wreaking havoc on Iraq’s ecosystem, drying up riverbeds and marshes, turning arable land into desert, killing trees and plants, and generally transforming what was once the region’s most fertile area into a wasteland.
“Falling agricultural production means that Iraq, once a food exporter, will this year have to import nearly 80% of its food, spending money that is urgently needed for reconstruction projects….
“So fragile has the environment become that even the slightest wind whips up a pall of dust that lingers for days.”
The Agriculture Ministry now estimates that 90% of the land is either desert or suffering from severe desertification. It’s gotten so bad that I read in the Tehran Times the following this week:
“The Islamic Republic of Iran Meteorological Organization has warned about a dangerous increase of dust in at least four provinces of the country….
“Satellite images show a large mass of dust over Iraq which will enter the south and southwest of Iran….
“Particles picked up by the wind can remain suspended in the air and add to the atmospheric dust load.”
On a different topic, it appears that Iraq’s insurgents are increasingly relying on bank robberies to finance their operations. The L.A. Times reported on one such heist where eight security personnel were gunned down as thieves made off with $7 million.
Afghanistan: The new U.S. general in charge, Stanley McChrystal, is supposedly going to recommend more troops for 2010 when he releases his reassessment over the coming weeks, or he may decide to hold back seeing as how the White House would be loathe to accept an additional request beyond the 21,000 troops authorized for this year.
North Korea: A South Korean fishing boat was seized by the North after it strayed into Pyongyang’s territorial waters. Seoul is demanding its release but the North will undoubtedly use it as a bargaining chip.
On the nuclear front, the North said it was open to fresh negotiations, but with the U.S. only and not inside the existing six-party structure.
Concerning the current White House posture regarding both Iran and North Korea, Michael Gerson, in an op-ed for the Washington Post.
“The Obama administration’s public campaign of engaging enemies is headed toward an entirely unintended consequence. Eventually it will raise expectations for action. As the extended hand is slapped again and again, the goals of North Korea and Iran will be fully revealed and the cost to American credibility will rise. Already the administration has given Iran a September deadline to respond to the offer of talks and has threatened ‘crippling action’ if Iran achieves nuclear capabilities. Congress is preparing sanctions on Iranian refined petroleum, which would escalate tensions significantly.
“This is the paradox of the Obama doctrine. By attempting to engage North Korea and Iran so visibly, Obama is dramatically exposing the limits of engagement – and building the case for confrontation.”
China: President Hu Jintao sent Taiwan counterpart Ma Ying-jeou a congratulatory telegram applauding Ma’s election as ruling party chief. Ma was elected president in May last year but was just named full party boss, giving him more power at a time when relations with the mainland are warming. It is the first direct communication between the two. Analysts point out that with Hu retiring in 2012, he has an incentive to meet Taiwan halfway if he wants a Nobel Peace Prize.
But not so fast. President Ma has reiterated that China must stop targeting the island with its estimated 1,000 missiles before there can be any talk of a possible summit.
On the issue of climate change, despite extensive talks there was no agreement between the United States and China as the latter’s position is it has the right to raise living standards for its people, even if it results in greater energy consumption and greenhouse gas emissions. Pretty basic stuff. But in a survey conducted by the University of Hong Kong, 62% of the people in the Greater China region, including Taiwan, believe their government should be doing more to combat climate change.
Russia: Russian Orthodox Church Patriarch Kirill visited neighboring Ukraine in a highly visible example of how Russia continues to extend its influence. The Russian Orthodox Church is split in Ukraine and the visit was deemed “highly sensitive.” It was Russian President Vladimir Putin who realized that the Church could be a useful diplomatic tool and both he and Ukraine’s President Yushchenko desire church unity, Ukraine being predominantly an Orthodox country.
Meanwhile, Secretary of State Clinton tried to cover for Vice President Biden’s rather inflammatory comments in a Journal interview that Russia’s economy was doomed to wither thanks to its shrinking population base and “a banking sector and structure that is not likely to be able to withstand the next 15 years….They’re in a situation where the world is changing before them and they’re clinging to something in the past that is not sustainable,” thus Russia will be forced to make accommodations to the West.
Hillary said, “We view Russia as a great power.” The Kremlin was “perplexed,” particularly after the positive tone of the summit between President Obama and President Medvedev.
And I see where a Mafia godfather survived an assassination attempt in Moscow and that he has been known to hold parties at the hotel I’ve stayed at during my trips there the past five years. No wonder the place is crawling with hookers.
[By the way, the mob boss, Vyacheslav Ivankov, once instituted a “reign of terror” over the Russian community in Brighton Beach, New York, and has supposedly divided up the U.S. into gang “turfs.” Ivankov also served nine years in Allenwood “for entering into a sham marriage to gain citizenship and extorting $3.5 million from two Russian immigrants.”]
Burma: Democracy leader Aung San Suu Kyi is expected to be sentenced to five years in prison for violating terms of her house arrest by giving shelter to an American who entered her home. This will garner a ton of publicity worldwide, and disgust from the likes of Sen. John McCain, one of her chief supporters.
Nigeria: The government in Nigeria has cracked down on Islamic rebels, killing up to 600, including one sect known as the “Nigerian Taliban.” The civilian death toll is unknown. The sect is against Western education and believes Nigeria’s government is corrupted by Western ideas. However, the leader, Mohammed Yusuf, was captured and then shot to death; not exactly Western-style justice (think the treatment of Saddam upon his arrest) and it will be interesting to see how the Islamists respond, not that they adhere to anything West themselves as noted above.
Spain: The Basque-separatist group, ETA, launched two attacks this week, one on a paramilitary barracks that wounded 46, and a car bomb attack on the tourist island of Mallorca that killed two Civil Guards. ETA marked its 50th anniversary on Friday. After ETA broke a cease-fire in 2006 with an attack at Madrid’s airport that killed two, the government said it will never again sit down with them.
Honduras: The coup leaders appear to be willing to take back ousted President Zelaya as long as he agrees to reduced powers and leaves come next year.
South Africa: Public services have been crippled by a municipal workers’ strike as they demand a 15% wage hike (inflation is 8%). The strike impacts public transportation and garbage collections. At least the country’s biggest union, involving the gold and coal mining sectors, agreed to an earlier wage deal.
France: President Nicolas Sarkozy collapsed while running at Versailles last week and friends are blaming First Lady Carla because of the “severe” new diet she has forced on her husband as part of his health makeover. Sarkozy insisted he has no serious health issues, but Carla hasn’t allowed him to have chocolate or cheese. No cheese?! Mon Dieu!
–In an NBC News / Wall Street Journal survey, President Obama’s overall job approval rating fell to 53%, off from a high of 60% in February. In the New York Times / CBS poll, Obama’s approval rating hit 58%, down 10 points from the April high in this particular survey. And the Gallup daily tracking poll has Obama’s approval rating down to a new low, 53%.
A Pew Research Center survey found that 41% of respondents disapproved of Obama’s handling of the arrest of Henry Louis Gates Jr. at Cambridge, compared with 29% who approved, and as I told you two weeks ago would be the case, the president’s approval among whites has slipped 7 points, according to the Pew Center. Support among minorities, though, rose following the Gates affair by 11 points. But this latter bit means nothing since he already had this block in his pocket.
So the president held his beer summit with Gates and Cambridge police sergeant James Crowley on Thursday, and this dumb idea yielded zippo. For starters, Gates first requested a Red Stripe, a most tasty Jamaican brew, but the folks in Beantown crammed a Samuel Adams Light down his gullet seeing as this was a more local representative. If I were Gates I would have stormed off the White House grounds. No offense, Samuel Adams fans, but Red Stripe is better. Actually, Vice President Joe Biden, a teetotaler, had a nonalcoholic Dutch beer, Buckler, that probably juices its sales this weekend.
But just what was accomplished by this fiasco? As the Washington Post’s Dana Milbank reported:
“(The) big moment came out flat: The three had no agenda and no comment as they sat in the Rose Garden, inviting the cameras to shoot the scene for a few seconds from 50 feet. The result: shaky images showing the trio, joined by Vice President Biden, around a table with a mug in front of each. Any hope of projecting a casual image of some guys downing a few cold ones was ruined by the formally attired White House waiter crossing the lawn with a mug of beer on a platter. The only words audible were those of White House aides shooing cameras away with ‘keep moving.’”
And as Sergeant Crowley said after, no apologies were issued and “you had two gentlemen agree to disagree.” For his part, President Obama described it as a “friendly, thoughtful conversation” and that “all of us are able to draw (a) positive lesson from this episode.”
I loved how many in the national media the past few weeks have talked of how the original incident reinvigorated “the national conversation on race.” Now I ask you. Did any of you have such a dialogue? I don’t see any hands. Point made.
On matters such as this, I use George Will as one of my personal barometers and, with his thoughts last Sunday on “This Week,” I couldn’t agree with him more.
“We converse about race too much!” said Mr. Will. “The president should have learned that some things are not any of his business.”
And to the initial sentiment expressed by Obama that we need to have such a dialogue and that it’s not about him, Will, exasperated, particularly because the others at the roundtable, including conservative David Brooks, pandered to the establishment, said:
“The president is everywhere…it’s entirely about Barack Obama.”
Granted, Obama is the Democrats’ best spokesperson, but Will is simply expressing reality. No one can have a problem with the president wanting to be a role model, but at the same time we don’t need to hear his opinion on every topic in America.
So was this a teachable moment? Are you kidding me?! This was a disaster for the president and his party, and as I noted when it first hit, this is going to stick in the craw of some of his best supporters and seeing as it’s a virtual lock 2012 will not be another 53-46 “landslide,” it could be a difference maker.
I do have to say I did like a line from Conan O’Brien, commenting on Obama’s first phone contact with Crowley.
“The conversation went well but there was an awkward moment when the cop arrested Obama.”
Michael Goodwin / New York Daily News…going back to how this all came about.
“There is an old saying among journalists that there are no such things as stupid questions to politicians, only stupid answers. Especially stupid are the answers that accuse a respected police officer of acting ‘stupidly.’
“And when you are the President of the United States, a stupid answer becomes a major political blunder. That’s where Barack Obama finds himself today after one of the biggest, most unlikely goofs of his six-months in office.
“It’s as if an expert mountain climber stumbled on a sidewalk crack. The normally surefooted, cool-as-a-cucumber Obama has only himself to blame for inflating a fairly routine arrest into a national firestorm with racial overtones.
“The damage to his focus on health care is temporary. More lasting damage may have been done to the aura of the post-racial presidency….
“Even yesterday, after talking to Crowley by phone and emphasizing what an ‘outstanding police officer he is,’ Obama couldn’t bring himself to concede the full extent of his error. He suggested both men were equally to blame, and cited ‘the fact that it has garnered so much attention’ as proof racial issues ‘are still very sensitive here in America.’
“Baloney. The case got so much attention only because a reporter asked Obama about it on national television and he foolishly took the bait to give a long, somewhat angry answer….
“Obama, by linking the case to the historically legitimate issue of police abuse of minorities, gave it a gravity it doesn’t deserve.”
Meanwhile, you have to feel sorry for Lucia Whalen, who not once brought up race in the first 911 call, though was initially accused of being a racist.
–In New Jersey, Democratic Governor Jon Corzine is scared to death that the corruption sweep in our state ensures his defeat this November as he forces the officials who were arrested to resign from their offices, even if some of them sought to fight the charges while remaining in place. One Democratic consultant that was arrested committed suicide.
–Republican Kentucky Senator (and Baseball Hall of Famer) Jim Bunning announced he would not run for a third term, with the 77-year-old saying he was bowing to pressure from Republican leaders, who “have done everything in their power to dry up my fundraising,” he said in a statement.
Bunning is thus the sixth Republican senator to announce he will not seek reelection in 2010, the others being Bond (Mo.), Gregg (N.H.), Brownback (Kan.), Voinovich (Ohio) and Martinez (Fla.). Two Democrats, Burris (Ill.) and Kaufman (Del.), have also announced they will not run.
–In stepping down 17 months early, Alaska Gov. Sarah Palin said she would continue to fight for Americans!
“I have never felt that you need a title to do that. I will be able to fight even harder for you for what is right.”
–A new study out of Virginia Tech reveals that drivers who text behind the wheel have a 23 times greater risk of a collision than those who do not. Astounding, though not unexpected. As reported by the New York Times’ Matt Richtel:
“In the moments before a crash or near crash, drivers typically spent nearly five seconds looking at their devices – enough time at typical highway speeds to cover more than the length of a football field.”
And while they didn’t appear to text anymore than other drivers, picture truckers barreling down on you from behind. So far 14 states ban the practice and look for others to quickly catch up, though nabbing the offenders is exceedingly difficult.
–A new analysis by the World Health Organization concludes that the risk of skin cancer jumps by 75% when people start using tanning beds before age 30. The experts also found that ultraviolet rays, such as those employed in the devices, are clearly carcinogenic.
–And we note the passing of Corazon Aquino, the courageous woman who, following the assassination of her husband, challenged Philippine dictator Ferdinand Marcos and toppled the bastard in 1986. She proved to be ill-equipped to be president but was deserving of her Time magazine distinction of Woman of the Year. Aquino was 76.
Pray for the men and women of our armed forces, and all the fallen.
Gold closed at $956
Oil, $69.45
Returns for the week 7/27-7/31
Dow Jones +0.9% [9171]
S&P 500 +0.8% [987]
S&P MidCap +1.0%
Russell 2000 +1.5%
Nasdaq +0.6% [1978]
Returns for the period 1/1/09-7/31/09
Bears 31.1 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
