Wall Street…vacation is over
President Obama and Congress return to work this week (I’ll spare you the usual lame jokes in this regard) and it seems as if Obama read an op-ed by former Republican Senate leader Bob Dole in the Washington Post, Dole having written in part:
“Many of us were taught that a president proposes and Congress disposes. Today, Congress is doing both – with the president relegated to the role of cheerleader in chief as he campaigns for various House committees’ efforts. Certainly, Obama supports much in these proposals – but Barack Obama is our president, not a commentator.
“Obama’s approval numbers would jump 10 points if Americans knew he was fully in charge. A tactical move of introducing his own plan (on health care) would also stir more Republicans to become active for reform in critical areas. Right now the president’s biggest problem is with congressional Democrats, who are split and searching for a way out of the medical wilderness.
“In short, the president, Congress and the public are choking on all this, and choking is not covered by the legislation.”
So Obama is going to regale us with a speech before a joint session of Congress on Wednesday as he supposedly lays out some specifics, finally, on what he would like to see in health care legislation. Which also means he’ll have to spell out how he plans to pay for it, beyond the inane comment that “reform will save $billions by rooting out waste and fraud.” He’s going to have to admit he is breaking his pledge not to tax American families earning more than $250,000, let alone how he’s going to tackle the enormous deficits he’s already running up, and this will all set off another round of talk show diatribes and ill will. Or…he could just try and bamboozle us one more time.
But I haven’t even gotten into the fact that with the official unemployment rate having now hit 9.7%, with an unofficial one far higher, let alone having a vice president running his mouth off about how successful the stimulus program has been when he’s not even close to the facts, the Obama administration’s credibility is verging on nil.
I do, however, believe Barack Obama is an immensely talented, smart individual who had the makings of a good leader favored by 55-60 percent of the American people on a consistent basis; and that would have made for a solid legacy.
But what is increasingly clear is he is being tremendously ill-served by his staff, just as his predecessor was in many respects, and while I hardly expect Obama to shake things up so early in his term, it’s an appropriate action to take. It’s time to admit he’s made some mistakes. It would show real guts…and leadership.
As for the economy and the Street, the global outlook continues to brighten, even if some perpetual pessimists don’t want to admit it. Manufacturing indices, for example, have now exhibited signs of real growth, not just a slowing in the pace of contraction, from Australia, to India and China, to France and now the U.S., with other big players following suit with the September readings, no doubt. So that’s good.
China once again led the news on Monday, though, as its stock market fell 6.7%, thus taking the correction in Shanghai into the bear phase, down 22% from the high in August. There were all manner of concerns that liquidity was drying up and that the economic stimulus had as well, but then the next day the manufacturing number in China was a very solid 55 (50 being the dividing line between growth and contraction) and bank lending for August was still strong so the market proceeded to rebound. Chinese regulators then said all the right things, that it will maintain a loose money policy while urging the banks to lend prudently, but it’s also a well-known fact that Oct. 1 is National Day in China, celebrating 60 years of communist rule, and the last thing the government wants is a market crash ahead of this.
As you know I have a large position in a specialty chemicals / biodiesel outfit in Fujian province and I am as acutely aware of what’s going on here as possible, given my location. I’m confident the China story will continue to work and as much as I don’t trust the numbers implicitly, I know the growth rate is substantial and that gradually the economy is transitioning from one totally dependent on exports to one where both exports and domestic demand share the spotlight. If I’m wrong on this, well then we’re definitely headed for a ‘W-shaped’ double-dip.
South Africa’s economy is in its first recession in 17 years, having seen GDP decline 3% in the second quarter, though better than the first quarter’s 6.4% drop, while Canada’s economy exhibited similar numbers with GDP down 3.4% in Q2 vs. the 6.1% fall in Q1. But Australia avoided recession in displaying growth of 0.6% in Q2. Aussie Aussie Aussie! Foster’s on the house!
In the 16-nation Eurozone, the manufacturing index came in at 48.2 for August, a considerable improvement, but the unemployment rate for July hit 9.5%. Consumer prices were down 0.2% last month.
Back in Asia, Japan’s industrial production was up 1.9% in July but retail sales were down 2.5%. More on Japan and their big election below.
In the U.S., the Chicago PMI hit 50.0 in August, far better than expected, which was followed by the national ISM manufacturing figure for the month, 52.9, also far better, while construction spending for July was down 0.2% and July factory orders were up a less than expected 1.3%.
Pending home sales, though, advanced a super 3.2% for July, the best reading in this category since June 2007, but on the real estate front, issues in the commercial market continue to make the headlines (if it bleeds, it leads) as the default rate for same could hit 7% in ’09. In each and every one of your neighborhoods, you see examples of construction loans gone bad. But I repeat, this will have minimal impact on equity prices.
August auto sales improved, thanks to cash-for-clunkers, with an increase over July and the highest total since May 2008, but year over year, GM sales were still down 20% and Chrysler’s 15%. Ford, however, bucked the trend and saw its sales for the month increase 17%. [Honda’s U.S. sales were up 10%, Toyota’s 6%.]
And it was a week that saw U.S. retailers report same-store figures for August and while they were still down in most cases, Kohl’s being a positive exception, there are signs that traffic is beginning to return.
Lastly, we had the above-mentioned jobs report with the economy losing 216,000 jobs and the unemployment rate spiking to 9.7%. As bad as the jobs data has been, a trend is nonetheless in place and there is growing consensus we will see actual growth in the first quarter. Seeing as the stock market is a forward-looking animal, it’s one reason why even after a 50% move off the March lows, equities just don’t seem to want to correct much at the end of the day, as much as the bears want the market to validate their theses.
Me? I haven’t changed my outlook all year so why would I now? Not being fixated on the fundamentals, solely, and looking to sentiment* and past market behavior as well has held me in good stead thus far, even at the bottom in March. Those who ignore the influence of sentiment on the markets are bound to make their share of mistakes. And so, while I won’t be the least bit surprised to see a sizable correction along the way, the target has remained the same; 20% gains for the Dow and S&P, 30% for Nasdaq (which we basically hit the week of 8/24…heck it\’s up 28% ytd as of Friday).
[*By sentiment I’m referring to far more than the contrarian bull/bear readings found below.]
But since I focus on sentiment as much as I do, it’s why I can not ignore items such as Iran and H1N1, the two that I’ve said all year are potential game changers. Obviously, if swine flu really gets cranking beyond laying up some college and high school students (my alma mater, Wake Forest, made NBC Nightly News the other day for the number of cases there) and progresses to the point where airlines are cutting way back and the malls are empty, those calling for a double-dip will be right, but for the wrong reasons.
And, obviously, when Israel attacks Iran, say November, one must weigh the blowback. No one…no one…has any idea the level to which Iran and its proxies, such as Hizbullah, will strike back. Do they take down some commercial aircraft? Do they hit some of our shopping malls? Or, is the blowback confined to soft targets in Europe or Latin America? Better still, do the Iranian people, recognizing the predicament their leadership has placed them in, revolt in numbers that overwhelm authorities? But try finding more than a handful of strategists today that even mention the potential of Iran to ruin the critical holiday shopping season (not that it\’s going to be good, anyway), let alone one’s portfolio.
So friends, don’t be surprised if in the coming weeks I say I’m hitting the bunker and advising all to sell their stocks. I’ve never been a market timer, at least a successful one, but I’m going to take a big stab at this one. In the meantime, especially since in the case of swine flu we won’t have the vaccine for at least another four weeks, cough into your sleeve and wash your hands 50-55 times a day.
–So much for the nasty correction. One of these days we’ll see it, but after being down about 3% at the lows early in the week, stocks posted minimal declines as the Dow Jones lost 1.1% to 9441, the S&P 500 fell 1.2% and Nasdaq lost just 0.5%. As former NBA star Derrick Coleman said to no one in particular, “Whoopty-damn-do.” Gold, though, flirted with $1,000 as everyone rushed to sell their signet rings for beer money. I loved how everyone was talking about gold’s advance signaling something unknown was about to occur. Yoh, guys, the unknown, Iran, and an attack on same, should be no surprise to the learned.
–U.S. Treasury Yields
Rates were basically unchanged as the Federal Reserve released the minutes from its Aug. 11-12 meeting and there was nothing we didn’t already know in terms of their opinions. The Fed is calling for a slow recovery, while the economy is still vulnerable to adverse shocks. The Fed also avers that inflation is not an issue for some time to come, representing the view of your editor as well. I know I keep repeating myself but until you show me real wage and pricing pressures, neither of which is remotely in the cards with the employment situation the way it is and with capacity utilization near all-time lows, I’m not buying the inflation story.
–I have a tremendous amount of respect for Morgan Stanley Asia’s Stephen Roach but he’s just more pessimistic on China than I am today. Roach’s main thesis is that China needs a robust U.S. consumer and we aren’t going to be spending at a rapid enough clip for years to come due to our having overstayed our welcome at the party. And for its part, China, Roach says, is going to need a long time to build its own consumer driven economy.
–For the first time in U.S. history, women are about to outnumber men in the work force, though women still earn only about 77% of what men make. This speaks to the massive job losses for men in sectors such as manufacturing and construction, while the only parts of the economy still growing, education, healthcare and government, have traditionally hired more women.
–General Motors said sales growth in China should exceed 40% this year. August’s jump helped push GM’s sales there to 1.11 million for the first eight months, outpacing its total for 2008. Total auto sales in China could surpass 12 million, besting the U.S.
–BMW is planning on building two new Mini models in a boon to Britain’s struggling auto industry, the cars to be produced at a plant near Oxford.
–British Petroleum announced a “giant” oil discovery in the Gulf of Mexico. But before we all shout “Eureka!” understand the future crude is like 35,000 feet down.
–Baker Hughes is acquiring BJ Services for $5.5 billion in a move designed to create a rival to giant Schlumberger in the oilfield-services industry. BJ Services specializes in technology for developing natural-gas fields.
–And PetroChina is buying a 60 percent stake in Athabasca Oil Sands Corp.’s key projects for $1.7 billion in a further example of China’s resource grab (this one in America’s backyard). Athabasca is a closely held company based in Calgary.
–The SEC’s inspector general issued a blistering report on the agency’s performance in failing to scrutinize Bernie Madoff, despite all kinds of warning signs and “ample information” that Madoff was defrauding investors, while allowing the scam to go undetected for 16 years. H. David Kotz wrote in his summary that the fraud could have been uncovered by any of three examinations or two more-formal ones, but sheer incompetence prevented this.
So with the above in mind, SEC Chairman Mary Schapiro announced she may create a “fraud college” to train her staff in detecting market abuses such as Madoff’s.
Lesson one…Is the following e-mail solicitation real or not? [Don’t concern yourself with spelling and punctuation.]
“The Board of federal ministry of finance BENIN REPUBLIC. Are here to notify you of your payment inherited funds. After the meeting held on 26th of AUG 2008. His Exelence the PRESIDENT OF FEDERAL REPUBLIC OF BENIN DR BONI YAYI . has Instructed all the westren unuion Department to send your funds through western union money transfer for easier receive of your inheritage funds without any further delay.”
If you said the above is real…advance straight to clown school.
–Natural gas futures fell to their lowest level since March 2002, as inventories continue to pile up; record amounts for this time of year. Due to the recession, factory usage is expected to fall about 9 percent in \’09, according to the Department of Energy. It’s also a fact that in many traditional high usage parts of the country, it was a moderate summer [here in New Jersey, I’ve had my air-conditioning on about a total of ten days since May 1] and there have been zero storms threatening production in the Gulf of Mexico.
But when it comes to winter, and potential nat gas demand, the Farmer’s Almanac is predicting a cold one… “numbing cold” from the Rocky Mountains to the Appalachians. Managing Editor Sandi Duncan says it’s going to be an “ice cold sandwich….very, very cold, very, very frigid, with a lot of snow.” Nooooo! Alas, the East Coast is going to be a little milder.
However, the National Weather Service is calling for warmer-than-normal temps because of an El Nino system in the Pacific. I’m so confused, let alone I always mix up the Farmer’s Almanac with the Old Farmer’s Almanac.
–Ukrainian Prime Minister Yulia Tymoshenko said she reached agreement with Russian Prime Minister Putin that there would not be a gas crisis this year, no more “traditional stunts,” said the braided one. Ukraine normally has to meet a minimum amount of imported gas from Russia and energy giant Gazprom, even if it doesn’t use it, but Putin has evidently relented on the limits.
And therein is your lesson for today, boys and girls. Vladimir Putin is involved in the day to day operations of Gazprom.
–Russian oil output hit a record high in August, 9.97 million barrels per day, or about 11 percent of daily global demand.
–Shares in AIG tumbled from $55 to $38 on Monday and Tuesday after more than tripling in August, even including Monday’s 10 percent sell-off. Who the heck knows what the company is worth two years from now in a more stable environment when the reality is the government also owns 80 percent of it?
Of course aside from speculators having their way, a major reason for the run-up is the reputation of new AIG CEO Robert Benmosche, who had to apologize this week for saying that New York attorney general Andrew Cuomo’s approach to bonus recipients was “unbelievably wrong.” Benmosche then continued in a meeting with employees, “(Cuomo) doesn’t deserve to be in government, and he surely shouldn’t be the attorney general of the state of New York. What he did is criminal. You don’t create lynch mobs to go out to people’s homes and do the things he did. The worst thing that will ever happen to him is when he and I meet in the room and I close the door.” Sounds like Mr. Benmosche is kind of a loose cannon, don’t you think?
–Back in January, Pfizer indicated it would be hit with a record-breaking fine and this week we learned it was indeed $2.3 billion for repeated abuses including illegal drug promotions that led to free junkets for doctors. This is the fourth time in the past decade Pfizer has been charged with gross misconduct and among the latest indiscretions was the promotion of four prescription drugs, including the pain killer Bextra, as treatments for medical conditions different from those the FDA had approved the drug for, plus Pfizer backed the unapproved uses and dosages with false and misleading claims about safety and effectiveness. So I’m thinking the executives involved should be locked up for 25 years…that would stop this crap.
–New York City, in a sign of the times, has seen sales-tax revenues decline 10 percent over the first seven months of 2009.
–Disney acquired Marvel Entertainment and its stable of characters such as Iron Man and Spider-Man for $4 billion, leaving me to wonder, why didn’t they do this before? In 2006, Disney purchased Pixar Animation Studios. But way back in 1969, Warner Bros. acquired DC Comics and the rights to Superman and Batman, which worked out pretty well.
–Cerberus, the hedge fund folks who took a bath in Chrysler and GMAC, have seen investors pull about $5 billion out, or 60 percent of the group’s total fund assets, but they may not see their money for years to come as the withdrawal requests are placed in a wind-down vehicle that will sell the assets and return the money when available.
–Iceland’s parliament voted to reimburse British and Dutch investors to the tune of $6 billion in one of Iceland’s failed banks, an amount that equates to about half the country’s yearly economic output. The reason for the move, though, was to avert a diplomatic crisis that threatened Iceland’s accession into the European Union and would have delayed badly needed international funding in the wake of its financial-system collapse. The Internet bank involved, Icesave, had 400,000 depositors in Britain and Denmark at its peak.
–The number of mobile phone users in China is now up to 703 million.
–Ireland’s unemployment rate rose to 12.4 percent in August, the highest in more than 14 years. But the pace of the slide in the economy, like elsewhere, is slowing considerably; in Ireland’s case helped by the emigration of Eastern European workers back home.
–In a pathetic move, the Fox Business Network, watched by 20, maybe 32 people, nationwide, has thrown in the towel and opted for simulcasting Don Imus to fill the 6:00-9:00 a.m. slot. I used to be a big I-Man fan, but last cared around 2000. [He botched some ‘live reads’ of spots for this site that I had shelled out major bucks for.] For FBN, though, it’s just an admission that in the business world, they’re irrelevant.
–Sales of Playboy declined 9 percent in the first half of the year, but women’s magazines such as Family Circle and Woman’s Day, declined over 20 percent, thereby proving that…actually, I really don’t know where I’m going with this…
–Reminder, friends. Keep stockpiling those incandescent bulbs, just as we do here at StocksandNews.
–Finally, my man Arnold Palmer turns 80 on Thursday, Sept. 10. So when I realized he was born in 1929, it hit me the stock market was peaking then. Specifically, the Dow Jones hit its all-time high of 381 on Sept. 3 and closed at 367 the day Arnie was born. Well, you should know enough of your market lore to recall that we didn’t see 381 for 25 years… November 23, 1954 the Dow closed at 382. 25 years in the wilderness. Of course we’ve just had 10 years plus ourselves of going nowhere, fast.
Afghanistan: Defense Secretary Robert Gates has endorsed a report from Gen. Stanley McChrystal, the top commander in Afghanistan, who is recommending more U.S. troops be deployed to effectively wage a counterinsurgency; this after Gates last spring warned of deploying too many troops and losing the local population’s support which is admittedly weak to begin with. Gen. David Petraeus, head of U.S. Central Command, also endorses McChrystal’s strategy.
But President Obama himself has said little on the war the past few months, outside of an Aug. 17 speech to a VFW convention where he devoted three minutes to this “war of necessity.” And administration officials said there was no thought to giving a national address on the topic.
Well, events will outrun him, it appears. Just a few weeks ago I said Afghanistan would be the number one issue in 2010, over health care and the economy, but it appears I could have been off a few months. Support among Americans is flagging badly, with a CNN survey revealing 57% of independents opposed to the war, while Republicans hold at 70%, making for strange bedfellows between them and the president.
Meanwhile, casualties mount with a record 74 NATO forces having died in August and with Britain’s cumulative toll up to at least 211. The latter remains a key because with British Prime Minister Brown floundering on all manner of levels and facing a humiliating defeat at the polls next spring, he is likely to withdraw British forces (currently over 9,000) in the months leading up to the vote to try and save himself. 2 in 3 Brits want their troops home now. [Brown\’s current stated support won\’t last.]
Then you have this election in Afghanistan, with the UN having documented at least 650 cases of probable fraud in the conduct of the vote. President Karzai needs 50% to avoid a run-off and with 60% counted, he’s at 47%.
I’m in the camp that believes we must give Afghanistan one last try, similar to my thoughts on Iraq as the surge was initially announced there. But unless Obama builds a case for the effort, his poll numbers will continue to plummet and the American people won’t even give him another year at this point.
Arguing for the other side, I present some opinion from three Republicans, though the first one really should form a third party, even if the charismatically challenged Nebraskan is not then its official standard-bearer.
Former senator and Vietnam War hero, Chuck Hagel, in an op-ed for the Washington Post.
“The other night I watched the film ‘The Deer Hunter.’ Afterward, I remembered why it took me so many years to be able to watch Vietnam movies.
“It all came tumbling back – the tragedy, the innocent victims, the waste. Too often in Washington we tend to see foreign policy as an abstraction, with little understanding of what we are committing our country to: the complications and consequences of endeavors. It is easy to get into war, not so easy to get out. Vietnam lasted more than 10 years; soon, we will slip into our ninth year in Afghanistan. We have been in Iraq for almost seven years….
“The U.S. response (to 9/11), engaging in two wars, was a 20th-century reaction to 21st-century realities. These wars have cost more than 5,100 American lives; more than 35,000 have been wounded; a trillion dollars has been spent, with billions more departing our Treasury each month. We forgot all the lessons of Vietnam and the preceding history.
“No country today has the power to impose its will and values on other nations. As the new world order takes shape, America must lead by building coalitions of common interests, as we did after World War II. Then, international organizations such as the United Nations, NATO, the World Bank, the International Monetary Fund and GATT (now the World Trade Organization) – while flawed – established boundaries for human and government conduct and expectations that helped keep the world from drifting into World War III and generally made life better for most people worldwide during the second half of the 20th century….
“Global collaboration does not mean retreating from our standards, values or sovereignty. Development of seamless networks of intelligence gathering and sharing, and strengthening alliances, diplomatic cooperation, trade and development can make the biggest long-term difference and have the most lasting impact on building a more stable and secure world. There really are people and organizations committed to destroying America, and we need an agile, flexible and strong military to face these threats. How, when and where we use force are as important as the decision to use it. Relying on the use of force as a centerpiece of our global strategy, as we have in recent years, is economically, strategically and politically unsustainable and will result in unnecessary tragedy – especially for the men and women, and their families, who serve our country….
“The president and his national security team should listen to recordings of conversations that President Lyndon B. Johnson had with Sen. Richard Russell about Vietnam, especially those in which LBJ told Russell that we could not win in Vietnam but that he did not want to pull out and be the first American president to lose a war. Difficult decisions with historic consequences are coming soon for President Obama.”
Ralph Peters / New York Post
“The classified status report from Afghanistan by Gen. Stanley McChrystal was censored by the White House before its submission. As a result, it’s all bun and no burger.
“According to multiple (angry) sources, McChrystal – our top soldier on the ground – intended to ask for 28,000 more U.S. troops. A presidential hatchet man directed the general not to make the request: Troop increases would be ‘addressed separately.’
“Worried about his poll numbers, our president’s making a bad situation worse. He’s given McChrystal the impossible mission of turning Afghan Flintstones into Jetsons, while starving him of means….
“I don’t believe the general’s correct, but he has a right to be heard. Any decision about troop levels should be made based upon the facts on the ground, not politics….
“Cooking the political books doesn’t win wars. It didn’t work for the Bush administration, and it won’t work for Obama. We shouldn’t waste another American life without a clear strategy our president will back with his full authority.
“When the White House silences the generals in the field, it condemns our troops to the silence of the grave.”
[Peters wrote the above before Gates’ position became clearer.]
George Will / Washington Post
“Even though violence exploded across Iraq after, and partly because of, three elections, Afghanistan’s recent elections were called ‘crucial.’ To what? They came, they went, they altered no fundamentals, all of which militate against American ‘success,’ whatever that might mean. Creation of an effective central government? Afghanistan has never had one. U.S. Ambassador Karl Eikenberry hopes for a ‘renewal of trust’ of the Afghan people in the government, but the Economist describes President Hamid Karzai’s government – his vice presidential running mate is a drug trafficker – as so ‘inept, corrupt, and predatory’ that people sometimes yearn for restoration of the warlords, ‘who were less venal and less brutal than Mr. Karzai’s lot.’….
“(U.S.) forces should be substantially reduced to serve a comprehensively revised policy: America should do only what can be done from offshore, using intelligence, drones, cruise missiles, airstrikes and small, potent Special Forces units, concentrating on the porous 1,500-mile border with Pakistan, a nation that actually matters.
“Genius, said de Gaulle, recalling Bismarck’s decision to halt German forces short of Paris in 1870, sometimes consists of knowing when to stop. Genius is not required to recognize that in Afghanistan, when means now, before more American valor is squandered.”
Iran: In a depressing sign of conservative unity, 18 of President Ahmadinejad’s 21 cabinet nominees were approved by parliament, including Ahmad Vahidi as defense minister. All Vahidi is responsible for is the 1994 terror attack on a Jewish center in Buenos Aires that killed 85 and he’s been wanted by Interpol ever since. So right after his appointment, Vahidi, having garnered more votes than any of the cabinet nominees, said, “Every move from the Zionist entity against Iran will be met with a harsh and powerful response from Iran.”
The action in parliament continues a trend, a purge, as 40 ambassadors were recalled, suspected of aiding the reformers, while a purge of the universities is also taking place, both in terms of professors as well as courses allowed.
But now we’re in September and originally President Obama set Sept. 15 as a deadline to respond to his offer of talks, though that will be stretched until the days after the UN General Assembly in New York, Sept. 23-25. The International Atomic Energy Agency’s latest report says Iran “has not suspended enrichment-related activities” and Germany and France have called for harsher sanctions immediately if Iran does not comply with prior UN resolutions. French President Sarkozy said that Obama’s hand can not be extended indefinitely and the easiest target with the most impact would be to hit Iran’s gasoline supply, the country having to import 40% of it because of its lack of refinery capacity.
Israel / Iran:
“Israel…looks warily on the Obama Administration’s policy of diplomatic pleading with Iran, which comes after six years of failed diplomatic overtures by the European Union and Bush Administration. Secretary of State Hillary Clinton’s suggestion in July that the U.S. would extend a ‘defense umbrella’ over its allies in the Middle East ‘once [Iranians] have a nuclear weapon’ may have been a slip of the lip. But Israelis can be forgiven for wondering if the U.S. would sooner accept a nuclear Iran as a fait accompli than do whatever is necessary to stop it.
“It’s no wonder, then, that the Israeli military has been intensively – and very publicly – war-gaming attack scenarios on Iran’s nuclear installations….U.S. and Israeli military officials we’ve spoken to are confident an Israeli strike could deal a significant blow to Iran’s programs, even if some elements would survive. The longer Israel waits, however, the more steps Iran can take to protect its installations.
“The consequences of an Israeli attack are impossible to predict, but there is no doubt they would implicate U.S. interests throughout the Middle East. Iran would accuse the U.S. of complicity, whether or not the U.S. gave its assent to an attack. Iran could also attack U.S. targets, drawing America into a larger Mideast war….
“But unless Mr. Obama gets serious, and soon, about stopping Iran from getting a bomb, he’ll be forced to deal with the consequences of Israel acting in its own defense.”
Israel, continued…The stories on how Prime Minister Netanyahu plans on dealing with the settlements issue are all over the board. Some say he won’t agree to freeze any in the West Bank or Jerusalem, others say he will. Then there was a report late Friday that Netanyahu will agree to a temporary halt to construction only after new homes are built, some 2,500+. Washington will have a problem with this.
Separately, former Prime Minister Olmert became the first such official to be indicted, past or present, as he was accused of accepting funds from an American backer, double-billing for trips abroad and concealing funds from a government watchdog, all of which should preclude Olmert from considering a political comeback.
And on one of my favorite long-standing topics, how Americans ignore the growing Iranian threat in South America, particularly Venezuela, the Jerusalem Post’s Olivier Javanpour:
“As Iran’s sphere of influence grows and deep relationships with Venezuelan President Hugo Chavez and Nicaraguan Daniel Ortega form, Tehran is not only repeating the success from lessons learned with Hizbullah in Lebanon, but is also displaying a unique understanding of the cultural nuances of the region. The Iranian approach with Hizbullah was a similar exercise in relationship building that started in the early 1980s. Not only did the Iranian regime train and arm Hizbullah militants, they also built medical centers, schools, mosques and homes for Shiite sympathizers.
“The Iranians have clearly understood that reaching the hearts and minds of the poor is critical to successful relationships, internally and internationally. North Americans have failed to leverage their own relationships in part because they have not grasped the nuances involved. Through low-interest loans of more than $250 million to Bolivia, helping Nicaragua to build ports, schools and hospitals, and through the exporting of technology and other products to Venezuela, Iran has secured a place in Central and South America.”
Iraq: Syria’s President Assad denies his country is being used as a launching pad for violence in Iraq, calling the allegations politically motivated and baseless. The Iraqi government is demanding Damascus extradite two suspects wanted in a string of suicide attacks on government ministries in Baghdad that killed about 100 on Aug. 19.
And there was a disturbing story involving the bank robbery I reported on in this space back on 8/1/09. Four suspects were members of the security forces, including one tied to one of the country’s two vice presidents. Two others, part of the same figure’s security detail, remain at large.
But the four in custody are going to be executed; this as $4.8 million of the cash taken was recovered in the offices of a newspaper the Veep owns.
So pretend Vice President Biden’s aides were implicated in a bank robbery and Biden got the court to hang them in order to keep them quiet, this as $5 million was found at, say, his home in Delaware. That’s basically the case in Baghdad today.
Lebanon: Prime Minister-designate Saad Hariri has been reaching out to the opposition in an attempt to form a coalition government, but it’s now three months since the June election and he’s losing his patience. Good. Hariri spoke out.
“We want the minority to take part in the next cabinet but not according to its own conditions but rather in line with the [democratic] principles of majority and minority.”
The minority does not “impose its conditions on the majority, or dictate what the majority is supposed to do. We have extended our hand to the minority [ed. such as Hizbullah], expressed openness and willingness to form a national unity cabinet but this does not mean we have to do what they want. In all honesty, we reject this logic. I Saad Rafik Hariri will not accept this logic.”
As Hariri also notes, “If people endorsed their [the minority’s] platform they would have voted for them.” [Daily Star]
You tell ‘em, Saad. Stand strong. It’s your country’s only hope.
[As an aside, there was a Kuwaiti report that Hizbullah has now received chemical weapons from Iran, as well as thousands of gas masks. They were supposedly flown from Iran to Syria and then transferred over land to the Bekaa Valley.]
Libya: British Prime Minister Gordon Brown continues to say he had nothing to do with the release of Lockerbie bomber al-Megrahi, despite evidence to the contrary.
“There was no conspiracy, no cover-up, no double-dealing, no deal on oil, no attempt to influence Scottish ministers.”
He’s flat out lying, though in a court of law a good attorney would probably get him off as a true smoking gun has yet to be revealed in the documents released thus far. Yet the weight of the evidence is there, as Justice Secretary Jack Straw set the deal in motion two years ago as a huge contract with British Petroleum, announced in May 2007, hit a stumbling block by December of the same year and the disposition of Megrahi became a key topic for the Gaddafi government. BP did then wrap up the contract.
“If there is a moment, a place, a person, and a legacy that come together to bring sadness to all Arabs, they are upon us this week in the 40th anniversary of the September 1, 1969 revolution that brought Moammar Gaddafi to power. There is nothing to celebrate today in Libya, other than a colossal waste of that country’s human and natural resources over four decades.
“This is also a day of calamity for the modern Arab world, not only because of what Libya has suffered and squandered, but also because Libya is only a severe example of the self-inflicted distortions, waste and misfortunes that have defined much of the Arab region since independence. This is also a moment that should spur some quiet reflection by all those in the West who deal with the Arab world with shameless self-interest….
“If much of Libya’s human wealth has been forced to flee abroad, most of its material wealth has been wasted in one of the most shocking cases of national self-squandering in the modern world. If we were to conservatively say that Libya has averaged $10 billion of oil exports per year in the past 40 years – with some single year income figures reaching over $45 billion, like last year, for example – we could reasonably ask: what has the Libyan government to show for the $400 billion or so of income that accrued since 1979?….
“The litany of four decades of failure in Libya is long and thick, and hard to believe were it not true. Now we are asked to believe that Gaddafi’s sons and presumed heirs embrace democracy and liberalism; yet somehow that proposition is hard to take seriously, as power continues to be exercised without any real accountability. This is a sad anniversary for a rich land that has mostly experienced derision, indictment, isolation and underachievement in recent decades.
“The Arab world watches silently, knowing that the Libyan tale is not so alien to our region – it is merely the most severe example of a management style that has made underachievement the hallmark of the modern Arab world. The West, meanwhile, looks to Libya for more opportunities to sign lucrative new contracts, oblivious to both the moral legacy of its own history in the Middle East or the desperate quest for simple dignity by the ordinary Arab citizen. There is nothing to celebrate today – 40 years and $400 billion later – there is nothing to commemorate other than monumental sadness.”
Poland / Russia: What a mess…the commemorations for the start of World War II, 70 years ago, Sept. 1, 1939. Russian Prime Minister Putin was on hand and while admitting the Ribbentrop-Molotov pact of ’39 was “immoral,” he focused on Soviet losses suffered following the Nazi’s decision to break their alliance with Moscow and invade the Soviet Union in 1941. By contrast, German Chancellor Merkel said, “I pay tribute to the 60 million people who lost their lives in this war unleashed by Germany.”
Putin tried to tell anyone who would listen that Europe was just as responsible for signing pacts of its own with the Germans, including 1938’s Munich Agreement, but ask any Pole and the danger today comes from Russia, not Germany.
After all, while Germany has undergone “unprecedented examination of conscience, not least over the Jewish Holocaust,” as the Financial Times’ Stefan Wagstyl put it, “Russia is a different matter. After a flurry of open discussion in the 1990s the authorities have restricted the public airing of difficult issues such as Soviet war crimes. Just as Mr. Putin has clamped down on political life, he has tightened the screws, notably with a law criminalizing the ‘falsification of history.’”
On a different issue, that of the missile defense shield, components of which were to be based in Poland and the Czech Republic, the White House is completing a review and among the potential alternatives would be a proposal to move the pieces beyond the Russian border, say to sites in Turkey or the Balkans. But Eastern Europeans would view this as the Obama administration caving in to Russian pressures. Eastern European critics say, see, President Obama is more concerned over getting cooperation on issues such as Afghanistan from Russia and China than he is with countries such as Poland.
I would just add that if I were a Polish or Czech leader that had stuck its neck out getting support from their respective parliaments, I’d be furious over the betrayal, which is exactly what it is.
North Korea: Pyongyang said it was producing enriched uranium, a worrisome development, though not unexpected. It’s the level of sophistication achieved that is under considerable debate. North Korea’s two previous nuke tests were of the plutonium variety, with Pyongyang saying it was also close to weaponizing it. The move follows a series of conciliatory moves by Kim Jong-il, but in a letter to the head of the UN Security Council, North Korea said, “We are prepared for both dialogue and sanctions. If some permanent members of the UNSC wish to put sanctions first before dialogue, we would respond with bolstering our nuclear deterrence first before we meet them in a dialogue.”
China: Taiwan officials asked the Dalai Lama to cancel public speeches and media events on the island under pressure from China, though Beijing did not formally make this request of President Ma and has not criticized him directly for allowing the Dalai Lama to go to Taiwan, ostensibly to comfort those impacted by the devastating typhoon.
Meanwhile, Taiwan said it will drop its annual bid to join the United Nations in another sign of rapprochement between Taiwan and the mainland.
Separately, there was a new round of protests in the western city of Urumqi where ethnic riots left hundreds dead back in July. This time the protests were over a series of mysterious syringe attacks on the public, though officials said none of the needles were contaminated.
And in Fujian province, of which I am very familiar, 10,000 clashed with 2,000 police over a wastewater treatment plant that has been the source of pollution and illness as people across China become increasingly impatient over efforts to clean up the environment.
Lastly, China is going to be unveiling a range of previously unknown missiles on Beijing’s October 1 National Day parade celebrating 60 years since the formation of the communist state.
Japan: The Democratic Party of Japan (DPJ) completed its historic victory in lower house parliamentary elections, 308 of 480 seats, thus ending 54 years of almost unbroken Liberal Democratic Party (LDP) rule. But after four prime ministers in four years, and 20 years of economic stagnation (an average growth rate over that time of one percent), the people want progress so the DPJ has its work cut out for it. Yukio Hatoyama will be voted in as the new prime minister on Sept. 16.
The DPJ wants to focus on the family and offer $276 per month to raise children, as well as increase the minimum wage and support farmers, which is in contrast to the LDP’s long-time policy of favoring business and the bureaucracy. The DPJ also wants there to be more of a debate on defense policy and the 50,000 U.S. military personnel stationed there that are treaty-bound to defend Japan. So some interesting dynamics could be playing out over the coming year.
Colombia: President Alvaro Uribe actually caught swine flu, though he’s recovering, and the Congress by a 85-5 vote cleared a major roadblock for Uribe to pursue a third term in office. No one is more important to the U.S. in the region than him. [Uribe still must gain approval from the Constitutional Court and then win a national referendum to change the constitution.]
Mexico: The violence here is numbing and in the latest high-profile attack in the drug wars, 18 were killed as gunmen broke into a drug rehab center in Ciudad Juarez, across from El Paso. In this hellhole alone, 1,400 have been killed this year. And the attacks are getting closer and closer to the top of government as a state deputy public safety director was the latest victim in a separate assassination.
–Former Vice President Dick Cheney said he’s not sure he will cooperate in any probe of suspected CIA prisoner abuses. “I’m very proud of what we did in terms of defending the nation for the past eight years, successfully,” he told ‘Fox News Sunday.’ “And it won’t take a prosecutor to find out what I think.”
On the topic of Iran, Cheney hinted he pushed for a strike to take out its nuclear weapons program in the waning days of the Bush administration.
“I was probably a bigger advocate of military action than any of my colleagues. I thought that negotiations could not possibly succeed unless the Iranians really believed we were prepared to use military force. And to date, of course, they are still proceeding with their nuclear program and the matter has not yet been resolved.”
–In his memoir, “True Compass,” drawn on notes from almost 50 years in public life, Sen. Edward Kennedy describes his behavior after Chappaquiddick as “inexcusable” and admits he made “terrible decisions” at that time. Kennedy had been preparing the book with his editors during his final months and from the little I’ve read, it seems to be a pretty honest portrayal. For instance he says he never questioned the findings of the Warren Commission on JFK’s assassination, and that Bobby’s reaction over the loss of John “veered close to being a tragedy within a tragedy.” He also regrets his “self-destructive drinking.”
But in an editorial for the New York Post, Maureen Callahan asks:
“(How) is it that so many women unabashedly revere Kennedy today? The particulars of Chappaquiddick are especially gory; his behavior after the accident approaches the amoral. Once he broke free and swam to the surface, Kennedy said that he dove back down seven or eight times to rescue Kopechne. Failing, he swam back to shore and checked back into his hotel, and a short time later lodged a noise complaint with the desk clerk. The people in the room next to his were partying and it was interfering with his sleep. Then he asked the desk clerk for the time.
“According to the Aug. 4, 1969 edition of Newsweek, that clerk, Russell E. Peachey, told Kennedy it was 2:25 a.m., then asked, ‘Is there anything else I can do for you?’
“In 1990, GQ magazine ran a devastating profile of Kennedy. Two 16-year-old girls near the Capitol startled by a limo rolling up, the door opening, Ted sitting in the back with a bottle of wine, asking one, then the other, to join. A former aide who acted as Ted’s ‘pimp.’ His penchant for dating women so young that one did not know he was the subject of many books. Kennedy, at a swank DC restaurant with his drinking buddy Chris Dodd, throwing a petite waitress on his dinner table with such force that glass and flatware shatters and goes flying. Then Ted throws her on to Dodd’s lap and grinds against her. He is interrupted by other wait staff. He is later caught in the same restaurant, in a semi-private area, having sex on the floor with a lobbyist.”
The guy was a pig…and worse. But I watched last Saturday’s funeral, including the burial, because it’s history. I was also curious what President Obama would say in the eulogy, all the while reminding myself of my chief tenet when it came to Teddy Jr.’s remarks, wait 24 hours.
The burial was important because it was then we learned that some news publications, i.e., Time, had blown the coverage of the last communications between Kennedy and Pope Benedict; that, indeed, the Vatican had responded even as Time said it hadn’t.
The man who broke this story was none other than Cardinal Theodore McCarrick, whose consistory (elevation to cardinal) I had attended in Rome in 2001. [One of my 2 or 3 most cherished pictures is of the two of us there.]
So McCarrick obtained permission to read Ted’s letter, then the Vatican’s response, as Sen. Kennedy pleads for forgiveness:
“I have always tried to be a faithful Catholic, Your Holiness, and though I have fallen short through human failings, I have never failed to believe and respect the fundamental teachings of my faith….”
“His Holiness prays that in the days ahead you may be sustained in faith and hope, and granted the precious grace of joyful surrender to the will of God, our merciful Father. He invokes upon you the consolation and peace promised by the Risen Savior to all who share in His sufferings and trust in His promise of eternal life.
“Commending you and the members of your family to the loving intervention of the Blessed Virgin Mary, the Holy Father cordially imparts his Apostolic Blessing as a pledge of wisdom, comfort and strength in the Lord.”
You have to read both letters in full, but I’ve tried to give you a sense of the Pope’s bottom line….You’re on your own, Teddy. The Pope dissed him, while at least extending the courtesy of a response. I just found this all fascinating.
I was also fascinated by a passage in Obama’s eulogy that echoed April 1968.
“We cannot know for certain how long we have here. We cannot foresee the trials or misfortunes that will test us along the way. We cannot know God’s plan for us.
“What we can do is to live out our lives as best we can with purpose, and love, and joy. We can use each day to show those who are closest to us how much we care about them, and treat others with the kindness and respect that we wish for ourselves. We can learn from our mistakes and grow from our failures. And we can strive at all costs to make a better world, so that someday, if we are blessed with the chance to look back on our time here, we can know that we spent it well; that we made a difference; that our fleeting presence had a lasting impact on the lives of other human beings.”
It was a great passage, but I was astounded how right after the funeral, some liberal commentators were castigating the president for not taking advantage of the moment and spreading Ted’s liberal gospel. On CNN, Wolf Blitzer seemed incredulous some of his regulars brought this up. “It’s a funeral, not a Democratic convention!” he said in exasperation.
But back to the part beginning “We cannot know for certain….”
“Like anybody, I would like to live a long life. Longevity has its place. But I’m not concerned about that now. I just want to do God’s will. And He’s allowed me to go up to the mountain. And I’ve looked over. And I’ve seen the Promised Land. I may not get there with you. But I want you to know tonight, that we, as a people, will get to the Promised Land!”
–As for Obama and his planned speech to America’s schoolchildren, I totally agree with the opinion of the editorial board of the Wall Street Journal. This should not have been a big deal…with one caveat.
“President Obama’s plan to speak to America’s schoolchildren next Tuesday has some Republicans in an uproar. ‘As the father of four children, I am absolutely appalled that taxpayer dollars are being used to spread President Obama’s socialist ideology,’ thunders Jim Greer, chairman of Florida’s Republican Party, in a press release. ‘President Obama has turned to America’s children to spread his liberal lies, indoctrinating American’s [sic] youngest children before they have a chance to decide for themselves.’ Columnists who spy a conspiracy behind every Democrat are also spreading alarm.
“This is overwrought, to say the least. According to the Education Department’s Web site, Mr. Obama ‘will challenge students to work hard, set educational goals, and take responsibility for their learning’ – hardly the stuff of the Communist Manifesto or even the Democratic Party platform. America’s children are not so vulnerable that we need to slap an NC-17 rating on Presidential speeches. Given how many minority children struggle in school, a pep talk from the first African-American President could even do some good.”
But the problem is the Dept. of Education then provides teachers with suggested lesson plans, including using Obama quotes before the speech and to brainstorm with students on how Obama “will inspire us?”
“(The lesson plans) cross the line between respecting the office and aggrandizing the man who currently holds it.”
–Levi Johnston, the father of Sarah Palin’s grandchild, gave an interview to Vanity Fair wherein he said the former veep candidate wanted to adopt his child so that people wouldn’t know daughter Bristol was pregnant.
“Sarah kept mentioning this plan. She was nagging – she wouldn’t give it up. She would say, ‘So, are you gonna let me adopt him?’ We both kept telling her we were definitely not going to let her adopt the baby. I think Sarah wanted to make Bristol look good, and she didn’t want people to know that her 17-year-old daughter was going to have a kid.”
Seems plausible to me, Sarah being Sarah. I also got a kick out of another observation of Levi’s.
“The Palin house was much different from what many people expect of a normal family, even before she was nominated for vice president. There wasn’t much parenting in that house. Sarah doesn’t cook, Todd doesn’t cook – the kids would do it all themselves,” Johnston told Vanity Fair.
What? No Salmon Sunday?!
When Palin returned to Alaska following the election, Johnston notes:
“Sarah was sad for a while. She walked around the house pouting. I had assumed she was going to go back to her job as governor, but a week or two after she got back she started talking about how nice it would be to quit and write a book or do a show and make ‘triple the money.’ She would blatantly say, ‘I want to just take this money and quit being governor,’ Johnston said.”
–But wait…there’s more! Sarah is taking her first trip to Asia to speak at an annual conference of global money managers in Hong Kong, Sept. 23. She will be paid nicely, no doubt, though just why the CLSA Investors Forum wants to hear from her is beyond me. There isn’t one thing you can learn from this woman if you’re looking for investment themes or ideas.
–Former New York Gov. Eliot Spitzer is contemplating a return to public office, possibly running against newly appointed Sen. Kirsten Gillibrand. As Charlie Brown was heard muttering, “Good grief.”
But high-priced escort Ashley Dupre said, “I read the front page of the New York Post this week and was happy to see that Mr. Spitzer is moving on with his life and considering getting back into politics.” Ms. Dupre, in her blog, also went after her critics, presented for your amusement.
“Get real and get over yourself,” Ashley tells all the women out there who “just love to judge.”
“Let me say this – most girls, to varying degrees, of course, want to be pampered and have nice shoes, designer handbags and gorgeous clothes. I know many women who target guys with money and use them to get these things. They toy with them, flirt, go on dates, have sex and then drop hints about that new dress…or being short on rent money – and the guys deliver it.”
–New York City Democratic Congressman Charles Rangel is so hopelessly corrupt it’s a wonder even his fellow donkeys don’t kick him out the door. And at 79, he’s yet another walking billboard for term limits.
–Then we have this gubernatorial race in New Jersey, where incumbent Democrat Jon Corzine trails Republican Chris Christie 47-37 in the latest Quinnipiac University poll. But this baby is far from over. Corzine is famous for lining black ministers’ pockets to get out the vote, while us Republicans have learned that Christie, formerly a hero as U.S. attorney, is deeply flawed in his own right. I yearn for the days of former Gov. Tom Kean, about the last decent politician in America, come to think of it.
–Remember James Traficant, the fiery Ohio congressman? He was released from prison this week after serving a seven-year sentence for bribery and racketeering. Traficant, 68, was known for his wild hair and punctuating floor speeches with the phrase “Beam me up.” He is still a hero to many in his Youngstown district…sadly.
–According to the European Society of Cardiology, several experts said doctors should focus on persuading patients to exercise more rather than go for an angioplasty.
–Speaking of exercise, I’m moving over the coming months to a new place that is near my old high school’s track where I used to bump into ABC’s Charlie Gibson from time to time, going back to the late-80s. So now that he’s retiring, and assuming even at 66 he still jogs, I hope to see him again. It would be like old times, after all. “Good morning, Mr. Gibson. It’s a beautiful day.” “Grunt.” Charlie doesn’t have a lot of personality.
But what’s this? “Veteran anchor Charlie Gibson was so ‘livid’ at the selection of Diane Sawyer as his successor that he didn’t even mention her in his retirement announcement”? As the New York Post reports, “It’s not clear why Gibson would be so unhappy.” Film at eleven.
–On the global warming front, the National Center for Atmospheric Research concludes the Arctic is warmer than it’s been in 2,000 years, even though it should be cooling due to the Earth’s orbit that causes the region to get less direct sunlight. Said researcher Bette Otto-Bliesner:
“If it hadn’t been for the increase in human-produced greenhouse gases, summer temperatures in the Arctic should have cooled gradually over the last century.”
The most recent ten-year interval, 1999 to 2008, was the warmest of the last 2,000 years. But the greenhouse gas angle not only prevented cooling, it could yet preclude another Ice Age, which otherwise would occur over the next 4,000 years, the study published in the journal Science concludes.
Personally, I just want to see a Woolly Mammoth before I die, but that’s a story of a different sort, involving scientists tinkering with DNA and such.
–The director of India’s National Institute of Virology warns that with a rising swine flu death toll (over 100…which I hasten to add needs to be put in perspective…India being a rather large place with a billion people) and with India’s unregulated health industry, unproven remedies such as cow urine are being snapped up. I’ll pass on this one and instead wash my hands an extra ten seconds.
–This is depressing. NASA’s current Constellation Project envisions landing on the moon by 2020 and on Mars by 2037. But now budget cuts render this modest agenda impossible. [11 years to get back to the moon? Give me a freakin’ break.] NASA has its head up its butt and there is zero national leadership on this topic, especially from Spock, err, Obama.
Then again, as the Washington Post editorialized, it’s also time to open space up to more entrepreneurs. Turning the space station over to them would be a good first step.
“Why are we so interested in bringing the Mars astronauts home again?”
Bingo! Now you’re talkin’. That’s why I’ve always recommended we send snowboarders. They don’t seem like they particularly care about anything but the conditions on the slopes, anyway. And there are some skateboarders in my area that would qualify as well. They don’t have a clue what’s going on in the world, either. So start launching them.
Lawrence Krauss, who I hasten to add doesn’t necessarily share my opinions on the ideal candidates, also notes:
“Moreover, if the radiation problems cannot be adequately resolved then the longevity of astronauts signing up for a Mars round trip would be severely compromised in any case. As cruel as it may sound, the astronauts would probably best use their remaining time living and working on Mars rather than dying at home.”
Actually, Krauss’ own studies show that older astronauts and scientists have told him “they would be willing to live out their remaining years on the red planet or elsewhere.”
Frankly, with the shape the New York Mets’ franchise is in these days, and with zero hope for the future, sign me up, too! [I’d prefer two double beds with Internet access and a mini-bar stocked with Pilsner Urquell, if available.]
Pray for the men and women of our armed forces, and all the fallen.
Dow Jones -1.1% [9441]
S&P 500 -1.2% [1016]
S&P MidCap -1.5%
Russell 2000 -1.6%
Nasdaq -0.5% [2018]
Bears 24.1 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
