I’m going to limit my comments on the economy as much as possible since I’ll have my yearend stemwinder on Jan. 2, at which time I’ll unveil the forecast for 2010, but for now the economic news was solid this week, with November industrial production up 0.8%, better than expected, along with solid readings for the leading economic indicators\’ benchmark as well as November housing starts, up 8.9%.
The Federal Reserve’s Open Market Committee met for the final time of the year and reiterated yet again that economic activity is likely to remain weak, inflation subdued, and the Fed is going to keep interest rates near zero for an extended period of time. It’s still all about a weak labor market and tight credit.
And, as a big storm threatens a large segment of the U.S. population this last shopping weekend before Christmas, it’s a lock retail sales will be down, or flat at best, vs. last year’s desultory performance. The Wall Street Journal’s Gerald Seib nailed it in his column on Friday when he spoke of the general lack of confidence on the part of the American public these days. Whereas there was a burst of optimism around mid-year when we realized we weren’t falling off a cliff, today there is a deep-seated unease that will not go away anytime soon. It’s best spelled out in a Journal poll this week that showed 2 in 3 do not believe the next generation will be better off than today’s. Without giving away all my thoughts on 2010, this is an important item for me, and I’ll just add for now that due to geopolitical reasons there will come a time next year when we’ll feel about as low as you can get.
There was some good news on the corporate front in the here and now, though. While guiding earnings lower, bellwether Federal Express nonetheless expressed optimism the U.S. economy had reached a turning point in the current quarter. And tech heavyweights Oracle and Research in Motion reported solid earnings and revenues.
But global equity markets were generally flat on the week amid concerns about sovereign debt, especially in Europe, and more specifically the likes of Greece and Spain (along with fellow “PIIGS” Portugal, Italy and Ireland). It does beg the question, how will the European Union handle this? Do they, as Germany suggests, bail out their brethren? There is nothing in the charter that spells out how to do this. Imagine the precedent it would set. In the meantime the euro currency was taken out back and shot…which of course is good for European exporters, conversely…while the beaten down U.S. dollar rallied big, once again perceived as a safe haven. No surprise from yours truly, seeing as I haven’t been concerned about the dollar for ages. What you have in Europe, though, is a classic case of the haves vs. the have nots, North vs. South, save for the still struggling Baltics.
A few other thoughts before I get to bigger topics. Leading economist Martin Feldstein said “The recession isn’t over. It will be a while before we have enough information to know if (it) ended,” Feldstein being a member of the NBER’s Business Cycle Dating Committee that decides when recessions start and end.
Former Fed Chairman Alan Greenspan said, “We have a level of employment…which is barely adequate to staff the level of output. It seems to me virtually inevitable…that employment would start to come back fairly quickly.”
Abu Dhabi came to the temporary rescue of Dubai World in providing $10 billion to pay off some of its debts, including $4.1 billion due bondholders and select contractors last Monday, though it’s not known to what extent Abu Dhabi and other emirates may step up in the future and whether or not they view Dubai World as their responsibility. The debt had been originally sold with a kind of “implicit guarantee” of government support and Monday’s action only reinforced this.
On the issue of health-care legislation and the looming Christmas recess, it would appear the fate of the Senate bill rests in the hands of Democratic Senator Ben Nelson of Nebraska in order for there to be a filibuster proof 60 votes, but the Senate bill hardly resembles what President Obama laid out during his campaign and is far from universal coverage, let alone having a “public option,” a government-run health-insurance alternative. Republican Senator Olympia Snowe, who could still climb aboard, but only down the road, said the current timetable “is totally unrealistic” in looking for a vote by Christmas. Importantly, many in President Obama’s own base are none too happy.
Rich Lowry / New York Post
“(Senate Majority Leader) Harry Reid can rightly claim to be making history. If he passes health-care reform, he’ll depend on a series of historic ‘firsts.’ It’d be the first time Congress had passed a major new entitlement program without bipartisan support; it’d be the first time it passed such a program without popular support; and the first time it passed such a program without knowing or particularly caring what’s in it.
“John McCain complained last week that he had no idea what constituted the highly touted backroom deal that Reid sent to the Congressional Budget Office for evaluation. The No. 2 Senate Democrat, Dick Durbin, reassured McCain that he didn’t know, either. This is bipartisanship Harry Reid-style – nontransparency for everyone.”
Among the hidden proposals is giving the uninsured aged 55-64 entrée into Medicare, long reserved for 65 and older. For this reason alone, a momentous change, the bill should be shelved until January so that there can be a full debate. It’s astounding Reid seeks no such thing.
“Reid’s struggle getting to 60 makes some liberals fear that America has become ‘ungovernable.’….
Michael Gerson / Washington Post
“Democratic health reform legislation promises everything to everyone while imposing a series of hidden burdens to make a massive new entitlement affordable, at least on paper. So its authors are in a game of beat the clock: Pass the legislation before those burdens are fully disclosed to the public….
“The entire Democratic health reform effort is foundering, as its deep bow enters the shallow channel of fiscal reality. And that splash you hear is the sound of various groups being thrown from the ship to lighten the load.”
Then there’s Copenhagen and the United Nations conference on climate change. Today, according to a Washington Post/ABC News poll, only 45% approve of President Obama’s handling of the global warming issue. Four in 10 also place little trust in what scientists have to say about the environment, which is why, I repeat, this whole issue has been framed improperly. It’s about global pollution, including clean water.
But, in a USA TODAY/Gallup survey, if the question is asked whether you want a specific treaty limiting greenhouse gases, by a 55-38 margin Americans support this. However, by a 7-1 margin, we want the administration to focus instead on improving the economy.
Editorial / Washington Post
“The Copenhagen climate conference…was supposed to produce a landmark accord on climate change. It won’t. Hopes for a binding treaty died weeks before the meeting. And with some observers terming the proceedings ‘Constipagen,’ it’s all too easy to wonder whether the conferees will even be able to conclude a less ambitious political agreement….
“The big fissures generally lie between rich and poor. Developing nations variously want rich countries to commit to emissions cuts on the order of 25 to 40 percent of 1990 levels by 2020; to provide at least $100 billion a year by 2020 to help poorer countries adapt to climate change, curb deforestation and decrease the carbon intensity of their development….
“Developed countries appear ready to provide about $10 billion annually for the next few years to help poor nations adapt to climate change…But they shouldn’t commit to much more without some critical concessions, particularly from the big emitters that will account for so much future emissions growth, notably China.”
Regarding China, the deal is they’ll agree to targets, and have already committed to achieving big cuts, but they don’t want anyone looking over their shoulders! Of course it’s not as if President Obama can jack them up against the wall…something about massive amounts of U.S. debt that they own, you understand.
And so late Friday, a non-binding agreement was announced between the U.S., China, India, Brazil and South Africa that President Obama had to admit was hardly enough to prevent global warming. “We have much further to go,” he said.
As in there were no emissions targets after all and transparency is virtually non-existent, it would seem. Not that I really care, mind you, it’s just all a farce, and a real humiliation for the likes of Obama and British Prime Minister Gordon Brown.
What might be of significance down the road is that it was apparently a real tension convention between the U.S. and China on Friday, and that’s not necessarily good. Far more next time as further details emerge.
Lastly, Iran remains a potential game-changer. Israel’s chief of military intelligence, Maj. Gen. Amos Yadlin, in rare public comments, said Iran was nearing a breakthrough and that there is enough enriched uranium at Natanz for a bomb, though it needs to be enriched further. Bottom line, the nuclear technology clock “has almost finished ticking.” Earlier, the London Times reported that Iran is working on a neutron initiator, a key final component of a nuclear weapon, while for its part, Iran tested a long-range missile with a supposed range of 2,000km (1,240 miles), giving it an ability to hit Israel. Tehran also laid out a bogus plan to exchange uranium for nuclear fuel, but only in stages, which leaves Iran in control of enough material to make a bomb. Friday night, President Ahmadinejad said he was prepared to reach an agreement on nuclear fuel “but not in a climate where (the U.S. and Western powers) threaten us.”
Iran’s leadership also claimed the opposition, which demonstrated anew in large numbers, tore up a picture of Ayatollah Khomenei, giving the Revolutionary Guard and its thugs, such as the Basij, an excuse for a further crackdown. But opposition leaders said the whole incident was trumped up and images fabricated so that they could be used as a pretext for a new wave of repression.
Defense Secretary Robert Gates reiterated that while he won’t take any options off the table, “the reality is that any military action would only buy some time, maybe two or three years.” Of course this is what you’d expect him to say. Israel would be happy to know it bought two years. That gives them and the forces of good around the world two years to work on a bomb plot that takes out Iran’s leadership during one of those Friday prayer sessions. [I’m only half-kidding. A cruise missile would also do the trick, but it would kill too many civilians.]
Israeli Defense Minister Ehud Barak stated the obvious when he said that “Egypt or Turkey or Saudi Arabia…can hardly afford not being nuclear if Iran turns…nuclear.” But it constantly needs to be said. Barak also noted, “There should be a time limit for all these attempts to block (Iran) through sanctions.”
There are some in Israel who say they will wait until the end of 2010, deferring to the United States and international diplomacy. I can’t possibly fathom that.
Danielle Pletka / Washington Post
“Iran is proceeding with an aggressive nuclear weapons program, and a few dogged holdouts notwithstanding, much of the Obama administration has come to terms with that reality. Official Washington has resigned itself to pursuing a containment policy that some argue will limit Iran’s ability to proliferate, terrorize and otherwise exploit being a nuclear power. But it is wrong to think a nuclear Iran can be contained….
“Advocates of containment and deterrence suggest that Iran will be encircled by a ‘like-minded group’ of nations bent on raising the costs of adventurism. This absurd notion rests on weak reeds in Europe and Arabs deeply hesitant to act….
“Worse, the common notion of deterrence is ill-designed for the regime in Tehran. Perhaps it is unfair to suggest that today’s Iranian leadership is fashioned from different cloth than the Soviets; after all, we are often reminded that the doctrine of mutually assured destruction worked with the Soviet Union for half a century. But even the most ardent hawks have serious doubts about U.S. resolve to ‘totally obliterate’ Iran in the event of a nuclear attack on, say, Israel – despite Hillary Clinton’s threat, as a presidential candidate, to do just that….
“Many also scoff at the notion that a responsible Iranian leader would risk using or transferring nuclear weapons or technology. We are told that Ahmadinejad (who most acknowledge is crazy enough to use such a weapon) won’t make the final decision. But the regime is remarkably opaque, and shifting power centers ensure that even capable intelligence agencies have low levels of certainty about decision-making in Iran’s nuclear program. If our intelligence community’s prognostications about Iran’s reaction to the Obama engagement policy are any indication (apparently they predicted that Iran was desperate to talk), then it seems safe to conclude that no one knows whose finger will be on Iran’s nuclear trigger….
“Privately, Obama administration officials confess that they believe Israeli action will preempt our policy debate, as Israel’s tolerance for an Iranian nuke is significantly lower than our own. But subcontracting American national security to Israel is an appalling notion, and we cannot assume that an Israeli action would not provoke a wider regional conflict into which the United States would be drawn….
“(After) a year of false starts and failed initiatives, the Obama administration should be pressed to find a new way forward. At the very least, we must hope the president’s new policy will not find footing in the false notion that a nuclear Iran can be contained.”
But it would appear the White House is indeed content to let Israel act. Haaretz is reporting that when President Obama met with Chinese President Hu Jintao last month, he warned Hu that the U.S. cannot indefinitely prevent Israel from launching strikes on Iran’s nuclear facilities if China maintains its opposition to new punitive measures. It’s possible Friday’s dust-up in Copenhagen between the U.S. and China makes Chinese cooperation even less likely…and an Israeli strike more inevitable.
–Stocks finished mixed, with the Dow Jones losing 1.4% to 10328, and the S&P 500 0.4%, but Nasdaq tacked on 1.0% and the small-cap Russell 2000, 1.7%. Aside from Citigroup’s dismal stock sale (more to follow), Meredith Whitney’s earnings cuts for some of the leading financials didn’t help matters.
–U.S. Treasury Yields
Treasuries were unchanged on the week as the reading on producer prices for November was up 1.8%, far hotter than expected, but the core reading advanced 0.5%. The CPI added 0.4% and was unchanged when taking out food and energy. Lots of further data on the housing market this coming week in what could be a volatile holiday-shortened one.
[As for Ben Bernanke being named Time Magazine’s “Person of the Year,” he was the correct choice in helping prevent a total collapse of the financial system, even if he had a large hand in bringing us to the brink in the first place. Time selects those who’ve had the greatest impact, for good or bad (Hitler and Stalin being past recipients, for example) and Bernanke fits the bill.]
–Citigroup repaid the government $20 billion that, when coupled with the government’s 34% ownership stake, took it out of its $45 billion TARP funding and back to independence, save for the 34%. To do this Citi issued $17 billion in stock (plus $3.5 billion in other securities) and ended a separate government agreement protecting it against losses on nearly $300 billion in hard to value assets.
But the issuance couldn’t have been handled more poorly and the Citi block was sold at $3.15, with the government opting not to sell its 34% that it had initially received at $3.25, but could have sold at $4.50 earlier in the year. Now the government says it will gradually unload its shares over the next 12 months so you have this constant overhang until they get rid of it all.
Citi, which deserves no sympathy, was upset that Treasury allowed Wells Fargo to exit TARP at the same time by letting them launch a simultaneous stock sale that took away from demand for Citi’s offering.
The bottom line is both probably should not have been allowed to exit TARP in the first place because they probably weren’t really ready to from a capital standpoint and are hardly in a position to do a lot of new lending, which was the freakin’ goal of TARP in the first place; allow the institutions to stabilize their books and then come out stronger.
[Separately, the Abu Dhabi Investment Authority filed a grievance against Citi, alleging it had been misled when it invested $7.5 billion in the bank two years ago, an investment that now requires Adia to buy Citi shares at $31.83, or over ten times the current share price! Good god.]
–Meanwhile, speaking of lending, President Obama called many of the country’s leading financiers to the White House (except for those who couldn’t make their flights, embarrassingly) and told them to start lending. Remember how a year ago I said Bush should give the bankers the LBJ treatment in the same regard? Of course you can’t really force the banks to make bad loans these days, but there are good, loyal credits getting screwed. It’s also a fact that among the 22 largest companies that received capital from TARP, loan originations from those banks totaled $239 billion in September, down 14% from an average for the previous six months of $279 billion. [Bloomberg]
–Bank of America stayed inside in selecting Brian Moynihan to be its new CEO, replacing Ken Lewis effective Jan. 1, after Bank of New York’s CEO couldn’t work out an agreement that satisfied him. Moynihan had most recently been BofA’s consumer and small business banking chief. He first joined the bank as part of the purchase of FleetBoston Financial Corp. in 2004.
–It looks like chaos for travelers going through Britain this holiday season as baggage handlers and check-in staff at Heathrow and Aberdeen airports are the latest to announce strikes in tandem with work stoppages by British Airways cabin crews. The 12-day strike by BA workers is due to start Dec. 22. Normally at this time of year, BA would be ferrying 90,000 passengers a day.
–Credit Suisse Group agreed to pay a whopping fine of $536 million to settle a Justice Department investigation, with Credit Suisse admitting to violating U.S. economic sanctions by hiding illegal business it was doing with Iran. It was the biggest forfeiture ever against a company for violations of this type. The government’s papers say:
“Credit Suisse’s internal communications showed a continuous dialogue about evading U.S. sanctions spanning approximately a decade.”
The goal of sanctions, of course, is to keep dollars out of the hands of those intending to do us harm, either at home or in targeting U.S. interests abroad. Attorney General Eric Holder called the scope of Credit Suisse’s financial misconduct “astounding.”
–Economist Nouriel Roubini said gold faced “significant risks of a downward correction” owing to the fact “The recent rise in gold prices is only partially justified by fundamentals, and is in part a bubble that could easily go bust.”
–Exxon Mobil made its first major acquisition since the two came together in 1999 in acquiring natural gas producer XTO Energy for $31 billion, a major strategic move for Exxon as demand for cleaner nat gas rises. Exxon can also now help shape a national energy policy that will increasingly turn to natural gas, such as with T. Boone Pickens’ proposal to make it the primary transportation fuel.
–The six-county Southern California real estate market saw the median price increase 1.8% in November from October to $285,000.
–The government issued a sweeping recall of roll-up blinds and shades because of the risk children could be strangled by the cords. Frankly, I would have made the announcement last summer to protect Mets fans from their personal hell.
–Congratulations to Boeing for finally getting the 787 Dreamliner off the ground as it went on its first test run Tuesday. The company has 840 orders for the jets, with first delivery slated for late next year. The plane produces far lower emissions and uses 20 percent less fuel than comparable craft.
But how many of the 840 will actually be delivered? On Friday, Ryanair ended discussions with Boeing to purchase as many as 200 new 737-800 aircraft after being unable to extract concessions from Boeing.
–A Paris court ruled that Google is breaking French law by digitizing books, handing down a daily $14,300 fine as well as damages in the amount of $430,000 to a publisher, representing a group of them. It’s not about the money…it’s the principle of the matter. Good for the French.
–BlackBerry maker Research in Motion reported revenue that was up 41% in the third quarter of the company’s fiscal year, surpassing expectations, as a record 10 million BalckBerry smartphones were shipped.
–General Motors hopes to repay $6.7 billion it borrowed from Uncle Sam by June, with new chairman Edward Whitacre Jr. making repayment a priority; though having received $50 billion from the U.S. and Canadian governments this would be but a drop in the bucket. Separately, GM announced it is shutting down the Saab brand after not being able to find a buyer. It was a crappy car…good riddance.
–Back in January 2008, my high school gang and I went to Las Vegas to celebrate our collective 50th birthdays and we were enamored with the CityCenter project; as in we thought there was no way it would ever be completed. Incredibly, it has been and the owners and builders deserve a ton of credit. It involved 10,000 construction jobs and will now employ 12,000. Not bad…not bad at all…unless you’re the competition, who just saw thousands more hotel rooms go onto a still very weak market. The average room rate for this year is 23% lower than the 2008 average, and 2008 was 10% below that of 2007.
[President Obama is supposed to tour CityCenter on Dec. 23 en route to his Christmas holiday in Hawaii. You would think if he does do so that he’d make some kind of statement that it is OK for companies to hold conventions here again after the stigma that developed against Vegas. Obama would really be coming to town to support Harry Reid’s reelection bid, I imagine.]
–Spending on tourism increased 6.4% in the third quarter after rising 0.2% in the second. Spending on accommodations climbed 17%, primarily due to an increase in leisure travelers lured by cheaper rates, according to the Commerce Department. But, while business improved, there were further job losses in the sector, including in air transport.
–The European Union finally ended its last pending antitrust case against Microsoft, with Microsoft agreeing to a pop-up allowing PC users to choose from 12 or more Web browsers.
–Here in the U.S., the FTC accused Intel of shutting out the competition by “running roughshod over the principles of fair play.” I love how “free marketeers” immediately decried the move, saying that prices are lower than ever for consumers so who cares. Well if they broke the law (and I have no idea of knowing if they did) then screw ‘em.
–If you default on some credit cards from bank issuers in China and Hong Kong you could be jailed if you fall three months behind and receive a second warning notice, China’s top court ruled. Credit card debt has been soaring, up 126% in the third quarter, year over year.
–Companies in Hong Kong and China have raised about $52 billion from initial public offerings this year, according to Dealogic, or twice the amount of American IPOs. Hong Kong alone raised $27 billion, making it the world’s top city for equity capital raising for the first time, going back to 1997. Since 2000, Wall Street has led every year except for 2006, when London was tops. [Investment News / AP]
–Update: Jeffrey Gundlach, the star bond manager who left TCW Group (taking 40 employees with him as of Thursday), launched an investment firm called DoubleLine that will be affiliated with Oaktree Capital Management. Gundlach had managed about $65 billion at TCW and will look to bring much of it over. As for the name DoubleLine, it’s a reference to the painting style of one of his favorite artists, Piet Mondrian. The message of double lines on the road – meaning “You don’t cross the double line of risk.” Whatever.
–The other day the Wall Street Journal’s Alan Murray interviewed Paul Volcker on the impact of financial innovation.
Volcker: “A few years ago I happened to be at a conference of business people, not financial people, and I was making a presentation. The conference was being addressed by a very vigorous young investment banker from London who was explaining to all these older executives how their companies would be dust if they did not realize the joys of financial innovation and financial engineering, and that they had better get with it.
“I was listening to this, and I found myself sitting next to one of the inventors of financial engineering. I didn’t know him, but I knew who he was and that he had won a Nobel Prize, and I nudged him and asked what all the financial engineering does for the economy and what it does for productivity.
“Much to my surprise, he leaned over and whispered in my ear that it does nothing – and this was from a leader in the world of financial engineering. I asked him what it did do, and he said that it moves around the rents in the financial system – and besides, it’s a lot of intellectual fun.
“Now, I have no doubts that it moves around the rents in the financial system, but not only this, as it seems to have vastly increased them….
“I made a wiseacre remark that the most important financial innovation that I have seen the past 20 years is the automatic teller machine. That really helps people and prevents visits to the bank and is a real convenience.
“How many other innovations can you tell me that have been as important to the individual as the automatic teller machine, which is in fact more of a mechanical innovation than a financial one?”
–Roy E. Disney died. He was 79 and the last member of the Disney family to work in the entertainment conglomerate built by his uncle, Walt, and father, Roy O. Disney. Roy E. helped bring about a resurgence in animation at Disney, overseeing the creative process for films such as “The Little Mermaid,” “Beauty and the Beast” and “The Lion King.” Roy E. was also the leader of a shareholder uprising that led to the departure of Michael D. Eisner as CEO and chairman.
What a childhood he had, though, as he played at the studio with animators testing material out on him. Disney liked to refer to the past in defining the future, as he once told a biographer: “The goal is to look over our shoulder and see Snow White and Pinocchio and Dumbo standing there saying, ‘Be this good.’ We shouldn’t be intimidated by them; they’re an arrow pointing someplace.” [Brooks Barnes / New York Times]
–Nobel prize-winner Paul Samuelson died. He was 94. Samuelson became the first American to win the Nobel Prize for Economics in 1970 and was responsible for a popular college textbook titled… “Economics.”
–Despite the recession, box-office revenue for Hollywood is up 8.6% in the U.S. and Canada, prior to the launching of “Avatar,” and will end up topping $10 billion, an all-time record. It’s not just rising ticket prices…attendance is up 4.5%.
–The ex-wife of hedge-fund billionaire Steven Cohen, Patricia Cohen, is back after 20 years and accusing him of cheating her out of millions, as well as profiting from insider trading. A new suit filed in Manhattan federal court alleges that Cohen hid assets from her when they divorced in 1989 and as a result owes Patricia $300 million. Not to worry, though, because Steven Cohen is said to be worth $5.5 billion. But it’s the insider trading angle that’s interesting, with Patricia bringing up General Electric’s 1985 deal to buy RCA, which allegedly Stevie knew about before it was announced.
–Danish brewer Carlsberg raised its earnings outlook for 2009 largely because of Russia, as in Russians are stockpiling beer due to a big increase in the tax on it come New Year’s Day.
–Morgan Stanley CEO John Mack refused to take a bonus for a third straight year. It’s gotten to the point where I feel like sending him some Harry & David pears, know what I’m sayin’?
–Note to PajamaGram. Why did you start airing your television commercials so late this year? Actually, doesn’t Tiger’s harem resemble the PajamaGram babes? Shouldn’t he be in the spots?
–The Obama administration announced the Shinnecock Indians on Long Island meet the criteria for federal recognition, the end of a 30-year court battle, so hello casino!!! Yes, the 1,066-member Shinnecock Indian Nation, now mostly poor, can do what every other Indian nation has done in America, though the rather wealthy White Man enclave surrounding the Shinnecock’s 800 acres is none too pleased with this development.
Pakistan: Relations between Washington and Islamabad are souring anew with little apparent cooperation on the battle against the insurgents in Waziristan and the Swat valley. Pakistani officials are telling American generals to cool it with the pressure, plus they are making life difficult for U.S. embassy staff, such as in delaying visa extensions to 135 of them.
Ralph Peters / New York Post
“The Pakistani military and intelligence services still believe that ‘their’ terrorists can be controlled and used. Ties to key Taliban factions go so deep that even the fundamentalist insurgency that surged to within 60 miles of the capital failed to convince the Pakistani security apparatus that there are no good fanatics. Even the New York Times has finally recognized what (I have) claimed for years – that the Pakistanis simply will not give up ‘their’ Taliban, which they view as a strategic reserve (and no Obama magic is going to change that). Meanwhile, the Pakistanis profit from our predicament and may even be shielding top al Qaeda leaders, as well.”
It starts with President Asif Ali Zardari, who is not only incompetent but has been proved to be hopelessly corrupt. Recently Zardari rebuffed President Obama’s pleas to step up Pakistan’s counterinsurgency.
But Zardari faces a huge issue of a different kind, his very survival as the top court here struck down an amnesty deal that had protected Zardari and his allies from further corruption charges. The Supreme Court’s ruling requires Zardari to step down and face criminal charges he avoided two years ago. He doesn’t have to leave, or resign right away, but the pressure for him to do so could become overwhelming.
Afghanistan: Talk about depressing…from the London Times’ Miles Amoore in Kabul.
“Taliban insurgents who have infiltrated Kabul are nailing ‘night letters’ to the doors of policemen, soldiers and government workers, warning them to leave their jobs or face punishment.
“The militants are being welcomed in the Afghan capital’s poorer areas among inhabitants who are disaffected with corruption, and who supply them with food, cash and weapons.”
Israel: In an absurd move, a British arrest warrant was issued for former Israeli foreign minister Tzipi Livni, charging her with war crimes allegedly committed by Israeli forces in the Gaza Strip last winter. The warrant was later pulled but, as John Bolton noted in an op-ed for the Wall Street Journal, the fallout will linger. It’s also curious, as Bolton points out, that no warrants have been issued for the likes of Kim Jong Il or Mahmoud Ahmadinejad.
“Nonetheless, human-rights activists who view their morality as higher than that of elected governments are satisfied by nothing less than prosecution.”
At least British Foreign Secretary David Miliband expressed “shock” at the arrest warrant, while Israeli Prime Minister Netanyahu blasted the Brits for allowing moves like the Livni arrest warrant to continue, year after year.
“The operation in Gaza was necessary and was meant to restore Israel’s deterrence and did restore Israel’s deterrence. The fact that Israel embarked on such an operation after withdrawing from the Gaza Strip and restraining itself for years in face of rocket fire shows that it was necessary…This is what any normal country that wants to defend its civilians from terror would do.”
Meanwhile, regarding Hizbullah, Israel is concerned over the growing alliance between the Lebanese government and the terrorists and is also worried that weapons the U.S. is sending the Lebanese Armed Forces will end up in Hizbullah’s hands. How does Israel go about its targeting in an inevitable future conflict? Can it really draw a distinction between the LAF and Hizbullah?
Iraq: The Wall Street Journal reported that militants here, utilizing $26 off-the-shelf software, can hack into U.S. Predator drones and pick off live video feeds. The military said it is working out a computer fix. There is no evidence fighters were able to take over a drone’s operations, but the video gave them an idea of what was being targeted.
And on Friday, Iranian forces seized an oil well across the disputed border with Iraq, though this should be settled diplomatically as relations between the two are pretty good these days, Iran having already stretched its tentacles well into Iraq.
North Korea: In one of the more curious developments of the week, Thai officials seized a cargo aircraft carrying tons of weapons that was flying from North Korea and probably bound for Iran. The crew carried passports from Eastern European countries. The airplane was seized when it requested refueling in Bangkok and was inspected after a tip-off from American officials. Such cargo is banned under a recent UN resolution after North Korea tested missiles in May. Pyongyang is also in desperate need of the estimated $18 million the cargo was worth.
Henry Kissinger / Washington Post
“It is time to face realities. This is the 15th year during which the United States has sought to end North Korea’s nuclear program through negotiations. These have been conducted in two-party and six-party forums. The result was the same, whatever the framework. In their course, Pyongyang has mothballed its nuclear facilities twice. Each time it ended the moratorium unilaterally. Twice it has tested nuclear explosions and long-range missiles during recesses of negotiations. If this pattern persists, diplomacy will turn into a means of legitimizing proliferation rather than arresting it. Why should Pyongyang alter its conduct when, within weeks of the end of a test series, an American special representative appears in Pyongyang to explore the prospects of new negotiations? At a minimum, before any formal talks take place, North Korea should be required to return matters to where they were when it broke off talks a year ago and refused to receive (special representative Stephen) Bosworth, specifically mothballing its plutonium production.”
Russia: The United States and Russia have begun discussions on Internet security and limiting military use of cyberspace, which is a good thing, but on the higher profile arms talks, while progress is being made there are still major hang-ups in Moscow with regard to verification and control measures. The Russians don’t want intrusive inspections. Said Foreign Minister Sergey Lavrov, “It’s time to get rid of excessive suspiciousness, especially as both presidents have said repeatedly they want to see a new level of U.S.-Russian relations based on trust, mutual respect and equality.” As if you can trust the Russians on anything, snickered the editor.
Venezuela: One of my favorite topics, going back years, is the growing relationship between Caracas and Tehran, which this week the Journal’s Bret Stephens highlighted; specifically a nuclear axis, including suspected uranium mining sites in Venezuela now being exploited by Iran. Stephens also points out that “For nearly three years, Venezuelan airline ConViasa has been flying an Airbus 340 to Damascus and Tehran. Neither city is a typical Venezuelan tourist destination, to say the least. What goes into the cargo hold of that big plane is an interesting question.”
“Forty-seven years ago, Americans woke up to the fact that a distant power could threaten us much closer to home. Perhaps it’s time Camelot 2.0 take note that we are now on course for a replay.”
But at least the administration is aware. Secretary of State Hillary Clinton called on the likes of Venezuela and Bolivia not to get too cozy with Iran.
“I think if people want to flirt with Iran, they should take a look at what the consequences might well be for them. And we hope that they will think twice and we will support them if they do.”
On a totally different matter, if I’m a major league ballplayer that hails from Venezuela, I would get the hell out of there. We’ve already seen incidents where family members were kidnapped, or even killed, and it’s only a matter of time before a really high-profile player meets an untimely end. It also goes without saying that the same folks should get all their assets out immediately.
Colombia: In a serious development, Colombia’s two biggest rebel groups, FARC and the ELN, have announced they intend to unite. FARC is the more militaristic of the two.
Japan: The new prime minister, Yukio Hatoyama, is turning out to be a supreme pain in the ass and the Obama administration is rightfully furious. Hatoyama has delayed implementing a long-planned relocation of U.S. forces on Okinawa and little junior needs to understand he can’t jerk us around. Hatoyama’s coalition is already showing signs of falling apart so he is pandering to the more radical elements.
Meanwhile, Chinese Vice President Xi Jinping, the apparent successor to President Hu Jintao in 2012, paid a visit here and got in hot water because he sought a royal audience 19 days in advance, not a month as is customarily required by Japan’s Imperial Household Agency, citing the emperor’s poor health. So Hatoyama asked the emperor to meet Xi anyway and now the conservative opposition said the prime minister was kowtowing to China.
China/Taiwan: In a good move, the New York Times reports the Obama administration will proceed with arms sales to Taipei, though the White House has yet to officially notify what will be a ticked off Beijing, nor Congress. So, in a tit-for-tat, China may break off military cooperation agreements with the U.S. What’s not known is whether Taiwan will receive advanced F-16 fighter jets per its longstanding request.
Italy: You can’t help but feel for Prime Minister Silvio Berlusconi and the horrifying attack he suffered at the hands of a mentally deranged man last Sunday. Berlusconi will require weeks of treatment for facial injuries and mental trauma, the former being far more serious than first thought.
Britain: Remember Abdul Baset Ali al-Megrahi, the Lockerbie bomber who was released for humanitarian reasons to die in his native Libya? He is nowhere to be found. Megrahi is supposed to be in regular communication with his monitors in Scotland and can not leave Tripoli.
Mexico: Congratulations to the government of President Calderon for killing the “Boss of bosses,” Arturo Beltran Leyva, perhaps the top drug lord. By all accounts it was a highly professional military operation and is a major coup for Calderon.
Zimbabwe: As the decade winds down, look who won’t die…Robert Mugabe. The president is now warning of new elections, which could entail another round of violence and repression. A key here, however, could be South African President Jacob Zuma, because the last thing Zuma wants is instability in neighboring Zimbabwe while he’s hosting the World Cup.
–In the latest NBC/Wall Street Journal survey, President Obama’s job approval rating is down to 47% (it was 61% in April). In the ABC/Washington Post poll, Obama’s job approval is 50%, and it’s 49% in a Battleground survey.
The Journal survey has just 33% believing the country is headed in the right direction, while 55% believe we’re headed in the wrong one. Only 42% approve of Obama’s handling of the economy.
In the Battleground poll, disapproval of the job Congress is doing has risen to 68%, “an all-time high,” and 77% among independent voters. The problem for Democrats in 2010 is that their more passionate supporters are less likely to turn out compared to the most angry in the independent camp, the latter having given Obama his edge in ’08. In a generic contest between an unnamed Democratic candidate and an unnamed Republican candidate for Congress, 42% of those surveyed said they would support the Republican; 40% opted for the Democrat. But among independents, it’s 40% for the Republican, 19%, the Democrat.
–Peggy Noonan / Wall Street Journal, on President Obama’s Oslo speech, which is still reverberating in some circles.
“(The) president used an audience of European leftists to place himself smack-dab in the American center. He said, essentially: War is bad but sometimes justified, America is good, and I am an American. He spoke of Afghanistan as ‘a conflict that America did not seek; one in which we are joined by 43 other countries – including Norway – in an effort to defend ourselves and all nations from further attacks.’…He said he had ‘an acute sense of the cost of armed conflict’ and suggested America’s efforts in Afghanistan fit the criterion of the concept of a ‘just war.’ It continues to be of great value that a modern, left-leaning American president speaks in this way to the world. ‘The world’ didn’t seem to enjoy it, and burst into applause a resounding once.
“He quoted Martin Luther King, when he received the Peace Prize: ‘Violence never brings permanent peace. It solves no social problem: It merely creates new and more complicated ones.’ But Mr. Obama added that ‘as a head of state sworn to protect and defend my nation,’ he could not be guided only by Dr. King’s example. ‘I face the world as it is, and cannot stand idle in the face of threats to the American people.’ Evil exists: ‘A nonviolent movement could not have halted Hitler’s armies. Negotiations cannot convince al Qaeda’s leaders to lay down their arms.’….
“All of this, as William Safire used to say, was good stuff.”
But there continues to be “an affection gap,” as Ms. Noonan writes. “It is not hard to respect this president, not hard to want to listen to his views and weigh his arguments. It is a challenge, however, to feel warmly toward him….The White House lately seems very fancy. When you think of them now, it’s all tuxedoes, gowns and Hollywood. There’s a certain metallic glamour. But metal is cold.
“White House image masters will think the answer is to show pictures of the president smiling at children and walking newly plowed fields. Actually this is part of the mystery of politics – what to do with the clay of your candidate, how to make your guy likable….
–George Will / Washington Post
“Rushing to lock the nation into expensive health-care and climate-change commitments, Democrats are in an understandable frenzy because public enthusiasm for both crusades has been inversely proportional to the time the public has had to think about them. And the president pushing this agenda has, with his incontinent hunger for attention, seen his job approval vary inversely with his ubiquity. Consider his busy December – so far.
“His Dec. 1 Afghanistan speech to the nation was followed on Dec. 3 by his televised ‘jobs summit.’ His Dec. 8 televised economics speech at the Brookings Institution was followed on Dec. 10 by his televised Nobel Peace Prize acceptance speech, which was remarkable for 38 uses of the pronoun ‘I.’….
“Then on Dec. 13, he was on ’60 Minutes’ praising himself with another denigration of his predecessor, a.k.a. ‘the last eight years.’…When Attorney General Eric Holder announced last month that five suspected terrorists would be tried in federal courts, he said: ‘After eight years of delay…’ When the U.S. Preventive Services Task Force made the controversial recommendation that women should get fewer mammograms, Secretary of Health and Human Services Kathleen Sebelius said: ‘This panel was appointed by the prior administration, by former President George Bush.’ In congressional testimony, Treasury Secretary Timothy Geithner almost deviated from the script. He said the Obama administration began after ‘almost a decade’ – slight pause – ‘certainly eight years of basic neglect.’….
“Today there are more independents than Democrats, more independents than Republicans, and according to a recent Gallup poll, independents’ approval of the Democratic-controlled Congress (14%) is lower than Republicans’ approval (17%)….
“A CNN poll shows 36% of the public in favor of what the Democratic Senate is trying to do to health care, 61% opposed. It is clear what the public wants Congress to do: Take a mulligan and start over.
“So Republicans can win in 2009 by stopping the bill, or in 2010 by saying: Unpopular health-care legislation passed because of a 60-40 party-line decision to bring it to a Senate vote. Therefore each incumbent Democrat is responsible for everything in the law.”
–The White House will use an underutilized state prison in rural Illinois to be the new home for a limited number of terrorist suspects now held at Guantanamo.
But as you’ve undoubtedly noticed, the focus these days is increasingly on homegrown terrorists, and it’s not just about the Fort Hood massacre. You have the plots that targeted La Guardia Airport, Fort Dix, the New York City subway system, terror cells in Queens and Buffalo, the Virginia Five that were arrested in Pakistan, and Chicagoan David Coleman Headley, who assisted in last year’s Mumbai attacks and is now cooperating with authorities.
Editorial / Washington Post
“We now know that the United States is not immune. In the past 12 months, the Department of Justice has identified a dozen cases of U.S. Muslims accused of terrorist activity or seeking terrorism training overseas. This pattern must be taken seriously and addressed….
“Had the parents of the five Northern Virginia men not reported them missing, government officials might have learned of the men’s quest too late.”
“The spread of the H1N1 flu virus through the United States this year revealed that the nation’s medical care system remains ill-prepared to handle the intensive demands that could develop from acts of bioterrorism or other major health crises.”
Get this… “Federal funding for public health emergency preparedness and hospital preparedness has declined 27% since fiscal 2005 when adjusted for inflation.” Yet we all know federal spending, overall, continues to skyrocket. This is absurd.
–In the past I’ve written of my trips through the Pine Ridge Indian Reservation in South Dakota, parts of which are the equivalent of going on an amusement park ride in terms of the adrenaline rush. But next time I’m out that way I think I’ll avoid the Res, as they say, because the New York Times’ Erik Eckholm had a pretty depressing piece this week on all the gangs that people the place…some 5,000 young men involved with at least 39 gangs.
“This stunning land of crumpled prairie, horse pastures turned tawny in the autumn and sunflower farms is marred by an astonishing number of roadside crosses and gang tags sprayed on houses, stores and abandoned buildings, giving rural Indian communities an inner-city look.”
All I know is that you don’t chance driving through after about 2:00 p.m. because the majority of the males are blind drunk shortly thereafter and anything can happen. But I also had no idea there are no more than 12-20 police per shift covering an area the size of Rhode Island.
–According to the Pew Research Center, 30% of 17-year-olds say they have received sexually suggestive photos or videos, sexting. Of course as the survey revealed, you have cases such as a couple’s breakup leading to a girl’s naked image being forwarded to everyone in the school. Just sick. To me this kind of thing tells you as much about our future as anything else. Coupled with the threat from homegrown terrorists, our best days are behind us.
–Get this…a normal CT scan of the chest is the equivalent of about 100 chest X-rays, but a study put out in the Archives of Internal Medicine shows that some scanners give off the equivalent of 440 conventional X-rays. In an accompanying editorial, Dr. Rita F. Redberg, editor of the journal, wrote, “The articles in this issue make clear that there is far more radiation from medical CT scans than has been recognized previously.”
“Whole body scans of healthy patients looking for hidden tumors or other illnesses are also becoming more common, even though they rarely find anything wrong. The irony is that, by exposing healthy people to radiation, the scans may be creating more problems than they solve.”
At least scanner manufacturers are designing instruments that use lower doses of radiation.
–In the latest federal study on drug use, 45% of eighth-graders said they thought occasional marijuana use was harmful. It was 58% in 1991. “When beliefs soften, drug use worsens,” said Gil Kerlikowske, the Obama administration’s drug czar. The University of Michigan researcher who oversees the annual survey said there was “serious softening” in the perceived risks of LSD, inhalants and the party drug Ecstasy. Binge drinking, on the other hand, has declined since peaking in 1983, though the numbers aren’t declining significantly; as in among high school seniors, “11% said they had drunk 10 drinks or more in a row in the two weeks prior to the survey.”
–In a new book to be published in February, “The Death of American Virtue,” Monica Lewinsky tells author Ken Gormley that “There was no leeway on the veracity of (President Bill Clinton’s) statements because they asked him detailed and specific questions to which he answered untruthfully.”
–At Copenhagen, Al Gore gave a speech wherein he misstated research on the Arctic. Quoting a Dr. Maslowski, Gore said during the summer months “the entire north polar ice cap…could be completely ice-free within five to seven years.”
One problem. Dr. Maslowski said, “It’s unclear to me how this figure was arrived at. I would never try to estimate likelihood at anything as exact as this.”
Gore had to then admit his embarrassing mistake, making the former vice president and Nobel Prize winner the “StocksandNews Fool of the Week.”
–Americans life expectancy is now 77, with white women at 80.7. Meanwhile, according to the latest census projections, whites will still comprise a majority of the U.S. population until at least 2050, eight years later than previously thought, reflecting the effects of the recession and stricter border control.
–According to yet another study, people are happiest living in Louisiana, followed by Hawaii, Florida, Tennessee and Arizona. It’s kind of funny that the bottom three represent the tri-state area here in my neck of the woods…49 New Jersey, 50 Connecticut, 51 New York [D.C. is No. 37]
–I suspect none of us would be too happy living on a new planet discovered by Geoffrey W. Marcy of Cal-Berkeley, who writes in Nature of a place that is 2.7 times the size of Earth and is about 40 light-years from here. There’s lots of water, but it’s 400 degrees Fahrenheit. No doubt Al Gore came up with some of his projections based on data acquired from the as yet unnamed body.
–What global warming? The temperature in Moscow this week hit -26C., or -15F. It actually froze cash machines. The last time it was so cold was in January 2006 and Wednesday saw the coldest December temps since 1997. But it was last year that Moscow had the warmest December on record, while the coldest was in 1888, when it averaged -18.3C!!!
–Lastly, as package delivery men and women whisk around the nation during this hectic time of year, I have to note George Lodovico, who, according to the Star-Ledger here in New Jersey, has put on 1.5 million miles in his 40 years for UPS without an accident. Congratulations George.
Pray for the men and women of our armed forces, and all the fallen.
Dow Jones -1.4% [10328]
S&P 500 -0.4% [1102]
S&P MidCap +1.3%
Russell 2000 +1.7%
Nasdaq +1.0% [2211]
Bears 16.7 [Source: Chartcraft / Investors Intelligence]
[WIR as usual on Dec. 26…because as Scrooge told me, “Editor, you can have Christmas Day off but be in all the earlier on the 26th.”]
