For the week 8/23-8/27

**[Posted Wed. 4:00 pm ET]**

Wall Street

Folks, without getting into specifics, I’m taking a little jaunt to Ireland in a few hours for an event that takes place every two years. Suffice it to say, there is zero chance I will get much work done owing to the schedule so I’m posting the following early. I will be adding market return figures at the bottom by Sunday p.m., and will catch up with the commentary next time.

For now, though, a few quick remarks. Last week I wrote, again, of how the austerity programs in Europe were going to be “incredibly painful, though necessary.” Some disagree just how necessary they are. I then added, however:

“It’s going to be one very depressed continent once this all settles in….

“You are nuts if you are bullish on Europe in the short-term.”

“Cameron Economy Set to Take a Pounding as Traders Turn Bearish”
–BBC News

“The story has changed,” said Richard Benson, an executive director at Millennium Asset Management in London… “The prospects for growth look quite soft and fiscal retrenchment is about to be undertaken.”

“Forecast is gloomy, Bank expert warns”
–London Times

“Britain faces a ‘significant’ risk of a renewed slide into recession, a leading policymaker at the Bank of England warned yesterday [Monday].

“It would be ‘foolish’ to rule out the possibility of a double-dip downturn, even if it was not the Bank’s central prediction, said Dr. Martin Weale, the newest member of the Monetary Policy Committee (MPC).”

Nobel Prize-winning economist Joseph Stiglitz then captured a lot of headlines when he said of Europe:

“Cutting back willy-nilly on high-return investments just to make the picture of the deficit look better is really foolish….

“Because so many in Europe are focusing on the 3 percent artificial number (percentage of debt to GDP), which has no reality and is just looking at one side of a balance sheet, Europe is at risk of going into a double-dip,” Stiglitz said.

And on Tuesday, S&P lowered Ireland’s long-term credit rating. I’ve been warning the past few weeks that Europe’s credit crisis is far from over.

Here in the States, Federal Reserve Bank of Kansas City President Thomas Hoenig said this of housing.

“If the American people are looking for the housing market to be their investment opportunity, I think they’re making a mistake. Right now, the facts are we have an excess supply” that could hold housing prices back for some time to come….(Housing) is not something that I think the American consumer should be speculating on in terms of investment.”

Hoenig made his sobering comments as the July data on existing and new home sales totally fell off a cliff, with new home sales coming in at their weakest level since 1963, and the median price, $204,000, the lowest since late 2003. The far bigger existing home category saw sales, post-federal tax credit, plunge 27% to 3.83 million, annualized, far worse than even the most dire forecasts. The median price on existing homes, however, edged up but is expected to fall anew this fall.

The double-dip crowd has been given ample ammunition. Credit card debt also continues to tumble, meaning Americans, while doing the right thing, aren’t spending, which obviously won’t make things better on the jobs front.

Street Bytes

–U.S. Treasury Yields…posted Sun. p.m., or earlier

6-mo. 0.18% 2-yr. 0.55% 10-yr. 2.64% 30-yr. 3.69%

–Talk about absurd. Dell Inc. made a bid for data-storage provider 3Par on Aug. 16 for $18, shares of 3Par having closed the previous Friday at $9.65. But then Hewlett-Packard bid $24 for the unprofitable outfit, and now Dell could increase its bid as 3Par announced it is formally talking to HP.

–In the ongoing BP spill aftermath and various studies as to the longer-term impact on gulf waters, researchers from the Lawrence Berkeley National Laboratory in California say the bacteria, “spearheaded by a new and unclassified species,” were degrading the oil rapidly without depleting oxygen. The study leader said the oil-eating microbes “appear to be one of the major mechanisms behind the rapid decline of the deep-water dispersed oil plume that has been observed.”

Well this would be good news, especially seeing as the Berkeley study also leads to the conclusion that the chances of many “dead zones” in the water would appear to be minimal.

A major contributing factor was the fact the oil from the Deepwater Horizon well was light crude, and thus more easily broken down.   And, it also means that the use of Corexit dispersants played a positive role in breaking down the oil into smaller droplets.

So you’d think the odds are the seafood from the gulf is reasonably safe, though I’d argue we still should have banned fishing for a spell to allow the stocks to get back to more normal levels while final testing was completed. This would have had to be worked out with BP, of course, because they are, after all, supposed to make everyone whole…so says Fred Lemond.

But, heck, I’d eat the fish. Take two Jell-O shots after to counteract any impurities. [Guys, just be sure when you’re getting a Jell-O shot in one of New Orleans’ clubs that you aren’t wearing a white shirt and you don’t let the woman touch your back. Just sayin’.]

–And what did your editor mean by this last remark? Well go down to New Orleans, friends, and find out for yourself!

“Thousands of fish have turned up dead at the mouth of the Mississippi River, prompting authorities to check whether oil was the cause of mass death.”

The fish were discovered last Sunday and collected in booms that had been deployed to contain the oil, and among the species were sting rays and eel. Just remember that the Mississippi is spewing tons and tons of agricultural pesticides and such every day into the Gulf as well.

–Back to BP, Transocean, owner of the Deepwater Horizon, said, “Overall rig maintenance aboard (the rig) met or exceeded regulatory and industry standards and, according to documents and testimony by BP’s own executives, the rig was found to be fit, strong and prepared for operations in the Gulf,” the company told the Financial Times.

This was in response to an investigative hearing in Houston that an internal audit by BP found 390 overdue maintenance problems on Deepwater Horizon in September 2009 “and that Transocean’s bonus structure, for some staff, was tied, among other things, to ‘rig uptime’ – as opposed to being shut down for maintenance.”

–Lastly, related to BP, retired Coast Guard Admiral Thad Allen, the “national incident commander” for the spill, wrote an op-ed in the Washington Post, wherein he said the administration deserves more credit for its successes than it’s receiving. 

“No one is claiming victory or ‘mission accomplished’ at this point, nor should we. We should, however, recognize what has been done.”

Admiral Allen, no doubt it’s now safe to say that in terms of the environmental impact of the spill, catastrophe has been averted. Obviously, had the oil just washed ashore without any effort whatsoever to clean it up, that is what we would have seen.

But catastrophe is nonetheless what Gulf Coast businesses have witnessed and for this the White House deserves considerable blame for one simple reason.

It took you weeks…weeks…to attack the oil in an effective manner at the source! President Obama, owing to the fact he received some awful advice in those first days, including from yourself, and lacking the proper instincts, failed miserably to recognize what was most needed.

–Construction starts in New York City hit a two-year low in the second quarter in yet another sign of our troubled economy.

–Visitor arrivals to Macau were up 23.2% in July vs. a year ago, with the Chinese mainland accounting for 52.8% of the total. It’s a good barometer for the overall Chinese economy because it speaks to a growing middle class (though not fast enough to some…see below). Chinese visitors were up 40.3% vs. those from Hong Kong and Taiwan, up 15.4% and 3.5%, respectively, year-over-year.

–Russia said it would harvest 38% less grain this year and the world’s third-largest wheat exporter is likely to need to import it to meet domestic needs following the devastating drought and fires.

–I forgot to note last time that Mexico’s economy expanded at a 7.6% clip in the second quarter, its fastest pace in more than a decade. For all of its problems, which are huge (see further below), this is a remarkable performance. And a Mexican captured the Miss Universe crown!

–China said it is considering dropping capital punishment for economic crimes. International rights groups have criticized Beijing for its excessive use of the death penalty, including in this arena. In all seriousness, in terms of crimes such as the tainted milk deal in China, the death penalty was warranted.

–While mutual fund groups that have specialized on the equity side continue to see significant redemptions, such as the $48.8 billion withdrawn from American Funds’ stock offerings in the 30 months ended in June, more than any other fund firm according to Morningstar, my old friends at PIMCO, the fixed-income experts, continue to rock ‘n’ roll, attracting $40.2 billion alone in the first half of 2010, owing in no small part to Bill Gross’ Total Return Fund, which hauled in $20.9 billion over the same period. [No, the fund is not too big.]

–There is growing evidence Wall Street’s mini-hiring boom off the market lows of 2009 has run its course and selected job cuts are in the offing. “Caution” is the watchword in all industries these days. Or as Bill O’Reilly could start off his show, “Caution! You are about to enter an economic black hole!”

–Do some of you have commercials for “tax lady” Roni Deutch in your area? On Monday, California’s attorney general sued Ms. Deutch for more than $34 million, alleging her law firm regularly violates state law by making false promises on its ability to resolve disputes with the IRS.

AG Jerry Brown (running for governor) said Deutch “promises to significantly reduce their IRS tax debts, but instead preys on their vulnerability, taking large up-front payments but providing little or no help in lowering their tax bills.”

What a dirtball. While advertising a success rate of 99%, in actuality it’s closer to 10%.

And what’s disturbing is that Ms. Deutch had settled four years ago with New York City’s Department of Consumer Affairs, which alleged she misled consumers with her advertising, yet in the New York area, at least, CNBC has been airing her commercials heavily. [Makes you wonder about the other guy in play, JK Harris, who comes off far better than Deutch does when you just look at the commercials dispassionately.]

–My portfolio: A leading forecaster trimmed its estimate for hurricanes this season, so natural gas crashed, just what I didn’t want to see happen. However, I’m waiting a few more weeks before initiating my repair strategy. I’m also going to be cloud-seeding as I cross the Atlantic, assuming the flight attendants will let me open the window.

Foreign Affairs

Iran: The mullahs decided to roll out all their new weapons systems this week, leading off with a bomber-drone rocket with a range of 600 miles, supposedly; not enough to hit Israel but certainly in the hands of Hizbullah in Lebanon, or Syria, a potential problem. President Ahmadinejad called the new drone a “messenger of death” with the main purpose of preventing any kind of aggression and conflict, he added. Iran also test-fired some new short-range missiles (though we really don’t know if these were old ones), and it announced it was mass-producing two versions of a high-speed missile-launching assault boat.

“The enemy must be careful of its adventurous behavior and not play with fire because the Islamic Republic’s response would be unpredictable.

“If enemies attack Iran, the Islamic Republic of Iran’s reaction will not be restricted to one area. The truth of our defense doctrine is that we will not attack any country and that we extend our hand to all legitimate countries.” [AFP]

An Israeli defense official said of all this week’s developments;

“They are making a mockery of the diplomatic options on the table.”

Meanwhile, the first fuel rods have been installed at the Bushehr nuclear facility, courtesy of the Russians.

And Ayatollah Ali Khamenei took the rare step of publicly rebuking his political allies, including President Ahmadinejad and parliament speaker Ali Larijani, for their infighting.   

Which leads to Michael Ledeen’s op-ed in the Wall Street Journal.

“The Iranian regime loves to boast of its military strength, international clout and hold on domestic power. Much of this is accepted by outside experts, but in fact the regime is in trouble. Iran’s leaders have lost legitimacy in the eyes of the people, are unable to manage the country’s many problems, face a growing opposition, and are openly fighting with one another.”

Ledeen cites sources who speak of a situation a few weeks ago where the Iranian air force shot down three drones near Bushehr, thinking they were part of an Israeli spy effort. Instead, the air force realized they shot down their own drones. A special unit in the Iranian military had deployed them but hadn’t informed the air force. And Ledeen says there have been attacks on Iran’s petroleum industry.

The opposition continues “to launch serious verbal attacks on the regime,” writes Ledeen. 

But “(very) little of this news reaches a mass Western audience, and one wonders to what extent Western governments understand what’s going on. If they do, their failure to support the democratic revolutionaries is all the more lamentable.”

Afghanistan: The American commander in charge of building this nation’s security forces, Lt. Gen. William B. Caldwell IV, said he would have to recruit and train 141,000 new soldiers and police officers over the next 15 months, or more than the current size of the Afghan Army. Caldwell’s timetable runs counter to a degree, by three months, to President Obama’s July 2011 deadline for the start of the American withdrawal.

The problems are many. Caldwell noted, for example, that desertions and resignations are huge. The attrition rate in the Afghan National Police, for example, is 47%, though it had been 70%. Plus they’re all illiterate!

And then on Wednesday, you had another example of a trainee turning his gun on his instructors; in this case an Afghan policeman who killed two Spanish police officers and their interpreter. The policeman was killed. This is at least the fourth incident of its kind I can remember off hand, which brings up the danger of Taliban infiltrating the police and army.

But back to Obama’s deadline, U.S. General James Conway, head of the Marine Corps, said the fixed date was “giving our enemy sustenance.” Conway said U.S. troops needed to be there several more years. For his part, Obama will be reviewing the war, again, in December. With the economy, and growing deficits, he’s under immense pressure to wind it down.

Pakistan: It has been over a month since the flooding started here and while the United Nations says it has raised enough money to provide emergency relief, 100s of thousands have yet to receive any and the crisis has reached a critical level. 17-20 million are affected. And the number requiring basic shelter is up to six million, this as the flooding surges south. Consider that 800,000 are totally isolated, reachable only by air, and aid workers need at least 40 more helicopters to ferry lifesaving aid. Tens of thousands of medical workers have also been displaced.

President Zardari is warning it could take three years to rebuild the basic infrastructure lost in the disaster, including roads, bridges and dams. Yet Zardari insists the catastrophe wouldn’t impair Pakistan’s fight against the Taliban and al-Qaeda.

Iraq: With U.S. combat troops having exited, the question is, “Have we made a difference?” As Gen. Odierno answers, ‘Wait 3-5 years.’ What we know today is that the level of violence the past two months has ratcheted back up and, disturbingly, many of the worst attacks are in Baghdad itself, such as in another series on Friday that claimed at least 30 lives (50+ overall in the country). And still zero sign of the formation of a new government.

Israel: Palestinian President Mahmoud Abbas has been accused of “surrendering” to American and Israeli pressure by virtually all the Palestinian factions. And it’s true the Palestinian Authority received no guarantees that Israel would halt settlement construction in areas such as east Jerusalem. The PA says that in dropping its conditions for launching direct talks, it “faced unprecedented and immense pressure from the Americans and some Europeans.” But some 600 Palestinian organizations and individuals signed a petition urging Abbas not to succumb to the pressure and drop the idea of talks until previous conditions, first and foremost the settlements, are met.

But in the end, it’s really about the United States, specifically Barack Obama, and whether he is truly an honest broker.

Lebanon:  At least three were killed in sectarian violence in Beirut on Tuesday. Typical of this region, what started out as a fight between Sunni and Shia factions in an area near Beirut’s main tourism area, quickly escalated to include rocket-propelled grenades and machine gun fire. Yes, had this happened when I was there last April, it would have been a bit disconcerting, though it appears the Lebanese Army did a decent job in quickly restoring order.

A bigger problem for this country, though, aside from the ever-present threat a new war between Hizbullah and Israel could erupt at a moment’s notice, are the nationwide protests sweeping the country as a result of the ongoing problems with the electrical grid, which is a national embarrassment. But as an editorial in the Daily Star put it, ‘What took everyone so long?’ Some wonder if Hizbullah or Syria have their hands in the protests since a few of them are taking place in areas least impacted. For a time, the main airport road was blocked in Beirut (always my fear when I’m there since it cuts through a Hizbullah stronghold).

China: In a move designed to appease Beijing, the United States opted not to include an aircraft carrier in joint U.S.-South Korean anti-submarine exercises in the Yellow Sea.

On the issue of the economy, perhaps no situation better illustrates some of the growing pains in China than the monumental traffic jam on the main road from Mongolia into Beijing, at least a 60-mile jam, now nearing two weeks, where some day’s motorists are going a whopping 1/3rd of a mile.

One positive, the jam largely developed because of far more heavy trucks on the road than planned when authorities launched a road improvement project, which was made necessary by highway damage caused by the steady increase in cargo traffic to begin with. The roadway is a major artery for the supply of produce, coal and other goods to Beijing.

So it’s a sign the economy continues to roar ahead, but at the same time those who wonder why China spends so much on infrastructure are staring right at Exhibit A.

And while much was made of China becoming the world’s second-largest economy as it pulled ahead of Japan, you weren’t finding any in China’s leadership crowing about it because for starters, they know that their country is actually 99th in terms of per capita GDP, and that average incomes among the 1.3 billion are just one-tenth that of Japan. So the last thing the leaders want to do is point out the growing disparity in China between rich and poor.

It’s why you see Premier Wen Jia-bao pop up at every natural disaster, of which there have been far too many the past few years. He wants to burnish his image as kindly “Grandpa Wen,” the caring father of the people (which is largely working), to take their mind off the great divides that threaten to splinter the country and lead to mass unrest.

Australia: You’ve gotta give the pollsters here credit. By the time of last Saturday’s big election, they had it a dead heat and that is exactly what transpired. In the 150-seat legislature, 76 seats are needed to form a government and the two main parties, the incumbent Labor Party, and the Liberals’ coalition, each have 72 or 73, leaving it up to horse-trading with the remaining independents.

But you know what’s amazing here? As pointed out in the Wall Street Journal, Australia hasn’t seen a year of negative growth since 1991, and regardless of who is in power, the change in the country’s growth rate has been minimal.

Australia’s chief concern these days, however, aside from forming a government, is China. Any big slowdown there will significantly impact Australia’s exports.

Russia: 3,000 protested in Kaliningrad, calling for the resignation of Prime Minister Vladimir Putin, and then the next day, another 3,000 protested in Moscow to denounce a local plan to cut down a centuries-old oak forest north of town for the purposes of making way for an $8 billion highway to St. Petersburg. Such events bear watching, even as the fires have finally been put out.

Somalia: It’s hard to believe but the Western-backed government in Mogadishu literally controls all of a few city blocks…that’s it…so no wonder then that Al-Shabaab, the Islamist militia group with links to al-Qaeda (and St. Paul, Minn.), launched a brazen raid on a hotel within the government’s center, killing six lawmakers and anywhere from 25 to 50 others (reports were all over the place). 40% of Somalia is in need of humanitarian aid.

Philippines: In a totally botched hostage crisis, an ex-policeman commandeered a tourist bus in Manila demanding his job back. When the drama was over, eight Hong Kong tourists were dead and Hong Kong and Beijing were furious at what they saw as gross incompetence on the part of the Filipino police. The next day the police were forced to admit that, yes, they didn’t handle it well. For starters, they didn’t realize that the drama, which was played out on national television, was being watched by the hijacker on a TV in the bus, so there was no element of surprise. It is an immediate crisis for new President Benigno Aquino III. For its part, China is urging its citizens to avoid the country, and it was disgraceful, if the reports are true, that Hong Kong Chief Executive Donald Tsang was unable to reach Aquino for an explanation in the immediate aftermath.

Venezuela: Crime has been soaring in Caracas, but one shelter from it is an army base at Fort Tiuna, where the vice president often spends the night. But last weekend, a soldier opened fire, killing two officers and wounding six other soldiers. The shooter reportedly had an argument with an officer over the changing of the guard and shot the officer in the head with an assault rifle, before shooting dead a lieutenant and the others. He then escaped.

Brazil: And if you think I’m going to the 2014 World Cup or 2016 Summer Olympics in Rio de Janeiro, no way, Jose. On Saturday, in the middle of an intense firefight between drug gang members and police, with as many as 50 gunmen with high-caliber rifles, pistols and hand grenades, 10 of them split off and ran into the 5-star Intercontinental Hotel, where they quickly grabbed hostages. One woman was killed and four bystanders and three policemen wounded. The gunmen finally surrendered.

So picture you’re in a lobby, waiting for your friend to come down from the room…and BOOM! I think I’ll watch both big events from the comfort of my own home.

Mexico: Just another day in Mexico. 72 bodies were discovered at a ranch in the north of the country, following a shoot-out with suspected drug cartels which killed 4. It was then the other bodies were noticed…58 men and 14 women.

Yup, as noted above I’m amazed that Mexico isn’t totally paralyzed. How do you think Americans would respond to this kind of daily carnage? I suspect not real well.

South Africa: When Jacob Zuma first took over I wrote that he had the potential to be a dictator. Well now there are signs he is cracking down on the press, and if you were a white contemplating fleeing before, you really have to now. As an editorial in the London Times noted, while South Africa is far from becoming Zimbabwe, Zuma needs to show he doesn’t intend this to become the case.

Random Musings

–Sen. John McCain defeated former Rep. J.D. Hayworth, 56-32, in their bitterly fought Republican primary in Arizona, while Sarah Palin’s preferred Republican candidate in Alaska, Tea Partier Joe Miller, is ahead of Sen. Lisa Murkowski as I write. And in an interesting matchup on the Democratic side, Florida Cong. Kendrick Meek defeated billionaire Jeff Greene, 57-31, in their senate primary. But now Meek will take on Republican candidate Marco Rubio and Republican-turned independent Charlie Crist, the current governor, in what is a truly fascinating race in November.

–In the ongoing Ground Zero mosque debate, New York City Mayor Michael Bloomberg reiterated there’s “nowhere in the five boroughs of New York City that is off limits to any religion.” Speaking at an annual Ramadan dinner, Bloomberg said that talk of a compromise location would not end debate.

“The question will then become, how big should the ‘no-mosque zone’ be around the World Trade Center site? There is already a mosque four blocks away. Should it be moved? This is a test of our commitment to American values. We have to have the courage of our convictions. We must do what is right, not what is easy.”

–Rima Fakih, the first Muslim crowned Miss USA, spoke out against the planned mosque at Ground Zero, saying the project is insensitive to 9/11 victims.

“We should be more concerned with the tragedy than religion. I totally agree with President Obama with the statement on Constitutional rights of freedom of religion. I also agree that it shouldn’t be so close to the World Trade Center.”

–As for the imam at the heart of the controversy, he was in the Middle East as part of a State Department-sponsored tour, touting the Americanization of Islam, whatever that means. But in all my readings, I do see that Feisal Abdul Rauf is respected by many influential opinion makers, including The Atlantic’s Jeffrey Goldberg who wrote the big piece on Israel and its probable attack on Iran’s nuclear facilities by next July. I’m just not convinced as yet as to Rauf’s intentions.

“If the president had said what he did in a single statement, and explained himself better, the fuss would have been much less. After all, as far as its logic goes, his position is perfectly defensible. But he was clumsy. The two-part statement looked vacillating. It is never a good idea to make your supporters look foolish, as those who praised his first statement soon did. Most of all, it was unwise to seem out of touch with the concerns of the nearly 70% of Americans who oppose putting the mosque so close to Ground Zero, or to imply they needed remedial teaching on the First Amendment.

“These errors fit readily into broader themes of criticism leveled at the president: that he is weak (something even his allies complain of) and that he is out of touch with mainstream America. The row over the mosque pales in comparison with the economy as an issue hurting the Democrats’ prospects in November, but it is not nothing. It resonates.”

Personally, I think it is critical this issue die down while the main players, including a representative from the construction unions, work out a compromise behind the scenes.  As much as I’m against the building of the mosque at this particular site, I am also troubled by the fact that as some supporters from the right have noted (per my extensive coverage of this topic last week) we have many Muslims in the American military fighting against Islamic fanatics. This cannot be an issue dividing us a year or two from now.

–Separately, eight imams and Muslim leaders made a trip to Auschwitz and unequivocally condemned anti-Semitism following the trip.

“We bear witness to the absolute horror and tragedy of the Holocaust where over 12 million human souls perished, including 6 million Jews,” read their statement.

“We condemn any attempts to deny this historical reality and declare such denials or any justification of this tragedy as against the Islamic code of ethics. We condemn anti-Semitism in any form. No creation of Almighty God should face discrimination based on his or her faith or religious conviction.”

U.S. special envoy Hannah Rosenthal told the Jerusalem Post, “When it comes to Holocaust denial and anti-Semitism, this can have a sea change.”

–Kim Lehman, one of Iowa’s two national Republican Committee members, told the Des Moines Register that President Obama really is a Muslim, basing her view on his address to the Muslim world in Cairo last year. That speech, Lehman told the paper, “just had the appearance that he was aligning himself with the Muslims.”

Oh brother. The White House reminded everyone, including Ms. Lehman:

“President Obama is a committed Christian, and his faith is an important part of his daily life. He prays every day, he seeks a small circle of Christian pastors to give him spiritual advice and counseling, he even receives a daily devotional that he uses each morning.”

–Talk about a classic case of ‘wait 24 hours,’ my motto around here, try the story last weekend of WikiLeaks founder Julian Assange, who was accused of sexual assault in Sweden, only to have the prosecutor reduce the charge to “molestation.” 

But two of the women involved deny they were part of some dirty tricks campaign organized by the Pentagon for the purposes of discrediting Assange, as he hinted was the case. The women met Assange during his trip to Sweden and claim he was sober at the time of the alleged acts. Their attorney says “it is very possible that it is an even more severe sex crime,” not just molestation.

Meanwhile, WikiLeaks is continuing with plans to release another 15,000 confidential reports on Afghanistan.

As for the Pentagon, William Matthews of Defense News writes, “there is a lot the U.S. military could have done to prevent the classified documents from being leaked in the first place.”

Essentially, the Pentagon failed to take some very basic steps, such as disabling CD burners and USB ports on network computers. Whereas banks have sophisticated software preventing data loss, the Pentagon failed to install automated security systems.

U.S. Army Pvt. Bradley Manning, identified as “a person of interest” in the leak, evidently spent months downloading classified documents and copying them to rewritable music CDs, which he then simply carried out through security checkpoints.

–Boy, you have to say a prayer for the 33 trapped miners in Chile, who as of this writing have not been told they could easily be stuck 2,000 feet below the surface until Christmas. While it’s encouraging they have a communications link, and they will receive needed supplies, it is virtually impossible to envision a favorable outcome for all 33 if the rescue shaft indeed takes four months to complete. For starters, while they may receive adequate food, imagine the sanitation down there amid the cramped quarters.

“Vyacheslav Datsik, a world heavyweight champion in mixed martial arts and an icon among ultranationalists, has escaped from a psychiatric hospital and possibly robbed a St. Petersburg cellphone shop.

“A self-confessed pagan, Datsik made a name for himself in the martial arts world before his career was cut short in 2007 when he was arrested for robbing several St. Petersburg shops.

“A court ruled Datsik to be insane and placed him in a psychiatric hospital….

“On Saturday, Datsik tore a hole in a wire fence with his bare hands and fled the facility.”

–My friends Ted Turner (the real Ted Turner, as old acquaintances like to say), and Kelly L., passed on some reading material from the Cape Cod area, along with a shipment of beer, and in looking through the Barnstable Patriot, there is this interesting bit on the 1960 presidential election between John F. Kennedy and Richard Nixon, it being the 50th anniversary and all.

For starters, 93.8% of 7,858 registered voters went to the polls, but get this. “Voters of the town where Jack Kennedy and other members of his family maintain Hyannis Port summer homes gave Nixon 4,515 votes and Kennedy, 2,783.”

–By the way, as President Obama and family vacation on nearby Martha’s Vineyard, and as he receives more heat for the time he has taken off amidst the economic turmoil for the rest of us schleps, in the interest of fairness, Obama has taken less than half the vacation that President George W. Bush did at this point in his administration.

–Uh oh…researchers have completed a “landmark study of historic seismic activity,” produced after several years of field studies about 100 miles northwest of Los Angeles, and concluded that “earthquakes along the San Andreas fault have occurred far more often than previously believed,” as reported by Rong-Gong Lin II of the Los Angeles Times.

“For years, scientists have said major earthquakes occurred every 250 to 450 years along this part of the San Andreas. The new study found big temblors on the fault every 88 years, on average.

“The last massive earthquake on that part of the fault was in 1857, leading scientists to warn that another such temblor is likely in Southern California.”

Said Lisa Grant Ludwig of UC Irvine, “It was thought that we weren’t at risk of having another large one any time soon. Well, now, it might be ready to rupture.” This is not good, sports fans.

–And finally, a senior astronomer for Seti, the Search for Extraterrestrial Intelligence, Seth Shostak, says that the odds favor detecting alien artificial intelligence rather than “biological” life. Ergo, extraterrestrials would not only not look like us, but they would not at a biological level even work like us.

Dr. Shostak believes we could easily be dealing with thinking machines, which is where we’re headed ourselves.

Drat…I was kind of hoping they’d all look like Rima Fakih, but then I guess that is asking for too much.

Pray for the men and women of our armed forces, and all the fallen.

Returns for the week 8/23-8/27

Dow Jones  -0.6% [10150]
S&P 500  -0.7% [1064]
S&P MidCap  -0.3%
Russell 2000  +1.0%
Nasdaq  -1.2% [2153]

Returns for the period 1/1/10-8/27/10

Dow Jones  -2.7%
S&P 500  -4.5%
S&P MidCap  +1.0%
Russell 2000  -1.4%
Nasdaq  -5.1%

Bulls  33.3
Bears 31.2 [Source: Chartcraft / Investors Intelligence]

Have a great week. I appreciate your support.

Brian Trumbore