Wall Street
And so it’s come to this. The American electorate will cast their votes on Tuesday, and the next day the Federal Reserve Board will tell us what their own vote is in terms of stimulating an economy that we learned yesterday is still growing at a putrid 2% pace.
You can expect Wall Street to react on Tuesday as the exit polls come in from some key races in the east (like if Christine O’Donnell is getting far more of the vote than expected in Delaware, even if she doesn’t win, it should foretell a defeat for Harry Reid later in the day), but the big move will come Wednesday after the Fed tells us how it plans to implement Quantitative Easing 2, or QE2. The stock market paused this past week when the Wall Street Journal ran a story hinting that the Fed’s plan would fall far short of the massive booster shot given to the economy during the height of the global financial crisis, and if this indeed proves to be the case, you would think stocks would sell off some.
But regarding the Fed’s probable action in buying up bonds and other assets to keep interest rates historically low, specifically the key 10-year Treasury bond off which most mortgages are pegged, there is far from unanimity on the Federal Open Market Committee that makes such decisions. One Fed governor, Thomas Hoenig, calls expanding the monetary policy further a “bargain with the devil.” PIMCO’s Bill Gross, manager of the world’s largest bond fund, went further in declaring in his latest investment outlook newsletter (pimco.com), that QE2 would be nothing more than a brazen “Ponzi scheme.” Gross continued:
“QE2 asset purchases may not stimulate borrowing or lending because consumer demand is just not there.”
Gross added that the Fed’s printing more money is clearly inflationary and signals the end of the “great 30-year bull market in bonds.”
Fed Chairman Ben Bernanke, on the other hand, will argue that unless the economy starts growing far more than the 1.7% and 2.0% annualized rates of the last two quarters, there is no way the Fed can achieve its legal mandate to maximize employment, the official 9.6% jobless rate being the American electorate’s primary concern these days, as will be reflected on Tuesday.
Bernanke also knows, though, that while the Fed wants some inflation to help convince consumers to buy now, rather than wait for lower prices (i.e., a deflationary mindset), it’s difficult to control the rate of price increases once the genie is out of the bottle, which is the concern of the likes of Mr. Gross.
Meanwhile, the U.S. dollar continues to take on gas, risking a currency and trade war, and this will be the focus of a critical G20 meeting of world leaders in Seoul on Nov. 11-12; the finance ministers of same having failed miserably to set a positive agenda last weekend before their bosses get together in two weeks.
These are extremely volatile and dangerous times for both the world economy and global markets. Terror threats, as developed late Thursday and Friday, hardly make the picture any brighter as part of my own prediction for 2010 was that we’d witness an incident that would shatter confidence all over again. We’ve come close, beginning last Christmas and with foiled subway bombing and other plots. It defies hope to believe that we, the West in general, can continue to remain so lucky, even as we quietly honor those behind the scenes who are doing their best to prevent another tragedy. A person near and dear to me is thinking of getting into the intelligence field after pursuing the appropriate course of study when he enters college next fall and all I can say is, “Go for it, nephew.”
But asides from the lousy GDP figure in the U.S. this week, what else did we learn?
A quarterly survey of economists conducted by the AP revealed that whereas the same one this past April had the group believing the unemployment rate would drop to 8.4% by December 2011, today they believe it will still be 9% by then. That’s a huge difference in terms of investor and consumer confidence. Psychologically, we have to get down below 9% to make everyone, including corporate CEOs holding $1 trillion in cash, more confident – the latter still not convinced for the most part that investments beyond computer upgrades are the prudent way to go given the gloomy environment.
The same above economists project GDP of 2.7% for 2011, again, nowhere fast enough to make a real dent in unemployment, while inflation is projected at just 1.7%.
Overseas, the aforementioned G20 finance ministers labeled the global recovery “fragile and uneven,” while German officials blasted the Fed’s manipulation of the U.S. dollar, hardly a good backdrop for Seoul.
But I found the head of the European Union’s financial stability apparatus’ (that which is responsible for propping up the likes of Greece) statement that the sovereign debt crisis is over remarkable for its infant-like quality.
No doubt, Europe’s austerity programs are in place to engender confidence, but what does it say when just days after the fellow’s pronouncement, Ireland’s 10-year bond traded at its highest yield, compared to the German 10-year, ever; even as Ireland’s government said it would double its budget cuts over coming years.
It is, it’s needed, but now it’s clear some governments, such as Ireland’s, and perhaps Spain’s and Greece, are going overboard and killing any hope of a recovery; recovery needed for increased revenues, for starters.
I love French President Nicolas Sarkozy and British Prime Minister David Cameron for holding firm on their own budget and entitlement cuts, but the jury is still out, particularly in the case of Britain, whether the austerity will be too much too soon.
I got a kick out of the “all-clear” being issued in some quarters in Britain when third quarter GDP came in at 0.8% vs. a projected 0.4%, still a come down from the 1.2% pace of the second quarter, as a sign that the public was giving a resounding vote of confidence for Cameron’s policies, even though they hadn’t begun to bite yet! Yes, we all want Britain to succeed, royally, but while the happy talk reined, housing prices and consumer confidence were falling anew in the U.K., with mortgage-lending at a 10-year low.
Back to the election here on Tuesday, Bloomberg released a telling poll on Friday. By a 52-19 margin, middle class voters think taxes have gone up, the economy has shrunk, and TARP (a Bush program) has been a huge failure in terms of the bank bailout portion, none of which is true. The $245 billion that went to the banks, for example, has been paid back, or will be, with profits expected. But as I said weeks ago, neither party wanted to run on this topic. Federal income taxes have stayed the same, or gone down, and the economy is technically growing.
Bill Gross made a statement in his newsletter that didn’t pertain to the Bloomberg poll, but could have, when he said “We’re getting what we deserve” in terms of the kind of government we always seem to end up with, election after election, while even Sen. John Kerry (D-Mass.) stumbled into a truth when he talked of today’s “Know-nothingism.”
This is in no way a defense of Obama, my bringing the preceding up, but it’s a reflection of the times and how easily the facts get in the way of a good story. There is so much that the Obama administration has done already that we’ll be paying for for future generations to come, but, for example, TARP, again Bush’s deal, but blamed on Obama, is not one of the reasons for throwing the bums out. It worked, in terms of the banks, and the auto bailout worked, whether you like it or not, with Ford’s survival as an independent adding to the success of all three. It’s just kind of funny. The majority of Americans continue to want to paint the world, and our nation, as black and white and that’s the furthest thing from the truth. Every issue has to be debated on its own merits. Blanket statements, such as ‘The financial reform legislation is going to bring down our capitalist system,’ are total B.S.
But there is no room for pragmatists these days…just look at someone like Delaware’s defeated Republican Rep. Mike Castle. Obama could have been a pragmatist, but instead he turned left from the start, as if he was at Daytona or Indy.
Of course when you return to the economic debate, all the above can be boiled down to two items, as it has been since the financial crisis unfolded…jobs and housing…housing and jobs. That’s the reason why the respondents in the Bloomberg poll may have gotten some of the other facts wrong. It’s because every American is focused almost solely on their job prospects and the fate of their number one asset. Everything else is largely noise to most of us, rightly or wrongly.
The economy simply isn’t going to grow at a solid rate until both the employment picture and housing improve, and regarding the latter, we are a long ways from any real success on that front, which has everything to do with consumer, and investor, confidence, and thus, jobs.
This past week saw September data on existing and new home sales and both figures, while above expectations, were still at historically low levels dating back to 1963. The Federal Reserve estimates 20% of homeowners are underwater. It’s probably higher. And despite the temporary moratorium issued by some banks and/or state and local authorities on foreclosures due to the documentation crisis, prior to the stoppage they had been rising anew.
And so it is amidst the doom and gloom, as well as considerable anger, that Americans, at least 50% of them, will exercise their right to vote. Others will stay home, thinking, what’s the use, nothing’s going to change. I’ve missed just one or two elections since I turned of voting age, regardless of where I’ve been in the world (I submitted my absentee ballot for this one long ago), but as to those in the stay-at-home crowd, heck, they do have a point. Most of us do hope, however, that this election does finally begin to change things for the better when it comes to fiscal responsibility, for starters. Some of us also hope the Federal Reserve listens to the same message itself.
Street Bytes
–As you can see from the table at the end, stocks were virtually unchanged on the week, across the board, with the exception of Nasdaq’s 1.1% increase. For the month of October, stocks rose, with the S&P 500 up 3.7%. This was a week that saw a continuation of the same theme on the earnings front. The bottom line may have exceeded expectations, but in the case of the likes of Texas Instruments, Merck, Bristol-Myers and Chevron, the top line, revenues, disappointed or flat out fell. Too many companies also echo the sentiments of Samsung, which said at week’s end that despite its success, it is seeing anemic recoveries in advanced countries.
Bonds fell some on the longer end (yields rose), but no sense overanalyzing things until after the Fed’s QE2 announcement.
–I haven’t given a thought yet to 2011 and what I’ll be forecasting (for new readers I said the major averages would be down 6% to 12% this year), but it seems most strategists are once again lining up in the bull camp, citing rising earnings and a continuing global recovery. Maybe they’re right.
But in the articles on the topic, I never see these same strategists talk about sentiment, which drives the market! It’s unreal. What doctor of finance and marketology did they learn from? If housing and jobs don’t improve much in 2011, it’s tough to build a case for a big up year, let alone one major external shock and we’d be back in the crapper, which is why once again Friday’s terror story should wake a few strategists from their stupor.
–My musings on steel production and the 20-year tracking of it last week proved to be quite prescient as giants U.S. Steel and ArcelorMittal both reported earnings and talked of soft global demand, still well below pre-recession levels. Excess capacity allows the likes of China and South Korea to undercut the market in shipping more of their cheaper steel to the U.S. and Europe as well.
–In reporting strong earnings this week, Microsoft said it was in the sweet spot for business spending as corporations have over 400 million PCs over 4 years old that need upgrading. The company netted $5.4 billion, on revenue of $16.2 billion, the latter figure slightly higher than the $15.8 billion the Street was expecting.
–Ford continues to kick butt in an amazing comeback as it handily beat expectations in reporting net income of $1.7 billion for the third quarter, plus it is paring down its debt well ahead of schedule and has increased its U.S. market share to 16.7%. Ford also announced it is adding 1,200 jobs in coming years, while for their part, GM and Chrysler announced they will be adding, or saving, 2,850 jobs, collectively, through either new plants or expanding existing ones. So, yes, good news! I may have an Asahi (the beer of choice in Guam) to celebrate tonight.
[Meanwhile, in Italy, Sergio Marchionne blasted Italy’s unions and said icon Fiat, of which he is in charge, would be better off eliminating its loss-making Italian plants, a statement that did not go over too well in the country shaped like a boot.]
–A J.D. Power & Associates study projects that the electric/hybrid car market will amount to just 7.3% of all vehicles sold by 2020, up from the current 2.2%. Not exactly what automakers want to hear given their massive investments in the area.
–Deflation Alert: James Bond’s Aston Martin was auctioned off for $4.1 million when it was expected to fetch at least $5.5 million.
–China appeared to ease up on restrictions to ship rare earth minerals to the rest of the world, China controlling 97% of a market that is used for items from PCs, to hybrid vehicles, to weapons systems.
–And on a separate development on the China front, the nation won the contest for having the world’s fastest supercomputer, which is a huge achievement, even if they did steal the technology behind it. The computer can make 2.5 thousand trillion calculations a second and has 14,000 Intel chips.
–I was shocked while in Australia just how poorly the Queensland (northeast coast) economy seemed to be doing. In the city of Cairns, where I spent five days, there were a ton of empty retail spaces, particularly in the better areas, and all the papers talked of a two-year slump in tourism that is forcing many smaller operators to close shop. All you had to do was look at the shape of some of the boats in the harbor to know which ones were next.
The Aussie boom, as you know, has been built on the mining industry and now the IMF is warning that housing in the country is 15% overvalued. Prices have definitely stopped going up. I would not call this a bubble, but a solid correction is in order and it’s coming.
Inflation, once considered a big concern, is also coming in tamer than expected, as a key reading on third quarter prices revealed while I was there, up only 2.8% on an annualized basis (2.4% core), so the end is here for central bank rate increases it would seem.
–New BP CEO Bob Dudley gave his first major speech since taking over for Tony Hayward and blasted politicians and the media for being too hasty in pinning all the blame for the Gulf oil disaster on his company. Dudley also said BP would not pull out of the U.S., while at the same time making it clear the company was learning every lesson from the disaster.
“We were certainly not perfect in our response, but we have tried to do the right thing,” he said.
“I watched graphic projections of oil swirling around the gulf, around Florida, across and around Bermuda to England – these appeared authoritative and inevitable. The public fear was everywhere.”
Dudley insisted BP was committed to the ongoing cleanup efforts, took pride in the company’s ability to withstand the financial shock, and spoke with optimism of the future.
A day or two after Dudley’s speech, the presidential commission investigating the original Macondo well explosion that claimed 11 lives issued its first official findings and said that Halliburton knew weeks before the disaster struck that a cement mixture it was responsible for to seal the bottom of the well was shoddy and flawed. It’s not the sole reason for the explosion, but the conclusion is, had the seal held, there would have been no accident. So place Halliburton back on the hot seat.
–Layoffs on Wall Street seem to be picking up as yearend approaches, with Credit Suisse serving notice it would be handing out about 250 pink slips, while Deutsche Bank cuts a rumored 5% to 10%. Total Street job losses are estimated to be in the 1,800 area this year according to some experts.
–Danish wind power giant Veritas said it was cutting 3,000 jobs, mostly in Denmark and Sweden, or 15% of its global workforce due to weak demand.
–But on the alternative energy front, the U.S. announced it would allow the building of the largest power plant in the world using solar, to be built in the Mojave Desert and the surrounding area, some 7,000 acres, as part of a $6 billion venture including Blythe Solar, with Southern California Edison having agreed to buy all the output.
However, the current massive incentives for the solar industry run out by year end so look for all kinds of announcements of this kind before then seeing it all stop as Congress is not expected to extend the incentives before a new Congress is in place in 2011…if they do so at all. As I noted a week or so ago, I wouldn’t touch the solar sector until there’s more certainty.
–Delta announced it was deferring 18 Boeing 787 Dreamliners to between 2020-2022, an example of how even as Boeing had reported a massive backlog for all their jets the previous week, the airline industry is still fraught with uncertainty. Many believe Delta’s move is a prelude to canceling the order once it figures out what its liabilities are left over from acquired partner Northwest.
–Who is Todd Combs and why is he smiling this week? Combs, 39, has been managing a small pool of money for a Greenwich, Ct.-based hedge fund, Castle Point, and while he may be a good talent, no one had heard of him.
Ah, but now Todd Combs has been hired by Warren Buffett and Berkshire Hathaway to manage a “significant portion” of the company’s portfolio as Buffett, 80, accelerates his succession plan.
While the Oracle of Omaha isn’t retiring anytime soon, seeing as he’s in good health and over the past decade has come to enjoy the spotlight, Combs will be groomed to become chief investment officer, and, it would seem, David Sokol, chairman of Berkshire unit MidAmerican Energy Holdings and CEO of NetJets, will eventually be named CEO.
–As part of its efforts to pay down its government debt following the bailout, AIG spun off its “crown jewel,” AIA, the insurance arm with operations in 15 Asian nations, in a highly successful IPO in Hong Kong that will reduce AIG’s stake in AIA to 33% from 58%. Aside from the U.S. government receiving some of the proceeds, it can also earn a profit on AIA shares.
But it was a bittersweet week for AIG as CEO Robert Benmosche announced he has an aggressive form of cancer, though he wasn’t specific.
–GlaxoSmithKline settled with the U.S. government for a whopping $750 million after admitting it knowingly sold tainted products out of a Puerto Rico facility, since closed. This started out as a whistleblower lawsuit and the person who filed it, under the new laws that have substantially upped the rewards for snitches, will receive, get this, $96 million!
–The battle between SAP and Oracle reached a new phase as Oracle says it has evidence incoming Hewlett-Packard CEO, and former SAP chief, Leo Apotheker, knew what efforts were being made by SAP to steal Oracle software in a case dating back to 2007, with damages still in dispute. HP is calling Larry Ellison and Co.’s move “harassment.” No comment from SAP due to the ongoing litigation.
–Well at least there haven’t been any death threats in the above row, but in Australia, a big headline on Thursday’s front page of The Australian read:
“Sydney property tycoon Ron Medich faces life imprisonment after being charged with masterminding the killing of a business rival…Michael McGuirk.
“The millionaire developer swapped his $40 million harbourside mansion for a jail cell last night after being denied bail on a charge of soliciting the murder of McGuirk, who was shot 13 months ago outside his Cremorne home.”
–Tuition at 4-year state schools rose 7.9% this year as state budget cuts hit, while private, non-profits saw a 4.5% increase. This is exactly the kind of thing that reduces the prospects for a strong recovery; coupled with rising healthcare costs, etc.
–It’s no joke…tourists are canceling vacations to New York City over the bed bug scare, some of which (but far from all) is unfounded. For example, there were headlines of bed bugs in Bloomingdale’s, yet just one…one…bed bug was found. There were stories of bed bugs in the Empire State Building, but they were confined to the basement.
Nonetheless, it’s a huge concern and if your hotel is found to have them, or your theater, forget it. I know everywhere I’ve been on this trip, particularly since I’ve been in tropical climes, I’ve been looking all over for bugs, not as much because I wouldn’t be able to sleep if I found them (I wouldn’t), but the last thing I want to do is bring them home with me so I’ll be extra careful in my final packing as I leave Honolulu to search the bags thoroughly.
–But Marriott showed its confidence in the future of New York tourism in announcing it would open 13 budget hotels in Gotham over the next three years. [“Budget” probably means just $350 a night instead of $500.]
–Newspaper circulation in the U.S. continues to plummet, down another 5% for the April-Sept. time period, though the Wall Street Journal is bucking the trend, up 1.8%.
–Super Bowl ads, however, have sold out earlier than in recent memory, a good sign, if not entirely unexpected because General Motors is back with advertisements after recognizing it wouldn’t have been a prudent move last year due to its bailout.
–My portfolio: The January 2011 call position on natural gas isn’t dead yet as forecasts for a colder than normal early November led to hopes of increasing demand. Nat gas futures climbed back over $4.00. Yes, this started as a storm play but I’ll take an advance any way I can get it. C’mon Old Man Winter! Work your magic, baby!
Meanwhile, my major holding in China is doing quite well, thank you, but with earnings probably coming out Thursday or Friday, Nov. 11-12 (a good guess, but without actual knowledge), I’m not sure how much further the stock can run given the company has already guided us to a certain earnings figure. If we closed the year at today’s price, I would not be disappointed, but with another strong quarter in the fourth, not released until March because this will also be annual report time, I’d look for another 40% by then. At least that is my hope and prayer. [The editor pauses to smile.] I continue to have a target price of double where we are today sometime in 2012, so, regardless, I will remain patient.
Lastly, I mentioned a Chinese travel stock last week, a more aggressive call for me than I’m used to in this space, and for those of you who knew which company I was talking about, I’m setting the price for the purposes of this column at $5.22, the closing price the previous Friday. It closed this week at $5.60 but I will not be mentioning it every week from here on, though I will let you know if I go in big.
Foreign Affairs
Afghanistan: It’s almost December and the critical review for President Obama on the state of the war. This week there were all manner of stories, from both left- and right-wing reporters, importantly, that spoke of progress in the critical battle for Kandahar. A cynic, though, would say that Gen. David Petraeus is going to do all he can to buttress his case because he is on record as saying the surge needs to go beyond the president’s July 2011 deadline for troops to begin to come home as Obama doesn’t want Afghanistan being a 2012 election issue.
At the same time, the likes of President Hamid Karzai are not making life easier for Petraeus. The New York Times broke the story that Karzai was receiving bags of cash, $millions, from Iran, delivered through a top Karzai aide. Karzai confirmed the story the next day when confronted but said it was not an attempt by Iran to buy influence and that a lot of countries are doing it; why the cash is simply for the purposes of running the government. [Iran, after first denying the charge, also soon admitted it was supplying the cash, but only for “reconstruction,” at which point there were muffled cries of ‘bulls—‘ from the audience, muffled lest offenders be identified and beheaded.]
For its part the United States quickly said, yes, we are aiding the Karzai government ourselves but not in this fashion and don’t lump us with Iran! The White House is furious, as it should be.
Karzai is only still in power because of 2009’s fraudulent presidential election and it’s been one attempt after another to undercut the U.S. effort to stabilize the country, all for the purposes of ensuring Hamid Karzai’s personal survival and nothing else.
Meanwhile, on a different topic, NATO is looking to bring the Russians into the fold, possibly to train the Afghan Army and supply helicopters, which would be quite a shift given the Russians’ past history here.
But the Kremlin is looking to maintain its influence in the region and at this point, bring ‘em on. In turn, Russia would have to be far more cooperative in allowing “lethal” shipments from Russian territory on into Afghanistan. And it was a good sign when later in the week there was a significant joint U.S.-Russian major drug raid in the country, the Russians previously complaining NATO was not doing enough to stop the flow of drugs from Afghanistan.
So a fascinating week here, filled with more good news and bad. It’s also going to be a helluva debate in Washington by yearend and we will learn an awful lot about how much Mr. Obama cares about his legacy over mere politics. I am not saying, personally, I support Petraeus as yet. I want to see real progress myself before committing more blood and treasure. [600 NATO troops have been killed this year.]
Pakistan: Of course the war in Afghanistan is as much about Pakistan as it is the former and the United States’ complicated relationship with the Pakistanis continues to be paramount amid growing signs the CIA is expanding its efforts to provide Pakistan with intelligence, for the purposes of going after Taliban safe havens on the border with Afghanistan. There is no telling how many CIA officers and special ops military folks are in Pakistan today (though we know 900 U.S. military personnel are there, most still in the flood relief aid effort), but the CIA is asking to be allowed to bring in far more, a request that has been turned down repeatedly by Islamabad. The extra CIA operatives could help Pakistani forces reach targets the drones cannot go after.
[It was interesting reading in a local Aussie newspaper this week the debate in Parliament over the war in Afghanistan, and what to do with Pakistan. One independent MP, Bob Katter, said it was inevitable the United States would invade Pakistan due to political instability there, and that “we (Australia) must go in” if requested by Washington. To which a Green Party leader, Bob Brown, said the war in Afghanistan was a “strategic stuff-up,” with former Prime Minister John Howard (whose memoirs were just released to much fanfare) to blame, along with George W. Bush and Tony Blair. “Our troops are fighting in 2010 because Bush, Howard and others like Tony Blair bungled their international ascendancy in 2001-03.” 21 Australians have been killed in Afghanistan, with 156 wounded. Doesn’t sound like much, but it’s a huge ongoing topic in the country. I also encountered zero anti-Americanism while in Australia, not that I expected any.]
Iraq: In the fallout from the release of nearly 400,000 secret Iraq war files by WikiLeaks, the single individual most upset is Iraq’s Prime Minister Nouri al-Maliki, as the charges of torture by Iraqi Army members stokes anger “against national parties and leaders, especially the prime minister,” in the words of Maliki, this as he tries to form a new government.
Speaking of the formation of the government, Iraq’s highest court ordered parliament to return to work, after nearly eight months since the March 7 election. The Court ruled that a new speaker must be elected, the first step toward forming a coalition to run the place. It’s all been quite pathetic.
Meanwhile, Deputy British Prime Minister Nick Clegg, addressing the WikiLeaks release and the implications some British soldiers were involved in torture, either directly or indirectly, said the basic rules of war and conflict have been broken and need to be investigated, calling the allegations extremely serious. This caused the head of British Intelligence to make an unprecedented public statement that at least from his operation’s standpoint, Britain was not involved in torture.
Lastly, Saddam deputy Tariq Aziz, the public face of the regime in terms of Western coverage in those last years, was sentenced to death by hanging.
Iran: The first fuel rods are being loaded at the Bushehr nuclear reactor and Iran hopes to generate electricity from the plant by early 2011. I agree with the White House that Bushehr is not the problem. Even the Israelis admit the same.
It’s about Natanz, and the recently disclosed suspected weapons facility at Qom, both of which are subject to attack at a moment’s notice should certain intelligence be obtained.
The U.S. and its European allies have also prepared a new proposal for Iran at what are expected to be new talks in November. Iran would have to exchange its uranium for material to be used to fuel its medical isotope production, similar to a 2009 plan that Iran rejected, though the new proposal is far stricter and designed to get Iran to indicate to what degree its nuclear weapons program has been impacted by sanctions.
Israel: Here’s the bottom line for this week. Prime Minister Benjamin Netanyahu doesn’t have the votes to extend the moratorium on settlements as a sop to President Obama even if he wanted to. This in a week in which the Vatican issued one of its strongest statements yet of Israel’s “occupation” of the West Bank, rejecting the use of biblical texts by many Jewish settlers to justify “injustices.” At the risk of offending some of my Jewish readers, following is part of a statement from the Synod of Bishops for the Middle East after a two-week conference in which they called on the international community to pressure Israel to end the occupation.
“Recourse to the theological and biblical positions, which use the word of God to wrongly justify injustices, is not acceptable.”
At a news conference, Greek-Melchite Archbishop Cyrille Bustros, said:
“The Holy Scriptures cannot be used to justify the return of Jews to Israel and the displacement of the Palestinians, to justify the occupation by Israel of Palestinian lands. We Christians cannot speak of the promised land as an exclusive right for a privileged Jewish people.
“This promise was nullified by Christ. There is no longer a chosen people – all men and women of all countries have become the chosen people.”
The bishops call for a two-state solution, saying this would allow Jerusalem to acquire its “proper status – which respects its particular character, its holiness and the religious patrimony of the three religions: Jewish, Christian and Muslim.” [The Australian]
When asked about the criticism of the use of the Bible to justify Jewish settlements on Palestinian land, an Israeli spokesman told The Australian newspaper, “Firstly, this has not been any official policy in Israel by any government and, secondly, he who has not sinned should cast the first stone – that is something they should understand.”
Here’s what I know. Those who continue to insist the settlements are not the key issue, as is the case often in discussion with Israeli leaders, are totally full of it.
But here’s what I also know. Today, this week, the rest of the year, the issue of paramount importance to Israel is not discussions with the Palestinians, but Lebanon, and its alternative government and militia in the form of Hizbullah, whose chief, Nasrallah, this week called on all Lebanese to boycott the Special Tribunal for Lebanon, and its investigation of the assassination of former Prime Minister Rafik Hariri in 2005, and refuse to cooperate with the UN-sponsored body.
This is outrageous, and a direct threat to the Lebanese government, but hardly surprising. Even UN Secretary General Ban Ki-moon, who has been pretty passive in his post, blasted Nasrallah, calling his statement an attempt to obstruct justice, while for its part, the government of Prime Minister Saad Hariri said it would abide by the STL’s findings; this as the United States pledged its full support of the government.
You don’t have to be an Einstein to see where this is all headed…violence, potentially on a large scale, with Israel becoming involved even if not initially directly targeted.
When I was in Beirut in the spring, I told you how I went there because it could be the last time in quite a while before it would be safe to return. I expected major problems then by yearend. I may yet be right.
China: In a front page editorial in the government’s mouthpiece, the People’s Daily, Premier Wen Jiabao’s recent talk of political reform was ridiculed, though Wen wasn’t mentioned by name. The editorial rejected the premier’s calls for speedier reform, saying reform is not lagging behind economic progress, as Wen told a number of Western journalists in the past month, and that China should not contemplate copying Western style democracy.
Separately, Wen, in addressing tensions with India, said the world was big enough for the two of them, and, on the China-Japan front, foreign ministers from both sides had a supposedly friendly discussion on the sidelines of a regional meeting in Hanoi, a good thing given the ratcheting up of tensions on this front as well, but then I just saw as I go to post, the result of the meeting was an explosion on the part of Chinese officials as to what Japan has been telling other leaders at the gathering. Oh brother, more on this next week.
But back to India, with President Obama traveling here for a key state visit, before talks with Chinese leaders at the G20 in Seoul, Indian Army chief, Gen. V.K. Singh, said Pakistan’s nukes are secure but insisted both Pakistan and China are “major irritants” and that India is prepared to fight a nuclear war if necessary; a curious statement given India’s patience with Pakistan after all the evidence pointing to government involvement in the Mumbai attacks.
North Korea: Shots were fired on both sides across a remote part of the border, but with no injuries and it’s unclear what precipitated it, though one can surmise a North Korean soldier was just having one of many bad days.
What’s important, though, is to remember that there will be deadly violence in Seoul at the G20 meeting (at least that was my prediction the other day) as Kim Jong Eun tries to make his mark with the North’s generals and daddy Kim.
France: In his latest audio tape, Osama bin Laden threatened France with attacks unless it pulled out of Afghanistan and dropped its laws against veils. On the labor front, President Sarkozy won the battle against those protesting the increase in the pension age. Yes, there are still scattered demonstrations and work stoppages, but for Sarkozy, a job well done. When I get home, I’ll celebrate with some pate de foie gras. [Sorry, PETA.]
Argentina: Huge blow for the country’s ruling party as former president, Nestor Kirchner, husband of current President Cristina Fernandez de Kirchner and a man expected to run for the top post again in 2011, died suddenly of a heart attack.
Mexico: Just another week in this hellhole, with at least 50 gunned down in the drug war, including two separate incidents where 13 were killed in each attack, one on a birthday party with teenagers among the victims…the other at a detox center…plus an attack in Mexico City, heretofore not a place riddled with drug violence, killed six. And you had a small town’s police force resign, all 14 members, after their headquarters were subjected to intense gunfire and grenades.
So let me just say what I hinted at a few weeks ago with the slaying of the American tourist in the lake bordering the two countries. The United States, preferably the Mexicans, needs to conduct direct airstrikes on the cartels’ headquarters. We know where they are. Absurd idea? Watch what happens next year. And imagine what would happen should Mexican President Felipe Calderon be assassinated. [Also see below story on Prop 19.]
Indonesia: With the death toll from the dual calamities of the volcano and the tsunami over 400, it was pathetic to learn that Indonesia’s tsunami warning system stopped working a month ago due to poor maintenance.
Haiti: It appears a UN base played a role in the cholera outbreak that has claimed about 300 thus far and threatens to become a long-term problem. It seems earlier in October, some Nepalese peacekeepers moved in and all manner of reports show that they have not been running a sanitary camp; specifically, septic tanks, supposedly meeting UN standards, were leaking vast amounts of waste into a main water source. [Not the kind of water source you or I would have, but the kind Haitians are in contact with.]
Zimbabwe: Grace Mugabe, 41 years younger than her 86-year-old hubby, Dirtball of the Year Emeritus President Robert Mugabe, has been having an affair with the head of the nation’s central bank, according to the Daily Mail.
“Mr. Mugabe finally found out about the affair in July when his sister Sabina revealed the scandal on her deathbed, it was reported.
“Since then his most-trusted bodyguard Cain Chademana – who is said to have known of the affair but kept quiet – has lost his life amid suspicions that he was poisoned.”
Needless to say central bank chief Gideon Gono is afraid for his life. He and Mrs. Mugabe were planning a life together following Robert Mugabe’s death, which cannot come a day too soon.
Random Musings
–President Obama made an appearance on Jon Stewart’s Daily Show and while I didn’t see it, I read enough stories to know this was a huge mistake on the president’s part. Kudos to Stewart for not going easy on the dude, as well.
“Dude”? How insulting, for Stewart to use that, but, at the same time, how appropriate given Obama’s tenor in the interview.
I mean Obama is now trying to convince us that when we elected him, he knew that two years later we’d all be frustrated. He came in as a not-ready-for-prime-time player and proceeded to prove it.
And then he stupidly told Stewart, “Yes, we can, but it’s not going to happen overnight.”
Of course if he had said that during the Democratic primaries, the nominee would have been Hillary Clinton, not Obama. Who the hell knows how that would have worked out, but one thing is for sure, she would have been far more pragmatic in her dealings with Republicans and I think it’s fair to believe that the initial reception on the part of the elephants would have been far more positive and the last two years quite different, for one simple reason. We would not have had the health care monstrosity we have today and the two sides would have reached agreement instead on coverage for pre-existing conditions and other important, yet smaller future budgetary provisions.
But with a President Clinton, you would have had the Bill factor, and after watching him interfere in the Florida senate race (despite Democratic candidate Kendrick Meek’s denials), would Bill have become a totally polarizing figure in his own right?
Just musing. Yes, the election is about the fate of tax cuts, among scores of other issues, and whether a lame duck Congress following the vote can get anything done in terms of extending same. It’s about a drastically split nation.
The other day, President Obama, as part of his outreach to Hispanics, said, “We’re gonna punish our enemies and we’re gonna reward our friends who stand with us on issues that are important to us,” referring, as Charles Krauthammer of the Washington Post guessed, to “exacting revenge for the 60% who support Arizona’s immigration law,” or as Krauthammer added, that Obama is “quite a uniter.”
Every freakin’ time Obama wants you to believe he’s that kind of guy, like during the health care debate, he then issues one idiotic statement after another to the contrary. See above on Hillary. She would have drawn a distinction between politics and the legislative process. With Obama there isn’t any attempt to.
–Carly Fiorina’s California Senate campaign suffered a blow when in the home stretch she was hospitalized due to an infection associated with her reconstructive surgery following breast cancer.
–Also in California, Meg Whitman has outspent her Democratic opponent for governor, Jerry Brown, by at least $130 million yet still trails by anywhere from 4 to 8 points.
–New Jersey Gov. Chris Christie stuck to his guns on the controversial rail tunnel between New Jersey and New York in opting to kill the project as the state pulls out. Christie was waiting to see if the federal government would pony up more money and it didn’t.
Reminder…the initial cost of the tunnel, the biggest public works project in the country, was slated to be $8.7 billion, with the Feds kicking in $3 billion, the Port Authority of New York and New Jersey, $3 billion, and New Jersey the remaining $2.7 billion.
But the state was responsible for all cost overruns and they are estimated to be anywhere from $1 billion to $5 billion by the time the project was complete. Christie thus said, “I will not hand over a blank check.”
When even the New York Times editorial page agrees with Christie’s move (while wondering why New York State/City aren’t agreeing to kick in some of the cost because they are the beneficiaries of all of New Jersey’s commuters who work in the City), you know the governor is doing the right thing…and now he will use the money not spent on local New Jersey transportation projects instead. It’s also another big item on which to build a presidential campaign. The pressure for Christie to run is going to mount considerably, though this would be a mistake. I hope he just focuses on the job at hand, and then if the eventual Republican nominee wants a super running mate, Christie’s the guy.
[Actually, you know what would be a fun ticket? Haley Barbour and Christie. Not exactly the President’s Council on Physical Fitness, but who do you want? A beanpole leftist with a feathery jump shot, or two slugs who would get things done? And here’s my slogan for the dynamic duo. “You take care of your body. We’ll take care of your government.”]
–I have long said the drug laws in the country needed to be changed, but I have never said decriminalizing marijuana use, for example, was a solution to our many ills as proponents of California’s Proposition 19, which would legalize recreational and small-scale cultivation of marijuana, claim.
However, I cannot argue with George Soros and a point he made in a Journal op-ed:
“Giving millions of young Americans a drug arrest record that may follow them for life serves no one’s interests.”
And while I cannot claim to have given the topic much thought at all recently, passing Prop 19 would be a grand experiment whose time has probably come. As Soros adds: “Its deficiencies can be corrected on the basis of experience.”
“Just as the process of repealing national alcohol prohibition began with individual states dropping their prohibition laws, so individual states must now take the initiative on repealing marijuana prohibition laws.”
Soros is also right in that if nothing else, Proposition 19 “has elevated and legitimized public discourse about marijuana and marijuana policy in ways I could not have imagined a year ago.”
But while Soros doesn’t bring it up in his op-ed, the chief target in the legalizing of pot in California, albeit an unintended one, is of course Mexico and the potential positive impact it would have on that nation’s fight against the cartels. That’s the real grand experiment.
As to the hue and cry from the opposition concerning the impact on our youth, etc., puh-leeze. Our kids are already so screwed up that this is way down my list of issues to be addressed. In my perfect world, kids would only have access to academic, news, music and sports Web sites until they are 18, for starters, and Facebook would be banned until then as well.
Half-kidding. I’d also lower the drinking age back to 18. 21 is a joke. Plus it’s always been insane you can serve your country and risk having a leg blown off, but you can’t have a domestic with your older brother or dad.
–President Obama also told Jon Stewart he hoped that voters were not just thinking about the next election, but the next generation. Dude, that’s what scares us this Halloween Eve; the impact of some of your policies on the next generation!
–Pope Benedict, addressing the immigration debate in Europe, said, “States have a right to regulate migration flows and to defend their own frontiers.” While adding immigrants need to be treated with respect, an interesting comment from His Holiness, he could have just as easily been talking about the U.S. as well.
–Transparency International is out with its annual survey of cleanest governments and 1, 2, and 3 are New Zealand, Denmark and Singapore. The United States is down to 22, out of 178, with China No. 75 and Russia 154. Kind of interesting that China and Russia are also two of the five permanent members of the UN Security Council…just to throw out a musing you won’t find anywhere else. As for the U.S., we deserve this lousy ranking. We’re really probably more like No. 40.
–In a significant development, Prince Alwaleed bin Talal, the Saudi multi-billionaire and U.S. investor, as well as backer of the Ground Zero mosque imam, said supporters of the project should move the location and that it wasn’t worth inflaming the situation further. Prince Alwaleed just rose six points in my rankings.
–New York Archbishop Timothy Dolan has had it with the New York Times and their Catholic-bashing.
“The common, casual way the New York Times offends Catholic sensitivity is something they would never think of doing – rightly so – to the Jewish, Black, Islamic or gay communities.”
Amen, Archbishop Dolan! I myself have not been the greatest Catholic the past 7 years or so since the scandal broke, but I still recognize the tremendous good that the church, and its individuals do. Heck, I just traveled halfway around the world to break bread with some who have proven time and time again they are the salt of the earth.
And I can guarantee in Indonesia, amidst the despair in both the tsunami and volcano zones, while it may be the world’s most populous Muslim nation, Catholic priests and nuns are doing yeoman’s work as they have in past disasters in the region.
–A survey of high school students in America revealed that 50% admit to bullying someone, with 43% saying they’ve been a victim. Thank you, Internet.
–So I’m in Guam now. I find this to be the perfect place to break up a long trip of this kind and usually spend at least one night here to catch up on the world, and/or write. I always stay on the main tourist drag, with beautiful views of the bay and ocean, plus the outdoor spots for having a burger and beer are a perfect place to watch the world go by.
But Guam is also the site of a huge U.S. military buildup as we move our troops from the Philippines and Japan to here, and, according to the plan, eventually South Korea as well. The United States won’t have to worry about offending the locals here as they do in the other spots, though Washington must fulfill its promises to the people of Guam when it comes to needed improvements on the infrastructure front (namely roads and sewers with thousands of personnel and their families being added to the population base). I’ve toured the island enough to know there are major issues in this regard. It would also be nice if the military could eradicate the brown tree snake, but perhaps when world peace has broken out they can tackle this one.
You see, Guam is a key hub for the Pacific Fleet, being close enough to protect not only our own interests in the key shipping lanes out this way, but also those of our allies such as South Korea and Japan. Some say, though, that our military assets aren’t as close as they should be, but given the politics of the Far East these days, I don’t see where else we could put them.
The future also holds that Guam could become a huge target of its own in any conflict with, say, China, let alone if North Korea can improve on its rocketry beyond the water balloon phase. So I’m assuming the locals understand this as well. All the more reason why the American people need to understand just why we will be shelling out as much as we are going to here. It’s a topic worthy of an Oval Office address next year. It’s what presidents are supposed to do…educate the people on matters of import.
–So I’ve had an interesting trip, with another four-five days to go, but it has been far from the greatest because by the end I will have spent exactly 48 hours in the air, and another 20 hours plus in airports, which would have been over 30 if I hadn’t gotten a day room during one of my Guam segments.
But I had to come out this way to see my friends on Yap, and I loved my time in Australia this week. I will definitely go back to Cairns as part of an extended Aussie trip next time, God-willing.
You know what I was fascinated with the last two nights I was in Cairns, Wednesday and Thursday? The bats…just very, very cool as they swarmed out at dusk to head over the harbor towards the mountains for the night. In fact, while I’m no Hank Paulson when it comes to birds (bats and the like), the older I get the more I’m often in wonder of them. I’m tellin’ ya, birds are underrated, sports fans!
And you know what else? I don’t have anything more profound than this to end up on. Except to say that in the interest of full disclosure, last time when I wrote of how no one was killed during a monster 2004 typhoon on Yap, I learned from a local after posting my piece that three Yapese did indeed die afterwards of dehydration. In the massive cleanup effort, they forgot to drink water and Luis said they just died in their sleep.
There, that might be a bit more profound for an ending…or maybe I should have stuck with the birds.
Pray for the men and women of our armed forces, and all the fallen.
Gold closed at $1357
Oil, $81.43
Returns for the week 10/25-10/29
Dow Jones -0.1% [11118]
S&P 500 +0.0% [1183]
S&P MidCap +0.5%
Russell 2000 -0.0%
Nasdaq +1.1% [2507]
Returns for the period 1/1/10-10/29/10
Dow Jones +6.6%
S&P 500 +6.1%
S&P MidCap +14.1%
Russell 2000 +12.5%
Nasdaq +10.5%
Bulls 45.6
Bears 24.4 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support. Next week back home, albeit briefly.
