Our Nation…Wall Street…and the Fed
It was a momentous week, and the coming one promises more of the same. If you were a Republican, you could even celebrate a bit, while those who’ve owned stocks since the lows of March 2009 can celebrate a stupendous rally since then, with the Dow Jones up 75%, for starters. It’s not just gold and silver going up. In fact, while the Dow was advancing 75%, much-ballyhooed gold advanced just 48% over the same period. My major China holding since the exact March 9, ‘09 low is up 900%! [Seriously, I bought a big slug at $0.13, on that very day, and it closed this week at $1.30. I also own shares, however, at $2.00 and higher.] So it’s been an amazing period, sports fans.
But let’s start with the election, move on to the Federal Reserve, next week’s big event in Seoul, and then my favorite topic since the spring, Europe.
As I go to post, with a few races still undecided, Republicans registered historic gains on Tuesday, picking up 60 House seats, handily exceeding the 39 needed to become the majority party there, and six in the Senate, narrowing the Democrats’ advantage in the debating club to 53-47 (regardless of who emerges victorious in Alaska).
Americans went to the polls in a surly mood, as perhaps best pointed out by the last CNN/Opinion Research survey showing 75% of us believing that the country was headed in the wrong direction. [Just to give you a sense of how the tide has turned, globally, 86% of Chinese are positive about their own future…but I digress.]
There were all manner of exit polls conducted on Tuesday but only one figure really matters and that was the action of independents, which went 56-38 for the Republicans. In 2008, independents propelled Barack Obama to the White House, Democrats taking them by 52-44. In 2006, independents swung to the Democrats by a whopping 57-39 margin. So just look at the move in the last four years.
Also by a 56-38 margin, Americans want government to do less, not more. Yet President Obama, in his day-after press conference, still didn’t get it; he couldn’t admit that perhaps some of his policies were wrong, whether it was the scope of health-care reform, the stimulus, cap and trade, or his anti-business rhetoric and actions. On this last bit perhaps he gets it a little, but we have one overriding saying here at StocksandNews…wait 24 hours. Wait 24 hours to see how the White House really reacts after the dust has settled and a new Congress is in place. Wait 24 hours to see how the Republicans take up the mantle of leadership in the House. And wait 24 hours to see how the world’s leaders treat President Obama and his fiscal policies at the G20 in Seoul next week.
It also now becomes all about 2012. As much as the nation has soured on Obama, if the economy has vastly improved by the fall of that year, he stands a good chance of being reelected. But Republicans, in that scenario, will be able to point to their own role in the turnaround and could maintain their gains in the House, while in the Senate, of the 33 seats up in 2012, 23 are Democrats so the Republicans could easily eke out four of those to gain a majority in that chamber.
“So much for President Obama’s attempts to become Reagan in reverse by rehabilitating government in the eyes of the public. One of the great ironies of the last two years is that the Administration that has expanded government more than any since LBJ has left the reputation of government in shambles. By constraining government to its more legitimate role, by contrast, Reagan left office after eight years with the reputation of Washington enhanced.
“All of this reflects the epic overreach that has typified the House under Nancy Pelosi, who will now have one of the shorter speakerships on record. A Republican President, even a lame duck one in Mr. Bush, could hold the Democratic House’s worst instincts in check. But with the arrival of Mr. Obama, the party’s liberal barons, most of them creatures of the 1960s, unleashed all of the ambitions they had been forced to submerge during the post-Reagan era.”
“He had defined himself as a world-class whiner even before Rahm Emanuel, a world-class flatterer, declared that Obama had dealt masterfully with ‘the toughest times any president has ever faced’ – quite a claim, considering that before the first president from Illinois was even inaugurated, seven of the then-34 states had seceded. Today’s president from Illinois, a chronic campaigner and incontinent complainer who is uninhibited by considerations of presidential dignity, has blamed his difficulties on:
“George W. Bush, Rush Limbaugh, Fox News, the Supreme Court, a Cincinnati congressman (John Boehner), Karl Rove, Americans for Prosperity and other ‘groups with harmless-sounding names’ (Hillary Clinton’s ‘vast right-wing conspiracy’ redux), ‘shadowy third-party groups’ (they are as shadowy as steam calliopes), the U.S. Chamber of Commerce and, finally, the American people. They have deeply disappointed him by being impervious to ‘facts and science and argument.’”
“Which brings us to the tea party and political patience. One lesson of the big GOP victory is that voters are again open to a message of limited government, but they want messengers with the savvy and smarts to implement it. Voters swept dozens of newcomers to power on Tuesday, but they also rejected prominent tea party candidates who didn’t seem up to the task. This cost at least two seats in the Senate, and it ought to chasten tea partiers who want House Republicans to perform immediate miracles. It should also inform the 2012 GOP Presidential nominating debate.
“By all means, tea partiers should hold Republicans to their promises, while recognizing that Harry Reid still has a Senate majority and Mr. Obama still has his veto pen. Republicans did not win a governing majority on Tuesday. They were given a chance to build one in 2012, if they can show they deserve it over the next two years.”
Or as Karl Rove put it best, “Republicans are on probation.”
Next up, the Federal Reserve, which back in August telegraphed it was going to unleash quantitative easing 2, or QE2, because the economy needed it. This set off a tremendous debate, even as virtually all asset classes took off. What? More free money? Count me in! said Joe Stock, Peter Silver, Barry Gold, Billy Bob Junk and Hu Emerging Market. It’s been premium beer all around!
On Wednesday the Fed made the following statement about the economy.
“Information received since the Federal Open Market Committee met in September confirms that the pace of recovery in output and employment continues to be slow. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structure continues to be weak. Employers remain reluctant to add to payrolls. Housing starts continue to be depressed. Longer-term inflation expectations have remained stable, but measures of underlying inflation have trended lower in recent quarters.”
Hard to argue with any of this. The only thing you might say is that this week’s economic releases, such as a strong manufacturing number for October out of the ISM, a reading of 56.9 when 54.0 was expected (50 being the dividing line between growth and contraction), September construction spending up 0.5% when a decline was anticipated, and September factory orders, up 2.1% vs. a consensus of 1.5%, coupled with Friday’s employment report showing 151,000 jobs were added might argue that we’re heading out of our soft patch. But the jobless rate remains stuck on 9.6%, and we need job growth of 250,000 and more to begin to make a real dent in this figure, but why do we need the Fed to pump more money into the system?
Fed Chairman Ben Bernanke himself answered in a rare Washington Post op-ed the day after the Fed’s announcement.
“The FOMC decided this week that, with unemployment high and inflation very low, further support to the economy is needed. With short-term interest rates already about as low as they can go, the FOMC agreed to deliver that support by purchasing additional longer-term securities, as it did in 2008 and 2009. The FOMC intends to buy an additional $600 billion of longer-term Treasury securities by mid-2011 and will continue to reinvest repayments of principal on its holdings of securities as it has been doing since August.
“This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”
“The Federal Reserve cannot solve all the economy’s problems on its own. That will take time and the combined efforts of many parties, including the central bank, Congress, the administration, regulators and the private sector. But the Federal Reserve has a particular obligation to help promote increased employment and sustain price stability. Steps taken this week should help us fulfill that obligation.”
Where the chairman is going to be making waves, one would expect, given this last passage, is on the deficit front and pressing Congress to do something about it to send a signal not just to domestic markets, but foreign ones as well, that America does ‘get it.’
So the Fed hopes that with QE2 it keeps interest rates low and spurs us all to buy, including homes, but home building is going nowhere and many homeowners can’t refinance because their homes are underwater. And while the Fed pushes down the U.S. dollar, a huge consequence of its actions, this may help U.S. exporters but it also means higher inflation here, as well as higher oil prices, which hit $87 a barrel this week. That’s not good.
And how the heck do you unwind all this…the Fed’s purchases? Oh well, that’s for another day.
Mohammed El-Erian, CEO of PIMCO, in an op-ed for the Financial Times:
“The Fed faces three problems, with its solo role being the first. Having warned in late August in Jackson Hole that ‘central bankers alone cannot solve the world’s economic problems,’ Ben Bernanke, the Fed’s chairman, is now leading an institution that is virtually on its own among U.S. policymakers in meaningfully trying to counter the sluggishness of the U.S. economy and the stubbornly high unemployment.
“Other government agencies are paralyzed by real and perceived constraints, seemingly happy to retreat to the sidelines and let the Fed do all the heavy lifting. But liquidity injections and financial engineering are insufficient to deal with the challenges that the U.S. faces. Without meaningful structural reforms, part of the Fed’s liquidity injection will leak right out of the U.S. and result in yet another surge of capital flows to other countries.
“The rest of the world does not need this extra liquidity, and this is where the second problem emerges. Several emerging economies, such as Brazil and China, are already close to overheating; and the eurozone and Japan can ill afford further appreciation of their currencies.
“Despite polite rhetoric to the contrary in the lead up to the Group of 20 leading economies summit in Korea this month, other countries are likely to counter what they view as an unnecessarily disruptive surge in capital flows caused by inappropriate and short-sighted American policy. The result will be renewed currency tensions and a higher risk of capital controls and trade protectionism.
“The third issue relates to the gradual erosion of America’s central role in the global economy – including as the provider of both the world’s reserve currency and its deepest and most predictable financial markets. No other country or multilateral institution can displace the U.S., but a combination of alternatives can serve to erode its influence over time. No wonder commodity prices surged higher and the dollar weakened markedly in anticipation of QE2, pointing to increased input costs for American companies and unwelcome pressures on their earnings.
“The unfortunate conclusion is that QE2 will be of limited success in sustaining high growth and job creation in the U.S., and will complicate life for many other countries. With domestic outcomes again falling short of policy expectations, it is just a matter of time until the Fed will be expected to do even more. And this means Wednesday’s QE2 announcement is unlikely to be the end of unusual Fed policy activism.”
“This is a terribly risky strategy for what we expect will be little economic gain. The Fed hopes the policy will have the effect of reducing long-term interest rates by 25 to 50 basis points or more, but the 10-year Treasury bond is already near historic lows. Marginal business borrowers aren’t worried about the price of money; they’re worried about the vagaries of economic policy. QE2 only adds to this uncertainty, as the Fed expands its role into fiscal policy and credit allocation.
“Meanwhile, Mr. Bernanke’s monetary cowbell will flow into higher commodity prices and other assets, perhaps leading to more bubbles. It has already caused havoc around the world, as investors flee the dollar for other currencies. Dollar-bloc countries are already seeing an increase in their price levels and several are contemplating capital controls.
“Where this all stops nobody knows, including, we suspect, the Fed itself. In our experience, central bankers who demand more inflation usually get it, sometimes more than they wanted.”
So as the Fed merrily manipulates markets, which I said weeks ago should be very unnerving (this is in some ways Third World stuff, folks!), hoping we’ll go along and throw caution to the wind and move from Treasuries to corporates and stocks, what of our trading partners?
They are furious! China is upset over the ongoing efforts to rein in its currency, Germany’s finance minister called the Fed’s move “clueless,” South Korea is pissed, and Brazil’s new leader, Dilma Rousseff, said of the currency mess in her country, “The last time there was a series of competitive devaluations…it ended in World War II.” With hot money flooding into Brazil, the real has risen 39% against the dollar and is slamming its industrial base by making Brazilian goods uncompetitive. Brazil’s foreign trade secretary said, “[The Fed’s decision] is cause for concern. These are policies that impoverish those around them and end up prompting retaliatory measures.” [Financial Times]
So it’s going to be quite a scene at the G20 next week. Don’t believe what seems inevitable in terms of a tame formal statement that has already been worked out by lackeys, and don’t believe the smiles you see are real. Behind the scenes, if not outward, it will be a tension convention and I continue to maintain it could get violent owing to North Korean leader-to-be Kim Jong Eun needing to make his mark. One thing is for sure, there will be lots of talk of hypocrisy when it comes to the United States and our lecturing other countries on how to behave, even as we recklessly go our own way, seemingly oblivious of the pain we may be inflicting on others.
Here’s an example of the great slowdown that is taking shape in Asia. While China’s Purchasing Managers Index (PMI) for October was higher than expected, 54.7, up from 53.8 in September (and, importantly, a respected HSBC independent reading showed 54.8), owing to growth in China’s domestic market (which is good), Taiwan’s PMI in October went from 49 to 48.6 (contraction), South Korea’s from 48.8 to 46.7, and Japan’s from 49.5 to 47.2. These are the headwinds confronting President Obama and his economic team as they touch down in Seoul.
It’s also not just about Asia. Germany’s industrial production fell a whopping, and unexpected, 4% in September over August. U.K. housing prices fell a 4th straight month in October. Spain’s GDP is now estimated to be flat for the third quarter, hardly what’s needed with nearly 20% unemployment and austerity measures just voted in.
And then there’s Ireland. Incredibly, the Irish 10-year bond now trades at a premium of 525 basis points over the German bund and they are sharing the same currency. Greece’s premium remains over 800, but they were supposed to be a one-off when the crisis hit last April. Why no further countries would require bailouts, the IMF and European Union confidently told us.
Ah, but your intrepid editor hasn’t taken his eye off the ball, thanks in no small part to his 18 trips to Ireland since 1989. It’s getting sicker, not better, by the day. And as I told you when the crisis first hit, when it comes to the European Union, once Greece received its bailout that was it. I said it would be every man for himself, afterwards, despite the EU’s pronouncements it had this $965 billion bailout package in place (minus what Greece has already drawn down).
Nope, this week the same German finance minister, Wolfgang Schaeuble, that called Ben Bernanke “clueless,” said taxpayers, read Germans, shouldn’t be called upon to shoulder the burden of future bailouts alone. Bondholders must pony up, which is exactly what the IMF and EU don’t want in trying to restore confidence. What bond buyer will aggressively go into certain sovereign debts if there is a chance they would get a future haircut? This is sovereign paper, after all, not Peter Schmo and Co.’s bonds. The IMF and EU know that if no one wants to buy Irish paper in the future, the interest rates will be such that Ireland, or Greece, or Spain, or Portugal, or Italy, will never be able to reduce their budget deficits to the preferred 3% of GDP.
This is Europe, friends. It’s North vs. South. It’s increasingly everyone vs. Ireland. I mean when it comes to the Emerald Isle, whose government announced another $6 billion in budget cuts, which is just the latest punch in the face for the average lad and lass, the official unemployment rate just dropped for a second month in a row to 13.6%.
Wait, Editor. Did you just say dropped? That’s good, isn’t it?
Au contraire, mon frère, when it comes to this basket case. You see, the rate is dropping because young people, in particular, are fleeing the place!
Arthur Morgan, Sinn Fein enterprise spokesman, told the Irish Independent:
“Emigration is a scourge on this State and it is a mask which the Government’s failed labor market policies are hiding behind. We will be left with an economic wasteland next month unless the Government stimulates the economy, creates jobs and retains our young people.”
A Fine Gael spokesman said high-skilled employees were leaving. “This group represents the lost generation which is being forced to leave Ireland and look for work overseas….In other words, the highly skilled people that are able to leave are abandoning the country in droves.”
I keep harping on Ireland because it was just a week ago that the EU man in charge of the whole bailout process idiotically gave the all-clear signal.
So let me repeat what I first said last spring. These austerity measures being put in place, while needed, run the risk of killing any recoveries in some of the EU member states and should there be another shock, external or financial, that saps confidence all over again, the European Monetary Union will disintegrate in a nanosecond. There will be no long debate the next time.
Don’t worry. If I’m wrong, I’ll be the first to admit it. I am not, and have not been, short the equity markets, nor am I playing gold. I have some aggressive equity plays of my own that have done well recently (and one clunker, natural gas).
But my holdings are special situations, and in the case of China in particular a very long-term play that I still plan on holding another 15 months, or more. I’m willing to ride out another dip over there should it occur in the interim.
My advice to you is just be careful. Don’t fall for Ben Bernanke’s trap without understanding the global picture. If you want to be 70% or 90% in equities, fine. Just make sure you know as much as possible about each holding of yours. [Which is why I’m not going in big into the China travel play I mentioned the other week until I know it better.] Understand your risk tolerance. Take time to think now and then. My sister-in-law made a great comment the other day when we were talking about how I was hosting Christmas this year and no presents were necessary (talk about a first for my family).
“Everyone we know is working twice as hard to stay where they were five years ago.”
You all know that’s the case. I have argued that I can’t disagree with the official inflation data because the hugely important wage component is going nowhere, for one.
But at the same time when everyone’s health-care premiums are going up 19% and many taxes are rising as states and municipalities deal with crushing problems of their own, I have a hard time believing, as some bulls do, that happy days are just around the corner. No. The deleveraging process must continue first. Take care of yourself. Don’t get sucked in by some academic from Princeton who is losing touch with reality and the rest of the world.
You know, I had some interesting conversations on my long trip that I returned from on Wednesday (just in time to see the president’s news conference). On the flight from Guam back to Honolulu, the fellow next to me and I started chatting about Guam and the military buildup there, he having something to do with the servicing of the bases, and he asked me my opinion of the current state of affairs once he found out what I do. “How do we solve our problems?” “Time,” I said. “We need more time.” Time has healed 95% of all wounds, after all, why shouldn’t it be the case now? Ah, but Uncle Ben wants it to be panic city!
And we may all yet be panicking. But I do feel a little better knowing that our president and his own reckless policies have at least partially been repudiated. That’s cause for a premium.
Street Bytes
–Yet another up week as the Dow Jones rose 2.9% to 11444, the S&P 500 up 3.6% and Nasdaq 2.8%. The Dow and S&P are now up 10% for the year. Nasdaq 14%.
–U.S. Treasury Yields
6-mo. 0.15% 2-yr. 0.37% 10-yr. 2.53% 30-yr. 4.12%
The tone at the G20 could have a large say in how the bond market reacts by end of next week and the following one, as well as the action in the commodities pits, of which I’ll have a lot more to say next week.
“The Stealth Stimulus of Defaulters Living for Free”
“Millions of homeowners keep paying on underwater mortgages: The payments absorb billions of dollars that might be used for other forms of consumer spending, creating a drag on the overall economy.”
–The dramatic mid-air emergency involving Qantas and the Airbus A380, the plane I dubbed the “Flying Weiner” when it was first introduced and one I hope never to fly in my life (it can seat 853 in an all-economy configuration), has the potential to spiral into a major crisis for the airline industry if, as Qantas said on Friday, an engine design fault caused the near disaster.
Qantas CEO Alan Jones, well aware his airline has never suffered a fatality in 90 years of operation, though the last few years has had innumerable problems, said early signs pointed to a “material failure or a design issue” in the Rolls-Royce engines. A second of the four engines would not shut down after the landing, raising further concerns. 20 of the 37 A380s in operation today have Rolls-Royce engines.
[On an entirely different matter, the advent of Wi-Fi and mobile phone usage on planes could be scuttled as a result of the al-Qaeda package bomb scare as mobile phones were discovered with the bombs and phones have commonly been used by terrorists to remotely detonate explosives.]
–The General Motors road show for its coming IPO is underway and the company is telling investors it can generate pretax profit of $11 billion to $13 billion as the auto market continues to improve. GM is also touting pretax annual profit of $17 billion to $19 billion when the market gets back to more historical levels; this as Ford earned $7 billion in pretax profit in the first three quarters of 2010, so, not unrealistic projections from GM it seems. A big thing in the new auto industry’s favor is the drastically reduced health-care obligation, in GM’s case down to $5 billion from $16 billion in 2005 as the liabilities have been moved to a union-run trust as part of bankruptcy reorganization. GM is proposing an IPO price of $26 to $29 in this highly anticipated event, which would make it roughly the value of Ford. As for the U.S. government, its own holdings of GM will drop to 43% with the sale of about $7 billion worth of shares Uncle Sam (and taxpayers) own.
–As to October car sales, GM’s were up 4% from October 2009, Ford’s up 19%, and Toyota’s down 4.4%. Chrysler’s rose 37% (but from a very low ’09 base) while Hyundai’s surged a record 38%. Overall, light-vehicle sales are now running at a 12 million annual rate, compared to pre-recession levels of 16M-17M units.
–So last week I said the inflation data out of Australia while I was there was improving and that the consensus in the Land Down Under was that the central bank would not raise interest rates further, whereupon the money authorities did just that, raise rates anew to a whopping (certainly compared to the U.S.) 4.75%, saying the country would see accelerated growth next year due to still aggressive expansion plans in the mining sector. GDP is estimated to rise 3.75% in Australia in 2011, but consumer prices are now forecast to jump just 2.75% next year vs. an earlier estimate of 3.25%.
I commented on the perceived housing bubble in Australia and said it was not one but that a correction was clearly in order. The central bank, though, is still concerned about a bubble. The Aussie unemployment rate, by the way, is just 5.1%.
[A UN study said Australia has the second-best quality of life behind Norway. Rounding out the top five are New Zealand, the United States and Ireland. Boy, I have a problem with Ireland given all their issues these days. Way too much uncertainty. Zimbabwe, by the way, is last among the 169 in the survey, in case you were thinking, ‘Gee, I wonder how Zimbabwe ranks?’ You can also probably skip fellow bottom-dwellers Mozambique, Burundi, Niger and Democratic Republic of Congo in terms of your vacation plans.]
–Saudi Arabia’s oil minister says the market could tolerate $90 oil, up from his previous statement that we’d all be comfortable with $80 crude. What a guy.
–Meanwhile, oil output in Russia rose to a record 10.26 million barrels per day in October as new fields on Sakhalin Island come on stream. Production has risen 70% since a low of 6 million bpd in 1999 after years of underinvestment following the collapse of the Soviet Union.
Russia’s output exceeds Saudi Arabia’s 8.3 million bpd, though the Saudis have 4 million barrels of spare capacity and are holding back per their OPEC-imposed quotas to keep prices steady. Russia is not a member but OPEC needs its cooperation to maintain, cough cough, price stability.
–The Canadian government stepped in to put a stop to BHP Billiton’s $39 billion bid for PotashCorp (the world’s largest supplier of salts mined for fertilizer) as Canada’s industry minister said the transaction is not likely to be of net benefit to Canada. Tony Clement said he would reveal his reasons in December, after a 30-day grace period in which it is expected BHP would improve the terms, but BHP could just walk away. BHP already promised to maintain employment at current levels in Canada if it wins approval.
–Back to country surveys, Frommer’s guide books chose Ireland as their favorite holiday destination for next year, beating out Paris. But the fact is Irish tourism saw an 11.6% decrease in overseas visits in 2009.
[Speaking of Europe…and Europeans…the New York Post reported that some of New York’s swankiest hotel bars have started adding tips to the tab of 18% to 20% because of non-tipping Europeans. Said one expert on the topic, “The French and the Italians and the Spanish don’t tip, so it’s becoming a necessity at any place that’s dealing with a Euro crowd and wants to maintain its staff.” Open up your wallets, Euros. I certainly do when I’m in your countries.]
–Not a good week for BlackBerry maker Research in Motion as Dell announced plans to move its 25,000 employees to its own line of smartphones and then help other companies do the same, while Bank of America and Citigroup have begun testing Apple’s iPhone as an alternative to its employees’ BlackBerrys for corporate e-mail once the banks are assured the iPhone can be made secure enough for company messages. Last month Apple CEO Steve Jobs said 80% of the Fortune 500 companies are deploying or testing the iPhone. Both BofA and Citigroup, with a combined 542,000 workers, are also testing Android smartphones. RIM counters the number of its corporate subscribers continues to grow. No mention in this entire discussion of my Palm Pre, which I had to set up with Sprint. Let’s just say that as I’ve traveled around, Sprint seems to have coverage that is limited to the 5 feet around an individual cellphone tower.
–In the litigation proceeding between Oracle and SAP, Oracle is receiving $120 million, for starters, from SAP to cover legal costs while agreeing not to pursue punitive damages. But, Oracle can still pursue punitive damages related to SAP’s acknowledged copyright infringement, which some say could reach $2 billion. In opening arguments this week, however, SAP said the ultimate damage inflicted on Oracle by SAP’s U.S.-based TomorrowNow unit was just $40 million.
–Shanghai and the Walt Disney Co. have reached agreement on a new $3.6 billion theme park there. The just concluded World Expo in Shanghai drew a record 72 million visitors, mostly Chinese tourists. I heard the U.S. exhibit sucked.
[I went to Hong Kong Disneyland about two years ago and it was totally unexciting and the park there has not been doing well.]
–Macao set a new monthly record for gaming revenue, $2.36 billion in October, a 50% increase year-over year and another strong economic barometer when looking at China in the eyes of your editor.
–Delta flight attendants narrowly rejected joining the Association of Flight Attendants’ union in a setback for the group that represents 55,000 workers at 22 airlines. Delta, which merged with unionized carrier Northwest Airlines in 2008, has a history of dealing directly with its employees.
–Templeton Asset Management’s famous emerging markets portfolio manager Mark Mobius is being investigated by Turkey’s stock market watchdog for making remarks that caused Turkey’s market to correct sharply. In a televised comment, Mobius said Turkish assets faced a correction “amounting to 15% to 20%.” The next day, the market dropped 3.1%. Of course there is nothing wrong with what Mobius predicted, unless he stood to benefit personally from a fall in prices.
–The FDA said that its tests confirm that Gulf seafood is safe to eat. But some say the FDA guidelines aren’t strict enough. For example, the level of toxins isn’t enough to make anyone sick who has an occasional meal, but for those who eat it frequently, such as locals, is the buildup of toxins over time dangerous? The issue arises because some of the guidelines it turns out are less rigorous than those applied following the Exxon Valdez spill.
[And another story just hit that coral seven miles from the Gulf explosion is dying, clearly due to toxins.]
–For its part, BP reported a profit in the third quarter but said it wasn’t rushing back into the Gulf of Mexico.
–I spent a few days in Honolulu on both ends of my trip to Australia and Micronesia and, aside from the number of Chinese tourists you see strolling Waikiki, I was struck by the “ABC” stores on seemingly every block. These sell all things needed for a beach vacation, plus food and booze, and I couldn’t help but muse, wow, these are a gold mine. So I asked one day, “Does one individual own all these?” “One family,” I was told. One very wealthy family, I’m assuming, the Kosasas.
–The SEC accused two operators of a Los Angeles-based hedge fund of misappropriating more than $2 million of $4 million raised from 25 investors from 2007 until earlier this year. Ordinarily I wouldn’t comment on such a ‘small case,’ but I can’t help but note the stupidity of the investors because the name of the fund in question was “Easy Equity Management Inc.” What, did these guys get this from the Acme Corp. catalogue of fake names?
–And the Los Angeles Times reported that a Native American tribe, the Quechan, alleges that a new Tessera Solar project on 6,000 acres could damage “cultural and biological resources of significance,” one of which includes the “flat-tailed horned lizard,” which The Times reports “plays a key role in the tribe’s creation mythology, the complaint said.” Sounds like the Quechan need to be sat down and have a few things explained to them, no disrespect to those believing we came from horned lizards. It’s clear to me we evolved from wildebeest, or lemmings.
–Sign of the Apocalypse. Ken S. passed along the incredibly important news that the Kardashian Sisters are coming out with a debit card with the girls’ pictures on them!
–Josh P., managing director at a large investment-related firm, wrote in that his employee healthcare contribution was rising by the exact 19% (18.6%) that everyone else’s, including yours truly, is seeing this year.
–Sign of the Apocalypse, part deux: From Golf World I learned that several high-profile PGA Tour and LPGA golfers have been involved in Facebook “fraud,” which, while I recognize is an issue throughout all of the sports and entertainment industries, seems to be particularly bad in terms of the golfer set.
For example, the PGA Tour’s Mark Calcavecchia used to find postings on his Facebook page, such as that he might skip a Champions Tour event because he had to attend the Economic Summit, “kind of hilarious,” as he said.
But there was a problem. Calc had never created a Facebook page for himself, and none of the posts under his name were written by him. As Golf World notes:
“It became an issue when the posts took a less happy tone, such as one that read: ‘Was out drinking all night; had to stagger to the first tee.’ Said Calcavecchia: ‘That was kind of irritating. I don’t want people to think I’m a jerk. And I know I’m not the only player this has been happening to.’”
Calcavecchia’s wife said she tried to contact Facebook officials to ask about her husband’s impersonator and never got a response.
–Deflation Alert: The New York Mets have cut single-game ticket prices by an average of 14% in an attempt to bring fans back to watch their dreadful product.
Foreign Affairs
Iraq: It was an absolutely horrible week here and there are very real concerns civil war could erupt again. On Sunday, al-Qaeda struck at one of Baghdad’s main Catholic churches and amid a rescue attempt by Iraqi security forces that failed miserably (my reading of it), at least 58 died, including six terrorists. 78 were wounded, including many missing limbs. The international community was in an uproar. Pope Benedict XVI called it “ferocious” and Prime Minister Nouri al-Maliki said it was just the latest attempt to drive Christians out of the country.
Then on Tuesday, al-Qaeda launched a huge wave of bombings, at least 14 to 17 in Baghdad that killed another 60+ with 360 wounded. [One report had over 90 killed in Tuesday’s attacks.]
It’s clear one of the reasons why al-Qaeda has been able to act as it has is the failure of Iraqis to form a new government since the March parliamentary elections and this week lawmakers finally got together with a new speaker to be voted on Monday, it would seem, even as the top vote-getting Iraqiya alliance of former prime minister Iyad Allawi said it might boycott Monday’s session as they don’t want to support another term for Maliki, who appears to have the votes. Excluding Iraqiya from the process could anger Sunni voters who supported it.
[Saudi Arabia has invited both Maliki and Allawi to a meeting in Riyadh for the purposes of breaking the impasse.]
Afghanistan: As the all-important December review comes up, Afghan President Hamid Karzai continues to make things difficult for those who believe the United States should stay in this hellhole. Karzai blasted the joint U.S.-Russian drug raid of the week before, saying it was a violation of Afghan sovereignty and of international laws, even though his own interior minister was involved in the raid which seized 932 kg of heroin.
And for all the success we’ve been reading of in terms of NATO’s operation and the U.S. surge, the New York Times reported that in one key area southwest of the capital, Khogeyani, the entire police force joined the Taliban. Said the police chief, “The Taliban and the police made a deal.”
Iran: President Ahmadinejad said not so fast when it comes to any future discussions over Iran’s suspected nuclear weapons program, which Iran maintains is of a peaceful nature. Ahmadinejad and other officials said that they reject new proposals by the U.S., France and Russia to increase the amount of uranium to be exchanged for the purposes of enriching to a level suitable for Iran’s medical isotope needs over the 2009 proposal.
Separately, the New York Times reported Iran is smuggling weapons to Gaza through Nigeria and other African nations in an attempt to evade sanctions.
Israel: Prime Minister Netanyahu wants a Palestinian state within temporary borders, coinciding with the current security fence, for 10 years, leaving Jerusalem for future negotiations. Egypt’s intelligence chief met with both Netanyahu and President Shimon Peres to urge that direct talks between the Israelis and Palestinians commence soon. Palestinian negotiator Saeb Erekat has given the United States at least two more weeks to break the latest impasse.
Meanwhile, in Lebanon, there are growing signs Hizbullah is trying to paralyze the Lebanese government ahead of any indictments issued by the Special Tribunal for Lebanon (STL). Prime Minister Saad Hariri, though, said the possibility of strife despite Hizbullah’s provocative acts is not in the cards. Oh, were some of us just as optimistic. The Italian judge presiding over the STL, Antonio Cassese, warned Lebanon this week not to overreact to the prosecutor’s indictment, which is not the same thing as a guilty verdict.
“The indictment as such should not trigger a civil war in Lebanon,” Cassese said to an audience at The Hague. Cassese added he had no idea when Prosecutor Daniel Bellemare would file his indictment with the pre-trial judge, who can then confirm or reject the charge sheet. Cassese added he did hope an indictment was filed before yearend. A spokesman with the prosecutor’s office said Bellemare has made significant progress in the past month and is confident the evidence is strong enough to establish the culprits’ guilt ‘beyond a shadow of a doubt,’ the spokesman said. [Daily Star]
China: Officials in Beijing are optimistic U.S. election results will encourage a ratcheting down of the rhetoric and anti-China bombast, particularly since it’s pretty clear nothing will be done on the trade sanctions front in the coming lame duck session of Congress.
Secretary of State Hillary Clinton, who studiously avoided Tuesday’s election while traveling overseas, pressed Beijing to allow the U.S. to broker China’s dispute with Japan over ownership of various islands in the East China Sea, but China said, ‘butt out.’ Separately, Clinton also pressed Beijing to get in Pyongyang’s face and tell them not to screw up the G20 summit in Seoul.
Lastly, China pressured European governments to avoid the Dec. 10 Nobel Peace Prize ceremony for imprisoned activist Liu Xiaobo and not make any statements of support for him. Fat chance the pressure will work.
Back to Japan, it is upset with Russia as President Medvedev became the first Russian or Soviet leader to visit another disputed island chain, known as the Southern Kurils in Russia and Northern Territories in Japan. So Tokyo recalled its ambassador to Moscow.
And in Russia, jailed former Yukos oil tycoon Mikhail Khodorkovsky said he’s ready to die in jail as he faces a new prison sentence on trumped up charges for tax evasion and embezzlement that will have him incarcerated until at least 2017 after he was supposed to be released next year. Vladimir Putin and others just don’t want the competition that Khodorkovsky would provide were he free to run for office.
Appearing in court this week, Khodorkovsky called his trial a landmark event for Russia and a test for President Medvedev, who had previously pledged to modernize the country’s judicial system.
“Two years have passed since a new president came to power, and many of my compatriots have regained hope – hope that Russia will become a civilized country with a developed civil society, free of lawlessness, corruption and injustice by officials.”
To the judge, Khodorkovsky said, “There’s more than just two fates in your hands (referring to his partner Platon Lebedev). The fate of every citizen of our country is at stake.”
According to the Moscow Times, “As Khodorkovsky wound up his remarks, dozens of people started clapping and chanting, ‘Freedom!’” I wish I was there. Granted, I would have been descended on by goons on the way back to my hotel.
Greece: Authorities were forced to suspend all deliveries of foreign-bound mail for at least 48 hours following the discovery of at least 15 letter bombs sent to both embassies in Greece and the leaders of Italy, Germany and France. The attempted attacks (some devices did go off with minor injuries inside Greece) were the work of domestic terrorists.
Yemen: Evidence continues to mount that the parcel bombs headed to two Chicago synagogues packed far more explosives than initially thought, though it’s still not clear if they were intended to explode in the air. Forensics point to Ibrahim al-Asiri, the master bomb expert out of Yemen and the group known as al-Qaeda in the Arabian Peninsula.
But an editorial in the Wall Street Journal cautions:
“As night follows day, the same people who have been saying that al-Qaeda is a spent force will now say the Yemen plot means Afghanistan is the wrong war. But whether in Kandahar, Mogadishu or the mountains of Yemen, the threat is from Islamic radicals with safe havens in ill-governed parts of the world. A counterterrorism strategy that merely attacks from offshore has major limitations, as we are discovering in Yemen. We cannot base troops in every country with an al-Qaeda presence, but our involvement in some form with these sanctuary nations is going to have to be long-term….
“The responsibility for having to keep Americans safe tends to concentrate the mind of those in power, if not yet of the Administration’s friends on the left who only recently were dismissing al-Qaeda as an overhyped threat.”
Turkey: A suicide bomber attacked a police unit in an area of Istanbul I am most familiar with, Taksim Square, where I stay when I’m there, but aside from blowing himself up, he was unable to get on a police bus and instead 32 were wounded. Turkey identified the bomber and said he was a Kurdish separatist, despite initial denials from the group, the P.K.K.
Britain / France: The two signed a series of defense treaties that among other things will allow them to share the upkeep and development of their nuclear weapons, while forming a joint expeditionary force of 10,000 (5,000 from each side).
Italy: It will be amazing if Prime Minister Silvio Berlusconi successfully fends off the latest charges he had sex with underage girls. Berlusconi attempted to fight back, blaming the Mafia, which Berlusconi says has a vendetta for his Government’s work in combating organized crime.
But aside from the charges of a prostitute that Berlusconi had sex with her and others 17 or 18 in his mansion, there was a new accusation that funds for hospital construction had been diverted to members of the prime minister’s inner circle. He has to be gone by December, but the complicating factor is it’s not just a matter of removing one man and sliding someone else in. The entire government is at risk of going down.
Mexico: Just another week in this hellhole. At least six Americans, in five different incidents, were killed in Ciudad Juarez, across from El Paso. It’s not known why all six were over there, whether they were involved in the drug trade or just innocent victims, but they’re dead.
Of even more concern to Americans, and tourists from all parts of the world, is the case of the three police officers gunned down while patrolling the tourist district in Acapulco. Why the heck you would consider going there these days I’ll never know. This is not an isolated incident here.
For example, five weeks ago 20 men, Mexicans, on a “guys’ vacation to Acapulco, were kidnapped in broad daylight soon after arriving. This week a mass grave containing the missing men was discovered, along with a note saying this was probably a case of mistaken identity. Lovely.
But…in a story that broke Friday night, we learned that one of the top drug lords, Cardenas Guillen, was killed in a “spectacular gunfight” across the border from Brownsville, Texas, in Matamoros. Yesss! Another big victory for President Calderon.
[In nearby Honduras, 14 were killed in a probable drug-related massacre, the second big one there in recent months.]
Brazil: Dilma Rousseff, a former militant who has never held political office, won her runoff to become Brazil’s next president. She is expected to fully continue the pro-market, pro-leftist social policy agenda of her successor, Luiz da Silva (Lula).
Random Musings
“Most important, Republicans have demonstrated that they are not a rump party confined to the states of the old Confederacy, as even some Republican strategists had begun to fear. The GOP did solidify its hold on the South, but it was progress in states such as Ohio and Pennsylvania that raises Republicans’ hopes for a competitive presidential season. The Bible Belt and the Rust Belt are the winning combination.
“But a high-water mark is also a kind of limit, showing where even the cresting floods do not reach. The revolution of 2010 had about as much influence in California as it did in Finland. Even following a historically good Republican election, the Golden State will be served by Jerry Brown and Barbara Boxer, giving California Republicans good reason to despair.
“And even a vast political victory does not change an iron law of politics: The quality of candidates matters. Serious, mainstream Republican Senate candidates could have won in Delaware and Nevada. But Christine O’Donnell was not serious. And Sharron Angle – warning of ‘Second Amendment remedies’ in case of political loss – was not mainstream. Weak, poorly vetted Senate candidates were the main reason that while Republican gains in the House were historic – the largest in 72 years – gains in the Senate were not.
“O’Donnell and Angle were gifts of Sen. Jim DeMint and Sarah Palin to their party. Tea Party enthusiasm and shallow ideological purity were supposed to be better than outdated, ‘establishment’ attributes such as achievement, wisdom or qualification. This approach to politics is expected of DeMint, who has gained national prominence by accusing his Republican colleagues of compromise. Coming from Palin, however, it is a threat to the Republican future.”
Mr. Gerson goes on to talk about Palin’s irrational support for Colorado’s Tom Tancredo, the Constitution Party’s gubernatorial candidate and “one of the most divisive figures in American politics.”
“Tancredo has made a career of fanning anti-immigrant resentment and lobbing ideological grenades. The people who voted Barack Obama into office, in his view, ‘could not even spell the word ‘vote’ or even say it in English.’… ‘The guy sitting in the White House,’ says Tancredo, is a greater threat to the Constitution than al-Qaeda. ‘If his wife says Kenya is his homeland, why don’t we just send him back?’….
“But it is disturbing that Palin found Tancredo to be the ‘right man for the job.’ Her endorsement raises the question of whether Palin has any standards for her support other than anti-government rhetoric. Either as a power broker or a candidate in the 2012 election, Palin’s increasingly erratic political judgment should raise Republican concerns.
“Palin recently took to the Fox Business Network to call establishment Republicans ‘sleazy.’ ‘Some within the establishment don’t like the fact that I won’t back down to a good-old-boys club,’ she said. This odd mix of Tea Party Jacobinism and feminist grievance has become Palin’s operating style. What many Republicans, establishment and otherwise, don’t like is this: The leading figure of the Tea Party movement seems increasingly indifferent to Republican fortunes and increasingly tolerant of disturbing extremism.”
You know how I feel about Sarah Palin. Gerson, a former speechwriter for President George W. Bush, expresses my sentiments perfectly.
“For all the turmoil, the spectacle, the churning – for all the old bulls slain and fuzzy-cheeked freshmen born – the great Republican wave of 2010 is simply a return to the norm. The tide had gone out; the tide came back. A center-right country restores the normal congressional map: a sea of interior red, bordered by blue coasts and dotted by blue islands of ethnic/urban density….
“In 1946, for example, when party loyalty was much stronger and even television was largely unknown, the Republicans gained 56 seats and then lost 75 in the very next election. Waves come. Waves go. The republic endures….
“(The) Republican swing of 2010 was a reaction to another rather unprecedented development – a ruling party spectacularly misjudging its mandate and taking an unwilling country through a two-year experiment in hyper-liberalism.
“A massive government restructuring of the health-care system. An $800 billion-plus stimulus that did not halt the rise in unemployment. And a cap-and-trade regime reviled outside the bicoastal liberal enclaves that luxuriate in environmental righteousness – so reviled that the Democratic senatorial candidate in West Virginia literally put a bullet through the bill in his own TV add. He won. Handily….
“Moreover, Obamacare and the stimulus were passed on near-total party-line votes – legal, of course, but deeply offensive to the people’s sense of democratic legitimacy. Never before had anything of this size and scope been passed on a purely partisan basis. (Social Security commanded 81 House Republicans; the 1964 Civil Rights Act, 136; Medicare, 70.)….
“This is not, however, a rejection of Democrats as a party. The center-left party as represented by Bill Clinton remains competitive in every cycle. (Which is why he was the most popular, sought-after Democrat in the current cycle.) The lesson of Tuesday is that the American game is played between the 40-yard lines. So long as Democrats don’t repeat Obama’s drive for the red zone, Democrats will cyclically prevail, just as Republicans do.
“Nor should Republicans overinterpret their Tuesday mandate. They received none. They were merely rewarded for acting as the people’s proxy in saying no to Obama’s overreaching liberalism. As one wag put it, this wasn’t an election so much as a restraining order.
“The Republicans won by default. And their prize is nothing more than a two-year lease on the House. The building was available because the previous occupant had been evicted for arrogant misbehavior and, by rule, alas, the House cannot be left vacant.
“The president, however, remains clueless. In his next-day news conference, he had the right demeanor – subdued, his closest approximation of humility – but was uncomprehending about what just happened. The ‘folks’ are apparently just ‘frustrated’ that ‘progress’ is just too slow. Asked three times whether popular rejection of his policy agenda might have had something to do with the shellacking he took, he looked as if he’d been asked whether the sun had risen in the West. Why, no, he said.”
“The most remarkable thing about last night’s overwhelming GOP victory in the midterm elections is the utter lack of triumphalism.
“ ‘This is not a time for celebration,’ said John Boehner, the man who’ll become speaker of the House, last night.
“In 1994, riding their previous tsunami, Republicans literally danced in the Washington streets and partied for 48 hours. In 2008, Democrats wept and sang. There was none of this last night, even from one GOP victor, the come-from-nowhere Floridian Marco Rubio – whose brilliant and imaginative campaign for Senate has already placed him on everyone’s short list of possible presidents down the road.
“ ‘This is a second chance for Republicans to be what they said they were going to be,’ Rubio said.
“Rubio’s words were echoed nationwide. No Republican I heard dared to claim the election represented a positive endorsement of his or her party – which must be a first in political history. This is a rueful GOP. A 60-plus seat win in the House and significant gains in the Senate have not given the victors a reason to gloat.
“The polls tell the tale: The party is unpopular, viewed favorably by maybe a quarter of the American people – even as 36% of them told exit pollsters last night they were Republicans. This means a third of self-described Republicans don’t have a positive view of the Republican Party….
“Nobody cares what the GOP might want to enact. Instead, the voters want the GOP to oppose, block and prevent.
“They want the GOP to oppose any further expansion of government, and block any new programs the president and his party might want….
“Unless Republicans can meet the voters in 2012 with something to show for what they were given last night, they will find themselves treated with scorn and derision – and with third-party insurgents interested in trying an even more radical path to reforming government.
“The election was indeed a referendum on Barack Obama. But the grant of power his opponents received last night is conditional, and will be hard to fulfill. No wonder nobody’s dancing.”
“On to the aftermath of the election. On Wednesday President Obama gave a news conference to share his thoughts. Viewers would have found it disappointing if there had been any viewers. [Ed. I watched the whole thing.] The president is speaking, in effect, to an empty room. From my notes five minutes in: ‘This wet blanket, this occupier of the least interesting corner of the faculty lounge, this joy-free zone, this inert gas.’ By the end I was certain he will never produce a successful stimulus because he is a human depression.
“Actually I thought the worst thing you can say about a president: that he won’t even make a good former president.
“His detachment is so great, it is even from himself. As he spoke, he seemed to be narrating from a remove. It was like hearing the audiobook of Volume I of his presidential memoirs. ‘Obama was frustrated. He honestly didn’t understand what the country was doing….They weren’t giving him the followership he needed. But that wouldn’t work, they’d only complain. He had to keep his cool. His aides kept telling him, ‘Show humility.’ But they never told him what humility looked like. What was he supposed to do, burst into tears and say hit me? Not knowing how to feel humility or therefore show humility he decided to announce humility: He found the election ‘humbling,’ he said.’….
“What the tea party, by which I mean members and sympathizers, has to learn from 2010 is this: Not only the message is important but the messenger.
“Even in a perfect political environment, those candidates who were conservative but seemed strange, or unprofessional, or not fully qualified, or like empty bags skittering along the street, did not fare well. The tea party provided the fire and passion of the election, and helped produce major wins – Marco Rubio by 19 points! But in the future the tea party is going to have to ask itself: is this candidate electable? Will he pass muster with those who may not themselves be deeply political but who hold certain expectations as to the dignity and stature required of those who hold office?….
“Conservatives talked a lot about Ronald Reagan this year, but they have to take him more to heart, because his example here is a guide. All this seemed lost last week on Sarah Palin, who called him, on Fox, ‘an actor.’ She was defending her form of political celebrity – reality show, ‘Dancing With the Stars,’ etc. This is how she did it: ‘Wasn’t Ronald Reagan an actor? Wasn’t he in ‘Bedtime for Bonzo,’ Bozo, something? Ronald Reagan was an actor.’
“Excuse me, but this was ignorant even for Mrs. Palin. Reagan people quietly flipped their lids, but I’ll voice their consternation to make a larger point. Ronald Reagan was an artist who willed himself into leadership as president of a major American labor union (Screen Actors Guild, seven terms, 1947-59.) He led that union successfully through major upheavals (the Hollywood communist wars, labor-management struggles); discovered and honed his ability to speak persuasively by talking to workers on the line at General Electric for eight years; was elected to and completed two full terms as governor of California; challenged and almost unseated an incumbent president of his own party; and went on to popularize modern conservative political philosophy without the help of a conservative infrastructure. Then he was elected president.
“The point is not ‘He was a great man and you are a nincompoop,’ though that is true. The point is that Reagan’s career is a guide, not only for the tea party but for all in politics. He brought his fully mature, fully seasoned self into politics with him. He wasn’t in search of a life when he ran for office, and he wasn’t in search of fame; he’d already lived a life, he was already well known, he’d accomplished things in the world.
“Here is an old tradition badly in need of return: You have to earn your way into politics. You should go have a life, build a string of accomplishments, then enter public service. And you need actual talent: You have to be able to bring people in and along. You can’t just bully them, you can’t just assert and taunt, you have to be able to persuade.
“Americans don’t want, as their representatives, people who seem empty or crazy. They’ll vote no on that.
“Obama still has the killer smile, but he’s more often sniffy than funny. When (Jon) Stewart called White House legislation ‘timid,’ Obama got defensive and offered a less-than-thrilling new mantra: ‘Yes, we can, but…’….
“In 2008, the message was him. The promise was him. And that’s why 2010 is a referendum on him. With his coalition and governing majority shattered around him, Obama will have to summon political skills – starting tomorrow – that he has not yet shown he has.”
–For the record, a few results I was interested in for various reasons.
Harry Reid over Sharron Angle, 50-45
Chris Coons over Christine O’Donnell, 57-40
Barbara Boxer over Carly Fiorina, 52-43
Jerry Brown over Meg Whitman, 54-41, despite Whitman spending $140 million.
Andrew Cuomo over Carl Paladino, 61-34
John Kasich over Ted Strickland, 49-47
–Talk about arrogance, it is truly remarkable that Speaker Nancy Pelosi announced she wants to remain leader of House Democrats after she was a prime reason her party lost 60 seats. It’s actually flat out comical that this clown is yet another who doesn’t get it.
–The following is meaningless, today, but I throw it in here because it helps with my future work. According to a CNN/Opinion Research Corp. survey, President Obama would lose a hypothetical race against former Arkansas Gov. Mike Huckabee, 52 to 44, and Obama would lose to former Mass. Gov. Mitt Romney, 50-45, which shows you just how pathetic Obama’s standing is today, given the fact that both Huckabee and Romney don’t stand a snowball’s chance in hell of winning the GOP nomination. Perhaps Huckabee has VP potential.
When you poll just GOP voters today, Huckabee gets 21%, Romney 20%, Sarah Palin 14%, and Newt Gingrich 12%.
I’m sticking early with Haley Barbour, Mitch Daniels, and now John Thune, as my top three, with Chris Christie the perfect No. 2. I’d also expect Christie to begin rocketing up the first list.
–Cutting defense spending is going to be paramount if we are to truly reduce the budget deficit, as Defense Secretary Robert Gates goes after personnel redundancies, first.
But Democratic chairman of the Senate Armed Services Committee military personnel panel, Jim Webb, said that he is leery about drastically reducing the healthcare package of service personnel as Gates has suggested.
“I think we have a very well-compensated force,” Webb said. “I am not going to be the one to walk back on that. Our people work hard. The package we have is commensurate with what we are asking people to do.” [Defense News]
Webb favors rolling back the size of the Army and Marine Corps after troops are withdrawn from Iraq and Afghanistan. But Webb expects the Army to fight back on that front.
Well the cuts are going to have to come from somewhere as at the same time we have to be careful about cutting too many of the big weapons projects. Some are nothing more than boondoggles, but we need others to maintain our competitive advantage, particularly over China.
I also have to note that since I brought up Guam last time and our huge buildup there, much of what may yet transpire on the island is still subject to change and it’s not written in stone that some of the money projected to be spent on Guam is indeed doled out in times of austerity.
–The measure to legalize marijuana in California fell by 54% to 46%. It seems very possible proponents will keep trying.
–In George. W. Bush’s memoirs, due out this coming week, he writes of a “sickening feeling” over the failure to find weapons of mass destruction in Iraq and is still “shocked and angry” over this. He also writes of thinking seriously about replacing Vice President Dick Cheney before the 2004 election, calling Cheney the “Darth Vader of the administration.”
On the issue of waterboarding, Bush says he personally approved the use of the technique against alleged Sept. 11 plotter Khalid Sheik Mohammed. The Obama administration, including the president and Attorney General Eric Holder Jr., have both said waterboaring is an act of torture, but at the same time have not sought to punish any former Bush officials for sanctioning it. I just bring this aspect of Bush’s admission up because now this gives human rights groups free rein to demand the Obama White House do something, and they won’t. It will make for a headline or two down the road and dominate the news coverage before fading away again as an issue.
–Only my friends Ted T. and Kelly L. would send me a tar ball from Cancun. A rather large one, I have to add. Yes, it’s going to be a tar ball Christmas here in New Jersey. Then again, seeing as it’s coming from Mexico, it could be a body part.
–We note the passing of baseball great Sparky Anderson, as well as the terrific triumph of the San Francisco Giants in the World Series.
–Uh oh…a Cornell University scientist, Jody Gangloff-Kaufmann, an entomologist who specializes in the study of bedbugs, “says she is convinced there is a link between patients getting bitten by bedbugs and coming down with dangerous and even lethal infections” such as Staph, or MRSA, as reported by Gale Scott of Crain’s New York Business.
“ ‘What we are starting to see is that hospitals just cannot get rid of MRSA until they get rid of bedbugs,’ said Ms. Gangloff-Kaufmann, who has a PhD in the study of insects. It’s not that bedbugs harbor staph in their blood and transmit it by biting, the way mosquitoes do with viruses, she says. Rather, bedbug bites can create hiding places where MRSA can take hold.”
Other scientists in the New York area concur this is a real possibility. It’s common sense, they observe.
–MSNBC’s Keith Olbermann was suspended without pay, indefinitely, upon the network’s discovery that he had given donations to three Democratic candidates in this week’s election. It was literally hours before Olbermann was to go on the air Friday, so MSNBC had to scramble for a replacement. They came up with contributor Chris Hayes, but he, too, had made political donations. NBC News policy prohibits staff from overtly political activity.
But at Fox News, hosts of opinion shows aren’t prohibited from making political donations. In August, for example, the Wall Street Journal notes that Sean Hannity donated $5,000 to MichelePAC, the political action committee of Rep. Michele Bachmann, (R-Minn.), in yet another instance of Hannity wanting to get in Ms. Bachmann’s pants. [That’s me, not the Journal.] Fox says that Hannity is not a journalist, “he’s a conservative TV host.”
–Bret Stephens / Wall Street Journal…the morning of the election.
“(The) only reckoning Americans can hope to get – and the one they most need to have – is the one they’re least likely to seek. That is a reckoning with themselves.
“Pundits, particularly those who lean right, are schooled always to praise the wisdom of the electorate. Please. Only three years ago, Americans became acquainted with a junior U.S. senator with an interesting personal history, notably rhetorical gifts, programmatically liberal ideas and zero legislative accomplishments. Whereupon he was hailed as a saint and elected president…
“And so Americans go to the polls. Democracy being what it is, it holds not only our leaders to account, but our own political choices as well. Plainly Barack Obama was not the one we’ve been waiting for. But let’s have the grace to admit we weren’t the ones we’d been waiting for, either.”
I for one greatly appreciate Mr. Stephens’ comment, seeing as how I’m often castigated for calling Americans from both sides of the political aisle “idiots.” Some of us are.
–Dorothy Rabinowitz / Wall Street Journal…also on election morn.
“Whatever the outcome of today’s election, this much is clear: It will be a long time before Americans ever again decide that the leadership of the nation should go to a legislator of negligible experience – with a voting record, as state and U.S. senator, consisting largely of ‘present,’ and an election platform based on glowing promises of transcendence. A platform vowing, unforgettably, to restore us – a country lost to arrogance and crimes against humanity – to a place of respect in the world….
“In the little over 18 months since Mr. Obama’s election, popular enthusiasm for him has gone the way of his famous speeches – lyrical, inspired and unburdened by the weight of concrete thought….
“What’s clear now is that we’ve heard quite enough about the ‘angry electorate’ – a peculiarly reductive view of citizens who’ve managed to read all the signs and detect an administration they were not prepared to live with.
“Nothing wakened their instincts more than the administration’s insistence on its health-care bill – its whiff of totalitarian will, its secretiveness, its display of cold assurance that the new president’s social agenda trumped everything.
“But it was about far more than health-care reform, or joblessness, or the great ideological divide between the president and the rest of the country. It was about an accumulation of facts quietly taken in that told Americans that the man they had sent to the White House had neither the character or the capacity to lead the country….
“Decades ago another president directly addressed Americans in a time of far greater peril. ‘Your government has unmistakable confidence in your ability to hear the worst without flinching and losing heart,’ Franklin Roosevelt told his national audience. The occasion was a fireside chat delivered Feb. 23, 1942. No radio address then or since has ever imparted a presidential message so remarkable in its detail, complexity and faith in its audience.
“It was delivered just a few months after Pearl Harbor, a time when the Allied cause looked bleakest. It would be known to history as ‘The Map Speech.’ The president had asked Americans to have a map at hand, ‘to follow with me the references I shall make to the world-encircling battle lines of this war.’ He took them through those lines, the status of battles around the globe, the enemy’s objectives, centers of raw material and far more. By the time they had finished poring over their maps with him they had a considerable education….
“Franklin Roosevelt led the nation through 12 years begun in incomparable national misery virtually to the end of the war. When he died, an anguished country mourned as it had not done since the death of Lincoln. Americans trusted him. The story is told of a man found weeping when Roosevelt’s funeral train went past, who was asked if he had known the president. ‘I didn’t know him,’ he replied. ‘But he knew me.’
“The times are now vastly different – no one expects a candidate with the powers of an FDR these days. But the requirements of leadership don’t change. Despite charm and intellect, Americans have never been able to see in Mr. Obama a president who spoke to them and for them. He has been their lecturer-in-chief, a planner of programs for his vision of a new and progressive society.
“Plenty of suggestions, none of them feasible, are in the air now about how he can reposition himself for 2012, and move to the center. Mr. Obama is who he is: a man of deep-dyed ideological inclinations, with a persona to match. And that isn’t going away.
“The Democrats may not take a complete battering in the current contest, but there is no doubt of the problems ahead. This election has everything to do with the man in the White House about whom Americans have lost their illusions. Illusions matter. Their loss is irrecoverable.”
I read Ms. Rabinowitz’ column on Tuesday morning from Honolulu. As my flight wasn’t until that evening I made the snap decision to hop in a cab and go back to Pearl Harbor for a third time in my life. I didn’t go out to the Arizona Memorial, which I’ve done before, because you need a ticket and the earliest I could have gone was three hours later.
But this proved to be good for me because for the first time I walked through the fantastic memorial to America’s submariners. There is a plaque telling the story of each of the 52 subs that we lost in World War II, sending some 3,500 brave men to a watery grave.
The plaques are stark. In so many cases a harsh ending, say, for example, the USS Escolar, which just disappeared, no message, in almost all probability hitting a mine and going down instantly. In the Escolar’s case, Oct. 1944…82 died.
I am going to detail the stories of some of these subs on another column I do for this site, but I spent over an hour at this memorial reading every single story. I read of commanders who went down with their gravely disabled subs, while a few of the crew managed to swim away, only to become POWs (where some of them later died horrible deaths), because the commanders didn’t want to give the Japanese any information if captured. For these actions of incredible bravery, some won the Medal of Honor.
You just walk around this memorial and not only have an amazing sense of pride over what we accomplished (and when I think of World War II I always have the Brits in the back of my mind as well, because God bless Winston Churchill and his brave countrymen, too), but you walk around with a feeling of wonder. The submariners…you’re out doing battle, and then poof! A depth charge hits, or you hit the dreaded mine, and you’re already in your tomb.
And so afterwards I went to see the 25-minute film explaining Pearl Harbor that I’ve seen every time I’ve been there. Hell, I start tearing up with the first strains of music (and this time I stupidly put myself in the front row). The scene of the Arizona exploding is one you’ll never forget…1,177 dead.
But the film is so important and made all the more powerful because you’re sitting there on the site of the biggest screw-up in our nation’s history, yet, it’s also at Pearl Harbor that we picked ourselves up by our bootstraps, thanks to an amazing leader who, as Dorothy Rabinowitz wrote above, never lost faith in us. We raised many of the same battleships that were sunk in the harbor and repaired them (which floors me as well), and it’s from Pearl that the great comeback was launched amid preparations for the decisive turning point at Midway.
But it’s upsetting today that given our history, so many still just don’t get it. Our president is so insincere when he throws in a line or two about America always bouncing back, just days after giving a speech or interview where he’s calling us “enemies.”
As many of the editorialists I quote above cite, hopefully we’ve learned a lesson about the kinds of leaders we pick after the experience of 2008. But then at the same time, a fair percentage of Americans, and maybe some of you readers, believe that the likes of Sarah Palin, or Christine O’Donnell, for crying out loud, are actually qualified for the offices they sought, and will seek in the future. It’s easy for someone like me to get depressed all over again.
Or maybe that’s yet another reason we must remember Dec. 7, 1941. It was our worst day, but also the beginning of true greatness. We better learn to recapture that spirit soon, friends, or this nation will continue to slide into mediocrity. It starts with having good leaders. The jury is out on whether we will have really gained much from this Tuesday’s vote. It’s not just Republicans who are on probation. We’re all on probation. A return to greatness, or failure, awaits.
Pray for the men and women of our armed forces, and all the fallen.
God bless America.
—
Gold closed at $1393…another new high
Oil, $87.40…highest in two years
Returns for the week 11/1-11/5
Dow Jones +2.9% [11444]
S&P 500 +3.6% [1225]
S&P MidCap +3.8%
Russell 2000 +4.7%
Nasdaq +2.8% [2578]
Returns for the period 1/1/10-11/5/10
Dow Jones +9.7%
S&P 500 +9.9%
S&P MidCap +18.5%
Russell 2000 +17.8%
Nasdaq +13.6%
Bulls 46.7
Bears 24.4 (unchanged) [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Next time from Spokane, Washington. It very likely will be posted closer to Noon, ET, Sat., or possibly a few hours later than that. The reason? The night before I’ll be at the Boise State-Idaho football game in Moscow, Idaho.
*Dr. Bortrum posted his latest.
