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11/25/2006
For the week 11/20-11/24
[Posted 7:00 AM ET]
Crisis
It was another horrible week for planet Earth with zero cause for
optimism the situation will improve anytime soon.
After Thursday’s horrific attacks on the Baghdad Shia slum of
Sadr City which killed over 200, radical cleric Moqtada Sadr told
Iraqi Prime Minister Nouri al-Maliki that if he met with
President Bush in Jordan on Monday, Sadr would pull his bloc
out of parliament. Sadr went on to say that Americans kill his
people at night and Sunnis kill them by day. I will forever
maintain the Bush administration was right to take out Saddam
and that somehow we had to begin to change the dynamic in the
region. But through amazing incompetence and arrogance we
have turned the Middle East into more of a seething cauldron of
hate than it has ever been in modern history.
I have also been writing for years now that U.S. credibility was
at stake and today America is increasingly irrelevant.
So what now? In Iraq, the government is under unbelievable
pressure and we’ll learn an awful lot in just the next 48-72 hours
as to whether it will even survive to see 2007.
This week Syria established full diplomatic relations with Iraq,
agreeing that U.S. troops should stay for now, but the biggest
immediate issue is whether Syria will tighten its borders. Then
Iran said it wanted to hold a conference with Iraq and Syria this
weekend, leaving many to wonder why it is that Iran and Syria
are setting the agenda and not the White House?
Of course all this maneuvering transpired before the
assassination of Pierre Gemayel, a key member of Lebanon’s
fragile government. Gemayel was killed by Syria or its acolytes,
namely Hizbullah, in an attempt to bring down the pro-West
government of Prime Minister Fouad Siniora. So should
Washington even be meeting with Syria in the first place?
I have steadfastly said it is criminal the way the Bush
administration has treated Lebanon since the Cedar Revolution in
the spring of 2005 that removed Syrian troops from Lebanon.
The U.S. played an important role in installing a democratically
elected representative government and then forgot about
Lebanon the next day. President Bush allowed Israel to destroy
the country under the guise of defeating Hizbullah and instead
made Sheikh Nasrallah more powerful. Every freedom-loving
person should shed a tear for Lebanon and it’s sickening to hear
Bush now say the country has “our unwavering commitment.”
In essence, you want a friend? Go buy a dog.
The United States hasn’t been an honest broker in the Middle
East since the first day of the Bush presidency and it’s going to
haunt Americans for decades to come.
---
Following are thoughts on the latest crisis in Lebanon.
Michael Young of the Daily Star (Beirut), in an op-ed for The
Wall Street Journal.
“British Prime Minister Tony Blair recently sent a senior adviser,
Sir Nigel Sheinwald, to Damascus for a chat. The visit,
reportedly approved by Washington, aimed to see if Syria could
be enticed away from Iran. If The Economist is correct, and the
magazine spoke to Mr. Sheinwald upon his return, (Syrian
President Bashir Assad) has four conditions: an end to the Hariri
investigation, a guarantee that the U.S. would not undermine his
regime, a return of Syrian influence in Lebanon, and the handing
back of the Golan Heights, occupied by Israel in 1967. No doubt
Mr. Assad would demand much the same from the U.S. if it ran
to Damascus to ‘engage’ him on Iraq, assuming the Syrian leader
would consider conceding to Washington in a moment of
strength what he refused when he was weak.”
Mr. Young wrote the above right before the Gemayel
assassination, which obviously complicates matters further.
Editorial / Daily Star [following the Syrian hit]
“There is no such thing as a routine political killing, but
Tuesday’s assassination of Lebanese Industry Minister Pierre
Gemayel threatens repercussions – and signals intentions – that
are nothing short of extraordinary .
“There must be no surrender to either the demands of a shadowy
enemy or the temptation to take revenge on him by targeting
innocents with no connection to the crime. Those who truly
want Lebanon to change for the better understand that this cannot
happen unless they unequivocally endorse due process and the
rule of law – especially on occasions when it is cruelly difficult
to do so.”
Druze leader Walid Jumblatt on the critical efforts to form an
international tribunal to try suspects in the killing of former
prime minister Rafik Hariri.
“Those who fear the implementation of justice will obstruct the
creation of the tribunal, including (Syrian-backed President
Emile) Lahoud, who wants to protect himself or some of his
officers.”
Jumblatt called on Speaker Nabi Berri, a Hizbullah sympathizer,
to convene a parliamentary session to approve a UN draft for the
formation of the Hariri court, but had to acknowledge this is
unlikely. Then Jumblatt said “I bluntly accuse the Syrian regime
I expect more assassinations.”
With the recent resignation of six ministers, plus Gemayel’s
death, the Lebanese Cabinet is down to 17 ministers from its
original roster of 24. Under the constitution, if one more
minister is killed or resigns Siniora’s government loses its
quorum and the government falls. Jumblatt and the democracy
forces in Lebanon know Syria could easily gun for that final
minister. It’s in Assad’s interests to do so and prevent the
tribunal that will undoubtedly implicate him in one form or
another.
But what of Hizbullah and Sheikh Nasrallah, who until the
assassination was prepared to take to the streets in an attempt to
overthrow the government? Due to the period of mourning and
the show of support for the democracy forces, he has told his
followers to stay put until this coming week at the earliest.
Nasrallah, like Syria’s Assad, is afraid the UN’s tribunal will
implicate Hizbullah as well.
Back to Iraq former leader Iyad Allawi is making himself
available as a strong man. At this point this could be our best
alternative. He has vowed to crush the militias if given the
chance, calling for an entirely new chain of command for the
Iraqi security forces.
As for the White House, it will be receiving suggestions from the
Pentagon, James Baker’s study group, and a third view from
administration insiders.
The Pentagon leaked three choices, among which was “Go long,”
meaning the U.S. boosts troops short-term while stepping up
training for the long term; but this requires patience, now in short
supply among the American public.
Other defenders of the original policy, such as Henry Kissinger
and Senator John McCain, continue to weigh in. Kissinger said
military victory was now “impossible” while both are in
agreement an early withdrawal would be “catastrophic.” McCain
at least gets high marks for acting like a true leader, even if many
view his ideas as misguided.
Lastly, it becomes clearer by the day that if there is to be any
stability in Baghdad, the road leads through Jerusalem. But
again, it’s about U.S. credibility, of which there is none these
days. Can the White House recapture some of it? It would take
an amazing leap of faith to believe this can be so.
After months of dithering, and with talks on Iran’s nuclear
ambitions now stalled because of Russia’s ongoing intransigence
in protecting its economic interests, Israel’s own confidence in
the White House preventing Tehran from coming up with the
bomb is bordering on nil these days. At the same time, when it
comes to the Palestinian issue all Israel sees is a green light from
President Bush.
Of course the Palestinians don’t make it any easier on
themselves, as once again unity talks between Hamas and Fatah
have broken down. President Mahmoud Abbas wants to handle
diplomacy while Hamas would be in charge of day-to-day
governing, but unless economic sanctions are lifted this
arrangement is untenable, especially when Hamas continues to
refuse to recognize Israel’s right to exist.
It was also interesting this week that an Israeli advocacy group
issued a report that found 39% of land used by Jewish settlers in
the West Bank is private Palestinian property, a clear violation of
international and Israeli law. Many of the key settlements are
sitting on Palestinian land. The Israeli government has long
contended the settlements sat on “state land.”
And as if we don’t already have enough to worry about, French
soldiers in Lebanon are being told they can shoot down Israeli
jets should they feel threatened. Israel cannot continue to
violate the ceasefire with impunity, but the White House just
looks the other way.
Wall Street
This is one of those weeks when we can keep the commentary
brief. There was no economic news of consequence and bond
traders were off Thursday and Friday. The biggest story,
perhaps, was the plight of the U.S. dollar and I have a few words
on that below. Otherwise, it’s all about retail the next four weeks
and the consensus of Wall Street economists is that we will see
holiday sales in the 5% range. These same economists also
believe real estate is close to a bottom, but I’m going to give this
topic a rest for a week.
As for 2007, the White House has lowered its expectations for
GDP growth to 2.9%, though it forecasts an inflation rate of
2.3%. That is the perfect goldilocks scenario, sports fans. 2.5%-
3.0% growth, 2% inflation. But some of us, such as PIMCO’s
Bill Gross, see GDP in ’07 more in the 1%-2% range, which if
true means corporate earnings will increasingly disappoint.
Globally, however, until the popping of the real estate bubble
hits in earnest, the picture continues to look pretty good. Growth
in Asia, ex-China and Vietnam, is increasing at a 4%-6% clip
(Hong Kong just raised its ’06 full year forecast to 6.5% from
4.5%), while the outlook for Europe is still generally good. But
Europe’s trade deficit with China is as much an issue as China’s
with the U.S. and calls for protectionism increase daily.
Meanwhile, I might as well use the time to expound on the topic
of the haves vs. the have nots. There was a rather telling table in
the New York Times the other day looking at growth in income
(adjusted for inflation) for the period 1990-2004.
Top 0.1%...up 85%...$4,506,000 median
Top 1.0%...up 57%...$940,000
Bottom 90%...up 2%...$28,350
Last Sunday Senator-elect Jim Webb, D-VA, was on “Meet the
Press” and Tim Russert quoted from an op-ed Webb had written
the week before for the Journal that I failed to get to last time.
Webb is bang on.
“The most important – and unfortunately the least debated –
issue in politics today is our society’s steady drift toward a class-
based system, the likes of which we have not seen since the 19th
century. America’s top tier has grown infinitely richer and more
removed over the past 25 years. It is not unfair to say that they
are literally living in a different country. Few among them send
their children to public schools; fewer still send their loved ones
to fight our wars. They own most of our stocks, making the
stock market an unreliable indicator of the economic health of
working people. The top 1% now takes in an astounding 16% of
national income, up from 8% in 1980. The tax codes protect
them, just as they protect corporate America, through a vast
system of loopholes.
“Incestuous corporate boards regularly approve compensation
packages for chief executives and others that are out of logic’s
range .When I graduated from college in the 1960s, the average
CEO made 20 times what the average worker made. Today, that
CEO makes 400 times as much .
“This ever-widening divide is too often ignored or downplayed
by its beneficiaries. A sense of entitlement has set in among
elites, bordering on hubris. When I raised this issue with
corporate leaders during the recent political campaign, I was met
repeatedly with denials, and, from some, an overt lack of concern
for those who are falling behind. A troubling arrogance is in the
air among the nation’s most fortunate. Some shrug off large-
scale economic and social dislocations as the inevitable
byproducts of the ‘rough road of capitalism.’ Others claim that
it’s the fault of the worker or the public education system, that
the average American is simply not up to the international
challenge, that our education system fails us, or that our workers
have become spoiled by old notions of corporate paternalism .
“America’s elites need to understand this reality in terms of their
own self-interest .
“If it remains unchecked, this bifurcation of opportunities and
advantages along class lines has the potential to bring a period of
political unrest. Up to now, most American workers have simply
been worried about their job prospects. Once they understand
that there are (and were) clear alternatives to the policies that
have dislocated careers and altered futures, they will demand
more accountability from the leaders who have failed to protect
their interests.”
Street Bytes
--The major averages finished mixed on the shortened trading
week, with the Dow Jones losing 0.5% to 12280, while Nasdaq
picked up 0.6% to close at 2460 and the S&P 500 lost a fraction
of a point. Once again Merger Monday powered the market
higher, initially, as Freeport McMoran Copper took a run at
Phelps Dodge, a reported $26 billion deal, Blackstone Group is
seeking to acquire Sam Zell’s Equity Office Properties for $36
billion, and Russian steelmaker Evraz Group is looking to
swallow Oregon Steel Mills in a $2.5 billion transaction.
Russia’s attempt at acquiring a U.S. producer should receive
particular scrutiny.
-- U.S. Treasury Yields
6-mo. 5.12% 2-yr. 4.73% 10-yr. 4.55% 30-yr. 4.63%
Little news worth passing on regarding the bond market,
specifically, particularly as it was closed Thursday and Friday.
But there was a lot of news overseas that impacted the U.S.
dollar, which in turn of course influences interest rates. The
euro, for example, rose to $1.30 for the first time since April
2005 as traders believe the European Central Bank will be hiking
rates throughout 2007 due to the threat of inflation.
Not only is the European economy chugging along at its best
pace in years, but the extra yield investors once got investing in
U.S. bonds vs. European ones is narrowing significantly, thus
making U.S. investments less attractive. Of course most traders
feel the Federal Reserve is finished raising rates and that the next
move will be to lower them; yet at the same time China is
making waves about diversifying its currency holdings out of the
dollar.
The flipside is that in the case of European manufacturers, the
stronger euro hits exports, while the downside for the U.S. is
more expensive European goods mean higher inflation here. But
for the second time in three weeks, Treasuries did not act in the
manner you’d expect, choosing to rally this week as thoughts of
a slowdown and Fed easing trumped the idea of needing higher
rates to offset the impact of a falling dollar, higher inflation and
the need to keep our securities attractive, especially in light of
our humongous government debts.
--Economist David Hale was interviewed for Barron’s and had
the following take on the private-equity boom.
“It is spinning out of control. We are raising so much money
there is bound to be an accident at some point. We are talking
now about literally tens of billions of dollars. Nobody knows
what the accident will be, but when you have this much money
chasing deals, the odds are very high.”
That’s the same refrain so many of us have. We know it doesn’t
smell right, but no one can tell when it will end, as opposed to
the Nasdaq Bubble where I was writing how it was pretty
obvious the end was nigh when once responsible Wall Street
strategists started saying price/earnings multiples didn’t matter.
The Nov. 27 issue of Business Week has a good example of the
private-equity scene in the case of Freescale Semiconductor,
recently acquired by Blackstone Group for about $18 billion.
As reported by Emily Thornton:
“The most pressing question for the buyout firms is whether
Freescale can thrive despite the $9.5 billion in debt it must take
on for its owners to pay for the deal. Freescale’s interest expense
payments are expected to zoom to more than $750 million, vs.
$105 million paid in the 12 months ended in September.
‘Because this is funded with so much debt, it is one of the riskier
deals in tech land,’ said one analyst .
“Right now it looks as though the buyers have some breathing
room; Freescale generated $780 million in cash last year. But
the firms are expected to cart off all but $600 million of the $3
billion of cash on the balance sheet to pay for the deal. Moody’s
Investors Service estimates that Freescale will generate only
$350 million in free cash in 2007. Value Line reckons net
income will shrink to $860 million, from $930 million .
“The debt load also leaves precious little room for error in the
event of an industry downturn. In the semiconductor industry’s
last severe bust, in 2001, Freescale, then Motorola’s chip
division, lost $2.2 billion.”
When does the whole private-equity craze end? It’s really pretty
simple the next recession.
--Americans currently have 148 million cars, China 19 million
and India 9 million. But Goldman Sachs projects that by 2050,
the U.S. will have 233 million, China 514 million, and India 610
million.
Of course the above is but one important example of human
activity and the prospective impact on global warming. But in a
survey for Harris Interactive in Germany, France, the UK, Italy
and Spain, while 68% said they would either strongly or
somewhat support restrictions on their behavior and purchases in
order to reduce the threat, only 43% strongly or somewhat
supported a charge on airline passengers to pay for
environmental damage.
At the same time, there are some on the continent who say
Europe is already moving too fast on climate change. The
Financial Times reported the EU’s industry commissioner has
warned “We have to recognize that our environmental
leadership could significantly undermine the international
competitiveness of part of Europe’s energy-intensive industries
and worsen global environmental performance by redirecting
production to parts of the world with lower environmental
standards.” [The commissioner is obviously targeting China,
India and other Asian nations.]
--Shares in Google exceeded the $500 mark, finishing the week
at $505. It was Aug. 2004 when the stock went public at $84.
Congratulations if you’ve been in it since the beginning, or $400
for that matter. I do not believe that the stock is necessarily
overvalued at these levels, if you can convince me the projected
growth rate will hold. But I’m just more and more convinced
that revenue models dependent to a large extent on online
advertising are doomed to fail.
--General Motors tanked after it was revealed investor Kirk
Kerkorian cut his stake by 25% or 14 million shares. Despite the
decline in the stock price, the sale was viewed as a victory for
GM CEO Rick Wagoner, who has refused to form an alliance
with Nissan Motors Co. and Renault, which was what Kerkorian
sought through his substantial position in GM that peaked at
close to 10%. But the 89-year-old Kerkorian didn’t just sell the
GM position; at the same time he sought to increase his share in
MGM Mirage to 62%.
--Motor Trend’s 2007 Car of the Year award goes to .Toyota’s
Camry! No surprise then that thus far in ’06 the Camry is the
leader in sales in the U.S. [Last year’s Motor Trend selection
was the Honda Civic, with Corgi’s Porsche Carrera tops in the
toy car category.]
--Dell finally released results for its third quarter and Wall Street
celebrated as Dell handily beat earnings estimates. But at the
same time Dell announced it wouldn’t file its 10Q for either the
2nd or 3rd quarter due to the SEC’s ongoing investigation into its
accounting, management offered no explanation, and there was
no conference call for analysts to question the company. Dell
added it may have to restate some of what it told investors. The
shares rose 10% anyway. That’s today’s Wall Street.
--Investigators in Germany and Italy are trying to get a handle on
the scope of a bribery scandal at Siemens AG, Europe’s largest
engineering company. What was once thought to be a $25
million scheme has now turned into at least a $250 million one,
with two employees already jailed and 30 offices and residences
of employees searched, including the offices of Klaus Kleinfeld,
CEO. According to Italian authorities and the Wall Street
Journal, “Consulting contracts were signed by senior Siemens
officials for work that was never done, (with) payments then
transferred through shell companies registered in offshore
locations such as the Channel Islands and Puerto Rico.” What is
it that we always say around here? Corruption makes the world
go ‘round.
--A survey by The Chronicle of Higher Education has found that
the number of college and university presidents earning at least
$500,000 increased by 53 percent in just the past year.
Amazingly, the top earner at a public university was David
Roselle, president of the University of Delaware, who earned
$979,000 in pay and benefits. Nothing against Delaware, where
my Uncle Conrad taught for decades, but you don’t see Delaware
competing for the NCAA football or basketball titles, do you? I
mean that’s all that really matters, right? Or am I revealing too
much about my shallow self?
Actually, the pay at our institutions of higher learning is a
function of fundraising and with huge budgets come
responsibility.
--Treasury Secretary Henry Paulson gave what was supposed to
be an “important” speech on market regulation and ended up
saying a lot of nothing. While criticizing the nation’s “ever-
expanding rulebook” and burdensome legal system, when
questioned after his prepared remarks he stood behind Sarbanes-
Oxley while expressing confidence it would be made more
flexible.
“I don’t think there is a single principle in [Sarbanes-Oxley] that
is ill-founded,” he said. But if the treasury secretary, who came
from Wall Street, doesn’t rail against the egregious aspects of
Sarbox that are leading to a precipitous drop in corporate listings
in the United States, then who the heck is going to force the
change?
[Separately, Paulson and Fed Chairman Bernanke are taking a
trip to China together to get the Chinese to let their currency
appreciate more. But the Chinese will feed them some shark fin
soup and the two will forget why they were there.]
--And now the latest episode on “CSI: Wall Street.” Just last
week we learned KB Home CEO Bruce Karantz was canned for
backdating stock options. But since he wasn’t really ‘fired,’
officially, and chose to resign instead, it has been revealed that
he will leave with cash and prizes of $175 million. $175 million!
when you add in the $80 million he receives under his negotiated
severance agreement, a special pension plan, and vested options
that aren’t in dispute. [LA Times]
This is absolutely insane.
--Forget silicon gel implants, there is a severe global shortage of
poly-crystalline silicon that is the basic material used to
manufacture materials for solar power. Because of the demand
for silicon chips with the booming semiconductor industry, it’s
increasingly difficult to find enough silicon for solar panels,
which could lead to higher prices for the material and thus make
investments in the solar industry less attractive.
--According to the Financial Times, $1.3 billion in art has been
sold in the past two weeks during New York’s auction season.
As one expert said, “It’s not just a few hedge fund managers
buying: it’s the growth of the high net worth sector over the past
five years, which has been dramatic.” I really should sell my
Lew Alcindor rookie card, come to think of it.
--The price of my favorite beer rose 6% this week! Drat!
--My portfolio: I haven’t been doing anything the past few
months, thus no chatter in this space. I am, however, ticked off
at my carbon fiber holding for being so late in releasing its third
quarter earnings. The company is falling back on the excuse the
quarter represents their fiscal year end, but that’s no reason not to
at least give shareholders an idea of just when the information is
forthcoming. Otherwise, I’m preparing my concession speech
for year end; the one acknowledging that my model portfolio of
80% cash, 20% stocks failed to beat the market by a sizable
margin.
Foreign Affairs
North Korea: President Bush had his opportunity to pressure his
counterparts at the 21-nation Asia Pacific Economic Cooperation
forum on the issue of North Korea and its nuclear weapons
ambitions and what happened? All Bush got was an oral
statement, read by Vietnam’s president, calling for the
implementation of UN Security Council Resolutions on the topic.
That’s it. And, further, in talks with South Korean President
Roh, Bush was unable to gain Seoul’s cooperation in boarding
North Korean ships. Later in the week, North Korea’s deputy
foreign minister, on a visit to Beijing, said “Why would we
abandon nuclear weapons? Are you saying we conducted a
nuclear test in order to abandon them?” It’s final exam time for
the White House. Can they ace it and pull the final grade up to C
from F?
Russia: What a nasty country. While the history of the place is
the most fascinating in the world, it remains a nation of devious,
scheming and corrupt people, with a leadership that is both
paranoid and constantly suffering from an inferiority complex.
And now we have another example in the death of former KGB
agent Alexander Litvinenko, poisoned in some fashion in
London as he was investigating the recent death of Russian
journalist Anna Politkovskaya. Scotland Yard is now focusing
on a radioactive compound, polonium-210, probably placed in
his tea as he sat down with a shady Russian character back on
November 1. Before he took ill, an Italian associate had
presented him with a list of Kremlin targets that included
Litvinenko.
After his death, an associate read a statement that Alexander had
dictated, addressing Russian President Vladimir Putin directly.
“You may succeed in silencing me, but that silence comes at a
price.
“You have shown yourself to be as barbaric and ruthless as your
most hostile critics have claimed.
“The howl of protest from around the world will reverberate, Mr.
Putin, in your ears for the rest of your life.”
His final words were whispered to his friend, filmmaker Andrei
Nekrasov.
“The bastards got me, but they won’t get everybody.”
Back in 2003, Litvinenko, an outspoken critic of Putin who was
forced into exile in Britain, had written a book on the 1999
apartment bombings in Moscow. In this very column, 12/12/99,
I first raised the issue, before it had appeared anywhere else that I
could ascertain, certainly not the mainstream press, that perhaps
the KGB had blown up the apartments, killing 300, so that it
could blame Chechen militants as part of the Kremlin’s war on
Chechnya at that time. Vladimir Putin was about to come to
power and Putin needed the cover in order to blast Chechnya to
kingdom come which he then proceeded to do a most popular
action in Russia. Litvinenko later came to the same conclusion,
as did the New York Times’ William Safire. It is one of the
great unsolved murder cases in history, with obviously incredibly
ominous implications, and yet many in the West continue to treat
Vladimir Putin, who clearly ordered the bombings himself, on
his own people, as a civilized member of the G-8. Shame on all
of us.
Meanwhile, last Wednesday Putin warned Poland and other East
European nations they risked creating fresh divisions by treating
Russia as an enemy, this while he wields the gas weapon.
But speaking of natural gas and behemoth Gazprom, there is
increasing concern Gazprom won’t even be able to meet the
energy needs of Russia itself. The director of gas research at the
Oxford Institute for Energy Studies told the International Herald
Tribune that “The issue is not about Russia’s reputation as a
reliable supplier of gas to Europe. The fact is that there is a limit
over how much gas Russia can sell to Europe. I don’t think
Europe realizes it, but we are reaching the limit of Russian
exports. Russia needs the gas for themselves.”
China: President Hu Jintao traveled to New Delhi for meetings
with a variety of Indian officials, including Prime Minister
Singh, but while the discussions generated a lot of press, and it’s
good the two are talking, there was really little progress on
substantive issues such as the ongoing border dispute and the
relationship each has with Pakistan and the United States. India
is concerned Pakistan is receiving Chinese nuclear know-how,
and China is concerned about the new U.S./India agreement on
the nuke front.
Separately, President Hu announced he would travel to Japan
early next year and this is a genuine positive. Hu refused to meet
with Prime Minister Koizumi because of Koizumi’s visits to the
controversial war shrine. But Koizumi’s successor, Shinzo Abe,
has vowed to focus on improving relations with China.
Japan: In a survey for Yomiuri newspaper, 80% of the people
polled support maintaining the country’s three-pronged policy of
not possessing, developing or allowing the introduction of
nuclear weapons on its territory. Kind of surprising, to yours
truly, in light of the recent North Korean detonation.
Pakistan: A London Times investigation found 30 Taliban
commanders, recovering from wounds suffered in Afghanistan,
in the Pakistani city of Quetta, just lounging around, perfectly
willing to talk to the reporter. President Musharraf wasn’t
available for comment.
Turkey: Pope Benedict is visiting the nation Tuesday thru Friday.
Security forces are on the highest alert after his recent anti-Islam
remarks. I don’t need to state the obvious.
Canada: Prime Minister Stephen Harper stunned Parliament in
introducing a motion recognizing Quebec as a nation within
Canada, a pre-emptive strike against Bloc Quebecois, the
separatists who have long advocated Quebec break away.
Harper told the House of Commons, “Do Quebecers form a
nation within a united Canada? The answer is yes. Do
Quebecers form an independent nation? The answer is no – and
it will always be no.” Harper is trying to stave off another
referendum in Quebec.
As for Canada’s efforts in Afghanistan, it is sending more special
ops forces to the Kandahar region where 2,500 Canadian troops
are stationed. 34 Canadian soldiers have died in Afghanistan this
year.
Colombia: President Alvaro Uribe is facing a crisis of mammoth
proportions as it has emerged members of Congress have been
collaborating with right-wing death squads. Two senators are in
custody as well as a congressman and former congresswoman.
Other local officials have been arrested. An investigation
revealed that lawmakers rigged elections and planned
assassinations. The scandal has raised questions on just how
tough Uribe’s crackdown on paramilitaries has been. Some of
those arrested are among his staunchest supporters and helped
change the law to allow him to run for a second four-year term.
Uribe has been a shining star to many of us and it would be a
disaster if he’s toppled as a result of the ongoing inquiry.
Neighbor Hugo Chavez must be licking his chops.
Random Musings
--I found the following powerful. Irwin M. Stelzer, in a piece for
The Weekly Standard (11/27/06).
“America is finished as a great power. Not because it no longer
possesses the resources, but because it has lost the will. That
was brought home to me on both ends of a recent trip through
London’s Heathrow airport en route to Phoenix.
“No great power permits its citizens to be discriminated against.
Yet just keep your eyes open as you go through security at
Heathrow (or any other international airport). Off goes your
jacket. Off comes your wife’s jacket, like yours, to be deposited
in a heap in a plastic bin headed through a machine designed to
detect something or other. Next comes a Middle Eastern woman,
clad head to toe in a black garment, loose-fitting enough to
conceal a weapon of mass destruction. No one dares impede her
progress through the detectors.
“America makes no move to tell the world’s authorities that its
citizens are not terrorists, and that any sensible program based on
statistical probability – some call it profiling – would reverse
security priorities. Jimmy Carter proved that any third-rate
power can lay hands on American citizens without consequences.
The world got the clue, and now treats us accordingly.
“No great power would allow itself to be held hostage to desert
kingdoms run by medieval theocracies. Yet America does. We
land in Phoenix and hop into a car that can be brought to a
screeching halt if our supplies of oil are cut off. So we are afraid
to tell our Saudi suppliers to stop financing terrorists, and to stop
polluting the minds of their young with anti-Semitic, anti-
Western rants. We allow Russia, a country with a GDP less than
that of Italy but with lots of oil, to tell us to take a hike when we
protest its increasing tendency to return to the good old days of a
KGB-dominated society. After all, if we support democratic
forces in Russia, Putin might divert his oil and gas to China
instead of giving us the privilege of buying it at inflated prices .
“No great power loses control of its borders. We have
“No great nation allows itself to get into hock to a potential
enemy. Yet we owe hundreds of billions to the Chinese because
we don’t have the nerve to tell them to get the value of their
currency in line with market forces or keep their sneakers, toys,
and television sets. And no great nation stands idly by while
another pilfers billions of dollars worth of its most valuable
product – its intellectual property .
“There’s more. But you get the idea. Travel the world with your
eyes open and you will see that America is no longer a great
power. Not that it can’t still be one – with our astonishingly
lethal soldiers, our daring entrepreneurs, our workers willing to
put in long hours, and a productive economy that is still the envy
of the world.
“But so long as we prefer to fund shopping sprees rather than a
military adequate to meet the challenges of our era, and so long
as we allow uncertainty about our virtues as a nation to swamp
our good judgment, we will continue to doff our jackets
obligingly to security personnel who are surprised – just ask
them – that we allow our people to suffer such indignities.”
Personally, I’m now tempted to cause a little incident at my next
international checkpoint. Could be good for ratings, you
understand.
--But it’s a very complex world these days. There are virtually
two sides to every story, case in point “Borat.”
Last week I offered the opinion that there was nothing funny
about his treatment of peasants in Romania while filming, and in
Sunday’s Star-Ledger, Sam Ali, a reporter with whom I worked
on a few stories on the markets years ago, had her own take.
“(When) Borat portrays Kazakhs – and implicitly all Muslims –
as retarded and backward, Cohen creates a false impression that
nobody of real import is being offended.
“The Cambridge-educated Cohen is himself Jewish and has often
said that he uses the Borat character to expose anti-Semitism and
racism.
“But come on, folks. Who’s kidding who?
“What the Borat character says about Jews is hateful and
repugnant. But personally, I think there’s an implicit
understanding that anything this dopey foreigner says or does
should not be taken too seriously because, frankly, Borat and ‘his
kind’ just don’t know how to behave.
“Actually, I’m shocked more Muslims haven’t questioned what a
devoutly Jewish man like Cohen is doing ridiculing a majority
Muslim country in the first place.
“To get an idea of how offensive or racist Cohen’s character
really is, one need only grant Borat a different passport.
“If perchance some other ethnic group were the target – one
which isn’t as fashionable to hate – Borat’s shtick would be
dismissed as nothing more than racist pandering.
“Think about it.
“It’s OK for Cohen to play a Muslim imbecile who hates Jews.
“But what if Cohen instead put on blackface and played a
bumbling African-American guy who hates Jews?
“Would people still find the material funny?”
--But wait, there’s more! Since we’re taking off after everyone
this week, here’s an opinion from African-American columnist
Stanley Crouch of the New York Daily News.
“Last week, I was in a studio in midtown where a popular
program for black youths was being filmed. I found myself
surrounded by black men, ages 18 to 35, and I was appalled.
“As a father with a daughter nearly 30 years old who has never
been close to marrying anyone, I was once more struck by what
my offspring describes as ‘a lack of suitable men.’ She has
complained often about the adolescent tendencies of young black
men, as will just about any young black woman when the subject
comes up.
“Those who believe that America is perpetually adolescent will
point at the dominance of frat-boy attitudes among successful
white men and will say of the black hip-hop generation, ‘So
what? How could they not be adolescent? They are not
surrounded by examples of celebrated maturity. The society
worships movie stars, wealthy athletes and talk show hosts.
These are not the wisest and most mature of people.’
“There is more than a little bit right about that. Our culture has
been overwhelmed by the adolescent cult of rebellion that
emerges in a particularly stunted way from the world of rock ‘n’
roll. That simpleminded sense of rebelling against authority
descended even further when hip hop fell upon us from the
bottom of the cultural slop bucket in which punk rock curdled.
“Hip hop began as some sort of Afro protest doggerel and was
very quickly taken over by the gangster rappers, who emphasized
the crudest materialism in which the ultimate goal was money
and it did not matter how one got it. The street thug, the gang
member, the drug dealer and the pimp became icons of
sensibility and success. Then the attitudes of pimps took a high
position and the pornographic version of hip hop in which
women become indistinguishable bitches and hos made a full-
court press on the rap ‘aesthetic.’”
Crouch goes on to tell of a conversation he had with a black
woman in her 40s who is a writer. She offered:
“ ‘I am sure many knew of Ed Bradley but they did not identify
with him. He was too sophisticated. They identify with the
overgrown boy, who is everywhere and who is getting over.
He’s got a lot of cash, plenty of girls, lots of jewelry, an
expensive car. To them, that’s the world. Or it’s the world they
want to be a part of.’
“So what can be done to make adulthood seem attractive to these
young black men?
“Good question.
“From one end of the country to the other, adults sleep in the
street for nights on end as though they are homeless in order to
have choice places in line when PlayStations go on sale. That
alone gives us more than an indication of how great a problem
we find ourselves facing.”
--While we’re on this general topic, of course there is no
defending Michael Richards’ despicable tirade. I would just
point out it’s par for the course in the comedy world these days.
I caught some of “Comedy Relief” the other day, the Robin
Williams, Whoopi and Billy Crystal production, and some of the
acts they had on were just as vile as “Kramer” was. F-this and F-
that .that’s the entire bit.
--Out-of-wedlock births have hit a new all-time high, 37%, with
a surge in births among unwed mothers in their 20s. While some
say this is due to the fact there is no longer such a stigma
attached to these newborns, especially with more couples
choosing to live together rather than get married, let’s see a show
of hands as to how many view this as a healthy trend?
--U.S. News & World Report, an early supporter of the Iraq war,
issued a scathing report in the Nov. 27 issue. Among the
conclusions, “To date, the administration has failed to meet a
single one of the reconstruction goals it set for itself back in 2003
– goals for rebuilding infrastructure, defraying reconstruction
costs by increasing oil production, and instituting a constitutional
democracy with functioning courts and the rule of law.”
--With each passing day, President Bush looks rather foolish, to
put it mildly, for awarding Medals of Freedom to L. Paul
Bremer, Gen. Tommy Franks, and then-CIA Director George
Tenet. Bush would have given a medal to Ralph Branca for
serving up Bobby Thomson’s home run in 1951. Actually, why
hasn’t he given one to Phil Mickelson for choking in the U.S.
Open?
--When I was in Beirut, spring 2005, two months after the Hariri
assassination, I stayed at the Phoenicia InterContinental, a terrific
hotel. I’ll never forget how well I was treated there and I note
with sadness that following the murder of Gemayel, hotel
occupancy at the Phoenicia dropped to 10%. Needless to say
thousands will be laid off across the tourism industry in Beirut,
which has been taking one big hit after another the past 1
years.
Beirut was also to be the scene of a marathon this Sunday, under
the banner “For the Love of Lebanon,” but it is yet another
victim of the latest assassination. Over 18,000 had signed up and
it was going to be an event the people could have taken great
pride in.
--USA Today had a story this week on a nationwide movement
to get kids outdoors. It’s about time, as we are currently rearing
a generation of giant sloths.
--I meant to write of an important story last week and somehow
misplaced it. From the Associated Press, “Manatees May Be
Smarter Than We Think.”
A few weeks ago I wrote of how manatees had a bad rap for
having such a small brain; this while we slice them up with our
power boats.
But alas, “Hugh, a manatee in a tank at a Florida marine
laboratory, doesn’t seem like a dimwit. When a buzzer sounds,
the speed bump-shaped mammal slowly flips his 1,300 pounds
and aims a whiskered snout toward one of eight loudspeakers
lowered into the water. Nosing the correct speaker earns him
treats.”
“Researchers contend that if the plant-eating beasts seem slow-
witted, it is because they faced no threats to their survival before
the advent of boat propellers.”
Back in September I placed manatees ahead of humans at #5 on
the top ten species list. With the despicable acts that we have
continued to perpetrate on each other in succeeding months, it
only makes sense to drop us out of the top ten entirely. We are
truly overrated.
--In fact, I’m thinking of dropping humans to #87 behind
wildebeests and river rats.
--But, this being Thanksgiving week and all, it needs to be noted
that over $13 million has now been donated to the Amish
community of Nickel Mines.
--And lastly, I’ve written of the preponderance of cheating taking
place among our high school and college age youth these days
and the general decline in ethics and values, so I was reading a
piece by Mitch Albom on former Michigan football coach Bo
Schembechler and leave you with this.
“I can tell you that he was born in the small town of Barberton,
Ohio, the son of a fireman, and that long after he’d left he still
could name you every factory in that town . I can tell you that
his father once had a chance to get a cheater’s advance copy of a
civil service exam but he refused, and he finished one point
behind a guy who cheated, and he didn’t get the job he wanted.
Bo said that night taught him more about integrity than anything
ever would.”
---
Pray for the men and women of our armed forces.
Pray for Lebanon.
God bless America.
---
Gold closed at $639
Oil, $59.90
Returns for the week 11/20-11/24
Dow Jones -0.5% [12280]
S&P 500 -0.0% [1400]
S&P MidCap +0.7%
Russell 2000 +0.5%
Nasdaq +0.6% [2460]
Returns for the period 1/1/06-11/24/06
Dow Jones +14.6%
S&P 500 +12.2%
S&P MidCap +10.0%
Russell 2000 +17.7%
Nasdaq +11.6%
Bulls 58.5 [Danger danger .]
Bears 22.3 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Brian Trumbore
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