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05/07/2011

For the week 5/2-5/6

[Posted 7:00 AM ET]

Triumph

President Barack Obama, May 2, 2011

“Tonight, I can report to the American people and to the world that the United States has conducted an operation that killed Osama bin Laden, the leader of al-Qaeda, and a terrorist who’s responsible for the murder of thousands of innocent men, women, and children…

“For over two decades, bin Laden has been al-Qaeda’s leader and symbol, and has continued to plot attacks against our country and our friends and allies. The death of bin Laden marks the most significant achievement to date in our nation’s effort to defeat al-Qaeda.

“Yet his death does not mark the end of our effort. There’s no doubt that al-Qaeda will continue to pursue attacks against us. We must – and we will – remain vigilant at home and abroad….

“Over the years, I’ve repeatedly made clear that we would take action within Pakistan if we knew where bin Laden was. That is what we’ve done. But it’s important to note that our counterterrorism cooperation with Pakistan helped lead us to bin Laden and the compound where he was hiding. Indeed, bin Laden had declared war against Pakistan as well, and ordered attacks against the Pakistani people….

“The American people did not choose this fight. It came to our shores, and started with the senseless slaughter of our citizens. After nearly 10 years of service, struggle, and sacrifice, we know well the costs of war….

“Yet as a country, we will never tolerate our security being threatened, nor stand idly by when our people have been killed. We will be relentless in defense of our citizens and our friends and allies. We will be true to the values that make us who we are. And on nights like this one, we can say to those families who have lost loved ones to al-Qaeda’s terror: Justice has been done….

“Finally, let me say to the families who lost loved ones on 9/11 that we have never forgotten your loss, nor wavered in our commitment to see that we do whatever it takes to prevent another attack on our shores.

“And tonight, let us think back to the sense of unity that prevailed on 9/11. I know that it has, at times, frayed. Yet today’s achievement is a testament to the greatness of our country and the determination of the American people.

“The cause of securing our country is not complete. But tonight, we are once again reminded that America can do whatever we set our mind to. That is the story of our history, whether it’s the pursuit of prosperity for our people, or the struggle for equality for all our citizens; our commitment to stand up for our values abroad, and our sacrifices to make the world a safer place.

“Let us remember that we can do these things not just because of wealth or power, but because of who we are: one nation, under God, indivisible, with liberty and justice for all.”

---

Last Saturday, after posting my column from Paris, one in which I blasted Barack Obama for failing to lead on two specific issues, “the Middle East/North Africa and our humongous deficits,” I did what I always do when in Paris, go to the war museum, Musee de l’Armee, which is also the site of Napoleon’s tomb. I’ve been to war museums all over the world and the one in Paris is as good as they come in its exhibits on World Wars I and II.

As I walked through, I took the same notes I always do and each time I look at the exhibit for World War I, I’m reminded just how quickly things exploded following the assassination of Archduke Ferdinand, heir to the Austro-Hungarian throne, in Sarajevo, June 28, 1914. Gavrilo Princip was the Serbian nationalist who carried out the crime but Serbia itself had nothing to do with it. Nonetheless Austria-Hungary opted to exploit the assassination and teach the Serbs a lesson and a month later Vienna declared war on Serbia. Two days later Russia entered, August 1 Germany declared war on Russia, August 3 Germany declared war on France, August 4 Britain declared war on Germany and it was off and running; or rather by the end of September the war had ground to a halt on the main fronts but they kept killing each other indiscriminately. France, for example, lost 1.37 million men in the war, with another 4.95 million wounded, out of 8.5 million men mobilized. Think about that casualty rate. I saw a clip of the “victory parade,” July 14, 1919, in Paris and it was pathetic. Very few marchers were in one piece.

Of course what followed was the flawed Treaty of Versailles in 1919, Hitler rose to power in 1933, Neville Chamberlain in September 1938 told his cabinet Hitler appears to be “a man who could be relied upon when he had given his word,” and shortly thereafter Hitler takes over the Sudetenland and in essence World War II is underway, though Hitler waited about a year until his military was fully ready before formally launching the war with the invasion of Poland, September 1, 1939.

In 1940, France falls, Britain retreats from Dunkirk (the greatest retreat in the history of mankind) and by June 4, Winston Churchill is appearing before the British parliament, girding his nation for battle. I get goose bumps every time I read his words.

“We will fight on our beaches, we will fight on our airfields, we will fight in the fields and in the streets, we will fight in the hills. We will never surrender.”

Two weeks later, June 18, Marshal Petain having surrendered France to the Germans the day before (while setting up a separate government in Vichy that then collaborated with the Nazis), General Charles de Gaulle took to the BBC airwaves from London in his own initial attempt to rally the French and begin to form a resistance to the Nazis.

“France has lost a battle, but France has not lost the war. Nothing has been lost because this war is a world war…Whatever happens, the flame of resistance must not be extinguished and will not be extinguished.”

So now the Battle of Britain was on and when it was over the Luftwaffe had lost 1773 aircraft and an invasion was postponed. As Churchill put it:

“Never in all of history has so much gratitude been owed by such a large number of people to so few.”

As for De Gaulle, who was recognized by Britain as the leader of the Free French Movement on June 27, 1940, in 1941, he was helping liberate Lebanon and Syria.

It’s this last bit that is one of the reasons I bring this all up, events of almost 100 and 70 years ago. As I walked the streets of Paris last Saturday after going to the museum, I was oblivious to what was on President Obama’s mind that day; just as all but a handful of Americans back home were as well.

But I was in France, as I told you before I went there, to attempt in my own small way to get a handle on the explosive immigration issue that is being fanned by the Arab Spring as tens of thousands of refugees flood into Italy and France and all points north and east. For years now I’ve written of the slow rise of nationalism in Europe, a disquieting trend, and the process is being accelerated due to events in Tunisia and Libya, for starters.

If you want to be dumped in one spot in Paris to get a handle on the immigration issue (and you don’t want to visit some of the awful train stations as I have over the years), go to the Eiffel Tower, where you’ll see 100 or so new immigrants hawking cheap keepsakes of the place, as well as loads of rather intimidating looking Serbs on the bridge across the Seine, the pont d’lena, playing shell games. This is not Paris’ best face. [Most of the rest of the city that I ventured through, I hasten to add, was as beautiful as I’ve ever seen it.]

Sunday, after Mass at Notre Dame, I tried to get into the natural history museum and it’s then I began to realize that most of the museums were closed on May Day. This proved to be an amazing stroke of good luck as upon return to the area of my hotel, I stumbled on the National Front’s (Front National / FN) annual May Day assemblage and there I was, about 50 yards from the stage amid a crowd later described as 3,000, getting ready for FN leader Marine Le Pen’s address. For me this was a tremendous opportunity, having written awhile back of the rise of Marine, daughter of FN founder Jean-Marie Le Pen, who was also on the scene.

It was fascinating. While I obviously didn’t understand 98% of her speech, I watched her closely on the video screen in front of me and the reaction of the crowd. She’s a leader and is currently ahead of President Nicolas Sarkozy in most of the polls leading up to next year’s election. [The Socialists are in the overall lead.]

Of course the National Front is an anti-immigrant (once virulently anti-Semitic party in Jean-Marie’s heyday) and I am not condoning the party platform.

But Marine, a mother of three, is trying to distance herself from the more radical elements of the FN manifesto and to be more inclusive, though in her speech at the foot of a statue of Joan of Arc, no less, she railed against the euro and French immigration policy, referring to Tunisian immigrants who showed up in Paris. [I later saw an article where 130 of them were squatting in an abandoned building, deemed unsafe, refusing to leave when pressed by authorities. “We are tired, we are hungry, we want papers and freedom.”]

But as part of her kinder FN face, Marine also said:

“Whether you are a man or woman, Christian, Jewish or Muslim, believer or nonbeliever, you are first and foremost French.”

Ironically, Marine was featured in the Sunday Times Magazine last week, wherein she said that her message isn’t xenophobic but rather commonsensical, pointing repeatedly to the U.S. as a model:

“In France we often say the U.S. is a multicultural society, but it’s not true. It’s multiethnic but one single culture. I don’t say that nobody should enter our country. On the contrary, in the old days immigrants entered France and blended in. They adopted the French language and traditions, whereas now, entire communities set themselves up within France, governed by their own codes and traditions.” [See the above Tunisia 130.]

Marine Le Pen’s message is more complicated than just the above and I’ll be talking about her the next year. What’s clear is the FN is but one far-right, nationalist party across Europe that is gaining traction; others being Finland’s True Finn’s (19% in a recent election), Norway’s Progress party (23%), Denmark’s People’s party (19%), the Democrats in Sweden, and other such parties in the Netherlands, Belgium, Switzerland, Italy and Austria. It’s a movement that is only going to grow and with the increasing turmoil over the euro currency, the haves vs. the have nots, and people such as the Finns and Germans increasingly unwilling to pay for the profligacy of others, as well as the immigration problem, it could end up being explosive, particularly if Europe were to reenter recession mode across the continent.

It’s why yours truly always keeps in the back of his mind historical events like the genesis of World Wars I and II. The first was to be the war to end all wars, they said at the time. How’s that worked out for Planet Earth since then? And you should never take your eyes off the Balkans…including Greece these days. 

So the above was what was on my mind when I awoke Monday morning to word that an elite unit of America’s finest had taken out bin Laden and that President Obama had led the way. I was too far away to celebrate, and there was no dancing in the streets of Paris. But Monday night for my last dinner in the city I was going to return to a favorite spot when I walked past this Irish pub and thought it might be a good place to get a reaction or two.

No doubt, Europe’s elite have found things to bitch about when it comes to the operation in Abbottabad, but as I overheard an Irish lad say at the bar, “The Americans didn’t [mess] around. They seldom do.”

That’s not a bad thing. There was certainly a feeling of supreme respect for the United States in the air.

But to close the circle, no, I do not apologize for my comments on our president last time. We must press the cause of democracy in the likes of Syria and Iran (even if doing so in the former makes the Israelis a bit squeamish as I discuss further below).

The war on terror is being eclipsed at lightspeed by developments transpiring in this Arab Spring. We have no idea yet how things will work out, but we do know this.

Iran has been taking advantage of this period to continue with its nuclear program while attention is focused elsewhere, plus Egypt has critical elections this fall and has reopened the gate to Gaza, while talking of annulling its peace treaty with Israel, leaving Israel feeling increasingly encircled, far more so than before, and on and on.

These are scary times and it’s why you’ll have to forgive me. Had I been back in the States last Sunday night, my celebration would have been a muted one. I’ll continue to honor the brave men and women of our armed forces at the end of each column just as I’ve done unfailingly since 9/11, and by end of the year I’ll return to Arlington National Cemetery to pay my respects to the fallen of both Iraq and Afghanistan. 

I just pray President Obama continues to focus not just on the war on terror, but the really Big Picture. It is not only a time to roll-up al-Qaeda for good (and on this he’s focused), but a time to press American principles and values throughout the Middle East and North Africa.

Back in 1940, it was Winston Churchill vs. Evil and he emerged victorious. Today, the oppressed, including in places like Syria, need America’s leadership. We have an opportunity. We must grab it.

---

As for Pakistan and reaction to the operation to take out bin Laden, President Asif Ali Zardari wrote in a Washington Post op-ed:

“Some in the U.S. press have suggested that Pakistan lacked vitality in its pursuit of terrorism, or worse yet that we were disingenuous and actually protected the terrorists we claimed to be pursuing. Such baseless speculation may make exciting cable news, but it doesn’t reflect fact.”

The fact is, Mr. President, your security service, the ISI, has always played a slippery, duplicitous game with terrorists, including al-Qaeda and the Taliban. Pakistan doesn’t want the United States to turn over Afghanistan to India, so it wants to promote instability in Afghanistan, and in all honesty a return over time of the Taliban, which until 9/11 had been formal friends with the Pakistani government. When it comes to the terrorist group Lashkar-e-Taiba, responsible for the Mumbai attacks, the ISI tolerates them because LeT can be used to target India at will and wreak mayhem during any possible conflict between the two nations, which seems increasingly likely these days.

CIA Director Leon Panetta said it all in referring to the operation on bin Laden: “It was decided that any effort to work with the Pakistanis could jeopardize the mission.”

So now Pakistani chief of staff, Gen. Kayani, says there will be no more violations of Pakistan’s sovereignty, but Pakistan desperately needs the $1.5 billion in annual aid it receives from Washington, particularly the military.

It’s a tough call. As Sen. Lindsey Graham (R-S.C.) says:

“For those who want to cut off aid to Pakistan, I understand your frustration. But at the end of the day, if you want to create a failed state in Pakistan, one of the best things to do is sever relations. It is not in our national security interest to let this one event destroy what is a difficult partnership but a partnership nonetheless.”

This past 1/8/11 in this very space, in discussing an assassination I had basically called the week before, that of Gov. Salman Taseer, I wrote:

“So the immediate question, and ongoing concern when discussing Pakistan, is ‘To what extent are security forces infiltrated by extremists?’ We know the army and intelligence services are, but does this mean a coup is a certainty? A coup that would, yes, cause the markets to tank over fears for control of Pakistan’s nuclear weapons and an almost certain war with India….

“Before Taseer was gunned down at a high-class shopping mall, the story for the week had been the lack of cooperation that Pakistan’s army chief of staff, Gen. Kayani, was supplying the U.S. in terms of going after the Taliban’s and al-Qaeda’s safe havens. Kayani was supposed to be a good friend, a man the U.S. could count on, but evidently he’s upset by the WikiLeaks cables showing him as being too chummy with Washington, which doesn’t go over well at home so he needs to be the bad guy now.”

And so he is…and clearly has been. I also can’t help but note that just last week I wrote:

“Speaking of Afghanistan, our terrific friends the Pakistanis have been lobbying Afghan President Hamid Karzai against establishing a long-term relationship with Washington, and instead looking to Pakistan and China for help in striking a peace deal with the Taliban.”

Following is selected opinion, from all sides, as I do on occasions such as this. 

Editorial / Wall Street Journal

“The death of Osama bin Laden at the hand of U.S. special forces doesn’t end the war against Islamic terror, but it is a crucial and just victory that is rightfully cause for celebration.

“Especially so in a war fought against combatants who hide in the world’s dark corners, who rarely fight in the open and who attack innocents far from any conventional battlefield. Even if it took nearly 10 years, the skillful tracking and daring attack on al-Qaeda’s founder shows that democracies can prevail in such a struggle and is as notable as landmark victories of other wars that involved the taking of cities or island-hopping. The battle of Abbottabad is a triumph of intelligence, interrogation and special operations that are by necessity three of the main weapons in what the U.S. military has called this ‘long war.’…

“The most striking fact of Mr. Obama’s prosecution of the war on terror is how much it resembles Mr. Bush’s, to the consternation of America’s anti-antiterror left. This includes the strategy to pursue terrorists in their sanctuaries, keeping them on defense and less able to plot against U.S. targets….

“Much as during the decades of the Cold War, the ‘long war’ on terror has made many Americans tire of the fight, especially in the absence of cheering crowds waving U.S. flags in Paris or Palermo. But we cannot forget that this is a war for national survival against enemies who would annihilate our cities if they could.   The death of bin Laden is a measure of justice for the thousands he killed. As important, it is a warning to others who would kill Americans that they will meet the same fate, no matter how long it takes or where they try to hide.”

George Will / Washington Post

“Jim Lacey of the Marine Corps War College notes that Gen. David Petraeus has said there are perhaps about 100 al-Qaeda fighters in Afghanistan. ‘Did anyone,’ Lacey asks, ‘do the math?’ There are, he says, more than 140,000 coalition soldiers in Afghanistan, or 1,400 for every al-Qaeda fighter. It costs about $1 million a year to deploy and support every soldier – or up to $140 billion, or close to $1.5 billion a year, for each al-Qaeda fighter. ‘In what universe do we find strategists to whom this makes sense?’

“There remains much more to al-Qaeda than bin Laden, and there are many more tentacles to the terrorism threat than al-Qaeda and its affiliates. So ‘the long war’ must go on. But perhaps such language is bewitching our minds, because this is not essentially war.

“During the 2004 presidential campaign, John Kerry received much derision for his belief (as expressed in a Jan. 29 debate in South Carolina) that although the war on terror will be ‘occasionally military,’ it is ‘primarily an intelligence and law enforcement operation that requires cooperation around the world.’ Kerry, as paraphrased by the New York Times Magazine of Oct. 10, thought ‘many of the interdiction tactics that cripple drug lords, including governments working jointly to share intelligence, patrol borders and force banks to identify suspicious customers, can also be some of the most useful tools in the war on terror.’ True then; even more obviously true now….

“And the more we couch our thinking in military categories, the more we open ourselves to misadventures like the absurd and deepening one in Libya.

“There, our policy – if what seem to be hourly improvisations can be dignified as a policy – began as a no-fly zone to protect civilians from wanton violence. Seven weeks later, our policy is to decapitate the government by long-distance assassination and to intensify a civil war in that tribal society, in the name of humanitarianism. What makes this particularly surreal is that it is being done by NATO.

“Unpack the acronym: North Atlantic Treaty Organization. NATO was created in 1949 to protect Western Europe from the Red Army. Its purpose was, in Lord Ismay’s famous formulation, ‘to keep the Russians out, the Americans in and the Germans down.’ NATO, which could long ago have unfurled a ‘mission accomplished’ banner, has now become an instrument of addlepated mischief.

“This is an episode of presidential malpractice. Obama has allowed NATO to be employed for the advancement of a half-baked doctrine (R2P – ‘responsibility to protect’), a quarter-baked rationalization (was it just in March that Hillary Clinton discovered that a vital U.S. national interest required the removal of Moammar Gaddafi because he ‘is a man who has no conscience’?) and an unworthy national agenda (France’s pursuit of grandeur on the cheap).

“When this Libyan mistake is finished, America needs a national debate about whether NATO should be finished. Times change.”

Editorial / New York Post

“The decision must have been beyond agonizing.

“Option A: A breathtakingly risky undertaking that would place Navy SEALs inside Osama bin laden’s Pakistani hideout.

“Option B: Carpet-bombing the terrorist’s compound, and letting God sort out the results.

“President Obama took the risk, as did the young warriors of SEAL Team 6, who flew into the compound and came out with the body of the man behind 9/11 – neat, clean and with only the tin-foil-hat crowd questioning the outcome.

“ ‘It was a good day for America,’ said Obama yesterday.

“Indeed.

“So three cheers for the president.

“Credit Obama also for laying aside politics and seeing value in many of the Bush-era policies he criticized during the 2008 campaign. Keeping Gitmo open and using coercive interrogation techniques paid substantial strategic dividends.

“Obama also held on not only to many of George W. Bush’s national-security policies but also to members of his team – like Defense Secretary Robert Gates and Gen. David Petraeus, architect of the successful 2007 troop surge in Iraq….

“The president, in other words, chose policy continuity over partisan advantage-taking, and the result was two bullets in Osama’s head – a very good day’s work.

“Still, questions remain:

“Has Pakistan been pretending to participate in the hunt for bin Laden – taking billions in U.S. cash and arms while protecting him all along?

“Certainly Pakistan’s intelligence service had to know that Osama had been hiding since 2005 in a super-secure compound in Abbottabad, a major city….

“Washington has long suspected that Pakistani officials knew of Osama’s whereabouts – their denials notwithstanding. Just two weeks ago, Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, warned that Pakistani ties to Osama’s Taliban allies were straining Washington-Islamabad relations….

“Which is why Senate Homeland Security Chairman Joe Lieberman warned that ‘there is going to be a time of real pressure’ on Pakistan to ‘prove to us that they didn’t know bin Laden was there.’

“Will bin Laden’s death accelerate a U.S. pullout from Afghanistan?....

“That would be a profound mistake.

“The U.S. has made significant progress in Afghanistan, which is no longer a terrorist haven controlled by the Taliban.

“But if the administration follows through with a ‘robust’ – i.e., precipitous – troop withdrawal under the cover of Osama’s death, Afghanistan would almost certainly slip back to a position where the Taliban would re-emerge.

“That would be more than just allowing the terrorists to win; it would be giving the ghost of Osama bin Laden the last word on what happens in Afghanistan.

“America simply can’t allow that to happen.”

Editorial / London Times

“(Bin Laden’s) death comes not as the result of hot-headed vengeance or indiscriminate retaliation. It is the result of extraordinary and exemplary detective work by American intelligence and counterterrorist operatives. Since the day the twin towers collapsed, the hunt for bin Laden has been hugely frustrating. He eluded capture many times. He continued issuing inflammatory videos and messages calling for more atrocities, more bloodshed. He taunted America and its president and stirred up further hatred between nations and religions. There were fears that no one would ever find the cave where he was supposed to be hiding. Some politicians in Washington suggested that he no longer mattered and America was no longer making much effort to find him.

“All this was wrong. His capture always mattered – not simply to hold the criminal responsible for his crimes, but to show America’s enemies that its people are not to be harmed or its values flouted without cost. And America’s allies, who entrust their security and their way of life to its global leadership, need to know that those who cross the U.S. will pay the price….

“Bin Laden’s death may spark further feuding within his organization, especially if his brutally efficient accomplice, Ayman al-Zawahiri, takes over as successor. But al-Qaeda has lost not only its leader but, more importantly, the argument among Muslims. To the millions who have demonstrated across the Arab world, freedom, democracy and human rights are what matter; no one is calling for the restoration of the caliphate. Islam will recover from this perversion. And the world too will be a safer place with bin Laden dead.”

Ahmed Rashid / Sydney Morning Herald

“There have been cheers and jubilation in the United States and elsewhere in the West, but capital cities around the world are already bracing for the repercussions of Osama bin Laden’s death.

“Hundreds of dedicated and would-be jihadis will be mourning and swearing to give their lives in revenge for his killing by a U.S. special forces team.

“There is little doubt that the death of bin Laden is a huge blow to al-Qaeda. But at the same time the network has moved over the years from a highly centralized hierarchy – with recruiting, training and orders all scrutinized by its top leaders – to something much more loose and amorphous.

“Today al-Qaeda’s philosophy is one man, one bomb. It does not need another September 11 to make its mark….

[The threat is in Pakistan.]

“Before September 11 there were no known al-Qaeda cells in Europe, except for the one in Hamburg that launched those attacks. Today every European country has an al-Qaeda cell.

“Hundreds of Muslims with European passports have travelled to Pakistan’s tribal areas for training and returned to Europe.

“After three Moroccans were arrested in Germany last week for planning to plant bombs in public places, German authorities admitted that more than 200 German citizens have had training in the tribal areas and many of them have returned to Germany.

“Al-Qaeda and its allies may try to launch another Mumbai-style attack. The same is the case in Britain, Scandinavia, France, Spain and Italy.

“The fear now of suicide bombings in subway or train stations in the U.S. or Europe is particularly high….

“Clearly bin Laden’s demise will give intelligence agencies around the world many clues and leads to catch other leaders, but al-Qaeda will not disappear overnight.”

Bret Stephens / Wall Street Journal

“(There) can be no true justice without vengeance. Oddly enough, this is something Barack Obama, Chicago liberal, seems to better grasp than George W. Bush, Texas cowboy.

“The former president was fond of dilating on the point, as he put it just after 9/11, that ‘ours is a nation that does not seek revenge, but we do seek justice.’ What on Earth did that mean? Of course we sought revenge. ‘Ridding the world of evil,’ Mr. Bush’s other oft-stated ambition, was nonsense if we didn’t make a credible go of ridding the world of the very specific evil named Osama bin Laden.

“For all of Mr. Bush’s successes – and yes, there were a few, including the vengeance served that other specific evil known as Saddam Hussein and those Gitmo interrogations that yielded bin Laden’s location – you can trace the decline of his presidency from the moment he said, in March 2002, that ‘I really don’t care [where bin Laden is]. It’s not that important.’*

“Wrong. It was of the essence….

“There’s been a whiff of sour grapes in some of the right-wing commentary about the president’s speech. Too much emphasis on the first-person pronoun, not enough credit to President Bush, and so on. It’s unbecoming. If ever there was a doubt about just how American Mr. Obama is, Sunday’s raid eliminates it better than any long-form birth certificate. This was his finest hour. It’s for the rest of us, avenged at long last, to rejoice.”

*Ed. Now that it appears Osama was involved in planning operations from Abbottabad, Bush looks incredibly stupid.

Charles Krauthammer / Washington Post

“The bin Laden operation is the perfect vindication of the war on terror. It was made possible precisely by the vast, warlike infrastructure that the Bush administration created post-9/11, a fierce regime of capture and interrogation, of dropped bombs and commando strikes. That regime, of course, followed the more conventional war that brought down the Taliban, scattered and decimated al-Qaeda and made bin Laden a fugitive.

“Without all of this, the bin Laden operation could never have happened. Whence came the intelligence that led to Abbottabad? Many places, including from secret prisons in Romania and Poland; from terrorists seized and kidnapped, then subjected to interrogations, sometimes ‘harsh’ or ‘enhanced’; from Gitmo detainees; from a huge bureaucratic apparatus of surveillance and eavesdropping. In other words, from a Global War on Terror infrastructure that critics, including Barack Obama himself, deplored as a tragic detour from American rectitude.

“It was all not just un-American, now say the revisionists, but also unnecessary.

“Really? We could never have pulled off the bin Laden raid without a major military presence in Afghanistan. The choppers came from our massive base at Bagram. The jump-off point was Jalalabad. The intelligence-gathering drones fly over Pakistan by grace of an alliance (unreliable but indispensable) forged with the United States to fight the war in Afghanistan….

“Bin Laden declared war on us in 1998. But it was not until 9/11 that we took him seriously. At which point we answered with a declaration of war of our own, offering the brutal, unrelenting and ferocious response that war demands and that police work prohibits….

“You want to say we’ve now won the war? Fine. It’s at least an arguable proposition. After all, the war on terror will end one day, and we will return to policing the odd terrorist nut case. I would argue, however, that while bin Laden’s death marks an extremely important inflection point in the fight against jihadism, it’s far too early to declare victory.

“Now, it is one thing to have an argument about whether it’s over. It’s quite another to claim that our reaching this happy day….has nothing to do with the war on terror of the previous decade. Al-Qaeda is not subsiding on its own. It is not retiring from the field, having seen the error of its ways. It is not disappearing because of some inexorable law of history or nature. It is in retreat because of the terrible defeats it suffered once America decided to take up arms against it, a campaign (once) known as the war on terror.”

Michael Young / Daily Star (Lebanon)

“Who truly regrets the assassination of Osama bin Laden? There are those of us who never saw the al-Qaeda founder as an avatar of Arab frustration and humiliation. We still believe that the 9/11 attacks had nothing to do with Palestinian suffering or American imperialism, and everything to do with rational criminals striving to execute what they imagined would be the most aesthetical of mass murders.

“However, there is something deeply disturbing in watching the United States applaud Osama’s elimination as the cornerstone of a national reawakening. A killing, no matter how justified, is still just a killing. Surely America can offer much more, particularly at this verge moment in the Middle East when protesters are looking to establish open societies, and are being gunned down as a consequence.

“Unfortunately, the greater likelihood is that with bin Laden out of the picture, President Barack Obama may have found the near-perfect excuse he seeks to involve the U.S. less in regional complications. Even before his political campaign to become president, Obama’s narrative was that the attacks against New York and Washington imposed, primarily, a counter-terrorism response, making President George W. Bush’s war in Iraq, with its nation-building component, the wrong war, in contrast to the right war in Afghanistan.

“Obama has vowed to start a military drawdown in Afghanistan this summer; next year he faces an election. The president will not linger among the Afghans longer than he needs to….

“Obama never bought (into the rationale that an American-dominated Iraq in the very heart of the Arab world could help transform the Middle East from within). Which is precisely why Osama bin Laden’s assassination seems so devoid of deeper significance when you listen today to American officials describing the operation in Abbottabad. Retribution came, period. But the administration has pointedly avoided associating bin Laden’s fate with the democratic rumblings in the Middle East, except to suggest that al-Qaeda, ultimately, is now a spent force in the region. Perhaps it is, but then why play up Osama bin Laden’s death with such fanfare?....

“(For) the Obama administration to view Osama as a phenomenon in isolation is, effectively, another way of declaring that the U.S. will not soon embark on a more profound meditation on liberty in Arab societies.

“But if America has nothing much to say, or do, about advancing liberty, or merely political and social pluralism, in Arab societies, then where does its comparative advantage lie, in relation to Russia or China let’s say? If Osama bin Laden’s death provides Washington with a means of avoiding answering the question, it will have been in vain. A striking security operation no doubt, but also one that is as meaningless as revenge, almost by definition, generally is.”

Europe

Aside from the above discussion on the rise of the far-right in Europe, once again we saw the plight of the euro-17 nations take center stage as Portugal’s political parties accepted a $116 billion bailout between the European Union and IMF that gives Portugal until 2013 to reduce its deficit to 3% of GDP. June 5 is the general election here, the previous government having been thrown out and forced to call a snap vote because it was unable to get its economic program enacted. This time the opposition came onboard because they had no choice, or as Tony Soprano would have said, “Whaddya gonna do?”

Of course bailout programs such as this one require the approval of all 17 euro nations and there was some concern that Finland might turn it down as the nationalist True Finns negotiate for a role in a new government there.   But the Finns appear to have struck a deal where the old parliament will approve the bailout plan before the True Finns are seated in the new government, thus saving face for both. Meanwhile, Portugal needs its plan in place before June 15 in order to access cash needed to repay $5 billion in government debt. Portugal is also now being forced to sell off assets such as TAP, the state-owned airline.

But then on Friday, rumors emerged that Greece was going to abandon the euro currency and leave the union. Interest rates on Greece paper have been soaring anew this week as everyone knows there is zero hope for Greece to meet its bailout terms as structured. Tax collections are lagging way behind projections and a debt restructuring seems to be a certainty, as much as the European Central Bank says there is no way they’d allow Greece to go down this road.

Separately, in non-euro Britain, the economy there appears to be slowing rapidly, while in Germany, as well as they’ve been doing there is a growing crisis in government; as in Chancellor Angela Merkel is flailing helplessly, having lost all credibility as she flip flops like a flounder just tossed onto the beach. 400,000 protesters turned out in various rallies across the country on May Day expressing their frustrations on issues from nuclear power to the political system in general.

Mario Blejer (former governor of Argentina’s central bank) / Financial Times

“As Greece, Ireland and Portugal were unable to service their unsustainable levels of debt, a mechanism was instituted to supply them with the financing necessary to service their obligations. This financing was provided, supposedly, in exchange for their implementing measures that would make their, now higher, debt burdens sustainable in the future. Yet the mode adopted to resolve the debt problems of countries in peripheral Europe is, apparently, to increase their level of debt….

“Here is where this situation resembles a pyramid or a Ponzi scheme. Some of the original bondholders are being paid with the official loans that also finance the remaining primary deficits. When it turns out that countries cannot meet the austerity and structural conditions imposed on them, and therefore cannot return to the voluntary market, these loans will eventually be rolled over and enhanced by eurozone members and international organizations. This is Greece, not Chad: does anyone imagine the IMF will stop disbursing loans if performance criteria are not met? Moreover, this ‘public sector Ponzi scheme’ is more flexible than a private one. In a private scheme, the pyramid collapses when you cannot find enough new investors willing to hand over their money so old investors can be paid. But in a public scheme such as this, the Ponzi scheme could, in theory, go on forever. As long as it is financed with public money, the peripheral countries’ debt could continue to grow without a hypothetical limit.

“But could it, really? The constraint is not financial, but political.”

Opposition is mounting

“As in a pyramid scheme, (however), it will be the last holder of the ‘asset’ that takes the full loss. In this case, it will be the taxpayer that foots the bill, rather than the original bondholders that made the wrong investment decisions.”

Far more on this topic next time as we see what develops between Brussels, Berlin and Athens.

Wall Street

WIR 4/9/11

“Chairman Bernanke…said ‘inflation will be transitory’ and that prices ‘will eventually stabilize.’

“I’d be a hypocrite if I didn’t say I tend to agree with this. I have no opinion on gold or silver, but on other commodities, save oil (which is high for geopolitical reasons), we are witnessing an incredible bubble. My bet is the CRB Index…will still finish the year below the 12/31 close of 332. I see no reason to change my tune on that one. Why? Because I told you this last spike will indeed be the tipping point for the economy, demand will then fall, and many of the commodities in the CRB will absolutely collapse as the speculators are wrung out. In the meantime, while prices continue to rise I can look like a fool.”

It’s a long year, sports fans, and so much is going to happen both domestically and geopolitically over the coming 7+ months.

For example, as of last Friday, the above-mentioned CRB Index was at 370, well above the 332 level I say it will finish beneath. I looked very foolish. Inflation was taking off around the world, commodities were reflecting this, the dollar was cratering because the U.S. was showing few signs of getting its fiscal house in order, etc.

Yesterday, the CRB closed at 337 after one of the worst weeks in the commodities pits in years. At least for one week, and I am not doing any victory laps because, for starters, the CRB is still positive on the year, my thesis that the speculators would be wrung out did indeed prove to be the case.

Gold collapsed from a Monday high of $1575 to $1491. Silver crashed from the prior week’s $48.58 to $35.64 ($34 earlier on Friday). Oil fell from $113.78 to $97.18. Some food stocks were crushed as well, along with the likes of copper, much of it related to a stronger dollar, as well as some economic news that was far from rosy, such as a very poor ISM non-manufacturing reading for April of 52.8 when 57.4 was expected, a huge miss for this barometer. Other recent evidence, including the first quarter flash report on GDP of just 1.8%, along with potential slowdowns in the likes of China, India and Brazil, let alone Europe’s ongoing problems, are giving many pause.

But the equity market, which had been taking it on the chin, pared some of its losses on Friday as the April jobs report showed a gain of 244,000 (268,000 in the private sector), both far better than expected. So this is good. But with more people entering the job market, the unemployment rate rose to 9.0% from 8.8% and it’s possible that even as we get better jobs figures the rate will keep ticking up, which could impact consumer confidence. From an inflation standpoint, since I’ve been sanguine on the topic due to zero growth in wages, the jobs data revealed that average hourly earnings in the month rose a whopping 0.1%, hardly enough to cover rising gasoline costs.

Meanwhile, on the other issue that I criticized the president on last time, the deficits, Vice President Joe Biden, refreshed after his deep sleep at Obama’s recent budget speech, chaired a bipartisan group on the topic and it’s clear now what is going to happen. Forget Republican Congressman Paul Ryan’s detailed program. It’s a non-starter. Both sides are going to do the following. Punt!

Yup, they will reach enough of an agreement to placate both sides of the aisle, and then wait until after the 2012 elections to do the really hard stuff. In other words, Republicans won’t do anything with Medicare because they realized wimpy Americans will burn any of their representatives at the stake who mess with their cherished entitlement, while Democrats will give in on no new taxes.

As for the debt ceiling, now we’re told the Treasury Dept. can finagle things so that Congress doesn’t have to act until as late as August, rather than the May 16/July 8 set of dates. So an agreement will be reached extending the debt ceiling, eventually, this summer, and there will be some kind of agreement on the new budget, and then when placed under the microscope we’ll realize our boys and girls in Washington failed once again. They’ll talk a good game but I doubt I’ll be writing good things at the time and my forecast of a crash in the financial markets in 2012 will remain in place.

There is one hope. The Gang of Six (3 Republicans, 3 Democrats) in the Senate that is working on their own plan, but I’m not holding my breath, as much as I admire their work that I’ve seen thus far.

Street Bytes

--Stocks slid on economic fears and the noted collapse in the commodities markets with the Dow Jones losing 1.3% to 12638 after running up nearly 4% the previous two weeks. The S&P 500 lost 1.7% and Nasdaq 1.6%.

--U.S. Treasury Yields

6-mo. 0.06% 2-yr. 0.55% 10-yr. 3.15% 30-yr. 4.29%

Bonds rallied big on speculation Greece may leave the EU, even as Friday’s payroll number built a case for a U.S. economy that was doing just fine.

--Editorial / Wall Street Journal

“Silver’s recent run-up is part and parcel of the commodity boom that has accompanied the Federal Reserve’s great reflation gamble. As the dollar has fallen in value, the price of commodities traded in dollars has risen nearly across the board. The world’s investors are looking for dollar hedges, and metals are always a favorite in such periods. Silver doesn’t pay interest and has to be stored, so unless you need it for a commercial use it is mainly a dollar hedge. Speculators naturally join the rush, and what goes up with irrational exuberance often comes down with a thud.

“Silver’s decline, and this week’s overall commodity correction, may thus be a useful economic warning. While no doubt the abrupt fall has caught some traders with big losses, the bigger danger is a long-term mania that leads to a far bigger misallocation of capital. This is what happened in the housing bubble, and it is what we have begun to see with the boom in such weak-dollar alternative investments as land prices, foreign currencies, and commodities, especially silver and gold.

“Betting on such investments is risky business and may end up unhappily. But such speculating, such boom and bust, is what happens when no one trusts the value of a fiat currency run by a wide-open Federal Reserve.”

--The Mexican central bank bought nearly 100 tons of gold in February and March, as reported by the Financial Times, the latest emerging market country to turn to bullion as a means of diversifying away from the falling dollar. At least they are still up on this position.

--Treasury Secretary Timothy Geithner said the Chinese yuan has risen about 5% against the dollar since last June and suggested Beijing understands it must let it rise more to right inflation.

“Fundamental forces are now operating in an overwhelming direction of encouraging China to let the exchange rate move more rapidly in response to market forces.”

Separately, Commerce Secretary Gary Locke, in an unusually bold statement for him, said China was frequently shutting Americans out of some industries but that Chinese companies were only blocked in a few cases in the U.S. over national security concerns.  It’s an unequal partnership, as Locke put it, an “imbalance of opportunity.”

--According to a report by the Boston Consulting Group, the U.S. is in the midst of a manufacturing renaissance that by 2015 will once again see the U.S. slightly ahead of China as a base for making many of the goods destined for sale in North America. Rapidly rising wage growth in China is reducing the incentive to base production there, other than for Chinese domestic consumption.

China, though, would remain number one overall in the world because of the need for goods by both Chinese industry and the consumer.

Last year, China accounted for 19.8 percent of world manufacturing output, according to IHS Global Insight, ahead of the United States’ 19.4%. In 1990, China accounted for only 3% of the total.

--Portugal’s bailout interest rates are reportedly going to be 3.25% the first few years of their loan package and then 4.25% afterwards. Greece’s rates are currently set at 3.5% and 4.5%. But Ireland’s average 5.8% so you can understand why the Irish are saying, “Hey, what the [heck]!”

--As commodities crashed this week, it only seems appropriate that Swiss-based industry king Glencore would go public in an IPO (the largest ever in London) valuing the firm at some $60 billion.  The trading firm’s CEO, Ivan Glasenberg, will be worth about $10 billion. For three decades, Glencore operated as a closely held partnership.

--General Motors saw U.S. sales rise 26% in April compared to year ago levels, Ford’s rose 16%, Kia Motors hit a record for monthly sales with a 57% increase, Hyundai had its best April ever, up 40%, Honda’s rose 10%, and Chrysler’s up 22.5%. But Toyota’s rose just 1%.

[GM reported a very nice profit of $3.37 billion for the quarter, while Chrysler reversed its losses of a year ago to post a gain of $116 million, though these could be the high-water marks for both in 2011.]

--Standard & Poor’s said the Irish property market was coming to the end of a “correction” in prices, but would scrape along the bottom for some time.

“Correction”?! What, are these guys nuts? It was a freakin’ CRASH! One of the problems with S&P’s call is that they say prices only fell 33% on average when any sane analyst would say it’s 50% and more. Prices are back to 2000 levels, at best.

--An independent study of California’s five biggest pension funds found that they only had enough money to cover 61% to 74% of their obligations to current employees. The nonprofit California Foundation for Fiscal Responsibility warns that pension benefits would need to be reduced 25% to 40%.

Of course labor unions are none too pleased and as the Los Angeles Times notes, “a costly and bruising ballot fight over retirement funding” looms. In a survey by Times/USC last month, 68% approved of raising the amount of money government workers should be required to contribute to their retirement. A study by Capitol Matrix notes that benefits are now two to three times larger for public employees than for private sector ones.

--The U.S. Senate referred Goldman Sachs to the Justice Department and the SEC for misleading clients about mortgage-backed securities. Democrat Carl Levin (Mich.) and Republican Tom Coburn (Okla.) are spearheading the drive, previously made public by their committee a few weeks ago. Goldman denies it misled anyone.

Separately, the Justice Department sued Deutsche Bank and one of its mortgage units for more than $1 billion for allegedly lying to qualify thousands of risky mortgages for insurance by the Federal Housing Administration.

--Warren Buffett harshly criticized David Sokol for violating company trading policy with regards to his position in Lubrizol, later acquired by Berkshire Hathaway at a nice premium, labeling Sokol’s actions “inexplicable and inexcusable.” Buffett told his annual gathering of shareholders, “(Sokol) violated the code of ethics.”

--This is ironic…because of the rise in Brazil’s currency the real against the dollar, and the high price of sugar, it has been cheaper for the country to import U.S. ethanol (though the percentages are small thus far). Nonetheless, the success of the U.S. industry puts added pressure on government to eliminate state subsidies.

--Intel claimed the biggest advance in microprocessing design in more than 50 years and will soon begin producing a revolutionary 3D technology that has been a decade in the making. Intel’s breakthrough involves producing complex three dimensional transistors on chips, rather than in flat structures like a sheet of paper. For starters, the new chips will be far more energy efficient.

Coincidentally, this week Applied Materials, which supplies Intel with manufacturing equipment, announced a $4.9 billion purchase of Varian Semiconductor Equipment at a 55% premium to Varian’s closing price on Tuesday. If you were a Varian shareholder, the odds are good you are treating the family/mistress/boy toy to premium lager this weekend.

--Gambling revenue in Macau rose another 45% in April from year ago levels. This is a terrific barometer on the strength of the Chinese economy, even if Macau is drawing on a very limited slice of the Chinese mainland. If I saw revenue slow considerably and approach single digits, that would be a huge warning sign but that doesn’t seem likely anytime soon. Revenues rose 58% for all of 2010 and were up 48% in both February and March. An analyst for RBS told the Wall Street Journal he expects 29% growth for 2011.

--Renren, the Chinese social network site with 117 million members can’t compete with 500 million-plus Facebook, but Renren’s IPO this week on the New York Stock Exchange was priced at $14 and rose to $24 before closing the first day at $18 ($16.80 to finish the week); perhaps a potential harbinger of things to come when Facebook goes public.

[Overall, China has 457 million Internet users as of the end of 2010 and half use social-networking sites.]

--AOL said first quarter net income plummeted as revenue fell 17% on a drop in advertising and subscription revenue.

--Sony had to admit hackers, apparently from the group Anonymous, breached its security for a second time in a month with more than 100 million customer accounts now compromised in some fashion, though it tried to convince users only about 23,000 may have had their credit card data stolen.

--Online shopping grew at its fastest rate in nearly four years in April as a result of higher oil prices, jumping 19% over April 2010, according to the SpendingPulse survey.

--Damage from Alabama’s tornadoes could approach the state’s record of $2 billion from Hurricane Ivan in 2004. 38 of the state’s 67 counties have been declared as disaster areas.

--New York City Mayor Michael Bloomberg stirred up some controversy when he selected Nissan Motor to supply Gotham with the next generation of yellow taxis in a deal estimated at $1 billion. I like what I saw of the model. Each will come with an overhead window to view skyscrapers and pigeons, plus there will be charging stations for mobile phones, a neat touch.

The taxis will be built in Nissan plants in Mexico, so critics ask why didn’t Bloomberg select a vehicle made in the U.S.? Hey, it was the cheapest and most fuel-efficient model.  

--It would be very difficult to extrapolate from what I saw during my week in Paris concerning the local economy and then draw nation-wide conclusions, but here’s a fact. I was all over the city, both on foot and by taxi, and I saw a total of three…three…empty storefronts and they were all lined up together in a less than great area. Pretty remarkable.

--U.S. genome researchers have determined that the first rice was cultivated in China’s Yangtze River valley about 10,000 years ago. Somewhere Uncle Ben Wang is smiling.

But the announcement from scientists at New York University, Stanford, Purdue and Washington Univ. has really ticked off India, which says, Uncle Wang didn’t invent rice, Jashri Singh did. [South China Morning Post]

--We’re going to need a lot of rice, by the way, if the United Nations is correct in saying the population of the world will keep growing and hit 10.1 billion by the year 2100, long after I’m gone (not to make this about me). Growth in Africa means the population there could grow from today’s one billion to 3.6 billion.

Now just where that continent is going to get water for all these folks isn’t my problem, but it will be someone’s.

Currently, the world population is expected to pass 7 billion in late October, during the World Series, not that these two topics are interrelated either. It was 6 billion just 12 years ago.

[One place that our grandchildren will be watching is Nigeria, which is projected to see its population rise from 162 million to 730 million by 2100. Another, Malawi, about half the size of Florida, just glancing at my world map, and between Tanzania, Mozambique and Zambia, is projected to grow from 15 million to 129 million. Good lord.]

--Of the 19 Nasdaq stocks currently suspended from trading, 15 are Chinese. Needless to say, suspicions over Chinese operations and accounting aren’t helping my own large holding there. The company should be reporting earnings this coming week and I’ll comment next time.

Foreign Affairs, Part Deux

Israel: After feuding for four years, one controlling the West Bank, the other Gaza, the Palestinian Authority and Hamas agreed on a reconciliation plan with the view of holding consolidated elections in a year. In doing so, the PA didn’t ask Hamas to acknowledge Israel’s right to exist. PA leader Mahmoud Abbas is thus giving up on U.S.-brokered peace talks with Israel and betting he can gain for the Palestinians formal recognition in the United Nations General Assembly instead. At the same time, Egypt promised to open up the border with Gaza, allowing a far freer flow of people, goods and weapons.

Israeli Prime Minister Benjamin Netanyahu called the Hamas-PA agreement “a tremendous blow to peace and a great victory for terrorism.”

But the quartet – the United States, U.N., European Union and Russia – have all said Hamas must renounce violence and recognize Israel’s right to exist before there could be any support for the new power-sharing arrangement. Netanyahu secured the individual support of Britain and France this week, while Secretary of State Hillary Clinton said:

“We’ve made it very clear that we cannot support any government that consists of Hamas unless and until Hamas adopts the Quartet principles.”

Netanyahu added:

“Just like any fair minded person, Israel can only make peace with those who have abandoned the goal of destroying Israel.”

Ted Koppel, in an op-ed for the Wall Street Journal, on various issues confronting Israel.

“Hearing Israeli leaders express grave concerns about Iran and its nuclear potential is nothing new. What is new is a growing worry that America’s adversaries will be less inclined to take warnings from Washington seriously. Each week that passes without the overthrow or elimination of Moammar Gaddafi is perceived in Jerusalem as emboldening the leadership of Iran and North Korea. ‘Imagine,’ one source told me, ‘how Gaddafi must be kicking himself for giving up the development of Libya’s nuclear program.’….

“With almost no margin for error, the Israelis have long been among the world’s foremost pragmatists. While I was in Jerusalem, events in Syria were coming to a boil. Since the Syrians are closely allied with Israel’s bitterest enemies – Hizbullah in Lebanon and Hizbullah’s main sponsor, Iran – one might expect Israeli leaders to take some comfort in seeing the regime of Bashar Assad in trouble. But here, too, the Israelis are far more comfortable with stability on their borders. Assad, like his father before him, has maintained an uneasy truce along Syria’s border with Israel, despite Israel’s continued occupation of the Golan Heights.”

Speaking of Syria, the government has been sweeping some of the cities, arresting as many as 8,000, according to various reports, while the death toll continues to rise, including another 40 on Friday. The protesters, though, are continuing to stand firm but there is no single opposition leader to rally around which hurts the movement.

Editorial / Wall Street Journal

“Bashar Assad’s regime has murdered at least 500 Syrians, and perhaps hundreds more, in putting down its democratic uprising. So what does the United Nations do? Nothing, except hold out the prospect of a seat on its Human Rights Council for the Syrian regime….

“Mr. Assad remains a rogue in good standing with Moscow and Beijing, and he has nothing to fear from the Security Council….

“Syria’s stature at the U.N. hasn’t suffered. The Arab League last week supported Syria’s bid to join the Human Rights Council, following the U.N.’s Asia group. A General Assembly vote is due next month, and on current trend Syria will take its seat on the body that purports to monitor the depredations of the world’s rogues. If the regime kills more Syrians, maybe it’ll become chairman.”

Libya: After the attempted assassination of Moammar Gaddafi, loyalists torched the British and Italian embassies in Tripoli, though the sites had been evacuated. Misrata was also pounded anew, adding to the suffering in that hellhole.

In two positive developments, Turkish Prime Minister Erdogan added his voice to those calling for Gaddafi’s ouster, while NATO has agreed to use some of Gaddafi’s frozen funds for humanitarian assistance.

Egypt: The Muslim Brotherhood previously said it only wanted to control 30%-35% of the seats in parliament following this September’s election, but they now say they will contest 50% of the seats and I still say they’ll end up with a de facto majority. The Brotherhood also called on the United States to leave Iraq and Afghanistan now that bin Laden has been killed.

Lebanon: Still no government after a three-month long stalemate. Pathetic. The holdup is the Interior Ministry portfolio, with both President Michel Sleiman and leader Michel Aoun desiring it.

Even Parliament Speaker (and Hizbullah sympathizer) Nabih Berri described the situation as “appalling.” He also denied the delay in forming a government is linked in some way to the upcoming indictment in the assassination of former Prime Minister Rafik Hariri. 

Speaking of which, a new indictment was filed on Friday, including “substantive new elements,” and replaces the previous one, according to the office of the prosecutor of the Special Tribunal for Lebanon. It remains confidential and has to be examined and confirmed by a judge before being released. Members of Hizbullah will be implicated and upon the unsealing of the indictment, all hell will break loose, but this could still be months away.

Separately, there has been no progress in finding the seven Estonian tourists kidnapped in the Bekaa Valley. Imagine the frustration in little Estonia, where this is no doubt the big news item of each day. It is believed they were taken into Syria.

Yemen: On Thursday, the U.S. just missed killing Anwar al-Awlaki, the American-born al-Qaeda in the Arabian Peninsula leader, in a drone strike but he evaded it. That would have been awesome, but he’s now obviously on the run big time. Yemeni President Saleh, who reneged on a deal to give up power, is supposedly feeding the U.S. information on the terrorist in an effort to gain Washington’s support.

Iraq: Since bin Laden’s death there has been a spasm of al-Qaeda-inspired violence here with over 50 being killed in various suicide attacks between Tuesday and Thursday, 29 policemen becoming victims in the largest car bombing. Otherwise, things are just hunky-dory. 

North Korea: Amnesty International is reporting that the North’s political prison camps are growing in size, utilizing published satellite images. AI says that new witness testimony also sheds light on torture, starvation and mass executions of inmates. Pyongyang has long denied the existence of such camps, where prisoners are often forced to eat rats and pick kernels of corn out of animal waste.

Japan: Workers entered one of the reactor buildings at the Fukushima nuclear plant for the first time since March 11.   Work is taking place in small groups to install ventilation systems to filter out radioactive material from the air. Tokyo Electric Power Co. then hopes to install a new cooling system.  Meanwhile, highly radioactive waste-water continues to leak from one of the other three troubled reactors. The death toll, including the missing, is 25,000.

Canada: In a stronger than expected showing, Prime Minister Stephen Harper’s Conservative Party beat back a challenge in the country’s general election, taking 167 seats to win a majority in parliament, while the New Democratic Party became the official opposition in winning 102 seats. Canada’s Liberal Party took only 34 (down from 77), the worst defeat in its history and party leader Michael Ignatieff resigned. Ignatieff blamed Conservative attack ads, though he even lost his own seat in a suburb of Toronto.

As for Harper, who took office in 2006, for the first time he leads a majority government. This is good for America. Harper is a terrific ally and hopefully he’ll continue to pump more into Canada’s defense, which only helps the U.S.

Random Musings

--Editorial / New York Post

“It sure didn’t take long for the fretting over the circumstances of Osama bin laden’s inglorious departure to move to center stage.

“The official story has been in motion almost from the start, each succeeding version more sympathetic to bin Laden than what came before, with the usual suspects muttering in the background about ’human-rights violations.’

“First there was a firefight.

“Then bin Laden was unarmed.

“Yesterday, one report described him as ‘confused’ and ‘fearful’ in his final moments.

“What’s next – he was reading to blind people and holding a litter of kittens as the SEALs burst through his door?

“Fact is, the White House has done a shockingly poor job of establishing a credible line and sticking with it.

“That line should have been aggressive and unyielding.

“Bin Laden was unarmed?

“So what? So were the victims of 9/11….

“Bin Laden engineered 9/11 to make a point; in that, he succeeded.

“And now he is dead, under circumstances that suggest America intended to make a point of its own.

“Also successfully.

“Nothing else matters.”

--Peggy Noonan / Wall Street Journal

“Let’s start with credit where it’s due. The U.S. Navy Seals did it and deserve our profound thanks and deep admiration.

“It was President Obama who told CIA chief Leon Panetta: Get this guy. When presidents insist, the guy tends to get got. It was Mr. Obama who made the decision not to bomb the house with predators or B2s, because that way we wouldn’t have known if we’d got Osama. It was Mr. Obama who decided to do it the hard way, the way that would allow us to know we’d succeeded. It was Mr. Obama who’d have taken the blame if the operation had gone wrong, and things like this are tricky and often go wrong because they have a thousand moving parts and almost every part has to move right. And it’s not as if the president was operating from a position of political strength. It was Mr. Obama who, having made the decision, apparently didn’t micromanage. He did his job and let the military do theirs….

“It was well and brilliantly done. It reminded the world that American might can be wielded with American competence. It highlighted the brilliance of the U.S. military when it is given clear goals and full resources….

“Osama’s importance is that he was the leader of al-Qaeda, but his mystique resided in the fact that he attacked America and got away with it….He was invincible, the ‘strong horse.’ This gave him charisma, which he used to rouse and recruit the young, the ignorant and the unstable.

“That’s over now. He has been answered….
“Is the world safer with bin Laden dead? Who knows. But it is better.

“However, and with our president there is always a however, he has spent almost every moment since his Sunday night speech displaying both a tin ear and a chronic tendency to misunderstand his own country. His refusal to release more evidence that Osama is dead is allowing a great story to dissolve into a mystery. He is letting a triumph turn into a conspiracy theory.

“Here is the fact of the age: People believe nothing. They think everything is spin and lies. The minute a government says A is true, half the people on Earth know A is a lie. And when people believe nothing, as we know, they will believe anything. We faked the moon landing, there was a second gunman in Dallas, the World Trade Center was blown up in a U.S.-Zionist conspiracy, Hitler grew old in Argentina….

“Mr. Obama misunderstands all this. He tells Steve Croft Sunday on 60 Minutes that showing photos of the dead Osama would be to ‘spike the football.’ ‘We don’t trot this stuff out as trophies.’ Trophies? Who does he think we are?

“It’s not about pride, it’s about proof. ‘We got him, shot him and immediately threw him in the sea’ is not enough. The U.S. government should release all the evidence it has that does not compromise security….And let the SEALs tell their story…If they cannot be identified or don’t wish to be, put a blue dot over their faces, filter their voices, and don’t use their names….

“Americans don’t want to spike the ball. They just want to show they crossed the goal line.”

The other side…Editorial / New York Post

“The conspiracy theorists will never be satisfied, and the downside of such a release (of the photo) looms large.

“And not just because, as Obama put it, the photo could be used as an ‘incitement to additional violence or as a propaganda tool.’

“What it boils down to is a matter of simple human decency.

“As House Intelligence Committee Chairman Mike Rogers said yesterday: ‘Imagine how the American people would react if al-Qaeda killed one of our troops or military leaders and put photos of the body on the Internet.’

“His point was clear: Americans have been treated like trophies of war before – when U.S. troops were killed in Mogadishu in 1993, their bodies stripped naked and dragged on ropes through the streets, and when military contractors were mutilated, burned and hanged from a bridge in Fallujah in 2004.

“This is not to suggest for an instant that bin Laden’s fate was in any way comparable to what happened in Mogadishu and Fallujah. He deserved exactly what he got, and probably more.

“And, again, let’s be clear on this: We could not possibly care less about offending the tender sensibilities of radical Islam.

“But neither should the United States be following the Islamists’ example.

“ ‘We don’t trot out this stuff as trophies,’ Obama said.

“That’s exactly right….

“The photo may soon be leaked or be made public, thanks to Freedom of Information Act requests.

“But for now, bin Laden has been denied his last moment of limelight – killed in the dark of night, interred in the North Arabian Sea.

“Obliterated. As he should be.”

[Ed. Of course the above debate one would hope should largely become moot now that al-Qaeda itself has admitted bin Laden is dead.]

--At the first Republican presidential debate, five lesser-known rivals tried to hit President Obama on foreign policy days after the raid to kill bin Laden and while I stated my own case above, of course for now the arguments ring hollow because the focus isn’t on the likes of Syria, as it should be. Also, missing from the debate were Sarah Palin, Newt Gingrich, Mitt Romney, Mike Huckabee and Donald Trump. Former Minnesota Gov. Tim Pawlenty sought to distinguish himself from the crowd but apparently failed to do so.

In a Quinnipiac University poll released May 4, Romney leads the pack at 18%, followed by Huckabee and Palin with 15% and Trump at 12%. [Paul 5%, Pawlenty 4%...just a pathetic lineup.]

--As for President Obama’s prospects for 2012 given his huge coup, every schoolchild knows their history by now on this front. President George H.W. Bush had a 90% approval rating after the 1991 Persian Gulf War and he still lost the election. A lot can happen and the state of the economy come November 2012 will of course be paramount in voters’ decision-making process.

--President Obama’s approval rating rose to 69% among New York City residents this week, up 10 points from the last NY1 / Marist survey. A Washington Post / Pew Research Center poll found that 56% of Americans approved of Obama’s job performance in a survey conducted Monday night, up from 47% last month.

--Republican strategist Karl Rove had a piece in the Journal explaining the 2012 electoral map and how Republicans are still in a good position to win, with the election to be decided in 14 battleground states; Florida and Ohio once again looking critical. Also, according to CBS Radio’s Mark Knoller, since January, Obama has made 40 stops in 15 states. Twelve stops were in battleground states and of the remaining 28 events, 15 were fund raisers in “treasure houses” like New York City, Los Angeles and San Francisco.

All well and good, but as Rove and any Republican knows:

“This election is within the GOP’s grasp. The quality of the Republican candidate’s campaign and message will decide whether it becomes so.”

--Interesting case in France these days concerning the discovery of the wreckage of the Air France flight that plunged into the Atlantic in 2009, killing 228 people. Incredibly, at a depth of 2.4 miles, mini-submarines found the black boxes, including the flight recorder (being analyzed) and the first body has been brought up (initially 51 were found floating on the surface).

So the issue is, if you’re a relative do you want the body being brought up or left there? They appear to be split 50/50 on the matter. The first one raised, for example, was just skeletal remains, still strapped to a seat.

--The National Oceanic and Atmospheric Administration says that the recent tornado outbreak was probably the largest in U.S. history with an estimated 305 twisters. April had more than 600 and the previous record was 267 set in 1974. 881 had been formed through April for the year and the annual record is 2004’s 1,817. May, we’ve learned, is normally the most active month.

--Leaders of various branches of the Apache Tribe are asking President Obama for an apology for the government’s use of the code name “Geronimo” for bin Laden. Can’t say I blame them on this one.

--Good potential news for sharks. Researchers from the Australian Institute of Marine Science found that diver tourism in the Pacific nation of Palau to dive with recently protected sharks (a 2009 sanctuary was established there), contributes 39% of the country’s GDP, and 21% of divers chose their vacation to Palau specifically to see the sharks. Each of the 100 sharks there that inhabit the prime dive area has a lifetime value of $1.9 million. “Sold in pieces for their fins and meat, those same 100 sharks would be worth an estimated $10,800 total, the researchers estimated,” so this should help promote ecotourism elsewhere. [Herald Tribune]

--Golfer Seve Ballesteros died after a long battle with brain cancer. He was just 54.

--Finally, on Friday, Willie Mays, one of the top three all-around players in baseball history, turned 80.  Happy Birthday, Willie!

---

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

God bless America. God bless the Navy SEALs.
---

Gold closed at $1491
Oil, $97.18

Returns for the week 5/2-5/6

Dow Jones -1.3% [12638]
S&P 500 -1.7% [1340]
S&P MidCap -2.6%
Russell 2000 -3.7%
Nasdaq -1.6% [2827]

Returns for the period 1/1/11-5/6/11

Dow Jones +9.2%
S&P 500 +6.6%
S&P MidCap +9.0%
Russell 2000 +6.3%
Nasdaq +6.6%

Bulls 54.9
Bears 16.5 [Source: Chartcraft / Investors Intelligence]

Dr. Bortrum posted a new column.

Have a great week. I appreciate your support.

Brian Trumbore

 



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-05/07/2011-      
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Week in Review

05/07/2011

For the week 5/2-5/6

[Posted 7:00 AM ET]

Triumph

President Barack Obama, May 2, 2011

“Tonight, I can report to the American people and to the world that the United States has conducted an operation that killed Osama bin Laden, the leader of al-Qaeda, and a terrorist who’s responsible for the murder of thousands of innocent men, women, and children…

“For over two decades, bin Laden has been al-Qaeda’s leader and symbol, and has continued to plot attacks against our country and our friends and allies. The death of bin Laden marks the most significant achievement to date in our nation’s effort to defeat al-Qaeda.

“Yet his death does not mark the end of our effort. There’s no doubt that al-Qaeda will continue to pursue attacks against us. We must – and we will – remain vigilant at home and abroad….

“Over the years, I’ve repeatedly made clear that we would take action within Pakistan if we knew where bin Laden was. That is what we’ve done. But it’s important to note that our counterterrorism cooperation with Pakistan helped lead us to bin Laden and the compound where he was hiding. Indeed, bin Laden had declared war against Pakistan as well, and ordered attacks against the Pakistani people….

“The American people did not choose this fight. It came to our shores, and started with the senseless slaughter of our citizens. After nearly 10 years of service, struggle, and sacrifice, we know well the costs of war….

“Yet as a country, we will never tolerate our security being threatened, nor stand idly by when our people have been killed. We will be relentless in defense of our citizens and our friends and allies. We will be true to the values that make us who we are. And on nights like this one, we can say to those families who have lost loved ones to al-Qaeda’s terror: Justice has been done….

“Finally, let me say to the families who lost loved ones on 9/11 that we have never forgotten your loss, nor wavered in our commitment to see that we do whatever it takes to prevent another attack on our shores.

“And tonight, let us think back to the sense of unity that prevailed on 9/11. I know that it has, at times, frayed. Yet today’s achievement is a testament to the greatness of our country and the determination of the American people.

“The cause of securing our country is not complete. But tonight, we are once again reminded that America can do whatever we set our mind to. That is the story of our history, whether it’s the pursuit of prosperity for our people, or the struggle for equality for all our citizens; our commitment to stand up for our values abroad, and our sacrifices to make the world a safer place.

“Let us remember that we can do these things not just because of wealth or power, but because of who we are: one nation, under God, indivisible, with liberty and justice for all.”

---

Last Saturday, after posting my column from Paris, one in which I blasted Barack Obama for failing to lead on two specific issues, “the Middle East/North Africa and our humongous deficits,” I did what I always do when in Paris, go to the war museum, Musee de l’Armee, which is also the site of Napoleon’s tomb. I’ve been to war museums all over the world and the one in Paris is as good as they come in its exhibits on World Wars I and II.

As I walked through, I took the same notes I always do and each time I look at the exhibit for World War I, I’m reminded just how quickly things exploded following the assassination of Archduke Ferdinand, heir to the Austro-Hungarian throne, in Sarajevo, June 28, 1914. Gavrilo Princip was the Serbian nationalist who carried out the crime but Serbia itself had nothing to do with it. Nonetheless Austria-Hungary opted to exploit the assassination and teach the Serbs a lesson and a month later Vienna declared war on Serbia. Two days later Russia entered, August 1 Germany declared war on Russia, August 3 Germany declared war on France, August 4 Britain declared war on Germany and it was off and running; or rather by the end of September the war had ground to a halt on the main fronts but they kept killing each other indiscriminately. France, for example, lost 1.37 million men in the war, with another 4.95 million wounded, out of 8.5 million men mobilized. Think about that casualty rate. I saw a clip of the “victory parade,” July 14, 1919, in Paris and it was pathetic. Very few marchers were in one piece.

Of course what followed was the flawed Treaty of Versailles in 1919, Hitler rose to power in 1933, Neville Chamberlain in September 1938 told his cabinet Hitler appears to be “a man who could be relied upon when he had given his word,” and shortly thereafter Hitler takes over the Sudetenland and in essence World War II is underway, though Hitler waited about a year until his military was fully ready before formally launching the war with the invasion of Poland, September 1, 1939.

In 1940, France falls, Britain retreats from Dunkirk (the greatest retreat in the history of mankind) and by June 4, Winston Churchill is appearing before the British parliament, girding his nation for battle. I get goose bumps every time I read his words.

“We will fight on our beaches, we will fight on our airfields, we will fight in the fields and in the streets, we will fight in the hills. We will never surrender.”

Two weeks later, June 18, Marshal Petain having surrendered France to the Germans the day before (while setting up a separate government in Vichy that then collaborated with the Nazis), General Charles de Gaulle took to the BBC airwaves from London in his own initial attempt to rally the French and begin to form a resistance to the Nazis.

“France has lost a battle, but France has not lost the war. Nothing has been lost because this war is a world war…Whatever happens, the flame of resistance must not be extinguished and will not be extinguished.”

So now the Battle of Britain was on and when it was over the Luftwaffe had lost 1773 aircraft and an invasion was postponed. As Churchill put it:

“Never in all of history has so much gratitude been owed by such a large number of people to so few.”

As for De Gaulle, who was recognized by Britain as the leader of the Free French Movement on June 27, 1940, in 1941, he was helping liberate Lebanon and Syria.

It’s this last bit that is one of the reasons I bring this all up, events of almost 100 and 70 years ago. As I walked the streets of Paris last Saturday after going to the museum, I was oblivious to what was on President Obama’s mind that day; just as all but a handful of Americans back home were as well.

But I was in France, as I told you before I went there, to attempt in my own small way to get a handle on the explosive immigration issue that is being fanned by the Arab Spring as tens of thousands of refugees flood into Italy and France and all points north and east. For years now I’ve written of the slow rise of nationalism in Europe, a disquieting trend, and the process is being accelerated due to events in Tunisia and Libya, for starters.

If you want to be dumped in one spot in Paris to get a handle on the immigration issue (and you don’t want to visit some of the awful train stations as I have over the years), go to the Eiffel Tower, where you’ll see 100 or so new immigrants hawking cheap keepsakes of the place, as well as loads of rather intimidating looking Serbs on the bridge across the Seine, the pont d’lena, playing shell games. This is not Paris’ best face. [Most of the rest of the city that I ventured through, I hasten to add, was as beautiful as I’ve ever seen it.]

Sunday, after Mass at Notre Dame, I tried to get into the natural history museum and it’s then I began to realize that most of the museums were closed on May Day. This proved to be an amazing stroke of good luck as upon return to the area of my hotel, I stumbled on the National Front’s (Front National / FN) annual May Day assemblage and there I was, about 50 yards from the stage amid a crowd later described as 3,000, getting ready for FN leader Marine Le Pen’s address. For me this was a tremendous opportunity, having written awhile back of the rise of Marine, daughter of FN founder Jean-Marie Le Pen, who was also on the scene.

It was fascinating. While I obviously didn’t understand 98% of her speech, I watched her closely on the video screen in front of me and the reaction of the crowd. She’s a leader and is currently ahead of President Nicolas Sarkozy in most of the polls leading up to next year’s election. [The Socialists are in the overall lead.]

Of course the National Front is an anti-immigrant (once virulently anti-Semitic party in Jean-Marie’s heyday) and I am not condoning the party platform.

But Marine, a mother of three, is trying to distance herself from the more radical elements of the FN manifesto and to be more inclusive, though in her speech at the foot of a statue of Joan of Arc, no less, she railed against the euro and French immigration policy, referring to Tunisian immigrants who showed up in Paris. [I later saw an article where 130 of them were squatting in an abandoned building, deemed unsafe, refusing to leave when pressed by authorities. “We are tired, we are hungry, we want papers and freedom.”]

But as part of her kinder FN face, Marine also said:

“Whether you are a man or woman, Christian, Jewish or Muslim, believer or nonbeliever, you are first and foremost French.”

Ironically, Marine was featured in the Sunday Times Magazine last week, wherein she said that her message isn’t xenophobic but rather commonsensical, pointing repeatedly to the U.S. as a model:

“In France we often say the U.S. is a multicultural society, but it’s not true. It’s multiethnic but one single culture. I don’t say that nobody should enter our country. On the contrary, in the old days immigrants entered France and blended in. They adopted the French language and traditions, whereas now, entire communities set themselves up within France, governed by their own codes and traditions.” [See the above Tunisia 130.]

Marine Le Pen’s message is more complicated than just the above and I’ll be talking about her the next year. What’s clear is the FN is but one far-right, nationalist party across Europe that is gaining traction; others being Finland’s True Finn’s (19% in a recent election), Norway’s Progress party (23%), Denmark’s People’s party (19%), the Democrats in Sweden, and other such parties in the Netherlands, Belgium, Switzerland, Italy and Austria. It’s a movement that is only going to grow and with the increasing turmoil over the euro currency, the haves vs. the have nots, and people such as the Finns and Germans increasingly unwilling to pay for the profligacy of others, as well as the immigration problem, it could end up being explosive, particularly if Europe were to reenter recession mode across the continent.

It’s why yours truly always keeps in the back of his mind historical events like the genesis of World Wars I and II. The first was to be the war to end all wars, they said at the time. How’s that worked out for Planet Earth since then? And you should never take your eyes off the Balkans…including Greece these days. 

So the above was what was on my mind when I awoke Monday morning to word that an elite unit of America’s finest had taken out bin Laden and that President Obama had led the way. I was too far away to celebrate, and there was no dancing in the streets of Paris. But Monday night for my last dinner in the city I was going to return to a favorite spot when I walked past this Irish pub and thought it might be a good place to get a reaction or two.

No doubt, Europe’s elite have found things to bitch about when it comes to the operation in Abbottabad, but as I overheard an Irish lad say at the bar, “The Americans didn’t [mess] around. They seldom do.”

That’s not a bad thing. There was certainly a feeling of supreme respect for the United States in the air.

But to close the circle, no, I do not apologize for my comments on our president last time. We must press the cause of democracy in the likes of Syria and Iran (even if doing so in the former makes the Israelis a bit squeamish as I discuss further below).

The war on terror is being eclipsed at lightspeed by developments transpiring in this Arab Spring. We have no idea yet how things will work out, but we do know this.

Iran has been taking advantage of this period to continue with its nuclear program while attention is focused elsewhere, plus Egypt has critical elections this fall and has reopened the gate to Gaza, while talking of annulling its peace treaty with Israel, leaving Israel feeling increasingly encircled, far more so than before, and on and on.

These are scary times and it’s why you’ll have to forgive me. Had I been back in the States last Sunday night, my celebration would have been a muted one. I’ll continue to honor the brave men and women of our armed forces at the end of each column just as I’ve done unfailingly since 9/11, and by end of the year I’ll return to Arlington National Cemetery to pay my respects to the fallen of both Iraq and Afghanistan. 

I just pray President Obama continues to focus not just on the war on terror, but the really Big Picture. It is not only a time to roll-up al-Qaeda for good (and on this he’s focused), but a time to press American principles and values throughout the Middle East and North Africa.

Back in 1940, it was Winston Churchill vs. Evil and he emerged victorious. Today, the oppressed, including in places like Syria, need America’s leadership. We have an opportunity. We must grab it.

---

As for Pakistan and reaction to the operation to take out bin Laden, President Asif Ali Zardari wrote in a Washington Post op-ed:

“Some in the U.S. press have suggested that Pakistan lacked vitality in its pursuit of terrorism, or worse yet that we were disingenuous and actually protected the terrorists we claimed to be pursuing. Such baseless speculation may make exciting cable news, but it doesn’t reflect fact.”

The fact is, Mr. President, your security service, the ISI, has always played a slippery, duplicitous game with terrorists, including al-Qaeda and the Taliban. Pakistan doesn’t want the United States to turn over Afghanistan to India, so it wants to promote instability in Afghanistan, and in all honesty a return over time of the Taliban, which until 9/11 had been formal friends with the Pakistani government. When it comes to the terrorist group Lashkar-e-Taiba, responsible for the Mumbai attacks, the ISI tolerates them because LeT can be used to target India at will and wreak mayhem during any possible conflict between the two nations, which seems increasingly likely these days.

CIA Director Leon Panetta said it all in referring to the operation on bin Laden: “It was decided that any effort to work with the Pakistanis could jeopardize the mission.”

So now Pakistani chief of staff, Gen. Kayani, says there will be no more violations of Pakistan’s sovereignty, but Pakistan desperately needs the $1.5 billion in annual aid it receives from Washington, particularly the military.

It’s a tough call. As Sen. Lindsey Graham (R-S.C.) says:

“For those who want to cut off aid to Pakistan, I understand your frustration. But at the end of the day, if you want to create a failed state in Pakistan, one of the best things to do is sever relations. It is not in our national security interest to let this one event destroy what is a difficult partnership but a partnership nonetheless.”

This past 1/8/11 in this very space, in discussing an assassination I had basically called the week before, that of Gov. Salman Taseer, I wrote:

“So the immediate question, and ongoing concern when discussing Pakistan, is ‘To what extent are security forces infiltrated by extremists?’ We know the army and intelligence services are, but does this mean a coup is a certainty? A coup that would, yes, cause the markets to tank over fears for control of Pakistan’s nuclear weapons and an almost certain war with India….

“Before Taseer was gunned down at a high-class shopping mall, the story for the week had been the lack of cooperation that Pakistan’s army chief of staff, Gen. Kayani, was supplying the U.S. in terms of going after the Taliban’s and al-Qaeda’s safe havens. Kayani was supposed to be a good friend, a man the U.S. could count on, but evidently he’s upset by the WikiLeaks cables showing him as being too chummy with Washington, which doesn’t go over well at home so he needs to be the bad guy now.”

And so he is…and clearly has been. I also can’t help but note that just last week I wrote:

“Speaking of Afghanistan, our terrific friends the Pakistanis have been lobbying Afghan President Hamid Karzai against establishing a long-term relationship with Washington, and instead looking to Pakistan and China for help in striking a peace deal with the Taliban.”

Following is selected opinion, from all sides, as I do on occasions such as this. 

Editorial / Wall Street Journal

“The death of Osama bin Laden at the hand of U.S. special forces doesn’t end the war against Islamic terror, but it is a crucial and just victory that is rightfully cause for celebration.

“Especially so in a war fought against combatants who hide in the world’s dark corners, who rarely fight in the open and who attack innocents far from any conventional battlefield. Even if it took nearly 10 years, the skillful tracking and daring attack on al-Qaeda’s founder shows that democracies can prevail in such a struggle and is as notable as landmark victories of other wars that involved the taking of cities or island-hopping. The battle of Abbottabad is a triumph of intelligence, interrogation and special operations that are by necessity three of the main weapons in what the U.S. military has called this ‘long war.’…

“The most striking fact of Mr. Obama’s prosecution of the war on terror is how much it resembles Mr. Bush’s, to the consternation of America’s anti-antiterror left. This includes the strategy to pursue terrorists in their sanctuaries, keeping them on defense and less able to plot against U.S. targets….

“Much as during the decades of the Cold War, the ‘long war’ on terror has made many Americans tire of the fight, especially in the absence of cheering crowds waving U.S. flags in Paris or Palermo. But we cannot forget that this is a war for national survival against enemies who would annihilate our cities if they could.   The death of bin Laden is a measure of justice for the thousands he killed. As important, it is a warning to others who would kill Americans that they will meet the same fate, no matter how long it takes or where they try to hide.”

George Will / Washington Post

“Jim Lacey of the Marine Corps War College notes that Gen. David Petraeus has said there are perhaps about 100 al-Qaeda fighters in Afghanistan. ‘Did anyone,’ Lacey asks, ‘do the math?’ There are, he says, more than 140,000 coalition soldiers in Afghanistan, or 1,400 for every al-Qaeda fighter. It costs about $1 million a year to deploy and support every soldier – or up to $140 billion, or close to $1.5 billion a year, for each al-Qaeda fighter. ‘In what universe do we find strategists to whom this makes sense?’

“There remains much more to al-Qaeda than bin Laden, and there are many more tentacles to the terrorism threat than al-Qaeda and its affiliates. So ‘the long war’ must go on. But perhaps such language is bewitching our minds, because this is not essentially war.

“During the 2004 presidential campaign, John Kerry received much derision for his belief (as expressed in a Jan. 29 debate in South Carolina) that although the war on terror will be ‘occasionally military,’ it is ‘primarily an intelligence and law enforcement operation that requires cooperation around the world.’ Kerry, as paraphrased by the New York Times Magazine of Oct. 10, thought ‘many of the interdiction tactics that cripple drug lords, including governments working jointly to share intelligence, patrol borders and force banks to identify suspicious customers, can also be some of the most useful tools in the war on terror.’ True then; even more obviously true now….

“And the more we couch our thinking in military categories, the more we open ourselves to misadventures like the absurd and deepening one in Libya.

“There, our policy – if what seem to be hourly improvisations can be dignified as a policy – began as a no-fly zone to protect civilians from wanton violence. Seven weeks later, our policy is to decapitate the government by long-distance assassination and to intensify a civil war in that tribal society, in the name of humanitarianism. What makes this particularly surreal is that it is being done by NATO.

“Unpack the acronym: North Atlantic Treaty Organization. NATO was created in 1949 to protect Western Europe from the Red Army. Its purpose was, in Lord Ismay’s famous formulation, ‘to keep the Russians out, the Americans in and the Germans down.’ NATO, which could long ago have unfurled a ‘mission accomplished’ banner, has now become an instrument of addlepated mischief.

“This is an episode of presidential malpractice. Obama has allowed NATO to be employed for the advancement of a half-baked doctrine (R2P – ‘responsibility to protect’), a quarter-baked rationalization (was it just in March that Hillary Clinton discovered that a vital U.S. national interest required the removal of Moammar Gaddafi because he ‘is a man who has no conscience’?) and an unworthy national agenda (France’s pursuit of grandeur on the cheap).

“When this Libyan mistake is finished, America needs a national debate about whether NATO should be finished. Times change.”

Editorial / New York Post

“The decision must have been beyond agonizing.

“Option A: A breathtakingly risky undertaking that would place Navy SEALs inside Osama bin laden’s Pakistani hideout.

“Option B: Carpet-bombing the terrorist’s compound, and letting God sort out the results.

“President Obama took the risk, as did the young warriors of SEAL Team 6, who flew into the compound and came out with the body of the man behind 9/11 – neat, clean and with only the tin-foil-hat crowd questioning the outcome.

“ ‘It was a good day for America,’ said Obama yesterday.

“Indeed.

“So three cheers for the president.

“Credit Obama also for laying aside politics and seeing value in many of the Bush-era policies he criticized during the 2008 campaign. Keeping Gitmo open and using coercive interrogation techniques paid substantial strategic dividends.

“Obama also held on not only to many of George W. Bush’s national-security policies but also to members of his team – like Defense Secretary Robert Gates and Gen. David Petraeus, architect of the successful 2007 troop surge in Iraq….

“The president, in other words, chose policy continuity over partisan advantage-taking, and the result was two bullets in Osama’s head – a very good day’s work.

“Still, questions remain:

“Has Pakistan been pretending to participate in the hunt for bin Laden – taking billions in U.S. cash and arms while protecting him all along?

“Certainly Pakistan’s intelligence service had to know that Osama had been hiding since 2005 in a super-secure compound in Abbottabad, a major city….

“Washington has long suspected that Pakistani officials knew of Osama’s whereabouts – their denials notwithstanding. Just two weeks ago, Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, warned that Pakistani ties to Osama’s Taliban allies were straining Washington-Islamabad relations….

“Which is why Senate Homeland Security Chairman Joe Lieberman warned that ‘there is going to be a time of real pressure’ on Pakistan to ‘prove to us that they didn’t know bin Laden was there.’

“Will bin Laden’s death accelerate a U.S. pullout from Afghanistan?....

“That would be a profound mistake.

“The U.S. has made significant progress in Afghanistan, which is no longer a terrorist haven controlled by the Taliban.

“But if the administration follows through with a ‘robust’ – i.e., precipitous – troop withdrawal under the cover of Osama’s death, Afghanistan would almost certainly slip back to a position where the Taliban would re-emerge.

“That would be more than just allowing the terrorists to win; it would be giving the ghost of Osama bin Laden the last word on what happens in Afghanistan.

“America simply can’t allow that to happen.”

Editorial / London Times

“(Bin Laden’s) death comes not as the result of hot-headed vengeance or indiscriminate retaliation. It is the result of extraordinary and exemplary detective work by American intelligence and counterterrorist operatives. Since the day the twin towers collapsed, the hunt for bin Laden has been hugely frustrating. He eluded capture many times. He continued issuing inflammatory videos and messages calling for more atrocities, more bloodshed. He taunted America and its president and stirred up further hatred between nations and religions. There were fears that no one would ever find the cave where he was supposed to be hiding. Some politicians in Washington suggested that he no longer mattered and America was no longer making much effort to find him.

“All this was wrong. His capture always mattered – not simply to hold the criminal responsible for his crimes, but to show America’s enemies that its people are not to be harmed or its values flouted without cost. And America’s allies, who entrust their security and their way of life to its global leadership, need to know that those who cross the U.S. will pay the price….

“Bin Laden’s death may spark further feuding within his organization, especially if his brutally efficient accomplice, Ayman al-Zawahiri, takes over as successor. But al-Qaeda has lost not only its leader but, more importantly, the argument among Muslims. To the millions who have demonstrated across the Arab world, freedom, democracy and human rights are what matter; no one is calling for the restoration of the caliphate. Islam will recover from this perversion. And the world too will be a safer place with bin Laden dead.”

Ahmed Rashid / Sydney Morning Herald

“There have been cheers and jubilation in the United States and elsewhere in the West, but capital cities around the world are already bracing for the repercussions of Osama bin Laden’s death.

“Hundreds of dedicated and would-be jihadis will be mourning and swearing to give their lives in revenge for his killing by a U.S. special forces team.

“There is little doubt that the death of bin Laden is a huge blow to al-Qaeda. But at the same time the network has moved over the years from a highly centralized hierarchy – with recruiting, training and orders all scrutinized by its top leaders – to something much more loose and amorphous.

“Today al-Qaeda’s philosophy is one man, one bomb. It does not need another September 11 to make its mark….

[The threat is in Pakistan.]

“Before September 11 there were no known al-Qaeda cells in Europe, except for the one in Hamburg that launched those attacks. Today every European country has an al-Qaeda cell.

“Hundreds of Muslims with European passports have travelled to Pakistan’s tribal areas for training and returned to Europe.

“After three Moroccans were arrested in Germany last week for planning to plant bombs in public places, German authorities admitted that more than 200 German citizens have had training in the tribal areas and many of them have returned to Germany.

“Al-Qaeda and its allies may try to launch another Mumbai-style attack. The same is the case in Britain, Scandinavia, France, Spain and Italy.

“The fear now of suicide bombings in subway or train stations in the U.S. or Europe is particularly high….

“Clearly bin Laden’s demise will give intelligence agencies around the world many clues and leads to catch other leaders, but al-Qaeda will not disappear overnight.”

Bret Stephens / Wall Street Journal

“(There) can be no true justice without vengeance. Oddly enough, this is something Barack Obama, Chicago liberal, seems to better grasp than George W. Bush, Texas cowboy.

“The former president was fond of dilating on the point, as he put it just after 9/11, that ‘ours is a nation that does not seek revenge, but we do seek justice.’ What on Earth did that mean? Of course we sought revenge. ‘Ridding the world of evil,’ Mr. Bush’s other oft-stated ambition, was nonsense if we didn’t make a credible go of ridding the world of the very specific evil named Osama bin Laden.

“For all of Mr. Bush’s successes – and yes, there were a few, including the vengeance served that other specific evil known as Saddam Hussein and those Gitmo interrogations that yielded bin Laden’s location – you can trace the decline of his presidency from the moment he said, in March 2002, that ‘I really don’t care [where bin Laden is]. It’s not that important.’*

“Wrong. It was of the essence….

“There’s been a whiff of sour grapes in some of the right-wing commentary about the president’s speech. Too much emphasis on the first-person pronoun, not enough credit to President Bush, and so on. It’s unbecoming. If ever there was a doubt about just how American Mr. Obama is, Sunday’s raid eliminates it better than any long-form birth certificate. This was his finest hour. It’s for the rest of us, avenged at long last, to rejoice.”

*Ed. Now that it appears Osama was involved in planning operations from Abbottabad, Bush looks incredibly stupid.

Charles Krauthammer / Washington Post

“The bin Laden operation is the perfect vindication of the war on terror. It was made possible precisely by the vast, warlike infrastructure that the Bush administration created post-9/11, a fierce regime of capture and interrogation, of dropped bombs and commando strikes. That regime, of course, followed the more conventional war that brought down the Taliban, scattered and decimated al-Qaeda and made bin Laden a fugitive.

“Without all of this, the bin Laden operation could never have happened. Whence came the intelligence that led to Abbottabad? Many places, including from secret prisons in Romania and Poland; from terrorists seized and kidnapped, then subjected to interrogations, sometimes ‘harsh’ or ‘enhanced’; from Gitmo detainees; from a huge bureaucratic apparatus of surveillance and eavesdropping. In other words, from a Global War on Terror infrastructure that critics, including Barack Obama himself, deplored as a tragic detour from American rectitude.

“It was all not just un-American, now say the revisionists, but also unnecessary.

“Really? We could never have pulled off the bin Laden raid without a major military presence in Afghanistan. The choppers came from our massive base at Bagram. The jump-off point was Jalalabad. The intelligence-gathering drones fly over Pakistan by grace of an alliance (unreliable but indispensable) forged with the United States to fight the war in Afghanistan….

“Bin Laden declared war on us in 1998. But it was not until 9/11 that we took him seriously. At which point we answered with a declaration of war of our own, offering the brutal, unrelenting and ferocious response that war demands and that police work prohibits….

“You want to say we’ve now won the war? Fine. It’s at least an arguable proposition. After all, the war on terror will end one day, and we will return to policing the odd terrorist nut case. I would argue, however, that while bin Laden’s death marks an extremely important inflection point in the fight against jihadism, it’s far too early to declare victory.

“Now, it is one thing to have an argument about whether it’s over. It’s quite another to claim that our reaching this happy day….has nothing to do with the war on terror of the previous decade. Al-Qaeda is not subsiding on its own. It is not retiring from the field, having seen the error of its ways. It is not disappearing because of some inexorable law of history or nature. It is in retreat because of the terrible defeats it suffered once America decided to take up arms against it, a campaign (once) known as the war on terror.”

Michael Young / Daily Star (Lebanon)

“Who truly regrets the assassination of Osama bin Laden? There are those of us who never saw the al-Qaeda founder as an avatar of Arab frustration and humiliation. We still believe that the 9/11 attacks had nothing to do with Palestinian suffering or American imperialism, and everything to do with rational criminals striving to execute what they imagined would be the most aesthetical of mass murders.

“However, there is something deeply disturbing in watching the United States applaud Osama’s elimination as the cornerstone of a national reawakening. A killing, no matter how justified, is still just a killing. Surely America can offer much more, particularly at this verge moment in the Middle East when protesters are looking to establish open societies, and are being gunned down as a consequence.

“Unfortunately, the greater likelihood is that with bin Laden out of the picture, President Barack Obama may have found the near-perfect excuse he seeks to involve the U.S. less in regional complications. Even before his political campaign to become president, Obama’s narrative was that the attacks against New York and Washington imposed, primarily, a counter-terrorism response, making President George W. Bush’s war in Iraq, with its nation-building component, the wrong war, in contrast to the right war in Afghanistan.

“Obama has vowed to start a military drawdown in Afghanistan this summer; next year he faces an election. The president will not linger among the Afghans longer than he needs to….

“Obama never bought (into the rationale that an American-dominated Iraq in the very heart of the Arab world could help transform the Middle East from within). Which is precisely why Osama bin Laden’s assassination seems so devoid of deeper significance when you listen today to American officials describing the operation in Abbottabad. Retribution came, period. But the administration has pointedly avoided associating bin Laden’s fate with the democratic rumblings in the Middle East, except to suggest that al-Qaeda, ultimately, is now a spent force in the region. Perhaps it is, but then why play up Osama bin Laden’s death with such fanfare?....

“(For) the Obama administration to view Osama as a phenomenon in isolation is, effectively, another way of declaring that the U.S. will not soon embark on a more profound meditation on liberty in Arab societies.

“But if America has nothing much to say, or do, about advancing liberty, or merely political and social pluralism, in Arab societies, then where does its comparative advantage lie, in relation to Russia or China let’s say? If Osama bin Laden’s death provides Washington with a means of avoiding answering the question, it will have been in vain. A striking security operation no doubt, but also one that is as meaningless as revenge, almost by definition, generally is.”

Europe

Aside from the above discussion on the rise of the far-right in Europe, once again we saw the plight of the euro-17 nations take center stage as Portugal’s political parties accepted a $116 billion bailout between the European Union and IMF that gives Portugal until 2013 to reduce its deficit to 3% of GDP. June 5 is the general election here, the previous government having been thrown out and forced to call a snap vote because it was unable to get its economic program enacted. This time the opposition came onboard because they had no choice, or as Tony Soprano would have said, “Whaddya gonna do?”

Of course bailout programs such as this one require the approval of all 17 euro nations and there was some concern that Finland might turn it down as the nationalist True Finns negotiate for a role in a new government there.   But the Finns appear to have struck a deal where the old parliament will approve the bailout plan before the True Finns are seated in the new government, thus saving face for both. Meanwhile, Portugal needs its plan in place before June 15 in order to access cash needed to repay $5 billion in government debt. Portugal is also now being forced to sell off assets such as TAP, the state-owned airline.

But then on Friday, rumors emerged that Greece was going to abandon the euro currency and leave the union. Interest rates on Greece paper have been soaring anew this week as everyone knows there is zero hope for Greece to meet its bailout terms as structured. Tax collections are lagging way behind projections and a debt restructuring seems to be a certainty, as much as the European Central Bank says there is no way they’d allow Greece to go down this road.

Separately, in non-euro Britain, the economy there appears to be slowing rapidly, while in Germany, as well as they’ve been doing there is a growing crisis in government; as in Chancellor Angela Merkel is flailing helplessly, having lost all credibility as she flip flops like a flounder just tossed onto the beach. 400,000 protesters turned out in various rallies across the country on May Day expressing their frustrations on issues from nuclear power to the political system in general.

Mario Blejer (former governor of Argentina’s central bank) / Financial Times

“As Greece, Ireland and Portugal were unable to service their unsustainable levels of debt, a mechanism was instituted to supply them with the financing necessary to service their obligations. This financing was provided, supposedly, in exchange for their implementing measures that would make their, now higher, debt burdens sustainable in the future. Yet the mode adopted to resolve the debt problems of countries in peripheral Europe is, apparently, to increase their level of debt….

“Here is where this situation resembles a pyramid or a Ponzi scheme. Some of the original bondholders are being paid with the official loans that also finance the remaining primary deficits. When it turns out that countries cannot meet the austerity and structural conditions imposed on them, and therefore cannot return to the voluntary market, these loans will eventually be rolled over and enhanced by eurozone members and international organizations. This is Greece, not Chad: does anyone imagine the IMF will stop disbursing loans if performance criteria are not met? Moreover, this ‘public sector Ponzi scheme’ is more flexible than a private one. In a private scheme, the pyramid collapses when you cannot find enough new investors willing to hand over their money so old investors can be paid. But in a public scheme such as this, the Ponzi scheme could, in theory, go on forever. As long as it is financed with public money, the peripheral countries’ debt could continue to grow without a hypothetical limit.

“But could it, really? The constraint is not financial, but political.”

Opposition is mounting

“As in a pyramid scheme, (however), it will be the last holder of the ‘asset’ that takes the full loss. In this case, it will be the taxpayer that foots the bill, rather than the original bondholders that made the wrong investment decisions.”

Far more on this topic next time as we see what develops between Brussels, Berlin and Athens.

Wall Street

WIR 4/9/11

“Chairman Bernanke…said ‘inflation will be transitory’ and that prices ‘will eventually stabilize.’

“I’d be a hypocrite if I didn’t say I tend to agree with this. I have no opinion on gold or silver, but on other commodities, save oil (which is high for geopolitical reasons), we are witnessing an incredible bubble. My bet is the CRB Index…will still finish the year below the 12/31 close of 332. I see no reason to change my tune on that one. Why? Because I told you this last spike will indeed be the tipping point for the economy, demand will then fall, and many of the commodities in the CRB will absolutely collapse as the speculators are wrung out. In the meantime, while prices continue to rise I can look like a fool.”

It’s a long year, sports fans, and so much is going to happen both domestically and geopolitically over the coming 7+ months.

For example, as of last Friday, the above-mentioned CRB Index was at 370, well above the 332 level I say it will finish beneath. I looked very foolish. Inflation was taking off around the world, commodities were reflecting this, the dollar was cratering because the U.S. was showing few signs of getting its fiscal house in order, etc.

Yesterday, the CRB closed at 337 after one of the worst weeks in the commodities pits in years. At least for one week, and I am not doing any victory laps because, for starters, the CRB is still positive on the year, my thesis that the speculators would be wrung out did indeed prove to be the case.

Gold collapsed from a Monday high of $1575 to $1491. Silver crashed from the prior week’s $48.58 to $35.64 ($34 earlier on Friday). Oil fell from $113.78 to $97.18. Some food stocks were crushed as well, along with the likes of copper, much of it related to a stronger dollar, as well as some economic news that was far from rosy, such as a very poor ISM non-manufacturing reading for April of 52.8 when 57.4 was expected, a huge miss for this barometer. Other recent evidence, including the first quarter flash report on GDP of just 1.8%, along with potential slowdowns in the likes of China, India and Brazil, let alone Europe’s ongoing problems, are giving many pause.

But the equity market, which had been taking it on the chin, pared some of its losses on Friday as the April jobs report showed a gain of 244,000 (268,000 in the private sector), both far better than expected. So this is good. But with more people entering the job market, the unemployment rate rose to 9.0% from 8.8% and it’s possible that even as we get better jobs figures the rate will keep ticking up, which could impact consumer confidence. From an inflation standpoint, since I’ve been sanguine on the topic due to zero growth in wages, the jobs data revealed that average hourly earnings in the month rose a whopping 0.1%, hardly enough to cover rising gasoline costs.

Meanwhile, on the other issue that I criticized the president on last time, the deficits, Vice President Joe Biden, refreshed after his deep sleep at Obama’s recent budget speech, chaired a bipartisan group on the topic and it’s clear now what is going to happen. Forget Republican Congressman Paul Ryan’s detailed program. It’s a non-starter. Both sides are going to do the following. Punt!

Yup, they will reach enough of an agreement to placate both sides of the aisle, and then wait until after the 2012 elections to do the really hard stuff. In other words, Republicans won’t do anything with Medicare because they realized wimpy Americans will burn any of their representatives at the stake who mess with their cherished entitlement, while Democrats will give in on no new taxes.

As for the debt ceiling, now we’re told the Treasury Dept. can finagle things so that Congress doesn’t have to act until as late as August, rather than the May 16/July 8 set of dates. So an agreement will be reached extending the debt ceiling, eventually, this summer, and there will be some kind of agreement on the new budget, and then when placed under the microscope we’ll realize our boys and girls in Washington failed once again. They’ll talk a good game but I doubt I’ll be writing good things at the time and my forecast of a crash in the financial markets in 2012 will remain in place.

There is one hope. The Gang of Six (3 Republicans, 3 Democrats) in the Senate that is working on their own plan, but I’m not holding my breath, as much as I admire their work that I’ve seen thus far.

Street Bytes

--Stocks slid on economic fears and the noted collapse in the commodities markets with the Dow Jones losing 1.3% to 12638 after running up nearly 4% the previous two weeks. The S&P 500 lost 1.7% and Nasdaq 1.6%.

--U.S. Treasury Yields

6-mo. 0.06% 2-yr. 0.55% 10-yr. 3.15% 30-yr. 4.29%

Bonds rallied big on speculation Greece may leave the EU, even as Friday’s payroll number built a case for a U.S. economy that was doing just fine.

--Editorial / Wall Street Journal

“Silver’s recent run-up is part and parcel of the commodity boom that has accompanied the Federal Reserve’s great reflation gamble. As the dollar has fallen in value, the price of commodities traded in dollars has risen nearly across the board. The world’s investors are looking for dollar hedges, and metals are always a favorite in such periods. Silver doesn’t pay interest and has to be stored, so unless you need it for a commercial use it is mainly a dollar hedge. Speculators naturally join the rush, and what goes up with irrational exuberance often comes down with a thud.

“Silver’s decline, and this week’s overall commodity correction, may thus be a useful economic warning. While no doubt the abrupt fall has caught some traders with big losses, the bigger danger is a long-term mania that leads to a far bigger misallocation of capital. This is what happened in the housing bubble, and it is what we have begun to see with the boom in such weak-dollar alternative investments as land prices, foreign currencies, and commodities, especially silver and gold.

“Betting on such investments is risky business and may end up unhappily. But such speculating, such boom and bust, is what happens when no one trusts the value of a fiat currency run by a wide-open Federal Reserve.”

--The Mexican central bank bought nearly 100 tons of gold in February and March, as reported by the Financial Times, the latest emerging market country to turn to bullion as a means of diversifying away from the falling dollar. At least they are still up on this position.

--Treasury Secretary Timothy Geithner said the Chinese yuan has risen about 5% against the dollar since last June and suggested Beijing understands it must let it rise more to right inflation.

“Fundamental forces are now operating in an overwhelming direction of encouraging China to let the exchange rate move more rapidly in response to market forces.”

Separately, Commerce Secretary Gary Locke, in an unusually bold statement for him, said China was frequently shutting Americans out of some industries but that Chinese companies were only blocked in a few cases in the U.S. over national security concerns.  It’s an unequal partnership, as Locke put it, an “imbalance of opportunity.”

--According to a report by the Boston Consulting Group, the U.S. is in the midst of a manufacturing renaissance that by 2015 will once again see the U.S. slightly ahead of China as a base for making many of the goods destined for sale in North America. Rapidly rising wage growth in China is reducing the incentive to base production there, other than for Chinese domestic consumption.

China, though, would remain number one overall in the world because of the need for goods by both Chinese industry and the consumer.

Last year, China accounted for 19.8 percent of world manufacturing output, according to IHS Global Insight, ahead of the United States’ 19.4%. In 1990, China accounted for only 3% of the total.

--Portugal’s bailout interest rates are reportedly going to be 3.25% the first few years of their loan package and then 4.25% afterwards. Greece’s rates are currently set at 3.5% and 4.5%. But Ireland’s average 5.8% so you can understand why the Irish are saying, “Hey, what the [heck]!”

--As commodities crashed this week, it only seems appropriate that Swiss-based industry king Glencore would go public in an IPO (the largest ever in London) valuing the firm at some $60 billion.  The trading firm’s CEO, Ivan Glasenberg, will be worth about $10 billion. For three decades, Glencore operated as a closely held partnership.

--General Motors saw U.S. sales rise 26% in April compared to year ago levels, Ford’s rose 16%, Kia Motors hit a record for monthly sales with a 57% increase, Hyundai had its best April ever, up 40%, Honda’s rose 10%, and Chrysler’s up 22.5%. But Toyota’s rose just 1%.

[GM reported a very nice profit of $3.37 billion for the quarter, while Chrysler reversed its losses of a year ago to post a gain of $116 million, though these could be the high-water marks for both in 2011.]

--Standard & Poor’s said the Irish property market was coming to the end of a “correction” in prices, but would scrape along the bottom for some time.

“Correction”?! What, are these guys nuts? It was a freakin’ CRASH! One of the problems with S&P’s call is that they say prices only fell 33% on average when any sane analyst would say it’s 50% and more. Prices are back to 2000 levels, at best.

--An independent study of California’s five biggest pension funds found that they only had enough money to cover 61% to 74% of their obligations to current employees. The nonprofit California Foundation for Fiscal Responsibility warns that pension benefits would need to be reduced 25% to 40%.

Of course labor unions are none too pleased and as the Los Angeles Times notes, “a costly and bruising ballot fight over retirement funding” looms. In a survey by Times/USC last month, 68% approved of raising the amount of money government workers should be required to contribute to their retirement. A study by Capitol Matrix notes that benefits are now two to three times larger for public employees than for private sector ones.

--The U.S. Senate referred Goldman Sachs to the Justice Department and the SEC for misleading clients about mortgage-backed securities. Democrat Carl Levin (Mich.) and Republican Tom Coburn (Okla.) are spearheading the drive, previously made public by their committee a few weeks ago. Goldman denies it misled anyone.

Separately, the Justice Department sued Deutsche Bank and one of its mortgage units for more than $1 billion for allegedly lying to qualify thousands of risky mortgages for insurance by the Federal Housing Administration.

--Warren Buffett harshly criticized David Sokol for violating company trading policy with regards to his position in Lubrizol, later acquired by Berkshire Hathaway at a nice premium, labeling Sokol’s actions “inexplicable and inexcusable.” Buffett told his annual gathering of shareholders, “(Sokol) violated the code of ethics.”

--This is ironic…because of the rise in Brazil’s currency the real against the dollar, and the high price of sugar, it has been cheaper for the country to import U.S. ethanol (though the percentages are small thus far). Nonetheless, the success of the U.S. industry puts added pressure on government to eliminate state subsidies.

--Intel claimed the biggest advance in microprocessing design in more than 50 years and will soon begin producing a revolutionary 3D technology that has been a decade in the making. Intel’s breakthrough involves producing complex three dimensional transistors on chips, rather than in flat structures like a sheet of paper. For starters, the new chips will be far more energy efficient.

Coincidentally, this week Applied Materials, which supplies Intel with manufacturing equipment, announced a $4.9 billion purchase of Varian Semiconductor Equipment at a 55% premium to Varian’s closing price on Tuesday. If you were a Varian shareholder, the odds are good you are treating the family/mistress/boy toy to premium lager this weekend.

--Gambling revenue in Macau rose another 45% in April from year ago levels. This is a terrific barometer on the strength of the Chinese economy, even if Macau is drawing on a very limited slice of the Chinese mainland. If I saw revenue slow considerably and approach single digits, that would be a huge warning sign but that doesn’t seem likely anytime soon. Revenues rose 58% for all of 2010 and were up 48% in both February and March. An analyst for RBS told the Wall Street Journal he expects 29% growth for 2011.

--Renren, the Chinese social network site with 117 million members can’t compete with 500 million-plus Facebook, but Renren’s IPO this week on the New York Stock Exchange was priced at $14 and rose to $24 before closing the first day at $18 ($16.80 to finish the week); perhaps a potential harbinger of things to come when Facebook goes public.

[Overall, China has 457 million Internet users as of the end of 2010 and half use social-networking sites.]

--AOL said first quarter net income plummeted as revenue fell 17% on a drop in advertising and subscription revenue.

--Sony had to admit hackers, apparently from the group Anonymous, breached its security for a second time in a month with more than 100 million customer accounts now compromised in some fashion, though it tried to convince users only about 23,000 may have had their credit card data stolen.

--Online shopping grew at its fastest rate in nearly four years in April as a result of higher oil prices, jumping 19% over April 2010, according to the SpendingPulse survey.

--Damage from Alabama’s tornadoes could approach the state’s record of $2 billion from Hurricane Ivan in 2004. 38 of the state’s 67 counties have been declared as disaster areas.

--New York City Mayor Michael Bloomberg stirred up some controversy when he selected Nissan Motor to supply Gotham with the next generation of yellow taxis in a deal estimated at $1 billion. I like what I saw of the model. Each will come with an overhead window to view skyscrapers and pigeons, plus there will be charging stations for mobile phones, a neat touch.

The taxis will be built in Nissan plants in Mexico, so critics ask why didn’t Bloomberg select a vehicle made in the U.S.? Hey, it was the cheapest and most fuel-efficient model.  

--It would be very difficult to extrapolate from what I saw during my week in Paris concerning the local economy and then draw nation-wide conclusions, but here’s a fact. I was all over the city, both on foot and by taxi, and I saw a total of three…three…empty storefronts and they were all lined up together in a less than great area. Pretty remarkable.

--U.S. genome researchers have determined that the first rice was cultivated in China’s Yangtze River valley about 10,000 years ago. Somewhere Uncle Ben Wang is smiling.

But the announcement from scientists at New York University, Stanford, Purdue and Washington Univ. has really ticked off India, which says, Uncle Wang didn’t invent rice, Jashri Singh did. [South China Morning Post]

--We’re going to need a lot of rice, by the way, if the United Nations is correct in saying the population of the world will keep growing and hit 10.1 billion by the year 2100, long after I’m gone (not to make this about me). Growth in Africa means the population there could grow from today’s one billion to 3.6 billion.

Now just where that continent is going to get water for all these folks isn’t my problem, but it will be someone’s.

Currently, the world population is expected to pass 7 billion in late October, during the World Series, not that these two topics are interrelated either. It was 6 billion just 12 years ago.

[One place that our grandchildren will be watching is Nigeria, which is projected to see its population rise from 162 million to 730 million by 2100. Another, Malawi, about half the size of Florida, just glancing at my world map, and between Tanzania, Mozambique and Zambia, is projected to grow from 15 million to 129 million. Good lord.]

--Of the 19 Nasdaq stocks currently suspended from trading, 15 are Chinese. Needless to say, suspicions over Chinese operations and accounting aren’t helping my own large holding there. The company should be reporting earnings this coming week and I’ll comment next time.

Foreign Affairs, Part Deux

Israel: After feuding for four years, one controlling the West Bank, the other Gaza, the Palestinian Authority and Hamas agreed on a reconciliation plan with the view of holding consolidated elections in a year. In doing so, the PA didn’t ask Hamas to acknowledge Israel’s right to exist. PA leader Mahmoud Abbas is thus giving up on U.S.-brokered peace talks with Israel and betting he can gain for the Palestinians formal recognition in the United Nations General Assembly instead. At the same time, Egypt promised to open up the border with Gaza, allowing a far freer flow of people, goods and weapons.

Israeli Prime Minister Benjamin Netanyahu called the Hamas-PA agreement “a tremendous blow to peace and a great victory for terrorism.”

But the quartet – the United States, U.N., European Union and Russia – have all said Hamas must renounce violence and recognize Israel’s right to exist before there could be any support for the new power-sharing arrangement. Netanyahu secured the individual support of Britain and France this week, while Secretary of State Hillary Clinton said:

“We’ve made it very clear that we cannot support any government that consists of Hamas unless and until Hamas adopts the Quartet principles.”

Netanyahu added:

“Just like any fair minded person, Israel can only make peace with those who have abandoned the goal of destroying Israel.”

Ted Koppel, in an op-ed for the Wall Street Journal, on various issues confronting Israel.

“Hearing Israeli leaders express grave concerns about Iran and its nuclear potential is nothing new. What is new is a growing worry that America’s adversaries will be less inclined to take warnings from Washington seriously. Each week that passes without the overthrow or elimination of Moammar Gaddafi is perceived in Jerusalem as emboldening the leadership of Iran and North Korea. ‘Imagine,’ one source told me, ‘how Gaddafi must be kicking himself for giving up the development of Libya’s nuclear program.’….

“With almost no margin for error, the Israelis have long been among the world’s foremost pragmatists. While I was in Jerusalem, events in Syria were coming to a boil. Since the Syrians are closely allied with Israel’s bitterest enemies – Hizbullah in Lebanon and Hizbullah’s main sponsor, Iran – one might expect Israeli leaders to take some comfort in seeing the regime of Bashar Assad in trouble. But here, too, the Israelis are far more comfortable with stability on their borders. Assad, like his father before him, has maintained an uneasy truce along Syria’s border with Israel, despite Israel’s continued occupation of the Golan Heights.”

Speaking of Syria, the government has been sweeping some of the cities, arresting as many as 8,000, according to various reports, while the death toll continues to rise, including another 40 on Friday. The protesters, though, are continuing to stand firm but there is no single opposition leader to rally around which hurts the movement.

Editorial / Wall Street Journal

“Bashar Assad’s regime has murdered at least 500 Syrians, and perhaps hundreds more, in putting down its democratic uprising. So what does the United Nations do? Nothing, except hold out the prospect of a seat on its Human Rights Council for the Syrian regime….

“Mr. Assad remains a rogue in good standing with Moscow and Beijing, and he has nothing to fear from the Security Council….

“Syria’s stature at the U.N. hasn’t suffered. The Arab League last week supported Syria’s bid to join the Human Rights Council, following the U.N.’s Asia group. A General Assembly vote is due next month, and on current trend Syria will take its seat on the body that purports to monitor the depredations of the world’s rogues. If the regime kills more Syrians, maybe it’ll become chairman.”

Libya: After the attempted assassination of Moammar Gaddafi, loyalists torched the British and Italian embassies in Tripoli, though the sites had been evacuated. Misrata was also pounded anew, adding to the suffering in that hellhole.

In two positive developments, Turkish Prime Minister Erdogan added his voice to those calling for Gaddafi’s ouster, while NATO has agreed to use some of Gaddafi’s frozen funds for humanitarian assistance.

Egypt: The Muslim Brotherhood previously said it only wanted to control 30%-35% of the seats in parliament following this September’s election, but they now say they will contest 50% of the seats and I still say they’ll end up with a de facto majority. The Brotherhood also called on the United States to leave Iraq and Afghanistan now that bin Laden has been killed.

Lebanon: Still no government after a three-month long stalemate. Pathetic. The holdup is the Interior Ministry portfolio, with both President Michel Sleiman and leader Michel Aoun desiring it.

Even Parliament Speaker (and Hizbullah sympathizer) Nabih Berri described the situation as “appalling.” He also denied the delay in forming a government is linked in some way to the upcoming indictment in the assassination of former Prime Minister Rafik Hariri. 

Speaking of which, a new indictment was filed on Friday, including “substantive new elements,” and replaces the previous one, according to the office of the prosecutor of the Special Tribunal for Lebanon. It remains confidential and has to be examined and confirmed by a judge before being released. Members of Hizbullah will be implicated and upon the unsealing of the indictment, all hell will break loose, but this could still be months away.

Separately, there has been no progress in finding the seven Estonian tourists kidnapped in the Bekaa Valley. Imagine the frustration in little Estonia, where this is no doubt the big news item of each day. It is believed they were taken into Syria.

Yemen: On Thursday, the U.S. just missed killing Anwar al-Awlaki, the American-born al-Qaeda in the Arabian Peninsula leader, in a drone strike but he evaded it. That would have been awesome, but he’s now obviously on the run big time. Yemeni President Saleh, who reneged on a deal to give up power, is supposedly feeding the U.S. information on the terrorist in an effort to gain Washington’s support.

Iraq: Since bin Laden’s death there has been a spasm of al-Qaeda-inspired violence here with over 50 being killed in various suicide attacks between Tuesday and Thursday, 29 policemen becoming victims in the largest car bombing. Otherwise, things are just hunky-dory. 

North Korea: Amnesty International is reporting that the North’s political prison camps are growing in size, utilizing published satellite images. AI says that new witness testimony also sheds light on torture, starvation and mass executions of inmates. Pyongyang has long denied the existence of such camps, where prisoners are often forced to eat rats and pick kernels of corn out of animal waste.

Japan: Workers entered one of the reactor buildings at the Fukushima nuclear plant for the first time since March 11.   Work is taking place in small groups to install ventilation systems to filter out radioactive material from the air. Tokyo Electric Power Co. then hopes to install a new cooling system.  Meanwhile, highly radioactive waste-water continues to leak from one of the other three troubled reactors. The death toll, including the missing, is 25,000.

Canada: In a stronger than expected showing, Prime Minister Stephen Harper’s Conservative Party beat back a challenge in the country’s general election, taking 167 seats to win a majority in parliament, while the New Democratic Party became the official opposition in winning 102 seats. Canada’s Liberal Party took only 34 (down from 77), the worst defeat in its history and party leader Michael Ignatieff resigned. Ignatieff blamed Conservative attack ads, though he even lost his own seat in a suburb of Toronto.

As for Harper, who took office in 2006, for the first time he leads a majority government. This is good for America. Harper is a terrific ally and hopefully he’ll continue to pump more into Canada’s defense, which only helps the U.S.

Random Musings

--Editorial / New York Post

“It sure didn’t take long for the fretting over the circumstances of Osama bin laden’s inglorious departure to move to center stage.

“The official story has been in motion almost from the start, each succeeding version more sympathetic to bin Laden than what came before, with the usual suspects muttering in the background about ’human-rights violations.’

“First there was a firefight.

“Then bin Laden was unarmed.

“Yesterday, one report described him as ‘confused’ and ‘fearful’ in his final moments.

“What’s next – he was reading to blind people and holding a litter of kittens as the SEALs burst through his door?

“Fact is, the White House has done a shockingly poor job of establishing a credible line and sticking with it.

“That line should have been aggressive and unyielding.

“Bin Laden was unarmed?

“So what? So were the victims of 9/11….

“Bin Laden engineered 9/11 to make a point; in that, he succeeded.

“And now he is dead, under circumstances that suggest America intended to make a point of its own.

“Also successfully.

“Nothing else matters.”

--Peggy Noonan / Wall Street Journal

“Let’s start with credit where it’s due. The U.S. Navy Seals did it and deserve our profound thanks and deep admiration.

“It was President Obama who told CIA chief Leon Panetta: Get this guy. When presidents insist, the guy tends to get got. It was Mr. Obama who made the decision not to bomb the house with predators or B2s, because that way we wouldn’t have known if we’d got Osama. It was Mr. Obama who decided to do it the hard way, the way that would allow us to know we’d succeeded. It was Mr. Obama who’d have taken the blame if the operation had gone wrong, and things like this are tricky and often go wrong because they have a thousand moving parts and almost every part has to move right. And it’s not as if the president was operating from a position of political strength. It was Mr. Obama who, having made the decision, apparently didn’t micromanage. He did his job and let the military do theirs….

“It was well and brilliantly done. It reminded the world that American might can be wielded with American competence. It highlighted the brilliance of the U.S. military when it is given clear goals and full resources….

“Osama’s importance is that he was the leader of al-Qaeda, but his mystique resided in the fact that he attacked America and got away with it….He was invincible, the ‘strong horse.’ This gave him charisma, which he used to rouse and recruit the young, the ignorant and the unstable.

“That’s over now. He has been answered….
“Is the world safer with bin Laden dead? Who knows. But it is better.

“However, and with our president there is always a however, he has spent almost every moment since his Sunday night speech displaying both a tin ear and a chronic tendency to misunderstand his own country. His refusal to release more evidence that Osama is dead is allowing a great story to dissolve into a mystery. He is letting a triumph turn into a conspiracy theory.

“Here is the fact of the age: People believe nothing. They think everything is spin and lies. The minute a government says A is true, half the people on Earth know A is a lie. And when people believe nothing, as we know, they will believe anything. We faked the moon landing, there was a second gunman in Dallas, the World Trade Center was blown up in a U.S.-Zionist conspiracy, Hitler grew old in Argentina….

“Mr. Obama misunderstands all this. He tells Steve Croft Sunday on 60 Minutes that showing photos of the dead Osama would be to ‘spike the football.’ ‘We don’t trot this stuff out as trophies.’ Trophies? Who does he think we are?

“It’s not about pride, it’s about proof. ‘We got him, shot him and immediately threw him in the sea’ is not enough. The U.S. government should release all the evidence it has that does not compromise security….And let the SEALs tell their story…If they cannot be identified or don’t wish to be, put a blue dot over their faces, filter their voices, and don’t use their names….

“Americans don’t want to spike the ball. They just want to show they crossed the goal line.”

The other side…Editorial / New York Post

“The conspiracy theorists will never be satisfied, and the downside of such a release (of the photo) looms large.

“And not just because, as Obama put it, the photo could be used as an ‘incitement to additional violence or as a propaganda tool.’

“What it boils down to is a matter of simple human decency.

“As House Intelligence Committee Chairman Mike Rogers said yesterday: ‘Imagine how the American people would react if al-Qaeda killed one of our troops or military leaders and put photos of the body on the Internet.’

“His point was clear: Americans have been treated like trophies of war before – when U.S. troops were killed in Mogadishu in 1993, their bodies stripped naked and dragged on ropes through the streets, and when military contractors were mutilated, burned and hanged from a bridge in Fallujah in 2004.

“This is not to suggest for an instant that bin Laden’s fate was in any way comparable to what happened in Mogadishu and Fallujah. He deserved exactly what he got, and probably more.

“And, again, let’s be clear on this: We could not possibly care less about offending the tender sensibilities of radical Islam.

“But neither should the United States be following the Islamists’ example.

“ ‘We don’t trot out this stuff as trophies,’ Obama said.

“That’s exactly right….

“The photo may soon be leaked or be made public, thanks to Freedom of Information Act requests.

“But for now, bin Laden has been denied his last moment of limelight – killed in the dark of night, interred in the North Arabian Sea.

“Obliterated. As he should be.”

[Ed. Of course the above debate one would hope should largely become moot now that al-Qaeda itself has admitted bin Laden is dead.]

--At the first Republican presidential debate, five lesser-known rivals tried to hit President Obama on foreign policy days after the raid to kill bin Laden and while I stated my own case above, of course for now the arguments ring hollow because the focus isn’t on the likes of Syria, as it should be. Also, missing from the debate were Sarah Palin, Newt Gingrich, Mitt Romney, Mike Huckabee and Donald Trump. Former Minnesota Gov. Tim Pawlenty sought to distinguish himself from the crowd but apparently failed to do so.

In a Quinnipiac University poll released May 4, Romney leads the pack at 18%, followed by Huckabee and Palin with 15% and Trump at 12%. [Paul 5%, Pawlenty 4%...just a pathetic lineup.]

--As for President Obama’s prospects for 2012 given his huge coup, every schoolchild knows their history by now on this front. President George H.W. Bush had a 90% approval rating after the 1991 Persian Gulf War and he still lost the election. A lot can happen and the state of the economy come November 2012 will of course be paramount in voters’ decision-making process.

--President Obama’s approval rating rose to 69% among New York City residents this week, up 10 points from the last NY1 / Marist survey. A Washington Post / Pew Research Center poll found that 56% of Americans approved of Obama’s job performance in a survey conducted Monday night, up from 47% last month.

--Republican strategist Karl Rove had a piece in the Journal explaining the 2012 electoral map and how Republicans are still in a good position to win, with the election to be decided in 14 battleground states; Florida and Ohio once again looking critical. Also, according to CBS Radio’s Mark Knoller, since January, Obama has made 40 stops in 15 states. Twelve stops were in battleground states and of the remaining 28 events, 15 were fund raisers in “treasure houses” like New York City, Los Angeles and San Francisco.

All well and good, but as Rove and any Republican knows:

“This election is within the GOP’s grasp. The quality of the Republican candidate’s campaign and message will decide whether it becomes so.”

--Interesting case in France these days concerning the discovery of the wreckage of the Air France flight that plunged into the Atlantic in 2009, killing 228 people. Incredibly, at a depth of 2.4 miles, mini-submarines found the black boxes, including the flight recorder (being analyzed) and the first body has been brought up (initially 51 were found floating on the surface).

So the issue is, if you’re a relative do you want the body being brought up or left there? They appear to be split 50/50 on the matter. The first one raised, for example, was just skeletal remains, still strapped to a seat.

--The National Oceanic and Atmospheric Administration says that the recent tornado outbreak was probably the largest in U.S. history with an estimated 305 twisters. April had more than 600 and the previous record was 267 set in 1974. 881 had been formed through April for the year and the annual record is 2004’s 1,817. May, we’ve learned, is normally the most active month.

--Leaders of various branches of the Apache Tribe are asking President Obama for an apology for the government’s use of the code name “Geronimo” for bin Laden. Can’t say I blame them on this one.

--Good potential news for sharks. Researchers from the Australian Institute of Marine Science found that diver tourism in the Pacific nation of Palau to dive with recently protected sharks (a 2009 sanctuary was established there), contributes 39% of the country’s GDP, and 21% of divers chose their vacation to Palau specifically to see the sharks. Each of the 100 sharks there that inhabit the prime dive area has a lifetime value of $1.9 million. “Sold in pieces for their fins and meat, those same 100 sharks would be worth an estimated $10,800 total, the researchers estimated,” so this should help promote ecotourism elsewhere. [Herald Tribune]

--Golfer Seve Ballesteros died after a long battle with brain cancer. He was just 54.

--Finally, on Friday, Willie Mays, one of the top three all-around players in baseball history, turned 80.  Happy Birthday, Willie!

---

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

God bless America. God bless the Navy SEALs.
---

Gold closed at $1491
Oil, $97.18

Returns for the week 5/2-5/6

Dow Jones -1.3% [12638]
S&P 500 -1.7% [1340]
S&P MidCap -2.6%
Russell 2000 -3.7%
Nasdaq -1.6% [2827]

Returns for the period 1/1/11-5/6/11

Dow Jones +9.2%
S&P 500 +6.6%
S&P MidCap +9.0%
Russell 2000 +6.3%
Nasdaq +6.6%

Bulls 54.9
Bears 16.5 [Source: Chartcraft / Investors Intelligence]

Dr. Bortrum posted a new column.

Have a great week. I appreciate your support.

Brian Trumbore