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For the week 12/27-12/31
Happy New Year!
The Weather…Wall Street…A Look at 2011
Last Tuesday, Dec. 21, the weather forecast in these parts was for a storm Christmas Day night that would probably miss New York City and west, giving Long Island a glancing blow. By Wednesday, forecasters realized that the storm, if it did hit the New York metro area at all, would come on Sunday, Dec. 26. But by Friday, it began to appear as if New York would get some snow, maybe 4-8 inches. So that was the deal as we all scurried off to Christmas Eve festivities. [Meanwhile, the storm was beginning to do a number on the South.]
On Saturday morning, Christmas Day, the forecast had changed considerably. A Winter Storm Watch was in effect for Sunday…maybe 6-10 inches in my area, about 20 miles west of New York City as the Canada Geese fly, starting around noon. I hosted Christmas at my place Saturday afternoon/evening and around 6:00 p.m. went to the computer just to check the latest weather forecast. It turns out two hours earlier the National Weather Service had issued a Blizzard Warning for Sunday. “11-17 inches” with winds 30-50 mph. I had my nephew Doug read the dire news to the group and we all agreed that Julie, who was due to fly back to Louisiana on Monday, was going to be sticking around a bit longer. Once the NWS gets to issuing blizzard anything, it almost always pans out.
On Sunday morning around 11:00 a.m. the snow began to fall. I had to drop some leftovers at my brother’s the next town over and our main concern was when the liquor stores opened because we were both out of beer and there was some good football to watch that day. “Noon?” “Yeah, noon.”
At noon as the snow was slowly gathering pace, I hit the liquor store and of course every single beer and wine drinker in the county had the exact same idea. Get it now…this could be our last chance until spring.
So I got my domestic and was back snug in my place by 12:30, ready for Jets-Bears and snow watch out the window…and through the Weather Channel’s radar. I’m a weather nut so in my office here I have the ideal setup of TV on one side, computer on the other, and as the Jets and Bears went up and down the field in Chicago, I could see the bands of snow lining up to hit New York and my county, Union. And from about 3:00 p.m. to at least 11:00 p.m. they kept coming and coming. ‘Huh,’ I mused. ‘This really is a biggie. Glad I don’t have to shovel it.’ [One of the joys of apartment living.]
Meanwhile…over in Gotham…the Big Apple…the Center of the Universe…New York, New York…we’ve now learned that city officials, from Mayor Michael Bloomberg on down, treated the Blizzard of 2010 as just another 4-8 inch storm to be enjoyed and marveled at. Nature’s bounty. Hit Central Park and play. It’s a holiday week after all. Schools are out. Everyone can get off work if they need to. Everything is well under control, the mayor said on Sunday evening.
But the snow was piling up at historic rates…we later learned that near where I live, it was coming down at a rate of 4 ½ inches an hour during one stretch. Consistently at 2-3.
And that’s why when we all awoke from our dreamy sleeps on Monday morning, we looked outside, blinked our eyes, and thought, ‘Holy [Toledo]! That’s a lot of snow!!!’
It was also then that the earlier snow totals, for example 10 inches in Central Park, were actually 20, and that in Elizabeth and Rahway, two towns about ten miles from my place, there was 32 inches of the white stuff on the ground. Some of us who follow the news and are aware of the kinds of cuts taking place in municipal governments (the very topic I was addressing last week) quickly understood that aside from the fact this was an historic storm, cleanup could take awhile.
Ah, but not to worry said Mayor Bloomberg, flanked by the man who would love his job down the road, Police Commissioner Ray Kelly, and a total dolt, Sanitation Commissioner John Doherty. ‘Boy, that guy’s not real impressive,’ I mused upon seeing Chief Garbage.
Well, you all know the story by now and what happened next. Total chaos. It was like after a serious earthquake where you know the damage is considerable but you also know to disregard the first casualty accounts. Think Haiti. Remember the first reports that talked of 100-200 dead? Try 250,000. Remember those first reports from the Tsunami in Indonesia?
So it was on a different scale in New York. Because of the city’s incredibly lax attitude towards the storm, such as in not declaring a State of Emergency that would have shut down 300 key roads to all but essential traffic (and plows), as Monday went on we learned that over 250 city buses were stuck in the drifts, about 100 ambulances, as well as countless police cars and fire trucks, while by Monday evening there were whispers (I don’t know how Bloomberg claimed on Thursday he didn’t hear ‘em, because I did all the way in Jersey) that the Sanitation Dept., which man’s the plows, wasn’t exactly busting it. It seems these esteemed garbage collectors/snowplow operators with future giant pensions were out to teach the mayor a lesson, you see. He can’t cut any jobs during this budget crisis, let alone demote 100 supervisors as Bloomberg was slated to do to save money on Jan. 1 (but importantly at least keep their jobs!) So these [jerks], also knowing they earn double overtime on Sunday, sat in their plows (if they didn’t purposefully get stuck) and idled the engine.
As this was going on, New Yorkers, who for all their so-called sophistication also count among themselves a considerable idiot class, were flooding the city’s 911 system with the 4th-highest call volume in history, asking why their street hadn’t been plowed yet, when the city has a 311 system in place to handle just those types of non-emergency calls. And so it was we learned a few days later that at least two, possibly three, deaths can be attributed to the dual fact that the victim’s families couldn’t get through to 911 and then when they did, the EMS and/or fire and police couldn’t get through the snow to help.
It’s important to note that through the crisis, and believe me, it was a major crisis that could have had even more cataclysmic consequences (think terrorists finally understanding that this is the primo time to unleash their plots, when the city is already shut down…think dirty bomb), by all accounts New York’s police, fire and EMS workers did the best they could. Some of the scenes that they faced, when they finally arrived, were tragic beyond words, such as the woman forced to deliver a baby in a lobby and the baby then dying.
Oh, this storm will reverberate for years to come. And you know that public vs. private debate of mine from last week? This will help increase the heat. The common refrain directed at Mayor Bloomberg, who amazingly didn’t ‘get it’ until Wednesday afternoon, was “We paid our taxes…dig us out!”
And then there was my state of New Jersey. No one begrudges our wunderkind Gov. Chris Christie going off to Disney World with his family. He works his considerable butt off and this is the time of year he should be able to slip away (though I wouldn’t if I were him because of the holiday season terror threat, particularly to the PATH train system running between New Jersey and New York).
[A system that is feverishly being upgraded to include a steel wrapping because officials are concerned a large bomb going off in a train car could rip through the ancient infrastructure and flood the lines, resulting in hundreds, if not thousands, of deaths were it to occur at rush hour.]
So Christie goes off on his vacation, but he stupidly lets his lieutenant governor go on vacation at the same time to Mexico! So we’re all asking ourselves, what the hell do we have a lieutenant governor for? [Upon returning, Christie said the woman…I didn’t even know it was a ‘she’…had a long planned two-week cruise with her ailing father and it might be his last Christmas. Oh brother.]
Well this meant that the next in line to be acting governor was Senate President John Sweeney, a Democrat, and this bozo declared a state of emergency on Sunday evening, then rescinded it Monday afternoon without realizing that virtually all of hard-hit Monmouth County (down by the shore) was still impassable, particularly some major highways.
So Christie comes back from his vacation and on Friday, as I’m writing this, realized that the best thing to do was praise everyone at the state and county level (to limit the sniping), while instead going after the local mayors!
And I haven’t even begun to talk about the air transportation system. You know what happened there. Our Julie was typical, getting out on Thursday instead of the scheduled Monday.
True, most of us survived, though I’m not so sure some of the economic losses will be recouped. But here’s something no one is bringing up, even as the television stations flashed the data in front of our faces but the nudnick anchors and weather people didn’t put two and two together. This region has now had 3 of its top six all time worst snowstorms in the last five years with records going back to 1880. Yes, the climate has changed. I call it global pollution. You can call it anything you want but you don’t have to be an Einstein to see the big picture, including the historic floods this past year in China, Pakistan, now Australia, as well as devastating droughts in places like Russia, let alone the record-breaking storms of all kinds in America (including Friday’s rare tornado outburst), to know that something serious is happening.
And for the New York area, storms like this one are increasingly becoming the norm, once every two years instead of every 30 or 40. We all pay taxes. We all elect officials to then run government and perform the services we expect them to. And, once again, the above just proves how unprepared for the unthinkable we are. Not a great way to finish the year for many in the area. You can bury your head in the snow, or you can hold your elected officials accountable (which is where a free press comes in), and to start out, Mayor Michael Bloomberg in turn must go after the sanitation workers who treated their fellow New Yorkers like chumps. Lock ‘em up. Better yet, throw them in a fetid dumpster filled with rats.
As to the final week of the year on Wall Street, stocks finished mixed (the S&P and Dow up fractionally, Nasdaq down 0.5%) as Thursday and Friday’s action was disappointing after an excellent Chicago Purchasing Managers Index reading of 68.6, the best since July 1988! Plus the early numbers on the Christmas shopping season were good, with MasterCard’s Spending Pulse reflecting a 5.5% increase for retailers, while two readings on online shopping for the season beginning Nov. 1 were up 13% and 15%. Personally, though, I like to wait until the National Retail Federation’s final review of the action. I was not a doom and gloomer this go ‘round, even though I myself made but one trip to the mall, an advantage of buying gifts while traveling.
But the week also saw more dismal news on the housing front, this time from the S&P/Case-Shiller index, with S&P’s David Blitzer saying there is “no good news” and there is increasing talk of a double-dip next year. I’m not so sure, but my initial prediction from way back in the fall of 2008 that we’d bottom in the April-May 2009 time frame and then just sit there continues to look like one of my better calls.
This final week was also dominated by talk of China, with the government choosing Christmas Day to hike its key lending rate to 5.81% (and the savings deposit rate to 2.75%, which many of us would kill for here in the States). It’s about inflation and continuing efforts to tamp it down from the November consumer price reading of 5.1%. Premier Wen Jiabao took to the state airwaves on Sunday to tell the people:
“We have raised the reserve requirement ratio for six consecutive times and increased interest rates twice to absorb excess liquidity in the market to keep it at a reasonable level to support economic development.
“I believe we can keep prices at a reasonable level through our efforts. As a major leader of the government, I have the responsibility and I have the confidence, too.” [South China Morning Post]
But a state editorial commented on the property bubble, which I have maintained the government will be able to handle without too much of a problem, even as it’s clear most prices need to decline 20%. Much more than that I concede turns it into a bigger issue.
“To rebalance the economy, China must constrain real estate lending and overall liquidity. Policymakers are raising interest rates, making debt more expensive. They are requiring higher down payments, forcing buyers to borrow less. These steps make sense. Also prudent is the central bank’s decision to boost reserve requirements for lenders, which will rein in credit growth. To stem capital inflows and speculation, China is restricting property purchases by foreigners.
“The question is not whether the government is using the right levers to control liquidity but whether they are pulling them hard enough. The voices of skeptics are growing louder, with many insisting that a collapse has become inevitable. If the property market seizes up, banks will experience sluggish loan growth and escalating defaults. Revenues will dive in such businesses as construction, development, steel, glass, and cement. Consumer confidence will erode. The entire economy will shudder. Construction has been powering much of China’s expansion, and Harvard economist Kenneth Rogoff reckons GDP growth could sink to two percent without the current real estate buoy. A sharp slowdown in China could bring about a double-dip recession in the global economy, which would hurt China further in the form of lower exports. A bursting Chinese property bubble would certainly echo around the world.
“Officials are hesitating to squeeze credit further for fear of going too far. They recognize that lowering the temperature of the property market will cool the whole economy. For two decades, the central government has fought to maintain at least 9 percent GDP growth. They have been spending and regulating to achieve that goal; however, reverse engineering like this poses risks. Markets do not perform evenly without considerable manipulation. Just ask Bernie Madoff, who struggled to uphold consistently high returns before resorting to a Ponzi scheme destined, inherently, to fail. Artificially propping up China’s real estate sector may lead to a similarly spectacular failure. Policymakers must decide whether to accept slower growth now or risk a property-led recession in the years ahead.
“By the time of the 2012 Spring Festival Gala, we may know whether the central government has the ability to resolve to steer the economy clear of trouble.” [Global Times]
Again, that was a state editorial. Certainly sobering, and I think we’ll be able to gauge success or failure long before next spring.
The Chinese government is also deathly afraid of the rising income gap and it is now requiring the largest state-owned enterprises “to pay larger dividends to the state next year to help rebalance the economy and funnel more money into the country’s underfunded public services.” [Financial Times] China also hiked pensions 10%, while Beijing was among the local governments (if you can call a government presiding over 20 million local) to hike the minimum wage, in their case another 21%. President Hu Jintao, not the touchy feely leader that Premier Wen is, went into a poor neighborhood in Beijing on Friday to show his human side and how the government is going to help, particularly with the recent bout of food inflation. China certainly has the funds to make a big difference, but many of the moves will hurt corporate profits, which as a major shareholder in China myself I have a rather vested interest in.
Shortseller Jim Chanos has argued China is on a “treadmill to hell.” I have maintained the government will maneuver around the stormy waters with minimal damage and that the economy will continue to grow at a solid clip (at which point I know my own investment would see its fair share). But I watch, and read, everything about this place, and I’ve been there many a time and when you go you understand that for all the talk of bubbles, outside the cities this nation is far from looking like America. Oh, as Thomas Friedman of the New York Times likes to point out, China’s airports put ours to shame, and he’s right, but I’ve been on the local roads and they aren’t good. As in there is a ton more development that needs to take place in China for decades to come.
But there will also be inevitable bumps along the road and if you want to invest here, and have more than a trader mentality, you must recognize this. 2-3 steps forward, one step back.
So what did I say last year when looking ahead to 2010?
“Stocks will finish the year in negative territory…with the S&P 500 and Dow Jones down 12%, Nasdaq off 6%.”
I missed it badly. As of July 2, the S&P was off over 8% but then, following more indigestion in August, it was off to the races. I also wrote of 2010 last year:
“I fall firmly in the camp that the deleveraging process for the consumer is far from over and that spending won’t return until the job picture improves, which I just don’t see happening in any big way. I also don’t see housing coming back significantly in terms of median home prices, owing to the still serious foreclosure issue.”
“It’s a year that’s going to be dominated to a great extent by further issues on the state and local government front, as in revenues won’t nearly meet expenses, which will lead to even further layoffs. The big stories are California, New York and New Jersey….
“It’s about deficits and this is an issue worldwide. 2010 is about still stagnant, if not falling, wages. This year will also see an ever-increasing anger with government and the health-care debate, and this will best be manifested in what is going to be an unruly mid-term election.”
Heck…that was darn good, too. Nailed it. But this is why I missed so badly on the return front, because my next paragraph was the following:
“2009 was about survival…2010 is going to be about shattered expectations and dreadful pictures on television that will depress the hell out of us. It’s going to be about Iran, for sure, but also a heavy dose of Pakistan as it hurtles towards collapse, with unfathomable consequences. It’s going to be about terror attacks around the globe, including a major incident in Latin America.”
Thankfully, this last part didn’t come to pass. We certainly learned, however, that in more than a few instances we dodged a bullet, or exploding canisters of fertilizer and pellets. Recall that last year at this time we were dealing with the failed attempt to take down the jet by the underwear bomber.
A recent New York Times piece (if I remember right by Paul Lim) had some comments from leading economists that pretty well summed up the year ahead and the two camps. Mark Zandi predicts that the economy will be “off and running.” “The policy response, in its totality, has been very aggressive, and I think ensures that the recovery will evolve into a self-sustaining expansion early in 2011.”
Economist Robert J. Gordon of Northwestern University, on the other hand, “cautioned against excessive optimism, noting the huge burdens on state and local governments, rising costs of health care and other long-run fiscal challenges. ‘The rise of the stock market is mainly because there are no other good investments in sight, not because the stock market has some unique talent in predicting what’s wrong with the economy.’”
N. Gregory Mankiw, who was chairman of the White House Council of Economic Advisors under George W. Bush and is now a Harvard economist, said that “anything that spooks consumers and businesses from spending” could threaten the recovery, including “a worsening of the fiscal crisis in Europe or the increased fear that a similar crisis will soon infect U.S. cities and states.”
Well, I agree with all three of the above. I also stick to my guns in that it’s all about jobs and housing, first and foremost, and, importantly, sentiment, which almost everyone ignores but which as you can see above Mr. Gordon and Mr. Mankiw clearly factor into their own calculations. What can possibly change sentiment? We’re feeling pretty good now, and there is a heckuva stimulus program about to kick in with the payroll tax cut and certainty on overall tax rates for two more years, plus if you’re unemployed you have extended benefits, which is a good thing for you and you’re likely to put it right back into the economy. True, it’s another $858 billion tacked onto the federal deficit, but What Me Worry?
For now, here are some bullet points and I will expound on some of them next week (I’ve realized over the years the yearly outlook is inevitably a two-parter).
I believe stocks will finish down 5-7% in 2011. As you know, I don’t allow myself the luxury of changing my forecast in midstream, though of course I can change the tone. And so I won’t be the least bit surprised if at some point in the first half in particular the market is up substantially owing to the stimulus. It would also be a real shot in the arm if the new Congress and President Obama got together on deficit reduction. Sending a message that both sides are serious, I commented the other week, could cause stocks to soar and I still believe this.
But I also believe the negatives will eventually overwhelm the positives by yearend. I believe the European debt crisis is with us well into 2012 and I can guarantee you that Ireland’s role is far from over; it’s bailout and recovery far from secure as it faces elections in March that threaten to be chaotic, with opposition parties wanting to reduce the harshness of the recently adopted austerity plan, which in turn means it would be in violation of the agreement reached by Ireland, the EU and the IMF for Dublin to receive its funding.
I also believe that not enough has been said on the transparency issue and European banks’ lack of same. We still really don’t know what many of the large banks’ exposures are to the likes of Spain, Portugal et al. And in the case of critical Spain, I’m amazed how some fail to see the incredible mountains of bad real estate loans there, let alone the massive corruption in the property market that accompanied the bubble.
And there are major issues concerning France, which at least in this case some recognize that it actually has a worse debt load than Spain. And watch what happens on the political front here as President Sarkozy deals with one Marine Le Pen, heir to the anti-immigrant party the National Front founded by her father, Jean-Marie. I’ve been meaning to tackle this issue in some depth and will either next week or the following one. It’s fascinating, and could spell trouble.
So, yes, I’m not taking my eye off the ball when it comes to Europe. Can David Cameron succeed with his severe austerity program without massive demonstrations? Labor is already targeting the week between Easter and the royal wedding for a confrontation. May Day, or around that time, could spell turmoil across all of Europe.
Of course back in Soviet times, May Day was an excuse for a grand military parade. Speaking of the Kremlin, look for Vladimir Putin to work some mischief, probably over Georgia. But also don’t ignore my warning on a third force, Igor Sechin, perhaps making a move of his own. The Kremlin showed its cards in the handling of Mikhail Khodorkovsky’s second trumped up trial.
In the Middle East, I’ve written volumes on the potential for conflict in Lebanon with the pending results of the tribunal. Violence can yet be prevented. If not, Katy bar the door. The entire region could go up in flames.
Pakistan is a mess and Islamists want more control of the government. Another high-profile assassination seems a certainty. The equity markets could drop 3% the day it occurs.
Iran? Who knows. See Lebanon and Hizbullah in the near term. The United States is in no position for another war, but the alternative, a nuclear armed Iran, is unthinkable in many quarters.
But the biggest story of the coming year is probably China and whether they can navigate stormy waters. I’m as uncertain as I’ve been in some time.
Those are my initial thoughts on 2011. I understand where optimists are coming from, but rightly or wrongly I’ve never been one to just focus on the U.S. It’s a big world out there and we continue to become more interconnected with each passing month. You just can’t ignore the risks. The job is to separate the ones that are truly market movers from those that aren’t. I don’t want to play the scare monger game. I couldn’t give a damn what happens in many parts of the world. But I will also continue to sleep with one eye open. I’ll wrap this up next time and tie it all together, including views on inflation, commodities, the all-important public vs. private debate (which as I go to post has two more prime examples with pension crises in Chicago and Pittsburgh that came to a head on Friday), and whether or not I can ignore the fact the stock market always rises the third year of a presidential cycle.
*Due to the timing of the column, it’s impossible to collect all the yearend data and I’ll fill in some gaps next week.
For all the bitching at yearend, you can see that rates are considerably lower than they were a year ago, yet that failed to help housing due to the reluctance of banks to lend and the inability of many to come up with the 20% down payment.
--The CRB Index of 19 raw materials was up 17.4% this year, led by cotton up 92%, a 140-year high, and silver up 84%. Corn hit a 13-year high, up 52%. But natural gas fell 21%.
--Oil closed the year at $91.38, just the second time it’s finished a year above $90, the other being $95.98 in 2007.
--Gold advanced a 10th consecutive year, up 30%. I did not sell my gold ring yet. I might bury it in Trader X’s yard with all his silver. [I need to protect my friend’s identity these days. He’s a walking mint.]
--And copper finished the year at a record settlement price, $4.45 a pound. [Not good for new home builders as the earth’s scum scavenges for the stuff in new construction and rips apart cellphone towers.]
--But for those who believe commodities can go nowhere but up, I would just caution that the cycles do work both ways. For instance in recent memory:
I don’t disagree commodities could run a bit more, but let’s be careful out there, people.
--From USA TODAY: “The decade has changed the way many view the nation’s mightiest corporations…Of the 10 largest stocks in the S&P 500 on Dec. 31, 2000, only three of those stocks have posted gains since then: On average, they’re down 20%, including reinvested dividends.”
--The ports of Los Angeles and Long Beach handled 20.3% more cargo boxes this year than in 2009, owing to increased international trade. New York/New Jersey saw a 12.8% increase.
--On Friday, Singapore announced its economy grew 12.5% in the fourth quarter from a year earlier; 14.7% for the year (and probably the fastest in the world). Prime Minister Lee, in his New Year’s address, said growth would slow to 4-6% in 2011. Lee was cautiously optimistic for growth in Asia as a whole this year. [I just love that a prime minister gives a New Year’s Eve address on the economy. I imagine the ratings are huge in this very cool country with the authoritarian streak.]
--More banks have failed in 2010 since the savings and loan crisis in 1992, 157, compared to 140 in 2009. The acting director of the FDIC, though, says he believes the number has peaked.
The problem remains with the community banks. I have a small amount in a local institution in town and while I haven’t talked to the president of it recently, I wonder how he and others of his ilk survive. The biggest boys will obviously get bailed out should more systemic problems reemerge, as I think is possible. The little guys would only continue to suffer.
If, however, you believe the current economic revival is for real, and that the picture is bright going well into 2012, then the better smaller banks should do quite well.
--Travel nightmares: “Cathay Pacific apologized yesterday (12/28) to more than 1,000 passengers who sat through 16-hour flights only to wait for up to another 11 hours in snowbound planes at New York’s main airport….
“Cathay said 1,100 passengers ‘suffered’ being trapped in its planes for between four and 11 hours as they sat grounded on the snow-covered tarmac ‘because gates were not available at the airport for passengers to disembark.”
“People are exhausted…They want to get home,” said Eric Schoor, 22, who was trying to get from New York City to Tel Aviv on Sunday night but ended up spending about nine hours stuck on the tarmac at Kennedy Airport, finally ending back in the airport around 3 a.m. His flight was rescheduled for 7 p.m.” [AP] [Suffice it to say he didn’t get out until Tuesday night at the earliest.]
“Sammy Tawil was stuck at Chicago’s O’Hare International Airport on Monday after Continental redirected his Newark-bound flight there from Tel Aviv, Israel. He said that when he tried to get on another flight home, he was told there were no seats available – until Friday….
“ ‘The passengers are a victim here,’ Tawil said. ‘Why’d we leave Tel Aviv? Why not wait 10 hours and leave after the storm?’” [USA TODAY]
--Barclays estimates spending on capital-expenditures in the oil and gas industry will rise 11% in 2011 over 2010 to $490 billion, based on a survey of over 400 companies. Consistent $80 oil (now $90) will do that. Even the deep-water drilling sector, post BP disaster, is going to rise, though activity in the Gulf will be slow to ramp back up due to the lengthy approval process.
--Crain’s New York Business reported that nine apartments asking more than $4 million went into contract last week in Manhattan, compared to zero for Christmas week last year, a good sign, unless you’re armed for class warfare. Moi? One year into my luxury rental in Summit, having sold my home of 16 years last January, I couldn’t be happier.
--As a subscriber to the High Plains Journal, a farming publication, I’ve read quite a bit on the Christmas tree business and I appreciate what an incredibly tough industry it is (starting from scratch, 7+ years for the first trees to mature, for instance). So it was good to see a Journal story that it appears sales of Christmas trees were up in the 20% range this year.
--Groupon, the online discount coupon provider that has seen its growth explode, is looking to go public in the latter part of 2011. The company is currently lining up $950 million in venture capital funding ($500 million of which is already raised) in what would be the largest round of equity financing since Pixar in 1995. Groupon’s sales are now at an annualized pace of $2 billion. The company recently spurned a $6 billion takeover bid from Google. Among the institutional investors currently funding the company are Fidelity, T. Rowe Price and Morgan Stanley.
--The number of Internet users in China has hit 450 million, a rise of 20% over the past year. The nation does, however, continue to aggressively block content it deems too politically sensitive.
--Alfred E. Kahn died. He was 93. Kahn presided over the historic deregulation of the U.S. airline industry during the Carter administration. Back in 1977-78, Kahn was chief of the now-defunct Civil Aeronautics Board. If you were born, say, just 30 years ago, understand that in the ‘old’ days, the CAB had to approve individual routes and any change in fares. President Carter sought deregulation to stimulate economic growth and Kahn pushed through the Airline Deregulation Act of 1978. The rest is history. Fares came down, new airlines were formed, from People Express (or as some of us called it, Peoples’ Distress) to JetBlue, while Southwest Airlines, then only operating in Texas, was allowed to expand nationwide. Alas, others such as Pan American, couldn’t adopt to all the change and were lost forever, while the likes of Continental and United went through one bankruptcy after another before getting it right.
Kahn would then be named anti-inflation czar by Carter as inflation approached 12% in 1979 and he had less success with this endeavor, witness Carter’s loss to Ronald Reagan.
--Speaking of the airline industry, despite screwing hundreds of thousands of passengers this week as a result of the blizzard with upwards of 10,000 cancelled flights that ruined everyone’s vacation plans, many of the carriers are hiking fares without explanation (though a legitimate one would be rising fuel costs).
--Shares in rare earth mining companies such as Molycorp continued to rocket higher, this time after China announced new cuts in exports of the minerals, with China producing about 97% of the elements that are used in high-tech, clean-energy and other products (such as fluorescent light bulbs). China is slashing exports because it says it needs them for its own economic development. Ergo, companies outside China that are dabbling in this industry have been on a wild ride, even if actual production of the stuff is years down the road. I’m in the sector myself with an investment I’ve been adding to…but I’m viewing it as a long-term play.
--China’s benchmark Shanghai Composite Index finished the year down 14.3%, making it one of the world’s worst performers in 2010. Said one local strategist as Shanghai finished up 1.8% on Friday, “Stocks are likely to rise next year as tightening fears have been priced in, while faster yuan appreciation could introduce more liquidity into the market.” Others say the slew of tightening measures that are likely to be front-loaded in the first part of the year will weigh on equities.
--When I was in Queensland, Australia this fall, I viewed the vast sugar cane fields but this beautiful area is now experiencing historic flooding (Australia as a whole had its wettest September-to-November on record…their spring, remember). Queensland is also the nation’s largest coal producing region and this sector is suffering as well. [To be selfish, looking back I can’t believe how lucky I was with the spectacular weather I had in Cairns.] Australia, by the way, is the world’s third-largest sugar exporter.
--Allstate filed a federal lawsuit against Countrywide Financial Corp (purchased by Bank of America in 2008) over $700 million in toxic mortgage-backed securities the insurer bought in 2007, only to see it turn into crapola. Allstate claims the documents backing the paper misrepresented crucial information and concealed material facts.
--AIG, on the other hand, is another step closer to paying off U.S. taxpayers and gaining independence as it received $4.3 billion in bank credit lines, “another important vote of confidence by the market,” CEO Robert Benmosche said. “We believe we are close enough to completing our recapitalization plan that we can see the finish line.” The lines are contingent on the insurer paying down its New York Fed credit line of $20 billion by March 31 and AIG is saying this won’t be a problem. Quite a story, and Benmosche, who is dealing with cancer, deserves a ton of credit.
--In a bid to end traffic chaos on city roads, the Beijing municipal government said it will limit the issuance of license plates for new cars to 240,000 in 2011, or about a third the number sold in 2010 here. The plates will also be limited to Beijing’s 20 million residents and if you don’t have one, you won’t be allowed to enter the downtown area during rush hour; all in an attempt to fight staggering gridlock. So…auto makers are going to have to adjust production forecasts. Beijing car sales were 5% of the national total, but now other big cities such as Shanghai could follow suit.
--Starting January, more than 10,000 Baby Boomers a day will turn 65, a trend for the next 19 years, and many of them face a real financial crisis. We haven’t saved nearly enough and the home many saw as their nest egg has turned into a liability, with 22% of homeowners (not necessarily the same percentage of baby boomers) now under water. The average 401(k) balance for those in their 50s and 60s is under $150,000. Many are taking Social Security at 62, and thus locking in far lower benefits than if they’d wait until 65. It’s not good and has to be taken into account if you’re a market strategist forecasting beyond the short- to intermediate-term.
--Us Baby Boomers do love football and talks on a new contract between the NFL and its players are at a standstill with the current collective bargaining agreement expiring March 3. The big issue is the owners wanting to expand to 18 regular season games from 16, which means more injuries, yet the owners don’t want to increase health benefits.
--Speaking of health benefits…thanks again to the Baby Boomers, Medicare is expected to cost $929 billion by 2020.
--Roy R. Neuberger died at the age of 107, 101 years of which he lived in New York City. Neuberger was a founder of the investment firm, Neuberger & Berman and due to his longevity, he experienced all the ups and downs from the 1920s to today.
Neuberger used the wealth he accumulated to invest in art, collecting hundreds of paintings and sculptures by Milton Avery, Jackson Pollock, and Willem de Kooning among others. As Edward Wyatt noted in an obituary for the New York Times, the works are now scattered over more than 70 institutions in 24 states.
Consider that Neuberger was born on July 21, 1903, in Bridgeport, Conn., before the family settled in Manhattan in 1909. So he saw a century of tremendous local sports, beginning with The Babe. [Neuberger was into tennis himself, big time.] He arrived on Wall Street in 1929, right at the peak, but consider that after the Dow Jones bottomed in 1932 (at a level of 42!), it was up, up, up…for those taking a long-term view and making concentrated bets as he and his firm did (Neuberger and Berman was founded in 1939).
--PIMCO agreed to pay $92 million to settle a private class-action lawsuit where it was accused of manipulating the 10-year Treasury futures contracts market back in the spring of 2005. As reported by Bloomberg: “The lawsuit, which sought as much as $600 million in damages, said that PIMCO used its holdings to drive up the price for traders who had sold the securities short, betting their value would fall.” Bill Gross wasn’t named as a defendant in the case.
--Today, Estonia becomes the first former Soviet republic to join the euro, the 17th country to adopt the currency. This is like changing the date on your checks from 2010 to 2011. It will take a while for me to remember to use 17 rather than the 16 figure I’ve had to use so often during the debt crisis on the continent. Estonia’s economy, by the way, is $19 billion, or less than the net worth of Warren Buffett. Neighbors Lithuania and Latvia are aiming to become euro users in 2014.
--Bird flu was discovered the other day in South Korea, prompting an emergency cull of 100,000 chickens and ducks. For all the talk of the impact of H5N1 on humans, though, just 40 people died of the strain this year worldwide. [This is different from H1N1, which a South Korean man died from this week.]
--Interesting piece in the New York Times on Friday by John M. Broder concerning the looming battle between the White House and Congress over the next round of regulations, beginning Sunday, that seek to limit greenhouse gas pollutants. Obama gave “Congress wide latitude to pass climate change legislation, but held in reserve the threat of E.P.A. regulation if it failed to act.” Debate is going to be intense this coming year.
“Greenhouse gas emissions in the United States are already falling faster than any current legislative or regulatory proposal envisions, because of the recession-driven drop in demand for electricity. Carbon dioxide emissions from the energy sector, by far the largest source of total emissions, fell to about 5,400 metric tons in 2009, down from 5,800 metric tons the year before, and they are likely to fall even further this year. Demand for electricity in 2009 fell by the largest amount in six decades and is almost certain to slip further in 2010.”
What it comes down to for Obama, though, is job creation and the legislation that the E.P.A. may enact unilaterally would hurt that, and thus Obama’s reelection bid.
--Update: Outgoing New York Attorney General/Incoming Gov. Andrew Cuomo settled with former Obama car czar Steven Rattner for $10 million in the influence-peddling case. As is customary in such settlements, Rattner admitted no wrongdoing, but his wallet is considerably lighter.
--Not all the news on the weather front has been bad the past few weeks. California’s wettest December in history also means the mountain snowpack is 200% of normal, according to the state Department of Water Resources, “the best water supply start since 2006.” California is still working off the effects of the 2007-09 drought so the snowpack is critically important in avoiding problems next summer. Reservoirs are also doing very well for this time of year.
--The awful weather in Ireland, aside from the situation I discuss in the section below, decimated the horse racing industry with only five out of a scheduled 19 meetings since the end of November resulting in losses totaling in the millions. The Christmas season is big for horse racing in both Ireland and Britain, and picture the loss of income for jockeys, for example. For every meeting that is cancelled, the average jockey loses about $800. Married, mortgage underwater, normal expenses…no income.
--Uh oh…Borders Group Inc. is delaying payments to some publishers, never a good sign. Borders is looking to refinance its debt and work out new terms with some of its suppliers. [I stupidly renewed my card here last week.]
--Nooooo!!! Nutrisystem is pulling celebrity endorsers, including Marie Osmond! This is depressing, guys (of a certain age). Nope, from now on the weight-loss company is going to use “real” people to hawk its pre-packaged meals. CEO Joe Redling said, “These are real people, we want them to inspire others.”
Actually, it seems that Weight Watchers saw its third-quarter sales rise 1.9%, while Nutrisystems’ fell 4.1%.
--Finally, we note the passing of Eugene Garfield, 74. Garfield originated the American Auto-Train, ferrying passengers and their cars between Virginia and Florida as a private corporation from 1971 to 1981. It was profitable the first five years but then competition, such as from rental car companies, was its eventual undoing.
Well, if you remember the Auto-Train you can’t help but think of Bill Murray, in what I always thought was his best role as entertainer Nick Rails, the lounge singer on the train.
“I’ll be the entertainment all the way to Orlando…How many people are on your first trip to the Sunshine State?”
Nothing but Star Wars
Give me those Star Wars
Don’t let them end…
“Hey good looking…what’s your name?”
Iraq: About 300 Christians defied threats to gather Christmas morning at a Baghdad church that was the scene Oct. 31 of a horrific attack during Mass that killed 68. Archbishop Matti Shaba Matouka said, “No matter how hard the storm blows, love will save us.” But otherwise, Iraqi Christians did not dare celebrate Christmas, including appearances by Santa Claus. Back at Our Lady of Salvation Church, “dried flesh and blood remain stuck to the ceiling.” [Rebecca Santana / AP]
Pope Benedict XVI called for political leaders to express solidarity with Christians in Iraq.
“May the comforting message of the coming of Emmanuel ease the pain and bring consolation amid their trials to the beloved Christian communities in Iraq and throughout the Middle East. May it bring them comfort and hope for the future and bring the leaders of nations to show them effective solidarity.”
As a Christian, I’m not holding my breath that beyond a shallow statement or two (such as that spoken by Iraqi Prime Minister Nouri al-Maliki this week) that leaders in the region will have the guts to act on behalf of Christians. So I repeat, the U.S. and its allies lost the war in Iraq. If, however, next Christmas there are more Christians in the country than today, and celebrations take place peacefully, then I’ll change my tune. [Prior to the war, there were an estimated 1.4 million Christians in Iraq. Today it’s somewhere around 500,000.]
As for Maliki, he ruled out any U.S. troops staying beyond the end of 2011, voicing confidence in Iraqi security forces (the same forces that failed this week to prevent another few bombs targeting Christians that killed two). Maliki told the Wall Street Journal in an interview, “This agreement is not subject to extension, not subject to alteration. It is sealed.”
As the Journal editorialized afterwards, “For the sake of Iraq and the combustible Persian Gulf region, the Prime Minister and the Obama Administration should find a way to walk back from his intemperate demarche.”
Then there is the story of a real hero, police commander Lt. Col. Shamil al-Jabouri, who in Mosul built a reputation for going after al-Qaeda. He knew his days were numbered. Insurgents had tried to kill him five separate times. They finally succeeded on the sixth attempt…only it took three suicide bombers to do the trick. One detonated his vest as he was hit by guards at the station where al-Jabouri was sleeping, but this distracted the guards from seeing the other two bombers who then slipped into the compound and blew themselves up at Jabouri’s door. Now that’s a hero, but it also shows you how much more needs to be done and Maliki needs to recognize he could use even a minimal U.S. presence to at least send the message there is no green light for the terrorists.
Separately, Iraq receives at least 90% of its revenues from oil and this week the new energy minister said production had finally ticked up to 2.6 million barrels per day from the stagnant 2.5 million that has been the general figure going back to pre-invasion days. Actually, 2.6 evidently hasn’t been hit in 20 years. But Iraq has a goal of increasing production to 12 million barrels by 2020. No way OPEC would allow this. Try 3.5 million. I mean if global demand doesn’t increase much, for a variety of reasons, oil would be $20 if Iraq was producing 12 million barrels per day.
Iran: There are major questions as to just how effective Iran’s uranium enrichment program is. Yes, apparently it has been dealt a severe blow by sabotage (such as the Stuxnet computer virus), as well as targeted assassinations of key scientists, but then you see a report that U.S. officials are concerned Iran has finally produced a new generation of centrifuges, which could greatly enhance the time it takes for Iran to “breakout” and produce enough enriched material for a bomb. The West is convinced it will know when this threshold, the breakout level, has been reached, at which point the West/Israel either attacks or backs off and figures out how to deal with a nuclear-armed state that sponsors terrorism. And what of the secret sites the West knows Iran is using?
As for sanctions, they are having an impact, no doubt, and even India appears to be joining the sanctions regime, despite all the trade between the two. President Obama’s strategy seems to be to give Iran every chance to sit down and negotiate a compromise, but if this doesn’t work, then hopefully sanctions will hasten regime change as the people rise up over the sick economy.
But regarding the sanctions topic, Reuel Marc Gerecht and Mark Dubowitz wrote the following for an op-ed in The Weekly Standard.
“Indirect demand-side sanctions on the Islamic Republic could possibly accomplish what an embargo could do without the diplomatic trauma. If the European Union can lay the groundwork for the slow-motion death of Iran’s oil and gas exploration business, which it already has, it can probably see its way to further constricting Iran’s energy sector. Nuclear counterproliferation is a holy of holies for Europeans. This is even truer in Washington, where surrender just isn’t an option for a Democratic president soon facing reelection.
“So let us see whether Khamenei can withstand a united West. With these sanctions, we just might not need the Chinese and the Russians to help out. Even though the Stuxnet virus has bought us some time, Iran’s nuclear program is still advancing. The old Persian counsel against complacency and sloth would be wise to remember. Harcheh zudtar behtar – the sooner we find out whether we can make the supreme leader conceive again of the awfulness of 1988, when surrender became thinkable, the better. Current sanctions and the regime’s atrocious economic management have brought hard times. For the United States and its allies to be successful, the times need to be made a good deal harder still.”
Meanwhile, the British government has drawn up evacuation plans for the expatriate population in the Gulf region, including more than 100,000 in the UAE alone, while an estimated one million British tourists and businessmen travel to Dubai each year. It’s all about what may happen should Iran’s nuclear facilities be attacked.
Israel: Foreign Minister Avigdor Lieberman has stated that the best that can be worked out with the Palestinians is a long-term interim pact because a permanent deal wasn’t possible, to which Prime Minister Benjamin Netanyahu said:
“If…we perhaps reach a [dead end] on Jerusalem and perhaps [a dead end] on refugees, then possibly the outcome could be an interim agreement. It is possible, I cannot rule it out.”
But a spokesman for Palestinian President Mahmoud Abbas rejects such an interim deal as the issues of Jerusalem and refugees had to be resolved today.
So that’s where negotiations stand…nowhere. But there are reports the United States may throw its weight behind a Palestinian declaration of statehood if Israel does not resume peace talks, so warned Israel’s Trade and Industry Minister, Benjamin Ben-Eliezer.
“We must do everything possible to get a dialogue with the Palestinians, even if it costs us a settlement freeze for a few months,” he said. “I wouldn’t be surprised if within one year the whole world supports a Palestinian state, including the United States. Then we’ll ask where we were and what we were doing.”
As for Hamas, with increased violence the past week on the second anniversary of Israel’s offensive to smash it, the terror group warned, “Our weapons are few compared to those of the Israeli occupation, but we have something that will worry the occupation.” What is it? Anything? If…emphasize if…it was something like an old chemical weapon shell and it actually worked, of course that would be the end of Gaza so it makes no sense Hamas would use such a weapon if it possessed one.
But there are a few other items from Israel Watch this week. Former President Moshe Katsav (2000-2007) was found guilty of rape and other sexual offenses. The three-judge panel said in its ruling on a case involving one former aide and two others claiming harassment, “Katsav’s testimony was riddled with lies. When a woman says no, she means no.” The 65-year-old Katsav faces a stiff prison term. It was in 2000 that parliament elected him president in an upset over Shimon Peres. Peres then succeeded Katsav when the latter was forced to resign over the scandal.
Then there is the case of Israel’s “ultra-religious.” The New York Times’ Isabel Kershner had an interesting piece on how many in Israel are tired of supporting ultra-Orthodox men who receive welfare subsidies for full-time Torah study and do not work. A full 60% of ultra-Orthodox men in Israel fall into this category, compared with 15% who do not work in the general population. But as Ms. Kershner reports:
“The issue is not just the hundreds of millions of dollars doled out annually for seminaries and child allowances. Worry – and anger – is deepening about whether Israel can survive economically if it continues to encourage a culture of not working.”
What’s more…the ultra-Orthodox make up 10% of Israel’s population of 7.5 million, but are increasing rapidly. They favor families of at least eight. Said one economist, “We have a few years to get our act together. If not, there will be a point of no return.” The Taub Center for Social Policy recently noted that if current trends continue, “78% of primary school children in Israel by 2040 will be either ultra-Orthodox or Arab.”
Well, I touched on a tangential subject the other week in this regard, that being the growing number in the Israeli military that align themselves with the far right. It’s about looming insubordination.
Lastly, tests this week confirmed a huge natural gas field off Israel’s north coast, mere miles from the maritime border with Lebanon, that could be enough to meet Israel’s domestic needs for 90 years. This is a gigantic development and the Tel Aviv stock exchange rocketed higher. Israel could not only be totally energy independent, but it could become a large exporter of energy. Today, Israel has to import virtually all its oil and much of its gas.
But the find will also increase tensions with Lebanon, which will claim offshore exploration is taking place in Lebanese waters.
Speaking of Lebanon, Israeli warplanes violated Lebanese airspace three times in less than two hours last Sunday. This is totally illegal! It must stop. There is no way Israel can claim the moral high ground when it pulls this crap. Israel, of course, when it’s not denying these overflights are taking place, would say it is acting in its national security interests, but it has other ways of obtaining intelligence (like through its own satellites, let alone intel on the ground), and if it’s instead just about intimidating Lebanon, it won’t work when it comes to Hizbullah.
Meanwhile, as we start a new year, in Beirut it’s all about the Special Tribunal for Lebanon (STL) and the timing of the expected release of indictments in the investigation of the assassination of former prime minister Rafik Hariri. Reports say the prosecutor has reached his final judgment and that both Hizbullah and, potentially, Syrian officials will be named, though, remember, the indictment is supposed to remain sealed for a lengthy period of time while the ruling court looks it over to see if everything is in order to then proceed to trial.
The whole issue has caused a stalemate and deadlock in governance in Lebanon and Syria and Saudi Arabia, for their own varied reasons, are feverishly trying to break the stalemate, including over Hizbullah’s insistence that those who supplied evidence to the STL, labeled “false witnesses,” need to themselves be investigated. I thought my friend at the Daily Star, Michael Young, summed up the situation here succinctly. It is “dizzyingly complicated.”
But imagine…there is currently zero governing going on here. Lebanon, as I’ve seen firsthand a few times, has serious issues including “the poor state of electricity, water supplies, sanitation, road safety, infrastructure, or the economy, to name just a few items,” and while the Cabinet concerns itself with strife over the handing down of indictments, the fact is the Lebanese people have all of the preceding on their agenda, and they are ticked off. As the Daily Star editorialized.
“Unrest related to events in The Hague is a possibility. But so is the outbreak of unrest that springs from the failure to address people’s needs and grievances….
“Elsewhere, countries will be entering the new decade by making huge efforts to provide better lives for their citizens. In Lebanon, the political class lives in denial, subsists on grandiose rhetoric, and waits for solutions from the outside world. But no solution will be durable unless Lebanese shoulder their portion of responsibility in 2011, acting with courage, creativity and inspiration. Otherwise, another lost year awaits.”
Afghanistan: Progress in 2010 was minimal at best, largely confined to Kandahar and around Kabul. The ninth year of the war was the bloodiest. At least 498 U.S. troops were among the 709 killed as of Dec. 30. June was the worst month of the war with 103 allied troops killed. The United Nations also reported that 2010 was the worst in terms of civilian deaths…5,480 in the first ten months (undoubtedly over 6,000 for the year when the final tally comes in). And according to the Afghan NGO (nongovernment organizations) Safety Office, the number of insurgent-initiated attacks surged 66% in 2010 from the previous year. “Vast amounts of the country remain insecure for the unarmed civilians, and more and more areas are becoming inaccessible,” said the director, Nic Lee. [Wall Street Journal]
This is going to be yet another huge issue for Congress this coming year as Democrats fight to limit funding for the war.
And in Pakistan, there were a slew of troubling signs this week, including a nationwide strike on Friday called by Islamists to pressure the ruling party, which in turn is trying to keep a fragile coalition in place. Strategist Anthony Cordesman told the AP:
“(The current government) is not only too weak to meet the U.S.’s short-term priorities even if it wanted to, it’s already too weak to meet the long-term priorities that would give Pakistan stability.” It goes without saying, as he added, that the stability of a nuclear-armed Pakistan is a higher priority than Afghanistan.
You also had the Christmas Day attack by a female suicide bomber on a UN food agency that has been feeding 41,000 families. 46 died, 96 were injured. President Obama labeled it “outrageous.” Apparently, the bomber targeted the local Salarzai tribe which has supported military action against the militants.
Finally, the New York Times reported that new intelligence assessments show “that insurgent factions…are setting aside their historic rivalries to behave like ‘a syndicate,’ joining forces in ways not seen before.”
Americans want more latitude to operate freely along the Af-Pak border, including inside Pakistan, but while Pakistani officials agree with the intelligence, they are still loath to give up their sovereignty, and events such as Friday’s demonstrations show you just how precarious the situation is for the government.
North Korea: Is it a new day in Pyongyang? Will peace break out? Why state TV broadcast for the first time a Western film, according to the British ambassador stationed there, the flick being “Bend it Like Beckham” because of the North’s passion for football. And in its annual New Year’s address, North Korea’s official state press carried the message that confrontation between the two Koreas should be defused as early as possible. [Though of course it added that it was still prepared to blow the South to smithereens.]
Earlier, South Korean President Lee said, “We have no choice but to resolve the problem of dismantling North Korea’s nuclear program diplomatically through the six-party talks.” Lee also called for inter-Korean dialogue to ease tensions, this after the South conducted its largest war games ever.
But before we get carried away, Seoul’s Defense Ministry released a report issued biennially that signaled the North’s military threat has expanded and that Pyongyang possesses faster, more powerful tanks and has 200,000 special forces poised to carry out assassinations and wreak havoc in the South. Why just a few weeks ago I told you myself that the North’s capabilities were vastly underrated. Consider that it is now estimated North Korea has 13,600 long-range artillery guns along the DMZ, ready for a surprise attack on Seoul.
Incidentally, the Defense Ministry document said the U.S. will deploy an additional 690,000 troops, 160 navy ships and 2,000 military aircraft in the event of a war on the peninsula. Where the heck they’d come from is anyone’s guess were war to break out today.
[On the off chance some of you read Mark Helprin’s op-ed titled “America’s Dangerous Rush to Shrink Its Military Power” in the Wall Street Journal this week, I’m going to use it for a coming “Hot Spots” piece. I do not totally agree with him, that we cannot disarm, because of our dire financial condition, but while he doesn’t address North Korea directly, the above statistics are what he’s talking about.]
China: In an annual survey for Global Times, only 12% of Chinese, when asked the question “Do you think China has become a superpower?” respond in the affirmative, while 34% say ‘no’ and 33% say ‘not entirely.’ 57% vote China as the most promising emerging nation among BRIC countries (Brazil, Russia, India, and China), a 10% drop from last year’s result.
Said the director of the Center for American Studies at Fudan University, Wu Xinbo, “The result shows that Chinese people are becoming more objective when considering (such) issues.”
“The diplomatic rows China encountered this year fueled public awareness about the difficult factors China will face as it continues to grow,” noted Wu.
On the military front, as Defense Secretary Robert Gates prepares to sit down for talks in Beijing for the first time in years, no doubt he will raise the issue of how the booming Chinese economy is leading to a huge defense buildup. Gates will be meeting his counterpart, Liang Guanglie, who said in an interview for various state newspapers:
“In the coming five years, our military will push forward preparations for military conflict in every strategic direction. We may be living in peaceful times, but we can never forget war, never send the horses south or put the bayonets and guns away.”
Liang emphasized China is focused on winning high-tech wars. He also said China’s modernization would come about because of Chinese technology, not from others, which some would say is a bit disingenuous because China has been buying a ton of arms from Russia the past few years and seems set to do so for the foreseeable future.
But U.S. officials are conceding that China has now developed a ballistic missile designed to take out U.S. aircraft carriers in the Pacific, which will force the U.S. Navy to operate further from China’s shores, possibly as far as what is called the second chain of islands, the Marianas, Guam and Palau (with my island of Yap between the last two). Gates himself has asked the question if China has such a capability, “how then do you use carriers differently in the future?”
Russia: The United States, U.K. and Germany are among those harshly criticizing the new six-year prison sentence imposed on former Russian oil tycoon Mikhail Khodorkovsky. This week, as expected, he learned he would have to stay in prison until 2017 for embezzlement and money-laundering. A State Department spokesman said the U.S. was concerned by the apparent “abusive use of the legal system for improper ends, particularly now that Khodorkovsky and [former business partner Platon] Lebedev have been sentenced to the maximum penalty.” The U.S. is also hinting the sentencing might impede Russia’s quest for entry to the World Trade Organization in 2011, though I seriously doubt this.
It was Vladimir Putin who said before the latest verdict that “a thief belongs in prison,” causing Khodorkovsky’s defense lawyer to say Russian authorities “headed by Putin” leaned on the justice system.
What it all really means is that Khodorkovsky will not be a thorn in the side of Putin as he runs for the presidency in 2012. [Nor in the parliamentary vote of 2016.] For his part, current President Medvedev, who also may still run, wouldn’t want Khodorkovsky stirring things up either, as much as Medvedev likes to talk about a new Russia and judicial freedom.
The Kremlin was none too pleased with the criticism from the West. The Foreign Ministry office said it was “unacceptable.”
“We expect everyone to mind his own business, both at home and in the international arena. Attempts to exert pressure on the court are unacceptable.
“Assertions about some kind of selective application of justice in Russia are groundless. Russian courts consider thousands of cases related to entrepreneurs’ responsibility towards the law.” [Sydney Morning Herald]
Meanwhile, Putin had his hands full with a weather-related emergency of his own this week, a massive ice storm that shut down the two main Moscow airports. Aircraft and the tarmacs were covered with a glass-like coating of ice. About 20,000 passengers were stranded as Putin did what he does best, blast those responsible while maintaining his own high approval ratings.
And I can’t help but note this item I saw in the Moscow Times.
“Investigators said Tuesday that robbers carrying assault rifles in a baby carriage fatally shot two guards and a man walking his dog and got away with more than $800,000 worth of cash in St. Petersburg….
“NTV said the attackers waited outside a commercial bank, one of them holding a baby carriage where two Kalashnikov rifles were hidden….
“When the guards got out of their armored truck and walked toward the bank with bags full of cash, the two assailants sprayed them with automatic gunfire, killing both on the spot.
“One of the attackers also shot a man walking his dog, apparently fearing that he could help police identify them.”
Ah yes, life in Russia. I’m surprised they didn’t kill the dog for good measure.
Ireland: As if this country doesn’t already have enough problems, the thaw that followed the deep freeze did major damage to the country’s water supply as antiquated pipes burst all over the place. Northern Ireland’s Belfast has been particularly hard hit and some neighborhoods have gone at least a week without running water. The situation is so serious, Scotland is shipping bottled water. Dublin’s 1.5 million population is suffering through its own severe restrictions.
“Householders were warned last night (Wednesday) that it could be well into the New Year before supplies are fully restored.”
Which means weeks. And one of the big issues is all the abandoned buildings, such as the ghost developments, vacant, with ruptured pipes spewing water uncontrollably. Many of the reservoirs are rapidly drying up. It’s so bad in Belfast (which of course is Britain’s problem) that people fear the spread of disease as floodwaters are now contaminated with sewage.
Not exactly the kind of environment that engenders the needed economic recovery here. Picture the massive repair bill in all of Ireland, for example.
Hungary: Editorial / Washington Post
“Next month many European Union members may be regretting their system of a rotating presidency. That’s because the gavel will be handed to Hungary, whose populist and power-hungry government has just adopted a media law more suited to an authoritarian regime than to a Western democracy.”
The right-wing government of Prime Minister Viktor Orban controls parliament with 66% of the seats, enough to change the constitution. It has proceeded to do just that, while Orban “has overseen passage of two media laws that will place Hungary in a league with Russia and Belarus on press freedom. One puts Fidesz [the ruling political party] in control of state television channels and all other public media outlets. The second, approved by parliament on Tuesday, creates a powerful Media Council with the authority to regulate newspapers, television, radio and the Internet….Journalists can be forced to reveal their sources, and the council can search editorial offices and require that publishers reveal confidential business information.”
It’s despicable. Orban is being compared to Vladimir Putin. But as the Post noted, “some governments have kept quiet, preferring not to stir up yet another controversy in the crisis-plagued E.U.”
“Europe cannot allow a member government to flout fundamental freedoms without consequence.”
Hungary is slated to host a European Union summit in May, one in which Hillary Clinton is scheduled to attend.
“Mr. Orban should be given a choice between curbing his concentration of power and amending the media laws – or suffering the humiliation of having the European Union and the United States move or boycott his summit.”
Nigeria: At least 80 were killed in religious violence on Christmas Eve in central Nigeria. The nation is split evenly between Muslims in the North and Christians in the South and the battle line is in the middle. You couldn’t pay me to go this seething hellhole that only merits interest because it is a leading oil producer.
Egypt: And Islamic terrorists detonated a car bomb outside a Christian Coptic church here on New Year’s Eve killing at least 21.
Ivory Coast: The country’s new United Nations ambassador, appointed by the presidential challenger Alassane Ouattara, said the Ivory Coast is “on the brink of genocide.” Ouattara is regarded by the UN, U.S. and the African Union as the legitimate winner of the Nov. 28 vote but incumbent Laurent Gbagbo has refused to stand down and ordered French and UN troops to leave the country, which they have refused to do. [C’mon, French. Just take the guy out, just like Robert Mugabe should have been ten years ago.]
Venezuela: President Hugo Chavez granted himself even more powers as he continues to undermine opponents. Chavez has new abilities to crack down on critics over the air, Internet, universities, etc. He also can bypass the legislature and enact laws by decree for the next year and a half, a nifty trick if you know the right people.
And the very public row over new U.S. ambassador to Venezuela, Larry Palmer, boiled over this week as Washington revoked the visa of the Venezuelan ambassador to the U.S. after Chavez withdrew his approval for Ambassador Palmer. Chavez dared the U.S. to cut off diplomatic ties. Palmer had previously commented that morale in the Venezuelan armed forces was low and expressed concern over Chavez sheltering Colombian FARC rebels.
--On Jan. 6, 1942, President Franklin D. Roosevelt announced that he had authorized one of the largest arms production plans in U.S. history. The president told Congress that the U.S., as part of the United Nations, must overwhelm Germany and Japan with firepower. He said the U.S. should produce tanks, guns and ships to “the utmost limit of our national capacity,” for its own use and to supply other Allied armies and navies against the Axis powers.
By the end of 1943, the president called for building 45,000 planes, 75,000 tanks, 35,000 anti-aircraft guns and 10,000,000 tons of ships.
It was time for an entire nation to mobilize for war, Roosevelt said. “We must convert every available plant and tool to war production. That goes all the way from the greatest plants to the smallest – from the huge automobile industry to the village machine shop.” [Army Times]
--Conservative William Kristol had the following editorial in The Weekly Standard.
“There’s been some hyperventilating among conservatives on the military of repealing Don’t Ask, Don’t Tell. It’s going to be amazingly difficult to implement, some say. It could well be the end of the U.S. military as a feared fighting force. It’s just another step in the decline of the West.
“Reacting to this, Casey Fiano, a conservative blogger whose Marine husband is serving in Afghanistan, asked last week: ‘At what point does concern [about the repeal of Don’t Ask, Don’t Tell] turn into hysterics, and when does it become insulting to our honorable men and women in uniform?’
“President Obama said last week, speaking ‘to all Americans: ‘Your country needs you, your country wants you, and we will be honored to welcome you into the ranks of the finest military the world has ever known.’ Our fine servicemen and women won’t quit, they won’t whine, they won’t fret, and they won’t cause a scene. Conservatives owe it to them to conduct ourselves with the same composure and dignity.”
“You could tell as much from the contrast between his petulant post-election press conference and his peppy pre-Christmas press conference. In the former, he was crabby about accepting Republicans’ demands that income-tax rates on all taxpayers not be raised. In the latter, he was celebrating the lame-duck Congress’ acceptance of his stands on the New START treaty, repeal of ‘Don’t Ask, Don’t Tell’ and even the previously reviled tax deal.
“Obama has obviously figured out that Americans prefer to see their president describe the glass as half full rather than half empty. That’s a good lesson for him, and for Republicans as well, especially those who believe that the Obama Democrats’ shellacking in the midterms means that Obama himself will definitely lose in 2012….
“The balance of enthusiasm favored Republicans and conservatives in 2010, as it had favored Democrats in 2006 and 2008. It could conceivably shift and favor the Democrats once again.
“Another factor is that polls show that most Americans have favorable personal feelings toward the president. Clinton and George W. Bush happened to have personal characteristics that people on the other side of the cultural divide absolutely loathed. Obama doesn’t.
“His reliance on his teleprompter, his secret smoking, his irritability when not adored – these are pretty minor failings. People like his family and his obvious devotion to them. They don’t mind that he likes to get away and play golf or shoot hoops from time to time.
“Then there is the powerful desire Americans have to see their presidents succeed. That worked for Clinton in 1996 and Bush in 2004. Polls and focus groups showed that voters in the middle of the political spectrum were ready to overlook their weaknesses and appreciated their strengths in those years. That could be the case with Obama in 2012.
“Moreover, there will be a reluctance on the part of many voters, understandable in light of our history, to reject the first African-American president. I’m convinced, though I can’t prove, that Americans who feel this way far outnumber those few who can’t abide seeing a black man in the White House….
“Working against Obama still will be substantive issues. Most Americans want to repeal ObamaCare; he wants to keep it. Most voters rejected his vast expansion of the size and scope of government; he still thinks it’s a good idea.
“Obama came to office with the assumption that economic distress would increase support for his policies to (in his words to Joe the Plumber) ‘spread the wealth around.’ But the 2010 midterms make it about as clear as these things can be that voters reject such efforts.
“Voters are not seething with envy over income inequality and are not convinced that we’ll all do better if the government takes away more of Bill Gates’ money. Obama, like the academics in whose neighborhoods he has always chosen to live, thinks that they should be seething and that if the message is just delivered the right way, they can be convinced.”
--Gallup’s yearend tracking poll finds President Obama with a 47% approval rating, though it’s absurd to track this stat daily. Nonetheless I cite it as a benchmark for gauging future ups and downs. What is interesting, however, is that at comparable points during their presidencies, Bill Clinton had a 40% approval rating and Ronald Reagan a 43% rating. But two one-term presidents, Jimmy Carter and George H.W. Bush, stood at 51% and 63%, respectively. George W. Bush finished his sophomore year at 61%. [Michael Muskal / Los Angeles Times]
--Back to the topic of the Baby Boomers, Maria Puente / USA TODAY:
“When America’s culture historians at the end of the 21st century look back at the influence of 20th-century Baby Boomers on entertainment and the arts, two things will stand out: TV and rock ‘n’ roll….
“(When) it comes to television and rock music in particular, neither would have emerged, flourished and dominated without the consuming and creative power of those Americans born from 1946 to 1964 – the largest generation cohort in history….
“The Boomers…were the first generation to be raised on TV, to be influenced by TV ads, to have their own record players, transistor radios and so on.”
As Steve Gillon, resident historian at the History Channel notes, “We still have episodes of Leave It to Beaver playing in our heads – it accounts for our desire to recreate a world that was always imaginary.”
Hey, it was real, Gillon! Right, Beav? Beav? Miss Landers?
--So last time I noted Sarah Palin and her inane sniping at Michelle Obama over the first lady’s childhood nutrition campaign. On Monday, the Wall Street Journal editorialized on the same topic.
“President Obama’s indiscriminate expansion of federal power has inspired a healthy populist rebellion, but his opponents sometimes seem to lose their sense of proportion. Take Sarah Palin’s mockery of Michelle Obama’s childhood anti-obesity campaign.
“The first lady has emphasized more nutritious school lunches but mostly encourages parents to make sure their kids eat healthy and exercise. Mrs. Palin sees a big government plot. ‘What she is telling us is she cannot trust parents to make decisions for their own children, for their own families in what we should eat,’ Mrs. Palin recently said on a talk radio show. ‘Just leave us alone, get off our back and allow us as individuals to exercise our own God-given rights to make our own decisions.’
“On her reality TV show, Mrs. Palin served her family chocolate and marshmallow ‘smores’ and said, ‘This is in honor of Michelle Obama, who said the other day we should not have dessert.’ She also turned a visit to a Pennsylvania high school into a political seminar, handing out cookies to students. The idea, she wrote on Twitter, was to ‘intro kids 2 beauty of laissez-faire’ amid a ‘Nanny state run amok!’
“No one hates the nanny state more than we do, but Mrs. Obama isn’t exactly ordering up Lenin’s Young Pioneers. Adults do have an obligation to teach children how to live, and that includes adults who are role models by dint of their national prominence. JFK asked kids to do chin-ups for the Presidential Fitness Award, and Nancy Reagan asked them to ‘just say no’ to drugs.
“A National Bureau of Economic Research study released in October puts the annual cost of treating obesity and related preventable chronic conditions like diabetes, heart disease and orthopedic issues at $168 billion, or 16.5% of all U.S. spending on medical care. Nearly one out of three children are overweight or obese. Many of these costs are transferred to taxpayers via Medicare, other entitlements and soon ObamaCare.
“ ‘Health-care reform on an individual basis is often just this simple: We could save a lot of money and a lot of grief by making smarter choices,’ Mrs. Obama said recently. ‘It starts by ending destructive habits and beginning healthy habits in eating and exercise.’
“Sorry, our mistake – that was actually Alaska Governor Sarah Palin, in her 2009 State of the State address. Mrs. Obama’s campaign is grounded in similar sentiments, and in that sense is unusual for this White House in emphasizing personal responsibility….
“Mrs. Palin would be more effective if she made some distinctions among the Obama policies that really are worth opposing. ObamaCare further redistributes the cost of obesity and other lifestyle ills by forcing individuals to buy the insurance that Washington says is for their own good, and then subsidizes the cost for some at the expense of others. That really is an affront to liberty. Telling kids to eat their vegetables and run around the block is merely instructing them to take responsibility for their own choices.”
And Republican presidential candidate Mike Huckabee, who shed 100 pounds in part by cutting out processed sugar and white flour, came to the first lady’s defense.
In a radio interview, Huckabee said, “With all due respect to my colleague and friend Sarah Palin, I think she’s misunderstood what Michelle Obama is trying to do.”
He said the first lady is “stating the obvious: that we do have an obesity crisis in this country.” He added: “The first lady’s campaign is on target. It’s not saying that you can’t or should never eat a dessert.”
Former Republican Sen. Rick Santorum, himself a potential presidential candidate, said Wednesday that it is “a proper role for the first lady to highlight something as important as childhood nutrition and what parents can do.”
“This is just basic good health and we as parents can sympathize with what she’s doing,” he added. [Washington Post]
I’m just glad to see some leading Republican voices finally take Palin on. She’s had a free ride among us elephants…except here. Now it’s time to take her down a few pegs until she’s irrelevant.
--You know who’s going to be fascinating to watch this coming year? Jerry Brown in California. The guy is facing a $28 billion, and rising, budget deficit and massive unfunded liabilities with dwindling revenues, but if you want a guy with experience to face such a crisis, Jerry Brown is as good as you’re going to get. He is not going to be afraid to speak the truth and at 72 this is his last rodeo. He just might be one of the pleasant surprises of the next few years. Here’s hoping he kicks ass and succeeds in stabilizing this critical state (or 8th-largest country as it likes to say).
--There was some very good news on Christmas Eve in the Holy Land. 100,000 pilgrims made it to Bethlehem vs. 50,000 last year.
--The Justice Department says homicide rates have dropped to their lowest levels in nearly a generation and overall violent crime has sunk to its lowest level since 1973, despite the recession, which surprises some. Homicides in New York are up this year about 14%, but are still down 75% over the past two decades. Even Chicago is down 46% during that period and Los Angeles is down 68%. As former New York and L.A. police commissioner William Bratton notes, there is no potentially ‘cataclysmic’ drug epidemic on the horizon similar to that of crack cocaine in the late 1980s and early 1990s. “I don’t see (homicides and other violent crime) ever returning in the numbers we once saw.” [USA TODAY]
I read a separate piece in the Los Angeles Times that noted L.A. is on track for its fewest homicides since 1967, with the recently departed Bratton deserving a ton of credit. [Heck, the guy has had a helluva career!] But I found this one stat particularly incredible, assuming it isn’t ruined these final hours of 2010. West Adams, a strip along the south side of the Santa Monica Freeway that is home to about 22,000 people, has had zero murders since a fatal stabbing early on Christmas morning a year ago. From 2007 to 2009, it had 17.
Sadly, though, while the overall nationwide homicide rate is down, the number of law enforcement officers in the U.S. who died in the line of duty jumped 37% this year, reversing two consecutive years of steep declines. With a week to go in 2010, 160 officers lost their lives, with traffic-related deaths – the leading cause of work-related death for police, up to 73. The 117 who died in 2009 represented a 50-year low.
Every time I see a policeman doing traffic duty I cringe because while I go out of my way to slow way down and give him extra room, I know so many other drivers are distracted and not taking the care they should.
-- “Person of the Year” time. I saw the London Times last weekend and thought, ‘Drat! I was going to pick him.’ I’m referring to British Prime Minister David Cameron. Yes, glance at a world map, which is where I always start. Not a lot of obvious candidates, I think you’d agree. Obama? Talk about the jury being out on all his policies. But if the economy comes roaring back in 2011, like 4% growth with a declining unemployment rate, and sound agreements on both the Korean Peninsula and on Iran’s nuclear program, then believe me, he’ll be everyone’s ‘Person of the Year’ and maybe pick up another Nobel Peace Prize. All of us should want this. But for 2010, Cameron showed both political courage and savvy and the reason why many eyes will be on Britain the first 4-5 months of 2011 is because the prime minister’s austerity program, that he ran on, and which makes him so unusual, begins to hit in earnest. We’ve seen some minor protests thus far but will they gather speed or will the British people provide an example for the rest of us a la during World War II and the blitz? Some say the austerity plan is too severe, but others in Europe, by necessity, are following suit. As alluded to above, the grand experiment is on. We all should want Cameron to succeed as well.
As for the “Robert Mugabe Dirtball of the Year Award,” this year we choose Pyongyang’s Kim Jong-il. But a special honorable mention not to Julian Assange, but to Pfc. Bradley Manning. Aaron Glantz of the New York Times had a story this week concerning a nonprofit group in Oakland called Courage to Resist which is raising money for a legal defense fund for Manning. Suffice it to say I will not be contributing to this one. I’ve said my piece on Manning. He should be tried quickly.
[As for Assange, he signed a $1.57 million book deal, of course. No doubt it will be a bestseller.]
--If you have any control over your kids, try to reinforce the dangers of listening to loud music. Thanks to the advent of the iPod, studies are showing that after ten years of playing music through it there is a considerable, irreversible loss of hearing. For example, when sitting next to a kid on a plane, if you can hear what he’s listening to on his iPod, one study shows the decibels exceed 85, the level at which the hairs of your cochlea can be damaged. Of course all of us as kids were guilty of this, and I’ve actually been to more live concerts in the last three years than the prior 20 combined, but one thing I didn’t know until seeing a piece in Men’s Health is that stepping outside for a break for 15 minutes every 2 hours allows the short-term hearing loss to recover.
--What a tragedy at a Hialeah, Fla., motel when five very close friends died in their room as a result of carbon monoxide poisoning. From the AP:
“A car used by the group was found running in a closed garage underneath the room. Friends say the car had needed a jump-start earlier and could have been left running to preserve the battery’s charge. A door leading to a staircase up to the room had been left open, and high levels of carbon monoxide were found inside.”
Ordinarily I wouldn’t write of something like this in this space, but then I read a story in a local paper, The Item, on an advisory put out by the fire department concerning carbon monoxide and not to be presumptuous but given the size of my readership, it just may save one of you.
It seems firefighters responded to an activated alarm at a residential home. The alarm had been reported by a home security service monitoring the alarm system. Since the alarm was called in by an outside company, firemen didn’t know if anyone inside was in trouble and after “their meter detected significant levels of the poison gas (carbon monoxide) outside the front door…the firefighters ‘decided to make their way in.’”
No one was home. The homeowner arrived shortly after as did the gas company. The carbon monoxide was traced to a furnace that was not functioning properly. Well, that happens. But here’s what’s really important.
An official of the Millburn Fire Department advised “residents to check the vents from their gas operated furnaces and clothes dryers when snow accumulates and drifts as it did during this week’s blizzard.” [emphasis mine]
“Many homes, especially newer or renovated homes use high efficiency gas operated furnaces for heat. These appliances use a vent that goes through the basement wall as opposed to venting the appliance by way of a chimney as was customary in the past. When snow piles up or drifts it can block these vents because of their low proximity to the ground. If the vents are blocked it can lead to a build-up of carbon monoxide into the home.” [emphasis mine]
Same with vents from clothes dryers. Again, newer homes often have the vent low to the ground. Obviously, make sure your carbon monoxide detector works, but check outside to see if you need to be on alert following snowstorms.
--The Washington Post’s Kevin Sieff had a story titled “Some Va. History texts filled with errors, review finds”. To wit:
“In the version of history being taught in some Virginia classrooms, New Orleans began the 1800s as a bustling U.S. harbor (instead of as a Spanish colonial one). The Confederacy included 12 states (instead of 11). And the United States entered World War I in 1916 (instead of in 1917).
“These are among the dozens of errors historians have found since Virginia officials ordered a review of textbooks by Five Ponds Press, the publisher responsible for a controversial claim that African American soldiers fought for the South in large numbers during the Civil War.”
Ronald Heinemann, a former history professor at Hampden-Sydney College, reviewed “Our Virginia: Past and Present,” and told the Post: “I absolutely could not believe the number of mistakes – wrong dates and wrong facts everywhere. How in the world did these books get approved?”
Historian Mary Miley Theobald, a former Virginia Commonwealth University professor, reviewed “Our America” and concluded that it was “just too shocking for words.”
“Any literate person could have opened that book and immediately found a mistake,” she said.
The Post reported, “Theobald’s list of errors spanned 10 pages.”
--Sign of the Apocalypse: NBC Nightly News had a story on Thursday concerning the famous Serengeti National Park in Tanzania. Guess what the government is doing there, largely as a way to appease China which is going after Tanzania’s rare earth minerals. It’s building a paved road right through the heart of it! There is no other place on earth like the Serengeti and the impact will be devastating. For one it will give poachers far easier access. “Man” really is pathetic.
--Sign of the Apocalypse, part deux: Have you seen the commercials for Pajamajeans? Beam me out of here, Scotty!
--Finally, you think the weather has been rough this month, including in Europe? I was reading a piece in the Irish Independent on the Great Irish Frost of 1740, what ended up being “21 months of bizarre weather” that was “without known precedent and defied conventional explanation,” according to a new book called “Arctic Ireland” by Trinity College history professor David Dickson. It “remains to this day the longest period of extreme cold in modern European history” and its causes remain unknown, though it is believed it was caused by volcanic eruptions similar to Iceland’s Eyjafjallajokull eruption from last spring. [You really don’t know if I spelled that correctly, do you?]
The extreme weather started after Christmas 1739 and “introduced a cold so penetrating that liquids froze indoors and ice floes appeared at the river mouths.”
Three ships sank in Dublin Bay and one body washed up onshore, covered in ice.
But due to a vast high pressure system, there was hardly any snow over northern Europe. Coal could no longer be brought in from across the Irish Sea due to ice-bound quays and frozen coal yards causing coal prices to soar.
As a result “hedges, fine trees, and nurseries around Dublin were stripped bare as desperate people searched for substitute fuel,” Mr. Dickson wrote. And the frost wiped out the potato crop the following spring. Widespread drought coupled with the low temps killed off sheep and cattle.
And then just when things couldn’t get worse, blizzards hit in October 1740, followed by a thaw and flooding. Up to 20% of Ireland’s population of 2.4 million was wiped out.
Pray for the men and women of our armed forces, and all the fallen.
Gold closed at $1421
Returns for the week 12/27-12/31
Dow Jones +0.0% 
S&P 500 +0.1% 
S&P MidCap -0.4%
Russell 2000 -0.7%
Nasdaq -0.5% 
Returns for the period 1/1/10-12/31/10
Dow Jones +11.0%
S&P 500 +12.8%
S&P MidCap +24.8%
Russell 2000 +25.3%
Bears 20.0 [Source: Chartcraft / Investors Intelligence]
Good luck to all in 2011. I appreciate your support.