Week in Review

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Week in Review

03/10/2012

For the week 3/5-3/9

Europe, U.S. and China

Greece’s private creditors finally hammered out a deal wherein they took a 70-75% hit on their sovereign bonds, the biggest debt writedown in history, which allowed the country to wipe out 100 billion euro in liabilities and, coupled with further austerity measures, entitles Greece to a second bailout of 130 billion euro, 35.5 billion of which was released on Friday, 14.5 billion needed for a March 20 debt payment. 

The restructuring, in which investors receive new bonds with a face value of 31.5% of the old ones, along with a growth kicker (if there ever is growth again in Greece) did result in a formal default, as the International Swaps and Derivatives Association, the derivatives trade body, announced that what transpired on Friday amounted to a ‘credit event’ for holders of credit default swaps, thus about $3.2 billion is to be paid out on CDS contracts. Failure to trigger would have spelled the end for this market, but I’m going to reserve further comment until we see how the payment process works over the coming days.   I also frankly know zero about who holds what, and who owes whom in this part of the saga. [And I apologize ahead of time if some of the figures quoted in this segment aren’t spot on as the details are bumping up against my deadline.]

Greece has been relying on rescue loans since May 2010 and is now in the midst of its fifth straight year of recession/Depression. On Friday we learned the Greek economy plunged 7.5% in the fourth-quarter, even worse than earlier estimated.    Unemployment is officially at 21% as of December, the last month reported, and today is clearly far higher.

All parties involved in the debt restructuring said the same thing. It was painful and the pain isn’t over yet, but at least there weren’t any runs on the bank and panic in the streets. The next round of potentially violent protests, though, is coming as the Greek people see the latest round of austerity measures implemented. At least they better be implemented, or the Germans, for one, will say enough is enough.   No more funds. Cut them loose.

And as the years go by, everyone knows Greece won’t be able to lower its debt to the expected 120% of GDP level by 2020, so we’ll be talking about more bailouts down the road, which is the point at which Greece exits the euro family and begins to saw off its border with Turkey and its other neighbors so that it can then just drift aimlessly in the Mediterranean, fighting off the occasional sea monster. At least it would be more fun than what the people are going through today, and probably the source of some classic literature for future generations to enjoy.

Bottom line, Greece still has no strategy for growth and it’s lost a lot of its sovereignty as all its creditors, read European Central Bank, International Monetary Fund and European Commission will be looking over its shoulder.

“He’s caring for his sick mother, Chancellor Merkel. He needs another paycheck.”

“Give me that phone…I’ll call him myself and give him the bad news. When are you going to learn to do this yourself?!”

[Under his breath, the Greek bureaucrat mumbles, “Why that sorry Merkel. I’ll show her. I’m going to the meeting of the anarchists tonight and learn how to make a Molotov cocktail.”]

Elsewhere in euroland, European Central Bank President Mario Draghi puffed out his chest like a pigeon strutting down the palazzo and proclaimed the environment for the continent “has improved enormously” and there are “many signs of returning confidence in the euro.”   So Draghi said it was time to refocus on inflation, which is running higher, at 2.7%, than the ECB’s 2% target.

No more stimulus, boys and girls. You’re on your own. You figure out how to grow your economies while meeting your austerity mandates. Of course it would help if the banks would start lending to each other again, and then start lending to their consumer customers and businesses.

A combined reading on the euro-17 services and manufacturing sectors came in at just 49.3 for February, after hitting 50.4 in January, 50 as you know being the dividing line between growth and contraction. Retail sales for the eurozone were up 0.3% in January. German factory orders in January unexpectedly fell, down 2.7% over December, and retail sales there were down 0.6% in the same month.   Retail sales in the non-euro U.K. were down 0.3% in February, after a similar downdraft the month before. So nothing good happening.

At least Italy’s leader, unelected Mario Monti, has a 52% approval rating, but this is down from 61% in December.

Lastly, Greece still has a big election coming up, late April/early May last I saw, while France has round one of its presidential vote on April 22. I have more on this below.

I can be mercifully brief on this front today.   It’s really all about Iran, even as the Obama administration would like to ignore the topic until after the election (they won’t be able to), but this week the White House reached for the Korbel to celebrate another solid employment report, with the February non-farm payroll figure showing the economy added 227,000 jobs, with upward revisions to December and January adding another 61,000. Plus, for February, 233,000 were added in the private sector. Add it all up and the president can crow about the best six-month streak for job growth since 2006, 1.2 million. The unemployment rate remained unchanged at 8.3%, but it’s still headed to 7.9% by November, thus the reason for the four remaining Republican presidential candidates doing heroin Friday night, along with millions of party loyalists. I mean it’s not as if Republicans want further misery and despair across the land, they just want to see the jobless rate at 8.1% when we all go to the polls.

I don’t need to tell you it’s about sentiment…and trends in same. Speaking of sentiment, in the latest NBC News/Wall Street Journal survey, 57% believe the “worst is behind us,” up from 49% in November.

One thing that the folks aren’t happy about, however, that can still bite the president in the butt, is the price of gasoline and 85% told Gallup pollsters that they want Obama and Congress to immediately do something about it. The last national price I saw was $3.77 and it is still expected to hit $4.00 by Memorial Day. To beat a dead horse, $4.00 is a magic number in terms of the impact on the economy. It doesn’t mean we go plunging back into recession, it just means that growth is slower than it otherwise might be…and thus corporate earnings won’t be as good…making stocks potentially overvalued.   But, again, it’s about Iran when you talk oil, and we have a major wait and see game on that front.

I kind of got a kick out of all the media types when word came out last weekend that China’s Premier Wen Jiabao set a government growth target of 7.5% for 2012, seeing as I wrote in this space on 2/25, “(Wen) is slated to target cutting pollution, while also addressing income inequality, at the upcoming National People’s Congress, where it is expected he’ll set a government growth target of 7.0%-7.5% for 2012.” So no surprise here.

Nor should it be a surprise when growth comes in closer to 8%, maybe 8.5%. [Last year at the NPC, Wen said the economy would grow 8% and it ended up at 9.2%.] 

China released a slew of data this week, virtually all of it confirming a slowdown, but I’ll save the most important number for last. [Due to the Chinese New Year festivities and vacation, many of the figures are for the Jan.-Feb. period vs. year ago levels in order to smooth out the distortions the week-long holiday creates.]

Passenger-car sales for the first two months of 2012 were the worst in 7 years, down 4.4% when a 3% decline was expected, so not good for the likes of General Motors and Volkswagen already struggling with a lousy European market.

Factory output was up 11.4% in February, the worst performance since July 2009, while fixed asset investment (54% of growth in 2011) rose 21.5% the first two months.

Retail sales rose 14.7% for the first two months, far less than expected.

Premier Wen said the government expects both imports and exports to rise 10%, but this morning the government reported exports grew 18.4% in February, while imports soared 39.6%, reviving after the previous month’s 15% decline. China actually reported a trade deficit of $31.5 billion; by one account the biggest since 1989. The thing is, Jan.-Feb. export growth slowed to 6.9% over the same two-year period last year, or barely half of December’s 13.4% rate. Imports for the two months rose 7.7%. 

China Eastern Airlines, the nation’s 2nd-largest carrier, expects a “big drop” in the rate of growth this year, as it sees demand for international passenger and cargo flights “clearly falling.”

Premier Wen said the local debt issue can be handled and that the real estate bubble is under control.

The Port of Shanghai said cargo throughput for Jan. and Feb. was up 7% vs. 13% in 2011.

But the big story concerns inflation. The government is targeting 4% for 2012 and in the month of February consumer prices rose just 3.2%, and were flat on producer prices. Even food inflation, 30% of the CPI here, is down to 6.2%, far better than the consistent double-digit picture of last year.

So what this means is Chinese authorities can stimulate the economy, as explained below.

You also have to understand that with a once-a-decade leadership change taking place in the fall and early next year, with Xi Jinping becoming president and Li Keqiang the new premier, China wants stability. The rebalancing of the economy from manufacturing to consumerism is part of the plan to achieve this.

“Contrary to widespread concerns over an imminent hard landing, China will defy the naysayers.

“Even after Premier Wen Jiabao’s latest warning over a moderate slowing of growth, it is doing a far better job in managing its economy than most give it credit. It even offers some lessons in macro policy strategy that the rest of the world should heed.

“Nowhere is that more evident than on the inflation front, where Chinese authorities have waged a very successful campaign against what has long been the nation’s most destabilizing economic threat….

“This reflects the impacts of three very deliberate policy actions taken by Beijing.

“First, administrative measures were put in place to deal with bottlenecks in agriculture [Ed. which then lowered food inflation]….

“Second, bank required reserve ratios were raised 12 times in 2011 to slow credit growth. The results are encouraging. Renminbi bank loan growth decelerated from 19.9% in 2010 to 15.8% in 2011 and renminbi deposit growth slowed even more sharply from 20.2% in 2010 to 13.5% in 2011.

“Third, the People’s Bank of China (PBoC) raised policy interest rates five times in 2011. This was particularly important in light of the acceleration of non-food, or core inflation, to a 3% high last summer – the sharpest such increase in more than a decade. Had the PBoC not acted, underlying inflationary pressures could have intensified further. Instead, they have now begun to moderate….

“This is classic central banking at its best. China now has plenty of ammunition in its monetary policy arsenal – namely, high required bank reserve ratios and positive real short-term interest rates – to deploy as circumstances dictate. In contrast, the U.S. Federal Reserve, the European Central Bank and the Bank of England are out of traditional ammunition. They have followed the Bank of Japan and taken their short-term policy rates down to the zero band.

“As a result, the world’s big central banks have been forced to rely on untested and dubious liquidity injections as the primary means of monetary control. Where this ends and what it implies for the future – inflation, another outbreak of asset and credit bubbles, or some combination of all that – is anyone’s guess.

“In the event of a downside shock to its economy, Chinese authorities have ample scope to ease….The west – out of basis points and with massive budget deficits – has no such option.

“In a crisis-prone world, there is a gathering sense of foreboding over China. First it was the U.S., then Europe. Now there are growing fears the Chinese economy must be next. It’s not just the hand-wringing over inflation but also worries of a huge property bubble, a banking crisis or social unrest.

“Those fears are overblown. China is cut from a very different cloth than the advanced economies of the west. Long focused on stability, it is more than willing to accept the short-term costs of a growth sacrifice to keep its development strategy on track.

“A successful battle against inflation is an important example of the interplay between China’s tactical imperatives and its overarching strategic objectives. That’s a lesson the rest of the world could certainly stand to learn.”

Street Bytes

--On Friday, the market celebrated the third anniversary of the historic market lows for all three major indices.

The Dow Jones closed March 9, 2009 at 6547; the S&P 500 at 676; and Nasdaq at 1268.

Friday, the Dow closed at 12922, up 97% since 3/9/09; the S&P finished at 1370, up 103%; and Nasdaq closed the week at 2988, up 136% since the lows. 

I myself didn’t call a bottom that week three years ago, but amidst the depths of despair that many felt, I did stick to my 2009 forecast that the Dow and S&P would both finish up at least 20% and Nasdaq would gain 30%, which proved to be a rather good call.

Alas, this year I have the three down 10% by Dec. 31. But I’ll have more to say on this when we finish the first quarter.

For the week, by the way, stocks finished mixed, with the Dow Jones down 0.4%, while the S&P gained a point, 0.1%, and Nasdaq tacked on 0.4%, its third straight week with the exact same percentage gain.

Bonds fell a little on Friday with the solid employment report.   Earlier in the week, Ben Bernanke hinted the stimulus game was over. If the Fed is going to do anything extraordinary this year, you’d think it would do so by Fourth of July because it doesn’t want to be seen interfering in the presidential election thereafter.

--Japan’s economy contracted less than the government first thought in the fourth-quarter, down 0.7%, compared with a preliminary estimate of a 2.3% contraction. Japan is still expected to grow 1.5% in the current quarter, according to Barclays Capital.

--The Thai government is projecting economic growth of between 5.5% and 6.5% this year as it rebounds from the catastrophic floods of 2011.

--Brazil’s economy grew at just a 2.7% pace for 2011, its second-worst performance since 2003. The nation’s finance minister, though, says growth will accelerate to 4.5% this year. [Analysts have it coming in closer to 4.0%.] The economy had grown 7.5% in 2010. Brazil is in the midst of an infrastructure boom tied to the 2014 World Cup and the Summer Olympics two years later. At least it better. There are conflicting reports just how ready they are going to be.

--The projected slowdown in China may cause Australian house prices to tumble by more than 5% this year, according to S&P; Aussie exports being negatively impacted. S&P is basing their projection on a “soft landing” in China with GDP growth at 8%.

--The Aussie economy grew by just 0.4% in Q4 over Q3 (2.3% on an annualized basis), less than expected. The Reserve Bank of Australia expects growth of 3-3.5% in 2012 and 2013.

--Interesting economic barometer. Aer Lingus’ passenger traffic increased by 8.8% last month compared to February 2011, with long-haul numbers up 15.4%.

--According to the U.S. Department of Energy, Colombia increased oil production by 450,000 barrels a day between January 2007 and December 2011, compared with 500,000 b/d in Brazil over the same period. As one who has a very small position in an energy company with interests in Colombia, I make note of this. Colombia’s prospects are bright on this front.

--Natural-gas prices fell to a 10-year low, $2.30 per million BTUs on a closing basis, Wednesday. [$2.32 to finish the week.] Warmer weather has done a number on demand this winter, pushing inventory to record levels.

--We note the passing of long-time energy analyst, Peter Beutel, at the all-too-early age of 56. I had no idea until reading his obituary that he was the son of famed New York television anchor Bill Beutel. 

--Apple Inc. unveiled the iPad 3, or what is being called “the new iPad,” which will be available starting March 16 in the U.S. and a few other countries. If you go for the model that offers cellular connectivity, your speeds could be as much as 10 times faster, 4G, rather than the 3G found in the iPad 2. Apple is dropping the price of the iPad 2 to $399 in an effort to broaden the market. [Apple shares were unchanged on the week at $545.]

--Meanwhile, tech research firm Gartner projects that the launch of Windows 8, coupled with a new wave of ultrabooks, will power PC sales in 2013, up 10%, after an estimated 4.4% growth rate this year. PC shipments worldwide would top 400 million units next year if Gartner is right. The key will be ultrabooks using the Windows 8 operating system.

--Cotton prices spiked after India banned exports for the second time in two years; India being the world’s second-largest producer. India is trying to ensure sufficient supply for its domestic textile companies.

--Allied Irish Banks is reducing its workforce by 2,500, most of the losses being in the Republic and Northern Ireland, a blow to the Irish government.

--According to New York State’s Dept. of Labor, New York City’s economy grew nearly twice as fast in 2011 as first thought, with Gotham adding 85,300 jobs, well above the initial estimate of 44,800. The new data shows Wall Street actually added 3,800 jobs rather than losing 1,900. Huh. An analysis of department data by a real estate services firm projects the city added another 31,600 in January, the largest one-month gain since 1990.

Something doesn’t quite add up, though, as the city’s unemployment rate hit 9.3% in January, up from 9.1% in December.

And, New York City’s Independent Budget Office now says Wall Street bonuses for 2011 fell a whopping 25% to $17.8 billion, nearly double the earlier projected drop the previous week by New York State’s comptroller. It’s all about the impact on the city’s tax coffers. All in all, a confusing set of numbers.

--Apartment rents continue to rise. In Manhattan, the average one bedroom with a doorman rose 3.7% to $3,692, though two-bedroom units without a doorman rose 10.5% in February vs. last year to $4,212.

If you want a doorman guarding your bedroom during sleeping hours, that’ll set you back about $40,000, depending on whether you give said sentry kitchen access.

--Texas financier R. Allen Stanford was convicted on 13 of 14 counts of fraud, conspiracy and obstruction of justice for his $7 billion Ponzi scheme. The 61-year-old will undoubtedly spend the rest of his time behind bars.

But as the Wall Street Journal observes, the real crime here is that “the vast majority of investor money was sucked into the Stanford operation after SEC examiners began blowing the whistle.”

And they blew the whistle not once, but four times; 1997, 1998, 2002 and 2004. “Each time, they concluded that the Stanford operation was a probable Ponzi scheme and urged SEC action. Each time, the enforcement staff failed to act.”

The payoff was the guy sitting on the investigation, Spencer Barasch, left the SEC to work for Stanford.

--Mexican tycoon Carlos Slim tops Forbes magazine’s annual list of billionaires once again, with an estimated net worth of $69 billion. Bill Gates ($61 billion) and Warren Buffett ($44 billion) retain the Nos. 2 and 3 slots, followed by Bernard Arnault, chairman of French luxury goods group LVMH, and Amancio Ortego, founder of Spanish fashion business Zara. I have no freakin’ idea what Zara is. I feel so stupid.

--Ford CEO Alan Mulally made $34.5 million in 2011 owing to stock option gains, after he was paid $26.5 million in 2010, so he has been rewarded rather handsomely for Ford’s turnaround; perhaps a bit too much so, as UAW President Bob King said Mulally’s pay was “morally wrong.”

--According to the Economic Policy Institute, as reported by the Journal’s James R. Hagerty, “the average inflation-adjusted hourly wage for male college graduates aged 23 to 29 dropped 11% over the past decade to $21.68 in 2011. For female college graduates of the same age, the average wage is down 7.6% to $18.80.”

Yup, kids. You might do better just ridin’ the rails or becoming a river boat gambler.

--McDonald’s shares slipped a bit this week on its February same-store comps. February sales in the U.S. were outstanding, up 11.1% over year ago levels, but they were up a less than expected 4% in Europe and disappointed elsewhere. I forgot the Filet of Fish offer. Drat.

--The number of airline accidents worldwide dropped in 2011. Among Western-built aircraft, the number of accidents declined from 17 in 2010 to 11 last year, according to the International Air Transport Assn., or one crash for every 2.7 million flights, the lowest in aviation history, according to the trade group.

The number of airline fatalities dropped from 786 in 2010 to 486 in 2011. Africa only had 8 accidents vs. 18 in 2010. This is good!

--And this is also good…California’s unemployment rate in January hit 10.9%.   In January 2011 it was 12.1%. It’s a start.

--My portfolio: I haven’t said anything about my main China holding recently because the company has gone radio silent until the last week in March. Yes, I’m incredibly frustrated, as I know those of you still playing along with me are.

--Carnival Cruise Lines reported a fiscal first-quarter loss, Dec. thru Feb., of $139 million owing to the Costa Concordia disaster. Thus far, Carnival has booked incident expenses of $29 million, with far more to come, one can imagine. It also recorded an insurance recoverable of $515 million, which offset the write-off on the Costa Concordia value, the ship being deemed a “total loss.”   Salvage bids are out but it could take up to 12 months to remove the vessel. Do you think the beer on board is still good? I mean it remains chilled at an appropriate temperature.

--Top members of the computer hacking group LulzSec were arrested in New York and elsewhere. Six associated with the group were either under arrest or being sought. LulzSec is a spin-off of the hacking collective Anonymous.

--Harrisburg, Pennsylvania is going to default on its general-obligation bond payments next week. So if you have to go to the bathroom and you live there, you may want to go now because no telling what will happen to city services.

Well you tell me? The city’s receiver said any cash flow while in bankruptcy goes to pay police and fire as essential services, but there’s nothing in what I’m reading about water and sewer service.

--Bad week on the P.R. front for Morgan Stanley as a broker, David S. Walker, was meeting with a woman accused of running an Upper East Side brothel, supposedly offering advice on how to expand her business. He hasn’t been accused of any wrongdoing, but it made for great fun in the tabloids in these parts.

And last weekend, it was Morgan Stanley investment banker W. Bryan Jennings, “a $2 million-a-year fat cat,” who made the news for threatening a cab driver who had taken him from Midtown Manhattan to his home in Darien, Conn.   The cabbie asked for the $204 fare and was then allegedly threatened and slashed with a knife by Jennings, who was drunk and refused to pay.

Oh, there is far more to this story that I’m leaving out, some real ugly stuff…I just found it rather amusing on balance, not having a lot of sympathy for fat cats these days. [The driver needed six stitches and is OK.]

--In the final week of February sweeps, ABC’s “Good Morning America” came within 164,000 viewers of NBC’s “Today.” Ann Curry isn’t cutting it. Bring back perky Katie! And “Today” better find a way of keeping Matt Lauer, your editor watching the first 22 minutes each morning. “Today” has been the No. 1 morning show for 16 years running. And get this. According to Kantar Media and the New York Post, “Today” earned NBC an estimated $443.5 million through the first nine months of 2011.

But I just saw a blurb that Matt Lauer makes $17 million a year and wants $30 million to stay!   And he gets like 53 weeks vacation a year, too. Nice gig.

--Speaking of television, according to a report from Sanford C. Bernstein, teens are not spending all their time on computer screens and cellphones, rather they still “consume the vast, vast majority of their video content via traditional television.” Studying Nielsen data, analyst Todd Juenger wrote that “consumption of television by teens has stubbornly continued to grow, even as new devices have permeated their lives.” [Joe Flint / L.A. Times]

Parents, get them playing Strat-O-Matic baseball and football if they’re going to waste all that time. Might as well learn some math as your editor did in his youth.

--Molson Coors Brewing Co. is launching Coors Light Iced T in Canada next month ahead of a possible U.S. rollout. The iced tea-flavored beer will have roughly 4% alcohol content but no caffeine. Boston Beer’s Samuel Adams has had good success with its hard iced tea brand, Twisted Tea. I will be having a taste-testing in the home offices of StocksandNews at an appropriate date and will report back to you my exclusive findings on the group overall.

Foreign Affairs

Iran: This was an historic week on the U.S.-Israel front.

President Barack Obama…to the American Israel Public Affairs Committee, March 4.

“Let’s begin with a basic truth that you all understand. No Israeli government can tolerate a nuclear weapon in the hands of a regime that denies the Holocaust, threatens to wipe Israel off the map, and sponsors terrorist groups committed to Israel’s destruction. And so I understand the profound historical obligation that weighs on the shoulders of Bibi Netanyahu and Ehud Barak, and all of Israel’s leaders.

“A nuclear-armed Iran is completely counter to Israel’s security interests. But it is also counter to the national security interests of the United States….

“And that is why, four years ago, I made a commitment to the American people, and said that we would use all elements of American power to pressure Iran and prevent it from acquiring a nuclear weapons. And that is what we have done….

“Iran is isolated, its leadership divided and under pressure. And by the way, the Arab Spring has only increased these trends, as the hypocrisy of the Iranian regime is exposed, and its ally – the Assad regime – is crumbling….

“The United States and Israel both assess that Iran does not yet have a nuclear weapon, and we are exceedingly vigilant in monitoring their program….

“(Given) their history, there are, of course, no guarantees that the Iranian regime will make the right choice. But both Israel and the United States have an interest in seeing the challenges resolved diplomatically….

‘Moreover, as President and Commander-in-Chief, I have a deeply held preference for peace over war…

“We all prefer to resolve this issue diplomatically. Having said that, Iran’s leaders should have no doubt about the resolve of the United States – just as they should not doubt Israel’s sovereign right to make its own decisions about what is required to meet its security needs.

“I have said that when it comes to preventing Iran from obtaining a nuclear weapon, I will take no options off the table, and I mean what I say….

“Iran’s leaders should understand that I do not have a policy of containment; I have a policy to prevent Iran from obtaining a nuclear weapon. And as I have made clear time and again during the course of my presidency, I will not hesitate to use force when it is necessary to defend the United States and its interests.”

Israeli Prime Minister Benjamin Netanyahu…to AIPAC, March 5.

“President Obama has reiterated…all options are on the table, and that American policy is not containment.

“Well, Israel has exactly the same policy – We are determined to prevent Iran from developing nuclear weapons; we leave all options on the table; and containment is definitely not an option.

“The Jewish state will not allow those who seek our destruction to possess the means to achieve that goal.  A nuclear armed Iran must be stopped….

“Fortunately, President Obama and most world leaders understand that the claim that Iran’s goal is not to develop nuclear weapons is simply ridiculous.

“Yet incredibly, some are prepared to accept an idea only slightly less preposterous; that we should accept a world in which the Ayatollahs have atomic bombs.

“Sure, they say, Iran is cruel, but it’s not crazy. It’s detestable but it’s deterrable.

“My friends, responsible leaders should not bet the security of their countries on the belief that the world’s most dangerous regimes won’t use the world’s most dangerous weapons.

“And I promise you that as Prime Minister, I will never gamble with the security of the State of Israel….

“For the last decade, the international community has tried diplomacy. It hasn’t worked.

“For six years, the international community has applied sanctions. That hasn’t worked either.

“I appreciate President Obama’s recent efforts to impose even tougher sanctions against Iran. These sanctions are hurting Iran’s economy, but unfortunately, Iran’s nuclear program continues to march forward.

“Israel has waited patiently for the international community to resolve this issue. We’ve waited for diplomacy to work. We’ve waited for sanctions to work. None of us can afford to wait much longer.

“As Prime Minister of Israel, I will never let my people live in the shadow of annihilation….

“We deeply appreciate the great alliance between our two countries. But when it comes to Israel’s survival, we must always remain the masters of our fate.”

[Note: I have more extensive excerpts of both speeches on my “Hot Spots” link.]

And so the two leaders met at the White House on Monday; Obama having spoken to AIPAC the night before, Netanyahu addressing the key lobby group hours later.

I have long said in this space that Benjamin Netanyahu is the smartest man on the planet…and it’s not even close. [He’s also a corrupt sonuvagun.]

President Obama, on the other hand, thinks he is the smartest man on the planet. And so you have this dynamic between the two. It’s largely why they don’t get along.

Well it would behoove the Free World that the two cooperate now, but here’s the bottom line.

Israel’s “red line” is when it can no longer take out Iran’s capacity to build a nuclear weapon; with Israel also not wanting Iran to pass into a “zone of immunity” in which key facilities may be invulnerable to attack. In both instances, Israel could build a case that given its Air Force’s existing capabilities, Iran has basically already reached the zone. 

For the United States, the red line is when the U.S. is convinced Iran is about to ‘break out’ and go for the bomb, acknowledging Iran could already have the capacity to build one, with the U.S. having far greater military capabilities for inflicting the kind of devastating damage necessary to disrupt Iran’s increasingly underground program at that point.

So, goes Israeli thinking, if Netanyahu doesn’t act, will Obama before it’s too late?

Obama is relying on the intelligence community to be able to tell him when Iran is within a year of having a bomb. But Iran can have a bomb within months of breaking out, meaning the enrichment of uranium from harmless 20% to bomb-grade 90%. Today, the West doesn’t have the inspectors on the ground to know when this is occurring. We just have some cameras at places like Natanz, while you saw how Iran prevented the inspectors from the International Atomic Energy Agency from checking out the military site at Parchin, which the IAEA now says Iran is attempting to clean up after possible tests of a nuclear-weapon trigger.

On Tuesday, British Prime Minister David Cameron said Iran is seeking to build “some sort of intercontinental missile capability,” adding in a speech to British lawmakers, he does not “believe that an Iranian nuclear weapon is just a threat to Israel.”

But now the United States and the other members of the Group of Six (China, France, Germany, Russia and Britain) will commence a new round of talks with Iran. The timing is to be determined, even as the sands of the hourglass are running out. 

“It’s Lucy and the football, Iran-style. After ostensibly tough talk about preventing Iran from going nuclear, the Obama administration acquiesced this week to yet another round of talks with the mullahs.

“This, 14 months after the last group-of-six negotiations collapsed in Istanbul because of blatant Iranian stalling and unseriousness. Nonetheless, the new negotiations will be both without precondition and preceded by yet more talks to decide such trivialities as venue.

“These negotiations don’t just gain time for a nuclear program about whose military intent the International Atomic Energy Agency is issuing alarming warnings. They make it extremely difficult for Israel to do anything about it (while it still can), lest Israel be universally condemned for having aborted a diplomatic solution.

“If the administration were serious about achievement rather than appearance, it would have warned that this was the last chance for Iran to come clean and would have demanded a shorter timeline. After all, President Obama insisted on deadlines for the Iraq withdrawal, the Afghan surge and Israeli-Palestinian negotiations. Why leave these crucial talks open-ended when the nuclear clock is ticking?....

“So what is Obama’s real objective? ‘We’re trying to make the decision to attack as hard as possible for Israel,’ an administration official told The Post in the most revealing White House admission since ‘leading from behind.’

“Revealing and shocking. The world’s greatest exporter of terror (according to the State Department), the systematic killer of Americans in Iraq and Afghanistan, the self-declared enemy that invented ‘Death to America Day’ is approaching nuclear capability – and the focus of U.S. policy is to prevent a democratic ally threatened with annihilation from preempting the threat?....

“A fair-minded observer might judge that Israel’s desire to not go gently into the darkness carries higher moral urgency than the political future of one man, even if he is president of the United States.”

“Should Israelis and pro-Israel Americans take President Obama at his word when he says – as he did at the American Israel Public Affairs Committee… ‘I have Israel’s back’?

“Here is a president who fought tooth-and-nail against the very sanctions on Iran for which he now seeks to reap political credit. He inherited from the Bush administration the security assistance to Israel he now advertises as proof of his ‘unprecedented’ commitment to the Jewish state. His defense secretary has repeatedly cast doubt on the efficacy of a U.S. military option against Iran even as the president insists it remains ‘on the table.’ His top national security advisers keep warning Israel not to attack Iran even as he claims not to ‘presume to tell [Israeli leaders] what is best for them.’

“Oh, and his secretary of state answers a question from a Tunisian student about U.S. politicians courting the ‘Zionist lobbies’ by saying that ‘a lot of things are said in political campaigns that should not bear a lot of attention.’ It seems it didn’t occur to her to challenge the premise of the question.”

On Thursday, Netanyahu gave an interview to Israel’s three television networks.

“I don’t have a stop watch in hand. This is not a matter of days or weeks. It is also not a matter of years. The result has to be that the threat of a nuclear weapon in Iran’s hands is removed.”

Netanyahu made clear that Israel and the U.S. had different time references.

“The U.S. is big and distant, Israel is smaller and closer to Iran, and – of course – we have different capabilities. So the American clock regarding preventing nuclearization of Iran is not the Israeli one. The Israeli clock works, obviously, according to a different schedule.”

[One note on Israel and the Palestinian situation, which is getting buried in all the Iran talk. An Israeli airstrike took out a top Hamas military commander, while action is heating up in Gaza with heavy exchanges of rocket fire between Palestinians and Israelis.]

Syria: I first brought up the issue of Syria’s chemical and biological weapons stockpiles a few weeks ago and Friday’s Wall Street Journal has a story that American and Jordanian militaries are jointly developing plans to secure it. For this story to be presented the way it has been, you know it is of utmost concern and no doubt in my mind that Assad will use them on his own people (U.S. officials say there is no sign of this…but frankly my track record is better than theirs), let alone the danger the WMD fall into the hands of terrorists.

“Significant quantities…are believed to have been weaponized by the Syrian government in artillery shells, bombs and possibly Scud and SS-21 missiles.

“Russia, North Korea, Egypt and Iran are among the countries that have assisted Damascus in developing these weapons, according to current and former U.S. officials.”

The main concern, as expressed by Adm. William McRaven, head of the U.S. Special Operations Command, is the weapons falling into the hands of Hizbullah in particular.

Any joint U.S.-Jordanian effort, however, can’t occur until Assad falls, but were a headline to flash that he has been assassinated or flown out of the country, you can just imagine the incredible amount of immediate activity that will take place in Syria, including tribal bloodletting. 

The other news of the week from here was the same. Dreadful, including talk of a fresh massacre in Homs, where 44 members of several families were reportedly executed the day after the UN’s humanitarian chief visited the place.

Syria’s deputy oil minister defected, condemning his family to death, by his own admission as he left them behind, the bastard. At least four generals also reportedly defected, but it’s too easy to then reach the conclusion that Assad’s fall is imminent. You can only pray this is so. Just remember, if and when he does go, it’s chaos and there is no united opposition…it’s worse than Libya.

And you also have Syria’s ability to light the entire region on fire. Just last Sunday, 2,000 Syrian refugees fled into Lebanon, according to the UN. A Lebanese security source told the Daily Star that the Lebanese Army arrested 30 armed Syrian rebels trying to sneak into the country as well. How many have already done so? Remember, I first went to Beirut in 2005 in the weeks after the Syrian Army was forced to exit following the assassination of Rafik Hariri. They had been there a long time. Assad could easily attempt to create a diversion in Lebanon today. Otherwise, Assad is trying to pound and cleanse one town, one city after another. As my friend Michael Young of the Daily Star adds:

“How the Syrian president intends to govern his sullen citizens after that is an open question. But if the principal American motive is a responsibility to protect citizens, then issuing statements of condemnation and piling up sanctions are unlikely to change Assad’s behavior, and a new Security Council resolution will either be vetoed by Russia or so watered down as to be irrelevant.”

Speaking on the Senate floor, Sen. John McCain said there was a “clear strategic interest in forcing the regime” from Damascus, seeing as the Assad government serves as the “main forward operating base” for Iran in the Middle East. McCain is calling for air strikes. President Obama said “Ultimately this dictator will fall” but that U.S. military action would be a big mistake.

For its part, fresh off his election victory, returning President Vladimir Putin said don’t expect any change in Russia’s policy.

“Testimony by senior U.S. officials to Congress this week about Syria has made one thing clear: The Obama administration has yet to face up to its own assessment of what is happening in that strategic Arab country.

“For months President Obama has been declaring that the fall of dictator Bashar al-Assad is ‘inevitable’ or ‘a question of when,’ as he put it Tuesday. But Marine Gen. James Mattis, the head of U.S. Central Command, told the Senate Armed Services Committee the same day that Mr. Assad is ‘gaining physical momentum’ in his assault on his rebellious population. ‘He’s going to be there for some time because I think he will continue to employ heavier and heavier weapons. It will get worse before it gets better.’

“Mr. Obama also derided suggestions that the United States should intervene militarily. Among other things, he said ‘we’ve got to think through…what’s critical for U.S. security interests.’ But Gen. Mattis said that if the Assad regime were to collapse, ‘it’ll be the biggest strategic setback for Iran in 20 years.’…

“As for building an international coalition for more forceful action, that historically has been the responsibility of the United States and its president. If Mr. Obama does not lead on Syria, there will be no international consensus – and an outcome that meets U.S. interests will be anything but inevitable.”

Russia: Vladimir Putin is officially back, having captured 64% of the vote in Russia’s presidential election on Sunday. Vlad, knowing his days are now numbered, shed a few tears as he accepted the cheers of his supporters outside the Kremlin Sunday evening. Err, rather, it was the cold wind that caused his eyes to water, he later said. 

Western observers said the vote was deeply flawed as Communist Party leader Gennady Zyuganov took second with 18%, while billionaire New Jersey Nets owner Mikhail Prokhorov came in third with 8%. The vote was a joke as you had situations like in Chechnya where, according to the Moscow Times, one precinct reported 99.7% for Putin with a turnout of 99.6%. Another precinct in Chechnya, as reported by the New York Times, saw Putin capture 1,482 votes, though only 1,389 were registered to cast ballots; a neat trick if you can pull it off…and they did.

The independent watchdog, Golos, said Putin got at least 50.7%, so he would have avoided a run-off anyway, and it’s a fact the opposition slate of candidates was pathetic.

But the world knows the vote was still far from clean; this after the disastrous Dec. 4 Duma election that spawned the mass protests leading up to the presidential ballot.

The discontent that spells Putin’s eventual demise (I’m on record as saying it’s this year) goes back to last September when Putin and soon-to-be former President Dmitry Medvedev agreed to swap positions. It was said to be a tense meeting, with Medvedev reluctantly agreeing to the move. He had wanted to run again and instead Putin subjected him to this humiliation; confirmation that Medvedev was nothing more than Putin’s puppet

The thing is, the job swap, when announced at the United Russia party congress on Sept. 24, could not have gone worse as Putin blurted out, “We agreed to this years ago.”

Mark Franchetti writes of this period in the Sunday Times of London, “(Putin) had overreached himself. If Russians thought they were the victims of a hatchet job, here was its architect rubbing their noses in it.”

And so the rumblings started, with the growing middle class having had enough; it being as much about Putin himself as the stupendous level of corruption that dominates all facets of life.

I’ve long said Putin will be done in by a shadowy third force, and of course it will be in essence an old-style KGB coup. I said way back it would be Igor Sechin and his people who take control. Regardless, Vlad is gone because he is no longer an asset.

The only thing that could potentially save Putin is a massive reform effort, including the release of one-time Yukos oligarch Mikhail Khodorkovsky, but this is not in the cards, especially the former. Just more stagecraft, designed to make the people believe Putin is reforming when he isn’t; only this time the people won’t allow the charade to continue.

The post-election protests fizzled out last week, but they’ll return (they might be today), and if Vlad tries to repress them it won’t work. [The Great Repression will come with the next guy.]

Meanwhile, one question for President Barack Obama. “How’s that reset workin’ out for ya?”

Afghanistan: “The tide has turned. (The insurgency in southwestern Afghanistan) is no longer able to intimidate the local nationals to the point where they’re fearful of siding with the government of Afghanistan,” Marine Maj. Gen. John Toolan told USA TODAY in a phone interview.

Two things. Afghans hate the U.S., and the Taliban is of course just biding its time, knowing 10,000 troops are leaving the region by October. Sorry to be such a cynic, but I’ve been following this theater too closely not to feel otherwise. I do not doubt the surge in Helmand and Kandahar has had its successes, it’s just not going to stick once we’re gone.

All you have to do is look at the deepening suspicion between Afghan security forces and NATO, especially after the recent incidents in which six Americans were killed in three separate attacks by their Afghan counterparts. Afghan soldiers and police, or Taliban dressed in Afghan uniforms, have now killed 75 U.S. and other coalition forces since 2007.

Maj. Gen. James Mattis, head of U.S. Central Command, tried to put it into context in testimony before Congress this week.

“Treachery has existed as long as there’s been warfare…No force is perfect.”

Mattis said that recruitment and training of Afghan security forces is progressing and that the goal of 352,000 will “be reached in 60 days,” ahead of schedule.

Separately, the Brits lost six soldiers in the worst single attack on their troops of the war, bringing the British death toll to 404 since 2001. The attack was blamed on the Taliban. General David Richards, Chief of Defence Staff, said “truly impressive” progress has been made in Afghanistan, adding: “We will hold our nerve. I know I speak for every man and woman in uniform when I say that we understand the importance of the mission with which we are charged.”

Wendy Rayner, the wife of a soldier killed in Helmand province in 2010, said that the lives of British and other NATO troops had been thrown away. “My husband and our friends who died, and everybody else’s throughout the whole of England and other countries, died for nothing,” she said. Rayner added:

“It makes me very angry…they have gone into this country to try to make peace and yet they will pull out of there and the poor people who are left will go back to the same crappy lifestyle that they had before our lot went in.” [The Times of London]

The UK still has 9,500 troops in Afghanistan. Prime Minister David Cameron is to address the mission in a meeting with President Obama in Washington next week.

Lastly, an estimated 200+ were killed when their village was buried in an avalanche near the border with Pakistan.

Pakistan: Al-Qaeda confirmed one of its top commanders, Badr Mansoor, was killed in an American drone attack last month. Mansoor, whose picture many of you would recognize, was said to be behind some of the worst attacks on Pakistani civilians in recent years. Al-Qaeda accused the Pakistani government of collaborating on the drone strikes, which is a nice change in sentiment when looking at it from the Washington-Islamabad standpoint.

Meanwhile, Pakistan charged Osama bin Laden’s three widows with illegally entering the country. The two Saudis and a Yemeni were taken into custody last May in the bin Laden raid. Why the Pakistanis would make this announcement this week is probably just to send a message that the government is not as protective of the bin Laden family as some believe. The 10 children are free to leave the country.

Iraq: Way back, former U.S. Defense Secretary Donald Rumsfeld famously said al-Qaeda had been reduced to a few “dead-enders.” Those dead-enders killed at least 27 Iraqi police in the western part of the country the other day, disguising themselves as police with false warrants.

Yemen: Speaking of, ahem, dead-enders, al-Qaeda ambushed a Yemeni military post in the southern part of the country, killing at least 90, while 30 or so militants are said to have died in the operation. Al-Qaeda made off with the heavy weaponry, it was reported, in an attack clearly meant to send a signal to new president, Abed Hadi, who has proclaimed he would go after the terrorists. The United States helped install Hadi so I wouldn’t be in the least bit surprised to learn of an American airstrike or two on al-Qaeda bases in the not too distant future.

Egypt: Many in the new parliament are seething over the release of pro-democracy American activists before they could stand trial on charges they received illegal funds. The speaker of the lower house said those involved in the decision to lift the travel ban on 43 non-governmental organization workers, including the 16 Americans, would be held accountable.

China: The government announced it was raising the defense budget to $100 billion this year, an increase of 11.2%. Spending rose 12.7% the previous year. Li Zhaoxing, a spokesman for the national parliament, said the amount was aimed at “safeguarding sovereignty, national security and territorial integrity.” Needless to say, many in the region find this a bit disconcerting.

At the National People’s Congress, Premier Wen Jaibao said government seizures of land must stop.

“Farmers’ rights to the land they contract to work on, to the land on which their houses sit, and to proceeds from collective undertakings, are property rights conferred by law, and these rights must not be violated by anyone.” [South China Morning Post]

Such land grabs have been a big cause of mass protests.

On the issue of the size of China’s economy, economist Robert Samuelson wrote the following in the Washington Post.

“Let’s look at the numbers. In 2010, according to the World Bank figures, China’s economy was about 70% the size of America’s. Its GDP totaled $10.2 trillion, compared with U.S. GDP of $14.6 trillion. The trouble, contends (Arvind) Subramanian (of the Peterson Institute for International Economies), is that the United States’ lead is a statistical illusion and that China’s GDP is about 47% larger than the official estimates. This would bring the 2010 figure to $15 trillion, slightly ahead of the U.S. GDP. Indeed, says Subramanian, a new study suggests the underestimate could be more than 70%. This implies China’s 2010 GDP exceeded $17 trillion.”

Kind of funny, considering all the talk on China is usually about their numbers being a total illusion, far less than reported.

As Samuelson points out, China’s production and income is spread over 1.34 billion while U.S. GDP is divided among 309 million; so using the World Bank figures, “U.S. per capita income totaled $47,153 in 2010, compared with China’s $7,599. Assuming a Chinese GDP of $17 trillion raises per capita income to about $12,700.”

Whether or not you believe China is bigger today, the point at which it passes the U.S. based on today’s widely accepted data is far sooner than once believed.

North Korea: The United States is seeking the return of International Atomic Energy Agency inspectors, soon, before granting any food assistance under the recent agreement that calls for the North to freeze long-range missile and nuclear tests and cease enriching uranium and other “nuclear activities” at the Yongbyon atomic complex. Assuming the monitors are granted full access, instead of the limited access they had at Yongbyon before they were evicted in 2009, then the first 20,000 tons of Drakes Cakes can be delivered. Personally, if I were a North Korean, I’d go with the Funny Bones because peanut butter travels better.

“(IAEA) inspectors will be limited to the Yongbyon facility, which is like looking at North Korea through a straw – and at the wrong place no less. The overwhelming mass of the North’s important nuclear-weapons activities have long been deeply buried in hidden locations, unknown even to U.S. intelligence, let alone IAEA inspectors….

“Most objectionable morally, despite U.S. denials of a quid pro quo: We are providing 240,000 tons of food aid that will almost certainly be diverted to the DPRK military and other favored recipients. It is a strict canon of U.S. humanitarian assistance that such aid be closely monitored, but there is no reason to believe that monitoring will be any more effective than in the past. Make no mistake, we are simply feeding young Kim’s dictatorship.

“This agreement is a sham, pure and simple – which the North’s separate communiqué highlights. Pyongyang emphasizes that the deal with Washington is a prelude to resuming the six-party talks (including South Korea, China, Russia and Japan), which will focus on ‘the lifting of sanctions on the DPRK and provision of light water reactors.’

“Those are hallmarks of the failed 1994 Agreed Framework that the North never honored….

“Undoubtedly, a campaigning President Obama, fearing that his much-touted foreign policy successes are less than meet the eye, is looking for quick diplomatic triumphs. He certainly does not want inconvenient crises in Iran and North Korea erupting simultaneously later this year.

“But whatever the electoral impact of the North Korea deal may be, its national-security consequences are all too painful. Let’s hope a new president can reverse them.”

Japan: The first anniversary of the tsunami / Fukushima disaster is Sunday. According to a survey of those most impacted, 72% said they could see little or no progress in reconstruction efforts.

Turkey: An official of the government said Turkey was prepared to annex northern Cyprus if talks on reunification of the island between Greek and Turkish Cypriots did not reach a conclusion. Many Turkish Cypriots oppose the idea of annexation. Cyprus is governed by a Greek Cypriot administration and is part of the European Union. Turkey has stationed troops in the north since invading in 1974. Northern Cyprus is only recognized by Turkey and its only air link is to there.

France: The race for president is heating up. This week President Nicolas Sarkozy said there were too many foreigners in France and the system for integrating them is “working more and more badly,” a shameless ploy aimed at picking off Marine Le Pen’s National Front supporters.

As for Le Pen, as of March 1, she only had 452 of 500 signatures needed to qualify for the ballot and needs to get the remainder by March 16. These are signatures of elected officials: mayors, deputies, regional councilors and such. We’ll see if my spoiler is just jerking everyone around and playing for PR, miraculously coming up with the rest just in time.

Meanwhile, the frontrunner, Socialist Party candidate Francois Hollande, has proposed a 75% income tax rate on France’s super wealthy, to be applied on income over 1 million euros ($1.32 million). Which means that this could spell the death of French football! The reason? The stars are among the few in the country making that kind of money and of course they’ll opt to play elsewhere.

Hollande himself is miffed because Europe’s leaders won’t meet with him. Angela Merkel, Mario Monti and Spain’s Mariano Rajoy have agreed not to see Hollande because of his demand that the recently signed fiscal compact be renegotiated upon his election. The Germans in particular worry that any changes a President Hollande may demand would open a Pandora’s Box of demands from other states and delay the ratification process. Recall, 12 Euro nations still must have their parliaments approve the compact and Ireland is having a referendum.

Britain: Aside from losing six soldiers in a single attack in Afghanistan, it was a bad week for Britain on another front as British Special Forces failed to rescue two taken hostage in Nigeria last May (one Brit, one Italian) and the hostages were then murdered by their captors before the Special Boat Service and elite Nigerian forces were able to seize them.

What makes this worse is that Italian authorities were not informed of the operation until it was underway and the Italians are pissed, rightfully so. We aren’t talking not informing Pakistan before taking out bin Laden, after all. You’re talking about an ally on a hostage mission.

The captors, at least two of whom were also killed, were affiliated with the Islamist terrorist group Boko Haram. The victims worked for an Italian construction firm.

Venezuela: President Hugo Chavez said a tumor removed from his pelvic region was malignant, indicating the cancer had returned. Chavez told his people his prognosis was good and that he looked to return from Cuba in a month or so to resume campaigning for re-election in October.

Congo: Unreal…three days after a fire inside an arms depot set off a series of massive explosions, at least 250 were dead in Brazzaville, yet there was no relief effort, as reported by the AP, nor was the Red Cross let in because of the risk of more unexploded shells going off.

Uganda: Finally, just a note on the video sweeping the world, “Kony 2012,” about the leader of Africa’s notorious Lord’s Resistance Army, Joseph Kony. Back on 10/15/11 in this space, I wrote “Kill Kony!” after learning President Obama sent 100 troops to the Central African Republic to help forces there track him down.

But now this video has been produced, it’s had well over 60 million hits as of Friday evening, and the producer did the documentary as a way of raising awareness of the horrors inflicted by the LRA, with Kony being accused of using thousands of child soldiers in his reign of terror.

The thing is, the video is apparently, to some experts in the region, loose with the facts and hardly helpful in existing efforts to bring Kony to justice, including the Obama administration effort, which I applauded last fall.

I mean who is this latest social activist hero, filmmaker Jason Russell? More importantly, there are serious questions about his fundraising. The accounting for his San Diego organization, “Invisible Children,” is murky at best.

But you have celebrities ranging from Justin Bieber to Oprah to J.K. Rowling offering their support. What the heck do they know about the topic?

If you aren’t concerned about this display of mass manipulation, then you should be. To me, it’s a Sign of the Apocalypse.

Random Musings

--Republican Delegate Count…post-Super Tuesday, according to the AP.

Mitt Romney 415
Rick Santorum 176
Newt Gingrich 105
Ron Paul 47

Super Tuesday results:

Romney 33 percent
Santorum   29
Paul 24

Gingrich 47
Romney 26

North Dakota

Santorum 40
Paul 28
Romney 24

Romney 38…453,927…35 delegates
Santorum 37…441,908…21 delegates…filing snafus

Santorum 34
Romney 28
Gingrich 27.5

Santorum 37
Romney 28
Gingrich 24

Romney 40
Paul 25
Santorum   24

Romney 60
Paul 40…only two on ballot

Up next…Mar. 10, today, Kansas caucuses; Mar. 13…Alabama primary, Hawaii caucuses, Mississippi primary.

In an NBC/Wall Street Journal national survey of registered Republicans, Romney leads Santorum 38-32, with both Gingrich and Paul at 13 apiece. Gingrich was at 37% in January.

The Romney camp should be troubled by the NBC/WSJ finding that only 28% of Americans, overall, view him positively, while 40% have a negative view.

And in the same survey, President Obama defeats Romney, 50-44; Santorum, 53-39; Gingrich, 54-37; and Paul, 50-42.

The NBC/WSJ survey also addressed the gender issue. In 2008, Barack Obama defeated John McCain by seven points, overall, but he won among women by 13 points, according to exit polls. Among men, Obama and McCain basically tied.

Today, though, as the Journal’s Gerald F. Seib reported:

“When the president is paired against Mr. Romney, he wins among all voters by six percentage points. But he wins among women by 18 points – and actually loses among men by six points.”

As Seib further points out, the gender gap can be a bigger problem for Republicans than Democrats for the simple reason that “Women tend to vote in higher numbers. In 2008, for example, 53% of the total turnout was female, and in 2010 it was 52%. So, in a close race – which 2012 figures to be – the advantage lies with the gender that shows up in greater numbers.”

Lastly, in 2001, George W. Bush won 44% of the Hispanic vote. Today, only 14% say they would vote Republican. 

--And the Republican base is far from fired up. I know I was watching the Super Tuesday coverage, bored to death…so I kept putting the Knicks game on (so much for Linsanity, by the way). As a Republican (who nonetheless would vote third party if there was a viable alternative), I’m tired of this group we’ve fielded. I need a break. Maybe I’ll get fired up again by the time the conventions roll around.

--Then there’s George Will. Now I’m a big fan of his work and have quoted him over the years more than any other commentator on the scene. But he got in a lot of hot water this week for a column he wrote in the Washington Post that began with a quote from William F. Buckley, Sept. 11, 1964:

“The beginning of wisdom is the fear of the Lord. The next and most urgent counsel is to take stock of reality.”

“On that evening 48 years ago – it was still summer, early in the presidential campaign – Buckley, whose National Review magazine had given vital assistance to Barry Goldwater’s improbable capture of the Republican nomination, addressed the national convention of the conservative Young Americans for Freedom. Buckley told his fervent acolytes that ‘when we permit ourselves to peek up over the euphoria’ of Goldwater’s nomination, we see that it occurred ‘before we had time properly to prepare the ground.’

“He then sobered his boisterous audience: ‘I speak of course about the impending defeat of Barry Goldwater.’ He urged ‘the necessity of guarding against the utter disarray that sometimes follows a stunning defeat.’ Goldwater’s doomed campaign should, Buckley said, be supported because it plants ‘seeds of hope, which will flower on a great November day in the future.’ They did, 16 Novembers later….

“Today, conservatives dismayed about the Republican presidential spectacle may write a codicil to what is called the Buckley Rule. He said that in any election, conservatives should vote for the most electable conservative. The codicil might be: Unless the nomination or election of a particular conservative would mean a net long-term subtraction from conservatism’s strength.

“If nominated, Mitt Romney and Rick Santorum might not cause such subtraction. Both are conservatives, although of strikingly different stripes. Neither, however, seems likely to be elected. Neither has demonstrated, or seems likely to develop, an aptitude for energizing a national coalition that translates into 270 electoral votes.”

Will then went on to say there may come a point when, “taking stock of reality, conservatives turn their energies to a goal much more attainable than, and not much less important than, electing Romney or Santorum president. It is the goal of retaining control of the House and winning control of the Senate….

“Such a restoration would mean that a reelected Obama, a lame duck at noon Jan. 20, would have a substantially reduced capacity to do harm.”

I couldn’t agree more. But, boy, did Will hear it from many of the Republican elite for giving up the ship so soon.

And, no doubt, we are still very early in the process. As noted above, one paramount issue looms, for starters, and others are bound to present their own obstacles, so we just don’t know what the mood of the people will be come November.

That said, many of us elephants will at least sleep better knowing we have truly divided government come next fall, even if we lose the top prize.

Finally, a bit more from the NBC/Wall Street Journal survey.

57% of Americans think that the “worst is behind us,” up from 49% in November. Advantage Obama.

And this on the topic of contraception in their healthcare plans. 53% support the U.S. government requiring employers to offer free birth control coverage, 33% opposed. “But support dropped sharply, to 38%, when people were asked about the requirement applying to religiously affiliated hospitals and colleges, and having the insurer pay for the cost.” [Wall Street Journal]

Catholics do still approve of Obama’s overall job performance by a 50-42 margin.

--So the preceding brings us to the topic of Rush Limbaugh and Sandra Fluke and the debate that dominated the news coverage for a few days.

I purposefully did not bring it up last time for two reasons. I had previously noted the comments of Timothy Cardinal Dolan on the issue of religious liberty, and with regards to Rush, I exercised my “wait 24 hours” rule.

Of course, Rush Limbaugh’s use of the words “slut” and “prostitute” to describe Ms. Fluke was despicable. But I now present some viewpoints, from all sides, as I do in matters such as this.

“Last week, Sandra Fluke, a student at Georgetown University Law Center, went to Congress looking for a handout. She wants free birth-control pills, and she wants the federal government to make her Catholic school give them to her.

“I’m a graduate of Georgetown Law and former chief counsel of the House Subcommittee on the Constitution. Based on her testimony, I wonder how much Ms. Fluke really knows about the university or the Constitution….

“I was not Catholic when I attended Georgetown Law, but I certainly knew the university was. So did Ms. Fluke. She told the Washington Post that she chose Georgetown knowing specifically that the school did not cover drugs that run contrary to Catholic teaching in its student health plans. During her law school years she was a president of ‘Students for Reproductive Justice’ and made it her mission to get the school to give up one of the last remnants of its Catholicism. Ms. Fluke is not the ‘everywoman’ portrayed in the media.

“Georgetown Law School has flung wide its doors to the secular world. It will tolerate and accommodate all manner of clubs and activities that run contrary to fundamental Catholic beliefs. But it is not inclined to pay for or provide them. And it has the right to do so – to say ‘this far and no further.’…

“In her testimony, Ms. Fluke claimed that, ‘Without insurance coverage, contraception, as you know, can cost a woman over $3,000 during law school.’ That’s $1,000 per year. But an employee at a Target pharmacy near the university told the Weekly Standard last week that one month’s worth of generic oral contraceptives is $9 per month. ‘That’s the price without insurance,’ the employee said. (It’s also $9 per month at Wal-Mart.)

“What about Rush Limbaugh? I won’t defend his use of epithets (for which he’s apologized), but I understand his larger point. At issue isn’t inhalers for asthmatics or insulin for diabetics. Contraception isn’t like other kinds of ‘health care.’ Yes, birth-control pills can be prescribed to address medical problems, though that’s relatively rare and the Catholic Church has no quarrel with their use in this circumstance. And the university’s insurance covers prescriptions in those cases.

“Still, Ms. Fluke is not mollified. Why? Because at the end of the day this is not about coverage of a medical condition.

“Ms. Fluke’s crusade for reproductive justice is simply a demand that a Catholic institution pay for drugs that make it possible for her to have sex without getting pregnant….

“Should Ms. Fluke give up a cup or two of coffee at Starbucks each month to pay for her birth control, or should Georgetown give up its religion? Even a first-year law student should know where the Constitution comes down on that.”

“Limbaugh’s gaffe…invited the mainstream media to portray Sandra Fluke as an innocent young student slandered by a broadcasting bully rather than the hard-eyed, hyper-entitled 30-year-old radical feminist activist that she is.

“Fact is, Fluke has acknowledged that she enrolled at Georgetown precisely to challenge the Catholic university’s refusal to include contraception in its student health coverage.

“She’s stretching her 15 minutes to the limit, and Democrats are flogging the incident mightily – from President Obama’s phone call to her to House Minority Whip Steny Hoyer urging her to sue Limbaugh.

“The demand that religious institutions be forced to pay for health procedures and practices that do violence to their core beliefs – the essence of the ObamaCare mandate – is abhorrent to the First Amendment. People of conscience should oppose such directives in all their forms.

“As Timothy Cardinal Dolan and the US Conference of Bishops rightly put it: ‘What about forcing individual believers to pay for what violates their religious freedom and conscience?....

“As for the suggestion that the real issue is women’s health, Dolan declared: ‘We will not let this deception stand.’”

Meanwhile, advertisers have been fleeing Rush’s radio program, but Rush, probably correctly, says he has a ton of companies waiting in line.

As for President Obama and his call to Ms. Fluke, he said at his press conference on Tuesday, “The reason I called Ms. Fluke is because I thought about Malia and Sasha and one of the things that I want them to do as they get older is to engage in issues they care about, even ones that I may not agree with them on. And I don’t want them attacked or called horrible names because they’re being good citizens.”

“Crudity isn’t just an affliction of the right. In the past year, liberal MSNBC host Ed Schultz called conservative Laura Ingraham a slut, and HBO’s liberal commentator/comedian Bill Maher used two vulgar terms for female anatomy to describe Sarah Palin.

“This is the sort of verbal ingenuity you’d expect to hear in a locker room full of 14-year-old boys, but that demeans 14-year-old boys.”

“Who’d have thought Rush Limbaugh would become the great uniter in this divisive political season?

“Indeed, he has united decent people of all stripes and persuasions with his vile remarks about a Georgetown University law student….

“The question of whether the Obama administration is acting constitutionally has been posed to the courts by religious-liberty scholars, so we’ll have an answer soon enough. In the meantime, the administration has promised to ‘accommodate’ religious groups so that only insurance companies have to pay for women’s contraception.

“Whether this is an adequate remedy is also debatable. Can the government really force private insurance companies to cover certain medications and/or procedures? What if religious organizations are self-insuring, as is the case with many Catholic organizations?....

“These are clearly compelling questions on which Limbaugh might have focused his gargantuan energies. Instead, he attacked Fluke in the vilest terms. Moreover, by addressing her argument that college women need contraception and should be able to get it for free, he essentially lent credence to the opposition narrative that this is all about birth control.

“Inadvertently, Limbaugh also helped advance the argument from the left that Republicans are waging a war against women….

“The point is that Limbaugh has so offended with his remarks that he has further muddled the issues. I realize he’s ‘just an entertainer,’ as his apologists insist, but he is also considered a leading and powerful conservative voice. His remarks have marginalized legitimate arguments and provided a trove of ammunition to those seeking to demonize Republicans who, along with at least some of their Democratic colleagues, are legitimately concerned with religious liberty.

“As a bonus, he has given his ‘feminazis’ justification for their claims that conservatives hate women. Limbaugh owes Ms. Fluke an apology – an event doubtless many would love to watch.” [Ed. Ms. Parker wrote this last Friday night and Rush apologized on Sat., and then on air on Monday, which I listened to.]

Appearing last Sunday on ABC’s “This Week,” George Will: “We want to bomb Iran, but we’re afraid of Rush Limbaugh.”

Peggy Noonan: “(Rush’s words were) deeply destructive and unhelpful (and) confused the larger issue, which is ObamaCare and incursions on religious freedom.”

Finally, Cardinal Dolan said some of the following last weekend.

“Don’t impose your teaching upon us and make us do as a church what we find unconscionable to do!  The Health and Human Services fight is a freedom-of-religion battle. It is not about contraception. It is not about women’s health. No, we are talking about an unwarranted, unprecedented, radical intrusion into the interior life of, integrity of a church’s ability to teach, serve and sanctify on its own….

“I suppose we could say there might be some doctor who would say to a man who is suffering from some sort of sexual dysfunction, ‘You ought to start visiting a prostitute to help you…and I hope the government will pay for it.’….

“President Johnson said, as an American, I look to the church – I look to religion as a beehive. If you leave them alone, they’re going to give you tons of their honey. But if you stick your head in there, you’re going to get stung bad.” [New York Post]

--I didn’t have a chance last time to comment on the death of political scientist (not sociologist, as so many called him), James Q. Wilson, 80. As the New York Post editorialized:

“Most New Yorkers have probably never heard the name…

“It was Wilson…who, together with George Kelling, developed the ‘broken windows’ crime-fighting theory that Rudy Giuliani used to save the city in the ‘90s….

“The theory was simple – but devastatingly effective. It argued that small crimes and/or blight – like a single broken window in an abandoned building – if ignored, inevitably lead to social chaos.

“ ‘Consider a building with a few broken windows,’ they wrote in their landmark 1982 article for The Atlantic.

“ ‘If the windows are not repaired, the tendency is for the vandals to break a few more windows. Eventually, they may even break into the building, and if it’s unoccupied, perhaps become squatters or light fires.’

“Mayor Giuliani and his police commissioners focused on long-ignored quality-of-life issues like graffiti and squeegee men and crimes like fare-beating.

“The result: Crime rates, both petty and major, began tumbling. And this success has been copied around the country.”

--So this winter, specifically December thru February, was the second warmest on record in these parts, and snowfall totals, starting in December and not including the Halloween disaster, was the fourth fewest for New York City on record. But what is truly remarkable is we haven’t had one coastal storm when we normally get at least five, with two panning out to be doozies.

--Lastly, I have to admit, years ago, when the American wind power industry was getting going in earnest, I largely pooh-poohed some of the stories on the impact the turbines had on birds, saying things like far more birds are killed by pet cats, which remains the case.

But I couldn’t help but note an op-ed by Robert Bryce in the Wall Street Journal this week.

“For years, the wind energy industry has had a license to kill golden eagles and lots of other migratory birds. It’s not an official license, mind you.

“But as the bird carcasses pile up – two more dead golden eagles were recently found at the Pine Tree wind project in Southern California’s Kern County, bringing the number of eagle carcasses at that site to eight – the wind industry’s unofficial license to kill wildlife is finally getting some serious scrutiny….

“It’s about time. Over the past two decades, the federal government has prosecuted hundreds of cases against oil and gas producers and electricity producers for violating some of America’s oldest wildlife-protection laws: the Migratory Bird Treaty Act and Eagle Protection Act.

“But the Obama administration – like the Bush administration before it – has never prosecuted the wind industry despite myriad examples of widespread, unpermitted bird kills by turbines. A violation of either law can result in a fine of up to $250,000 and imprisonment for two years….

“A pernicious double standard is at work here. And it riles Eric Glitzenstein, a Washington, D.C.-based lawyer who wrote the petition to the U.S. Fish and Wildlife Service. He told me, ‘It’s absolutely clear that there’s been a mandate from the top’ echelons of the federal government not to prosecute the wind industry for violating wildlife laws.”

Save the Eagle! Occupy the turbines! [Have a picnic.]

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

Gold closed at $1711
Oil, $107.40

Returns for the week 3/5-3/9

Dow Jones -0.4%   [12922]
S&P 500   +0.1% [1370]
S&P MidCap +0.8%
Russell 2000 +1.8%
Nasdaq +0.4% [2988]

Returns for the period 1/1/12-3/9/12

Dow Jones +5.8%
S&P 500 +9.0%
S&P MidCap    +12.0%
Russell 2000 +10.3%
Nasdaq +14.7%

Bulls  47.9
Bears 26.6 [Source: Investors Intelligence]

Have a great week. I appreciate your support.

And don’t forget the StocksandNews iPad app…the perfect St. Patrick’s Day gift!

Brian Trumbore

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