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08/11/2012

For the week 8/6-8/10

[Posted 6:00 AM ET]

Europe Is Now On Vacation…sort of

Editorial / The Economist

“What a miserable summer for Europe’s leaders. Away hiking in northern Italy, Angela Merkel spoke by phone to Mario Monti to promise to do ‘everything necessary’ to preserve the euro. The Italian prime minister then toured European capitals seeking help to hold down his country’s borrowing costs…And the man everybody is watching, Mario Draghi, president of the European Central Bank (ECB), promises: ‘I will not be going to Polynesia – it’s too far.’

“But the holiday is already a write-off, September promises to be worse: a rentree chaude, a ‘hot’ return to work. Several things are likely to bring the euro crisis to a head. These include the prospect that Greece may run out of money and drop out of the euro, continuing meltdown in Spain, awkward elections in the Netherlands, a legal challenge in Germany’s constitutional court and political resistance to a more integrated eurozone. All told, the autumn of 2012 may determine the fate of the euro.

“Start with Greece. Come September the wreckage of Greece’s public finances will become more obvious. The matter lies half-hidden behind technical discussions, but the ‘troika’ of officials from the ECB, the European Commission and the IMF will eventually have to produce a report. The word is that the shortfall in Greece comes to tens of billions of euros.

“To stay afloat, Greece needs both more austerity and more money. Both may prove politically impossible. Having already agreed to two bail-outs for Greece, its exasperated creditors are in no mood to provide a third – particularly not one that may require them to forgive a big chunk of Greece’s official debt.”

So Germany is already debating when Greece should be thrown out. And then does Spain, Portugal or Italy follow? Spain, for example, clearly needs a full bail-out, not just one for its banks.

Sept. 12 also looms as a critical day. Germany’s constitutional court rules on the new European Stability Mechanism rescue fund, while the Netherlands holds elections, with “Dutch parties competing in their vehemence against the debtors.”

And whatever shape the rescue funds take, Moody’s has already warned Germany it could lose its AAA status because of the looming bail-outs.

So even if Euro leaders get through August, which is no certainty (Greece has a 3.2 billion euro debt payment to make on Aug. 20, after all, and it doesn’t appear to have the cash), as The Economist concludes “they will soon be confronted by decisions they have tried to avoid. Give the Greeks more money, or let them leave the euro? Share more liabilities, either overtly (through Eurobonds) or covertly (through the ECB)? Surrender more power to EU institutions? Some senior figures think the crisis must get worse before it gets better.

“So enjoy the summer holiday while it lasts. The autumn is likely to be ugly. And history may record the last months of 2012 as the time when the eurozone came together – or fell apart.”

The data on the week was not good. S&P reduced its growth outlook for Greece, as in GDP will decline a whopping 11% over the 2012/2013 period. The unemployment rate in the country for May (the latest available) came in at 23.1% with a youth jobless rate now up to 54.9%. Tragic.

S&P confirmed it was downgrading 15 of Italy’s biggest banks and cut ratings on 15 more, this as industrial production fell 1.4% in June over May. New car registrations (sales) in Italy fell in July to the lowest level since 1978. Italy’s official GDP for the second-quarter over the first was down 0.7% over Q1, down 2.5% from a year ago. 

Germany’s exports in June fell 1.5% from May, while industrial production for the month declined.

Industrial production in the Netherlands declined 0.6% in June.

Industrial production in France for the month was unchanged, worse than expected.

Non-euro Britain saw industrial production decline 2.5% in June over May, but this was partly due to the Queen’s Jubilee. The Bank of England lowered its GDP forecast to zero for 2012 from a previous estimate of up 0.8%.

Euro finance chiefs meet Sept. 3 on Spain and Greece and then the ECB governing council meets Sept. 6, prior to the critical Sept. 12 date.

Next week, Aug. 14, we see the first estimate on eurozone GDP for the second quarter.

This week Italy’s Mario Monti, who is in office just eight more months, said in an interview with Germany’s Der Spiegel:

“The tensions that have accompanied the eurozone in the past years are already showing signs of a psychological dissolution of Europe,” adding the problems “have to be solved quickly now so that there’s no further uncertainty about the eurozone’s ability to overcome the crisis.”

Monti keeps bitching that the spread on Italian bonds vs. German bunds isn’t fair; as in Monti says he’s done everything right – overhauled the pension system, revamped labor laws and imposed austerity on Italians – so why is he paying like 450 basis points more on 10-year paper?

But at the same time, both Spain and Italy don’t want to make a formal aid request from the ECB because they would give up some sovereignty and the market knows they need the aid so they’ll be penalized until they ask. Then you have French President Francois Hollande, who wants the two to ask to protect France from the speculators.

Here’s another issue…an ongoing one for much of the crisis…banks simply aren’t lending to the real economy and talk of another LTRO, long-term refinancing operations, with the promise of more 1% money for the banks for three or more years, wouldn’t help one bit.

You also had a telling story out of the London Times’ Juliet Samuel.

“Royal Dutch Shell is to pull some of its huge cash pile out of European banks because it fears that the Continent’s debt crisis has made it too risky at home.

“The oil group’s decision is a worrying new sign of capital flight from the eurozone, identified by economists as a leading source of stress for European credit markets and businesses.

“The Anglo-Dutch company would rather deposit its $15 billion of cash in non-European assets, such as U.S. Treasuries and American bank accounts its chief financial officer Simon Henry told The Times…

“The energy group is also reviewing credit relationships in its European supply chain. ‘Can banks that finance our suppliers continue to finance them?’ Mr. Henry asked.”

Lastly, on the topic of Greece, 6,000 people were detained last weekend in a sweep trying to identify undocumented immigrants. Of that number, 1,400 did not have proper papers.

There are said to be 800,000 registered immigrants in Greece, and another 350,000 there illegally. The Greek people are ticked, complaining, of course, that the foreign residents are depriving them of jobs and threatening the country’s identity.

The perfect issue for Golden Dawn, the far-right, neo-Nazi group that picked up 7% of the vote in the June parliamentary elections. Golden Dawn calls for the immediate deportation of all immigrants.

French President Hollande made waves on the same front this week when he picked up where former President Sarkozy left off…dismantling Roma (Gypsy) camps in the city of Lille. Good for Hollande.   The Roma are among the nastiest people on the face of the planet. If your pocket is ever picked in Europe, odds are it’s a Roma who targeted you.

Turning to the U.S., it was a week light on major economic data but there were a few decent tidbits, such as another better figure on the weekly jobless claims front and a trade deficit that narrowed because of falling imports (lower oil prices for the recording period) and rising exports to the highest monthly total ever, $185 billion.

Fannie Mae and Freddie Mac reported combined net income of $8 billion for the second quarter due to improving conditions in the housing sector and the two are paying a total of $4.7 billion in dividends to taxpayers. The mortgage giants cited declining delinquency rates and rising prices (though I have other information down below that is less encouraging on the former) and Fannie and Freddie have now paid back $46 billion in dividends on the $190 billion in federal assistance they have required. Isn’t that great?! Well, it’s a start.

Credit card debt fell 5% in June, which is not good when it comes to consumer spending.

And the word on the farm front is downright awful as the drought in much of the country worsens by the hour. The U.S. Department of Agriculture issued its latest forecast for the corn and soybean harvests and it was dreadful, which means rising prices (more below). Corn is hitting one record high after another.

Then you have this whole “fiscal cliff” issue; the combination of tax increases and budget cuts come January unless Congress acts, which we know isn’t happening before the election and isn’t likely to right after, outside of, maybe, a short-term extension of existing tax and spending levels for a month or two until, say, March.

More than 40% of companies surveyed by Morgan Stanley in July said the fiscal cliff was a major reason for their spending restraint. Chief U.S. economist for the investment bank, Vincent Reinhart, said he expects that portion to rise when the poll is repeated this month. [Nelson D. Schwartz / New York Times]

The Wall Street Journal surveyed 47 economists and all but four said that without a deal in Congress, concerns about the fiscal cliff will drag on growth the remainder of the year.

As it is, with GDP rates of 2.0% and 1.5% for the first two quarters of 2012, the consensus of the economists surveyed was that growth would amount to 1.8% in the third quarter and 2.1% in the fourth. Like whoopty-damn-do. Obviously not enough to improve the employment situation much.

If there was no deal at all, economists say you can subtract a full 2.2 percentage points from 2013 growth, which would send us back into recession most likely.

Lastly, there was a slew of data on China this week. For the month of July….

Home sales were down 14.5% over June.

Industrial production was up 9.2% over a year earlier, disappointing and a 3-year low.

Retail sales were up 13.1% from a year earlier and less than expected.

Passenger car sales were up 10.7% over July 2011.   OK.

Exports were up just 1% year over year with exports to Europe down a whopping 16%; up 0.6% to the U.S. [Imports rose just 4.7%.]

None of the above was good and simply confirmed the slowdown.

But the inflation data was helpful with consumer prices rising only 1.8% from a year earlier. The all-important food inflation was up 2.4%, the slowest pace since October 2009. Pork prices fell 19% in July vs. July 2011, when pork was rising at a 57% clip.

Producer prices, though, were actually down 2.9% for the month, sparking some fears of deflation.

Add all of the above up, however, and with the Bank of China having a benchmark lending rate of 6% after two rate cuts since the beginning of June, you can see they have further room to lower rates to stimulate the economy and such a move should come shortly.

Street Bytes

--Stocks finished higher again in what is becoming a truly stupid rally, which I’ll examine in greater detail next week after we see some important data on inflation, retail sales and industrial production. The market is rallying on anticipated further stimulus from the Federal Reserve, the benefit of which will last about ten minutes, if that, while anyone who is suddenly optimistic about the fate of Europe sure as heck hasn’t been reading this column the past 2 ½ years.

Anyway, the Dow Jones rose 0.8% to 13207, just 70 points shy of a December 2007 high, which is indeed impressive, while the S&P 500, in rising 1.1%, is at its best levels since April. Nasdaq tacked on 1.8%.

--U.S. Treasury Yields

6-mo.   0.13% 2-yr. 0.26% 10-yr. 1.66% 30-yr. 2.75%

Fed Chairman Ben Bernanke gives a critical policy speech at Jackson Hole on Aug. 31, ahead of the FOMC meeting Sept. 12-13.

--The UN Food and Agriculture Organization reported that its food price index jumped by 6% in July, owing to rising grain prices with the drought in the U.S. It’s amazing how quickly things flipped. Food prices had declined the prior three months but then the flash drought hit in mid-June, after what was a very good start to the year. The same drought conditions suddenly hit key wheat growing areas such as Russia and Ukraine as well.

Global cereal prices surged 17%, while on a different front, sugar leapt 12% to new highs in July after untimely rains in Brazil. Delayed monsoons in India and poor rains in Australia also contributed to higher prices.

Separately, 69% of Iowa, the top state for production of both corn and soybeans, is in “extreme” drought, up from 30.7%, though the situation in Ohio and Kentucky improved a bit.

Nonetheless, as reported by the National Drought Mitigation Center at the Univ. of Nebraska-Lincoln, the amount of the corn crop in the two worst drought categories has nearly quadrupled from 14% to 53%. [Soybeans, 16% to 50%.]

But as corn continues to hit one record high after another, the UN has called for an immediate suspension of government-mandated U.S. ethanol production, putting further pressure on the Obama administration to change a policy that benefits swing states in the election such as Iowa, while livestock-producing Texas suffers with higher feed prices.

Due to congressional mandates, 40% of the corn crop is diverted to ethanol in spite of “huge damage” to the crop because of the drought, as Jose Graziano da Silva, director general of the UN’s FAO warned.

“An immediate, temporary suspension of that [ethanol] mandate would give some respite to the market and allow more of the crop to be channeled towards food and feed uses.” [Financial Times]

The administration argues that the U.S. biofuel industry had reduced petrol prices and created jobs.

--July was the hottest month on record in the contiguous U.S. since records began in 1895, according to the National Oceanic and Atmospheric Administration. The average for the first seven months of 2012 is yet another record.

In July, the average temperature was 77.6 degrees, or 3.3 degrees warmer than the average for the month. The previous July record was in 1936, the height of the Dust Bowl, 77.4 degrees. The temp in Death Valley, Calif., hit a record 128 degrees on July 12.

--A fire at a Chevron refinery in Richmond, Calif., has led to a big spike in gas prices on the West Coast, with gasoline now averaging at least $3.88 in California and probably headed to $4.25 over the next ten days.

Nationwide, gasoline prices, at $3.66, are essentially where they were a year ago but the recent trend back up (even prior to the fire) spells trouble for President Obama if it begins to attract nightly news attention again. Prices in Illinois, Indiana, Michigan, Wisconsin and Minnesota are up to 39 cents a gallon higher than the national average.

--Standard Chartered Plc CEO Peter Sands said there were “no grounds” for revoking the lender’s license after New York baking regulator Benjamin Lawsky threatened to strip the London-based bank of its right to operate in the state, as part of an investigation into money-laundering and the violation of sanctions against Iranian banks.

After a week of name-calling, it appears the bank may settle for $700 million to resolve the allegations that have been under investigation by various federal agencies for more than two years.

Politicians across the pond are upset that U.S. regulators seem to be targeting British banks. For his part, Sands says “There was no systematic attempt to circumvent sanctions.”

The regulator in its report quoted Standard Chartered’s then executive director of risk, Richard Meddings, as dismissing concerns by his New York colleagues in 2006 that doing business with Iran could sully the bank’s image, saying, “You f---ing Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with the Iranians?”

Standard now says no one made that statement, based on an individual’s recollection of a meeting rather than an e-mail. But e-mails point to outrageous behavior and Lawsky’s Department of Financial Services says Standard covered up $250 billion in roughly 60,000 transactions with Iran over nearly a decade, with Standard acting like “a rogue institution…motivated by greed” where “most senior management designed and implemented an elaborate scheme by which to use its New York branch as a front for prohibited dealings with Iran – dealings that indisputably help sustain a global threat to peace and stability. By definition, any banking institution that engages in such conduct is unsafe and unsound.”

In 2009, a unit of London-based Lloyds settled for $350 million after an investigation into allowing Iran illegal access to the U.S. financial system and in 2010, Barclays paid $298 million to settle claims it violated trade laws in facilitating transactions involving banks from countries under U.S. sanctions including Iran (as well as Libya and Sudan).   HSBC, also based in London, just last month was fined $700 million.

There is no evidence any of the funds were funneled to terrorist organizations.

--Knight Capital largely filled a $440 million hole in its capital base after its computer glitch of August 1st as it reached agreement with six investors, including TD Ameritrade, Jefferies Group, Blackstone Group, Stifel Nicolaus, and Stephens Inc.

After a frantic weekend of talks, however, existing shareholders saw their holdings severely diluted.

Joe Nocera / New York Times

“(Yet) another Wall Street firm most people have never heard of, relying on a computerized trading program that they can’t possibly understand, shook investors’ faith in the market. This is happening a little too frequently, don’t you think?...

“The primary way the government has tried to restore faith in the stock market is by prosecuting a series of high-profile insider-trading cases. That’s fine, but it doesn’t do a thing about the public, sudden events that have shaken investor confidence, like computerized trading glitches. As Jason Zweig pointed out recently in The Wall Street Journal, over the last 13 months, $136 billion has been withdrawn by investors from stock mutual funds. No doubt part of the reason for the withdrawals is that investors are unhappy with their returns. But I suspect that an even more important reason is that between the glitches and the scandals, people have simply had it with the market.

“What makes this particularly painful is that over the last four decades, we have built a society that has become deeply reliant on the stock market. It is how we are supposed to finance our children’s college education and our retirement. With the bursting of the housing bubble, the stock market, in some ways, is all we’ve got left. It is difficult to depend on something that seems so frequently unreliable.

“One wonders if Wall Street itself is beginning to question if it can rely on the monster it has created – and which it no longer seems able to control. In the immortal words of the screenwriter William Goldman, ‘Nobody knows anything.’ He was talking about Hollywood. But the same could be said today for Wall Street and its fixation with computerized trading.”

Lex column / Financial Times

“On the whole, technology is a good thing. It is relieving people of drudgery the world over. But the obsession with HFT [high-frequency trading] and algorithms that their designers claim mimic the behavior of investors is in danger of taking the human dimension out of the stock market. Worse, HFT renders even its creators redundant if it decides to go berserk: nobody at Knight apparently had the sangfroid to turn the switch to off.

“There was a lot wrong with the old trading floor culture but it provided a real and populist arena whose passing may yet be mourned. The kids and the nerds have too much sway on Wall Street and in the City of London. Before another Knight falls, let’s have some adult supervision.”

--China’s Wanxiang Group Corp. is offering struggling lithium battery maker A123 Systems Inc. a $450 million lifeline, with Republican Congressman Cliff Stearns (Fla.), who chairs the House Energy and Commerce Committee’s panel on oversight and investigations, worrying about the deal’s transfer of intellectual property.

“We need to make sure the federal government isn’t an unwitting accomplice to the theft of our own national secrets by providing [foreign-controlled companies] with multimillion-dollar government grants and loans,” he said in a statement.

A123 was originally awarded $249 million in Department of Energy grants. China says it is only looking to bolster its own investment in electric vehicles and infrastructure owing to the nation’s dependence on foreign oil. A123 saw its revenue fall 53% to $17 million in the second quarter. Enter Wanxiang Group.

--In another sign of a slowing Chinese economy, gambling revenue in Macau was up just 1.5% in July from a year earlier, though to be fair a tropical storm impacted numbers and analysts were actually only looking for flat to 1% growth. For the year, gambling revenues in Macau are now expected to rise 10%, far less than originally estimated.

--General Motors reported its sales in China surged to a record 199,500 vehicles in July, defying a market slowdown and moves by some cities to limit traffic/pollution by limiting car numbers. GM’s sales were 15% higher than July 2011.

--Indonesia bucked the slowing Asia trend in reporting second quarter GDP rose 6.4% over a year ago. 

--The U.S. Department of Justice has decided not to charge Goldman Sachs or any of its employees for the subprime mortgage deals (like collateralized debt obligations, CDOs) that helped precipitate the financial crisis. The DoJ said: “After a careful review of the information provided in the [Senate] report and more than a year of thorough investigation [DoJ officials] have determined that, based on the law and evidence as they exist at this time, there is not a viable basis to bring criminal prosecution with respect to Goldman Sachs or its employees in regard to the allegations set forth in the report.”

The SEC also dropped an investigation into another Goldman subprime mortgage deal. Two years ago, Goldman did settle with the agency for $550 million on charges related to the “Abacus” scam.

--In the key California housing market, million-dollar-or-more home sales surged in the second quarter to the highest levels since the third quarter of 2007, according to DataQuick. 7,763 homes sold in this category from April to June. The highest figure for $1-million or up houses since DataQuick began tracking such data was the third quarter of 2005, when 15,898 homes changed hands. That was a bubble, sports fans.

--But the Mortgage Bankers Assn., in looking at the housing market nationwide, said home loans with at least one missed payment but not yet in foreclosure increased in the second quarter to 7.58% of all mortgages, up from the first quarter’s 7.4%. Separately, RealtyTrac Inc. said the number of homes going into foreclosure rose 6% in July compared with a year earlier. Last year, you’ll recall, foreclosures were largely on hold due to the “robo-signing” scandal.

--The U.S. Postal Service reported a quarterly loss of $5.2 billion, with $3.1 billion of it stemming from payments for retirement health benefits. The second-quarter losses were $2.1 billion more than the same period last year. The USPS defaulted on a $5.5 billion payment for future retirement benefits last week and owes $5.6 billion more on Sept. 30. The agency said it was nearly out of cash. Congress has legislation before it to allow the USPS to eliminate Saturday delivery, among other cost-saving measures, but did not act on it before going on vacation.

One positive, aside from the fact election mail and holiday deliveries will lead to a far better revenue picture in the fourth quarter, the USPS’s parcel business rose 9.9% in the second. [First-class mail, however, declined 3.1%.]

--Shares in Priceline.com closed Tuesday at $679 before the company released its latest earnings. On Wednesday they finished at $562, down $117, after the online travel website issued a disappointing forecast for the rest of the year, with revenue guidance in the 9% to 15% range, well below expectations of 20%. Needless to say, many were caught with their pants down. Priceline blamed the turmoil in Europe for curtailing trip reservations to the region. [The shares finished the week at $563.]

--McDonald’s said U.S. same-store sales dipped 0.1% in July, worse than expected, while sales dropped 0.6% in Europe. Globally, sales were flat, vs. an estimate of a 2.4% increase.

--Single copy magazine newsstand sales fell 9.6% in the first half of the year, though paid circulation rose 1.1% during the latest reporting period. Single-copy sales for People magazine plunged 18.6%. Us Weekly saw its sales drop 11.4%. [Crain’s New York Business]

--Revenues at Sirius XM Radio rose 13% to $837.5 million for the quarter, better than expected, while the company raised its outlook for annual earnings, as well as maintaining it would add nearly 1.6 million net subscribers for the year. I have to admit I love having XM in my new car and when the promo offer expires I will definitely re-up.

--Commercial for Optimum online…a couple talking about their new baby.

“She was on Facebook before she was even born…”

Yup, another fake Facebook page among the supposed 955 million users.

--Macy’s continued to take advantage of JC Penney’s problems as profits at Macy’s rose 16% last quarter. JCP said this week that same-store sales for the second quarter declined 21.7%. That is totally unheard of in the retail sector.

--McDonald’s Australia announced it will add the lamb burger to its menu across the country after 18 months of developing the “home-style” recipe. In Japan, Wendy’s is introducing three lobster-based meals to its menu, including the Lobster and Caviar Burger and the Surf and Turf Burger ranging between $16 and $20. I’m drooling…might have to fly to Tokyo this winter for dinner. 

--In the UK, “Fifty Shades of Grey” has become the best-selling book all time, surpassing “Harry Potter and the Deathly Hallows” with sales of 5.3 million copies.

--I want Allyson Felix to get every single endorsement available. She deserves it. OK, Gabby can pick some up as well.

Foreign Affairs

Syria: Government forces appear to have the advantage in the city of Aleppo, supposedly taking a rebel stronghold, while the Syrian army claims to have retaken the last rebel held district of Damascus.

At the same time, Syria’s prime minister defected, accusing President Bashar al-Assad of carrying out “genocide” against his own people. Riad Hijab defected to Jordan and is headed for Qatar. But Assad is hanging on, appearing on television this week for the first time since the July 18 bombing that killed four of his top security officials. Assad was seated with a senior Iranian envoy.

The World Health Organization said the fighting has severely hit the country’s health services, to state the obvious, including the shutdown of 90% of the pharmaceutical plants in Damascus and not so minor stuff as losing 200 ambulances to theft or clashes.

The UN human rights agency said 1.5 million Syrians have been displaced. 21,000 is the latest death toll.

The New York Times reported on Friday that crime is rampant throughout the country as police forces have simply disappeared.

It didn’t have to be this way, I argued from virtually day one.

On Tuesday, the White House urged the rebels to leave key governmental institutions “intact” when they topple Assad, with press secretary Jay Carney saying the administration had learned from the worst errors of the Iraq War. “Contingency planning is the responsible thing to do,” Carney told reporters.

If it wasn’t so tragic this would be laughable. The White House is saying this now?! When it is too late?!

Can you imagine the retribution that will take place in the country, from like a hundred sides?

Opinion…

John McCain, Joseph I. Lieberman and Lindsey O. Graham / Washington Post

“Because we have refused to provide the rebels the assistance that would tip the military balance decisively against Assad, the United States is increasingly seen across the Middle East as acquiescing to the continued slaughter of Arab and Muslim civilians. This reluctance to lead will, we fear – like our failure to stop the slaughter of the Kurds and Shiites under Saddam Hussein in Iraq or of the Tutsis in Rwanda – haunt our nation for years to come.

“Our lack of active involvement on the ground in Syria also means that, when the Assad regime finally does fall, the Syrian people are likely to feel little goodwill toward the United States – in contrast to Libya, where profound gratitude for America’s help in the war against Moammar Gaddafi has laid the foundation for a bright new chapter in relations between our two countries.

“Much more than in Libya, moreover, the United States has significant national security interests at stake in Syria. These include preventing the use or transfer of the regime’s massive chemical- and biological-weapons stockpiles – a real and growing danger – and ensuring that al-Qaeda and its violent brethren are unable to secure a new foothold in the heart of the Middle East. Our decisions and actions have been woefully insufficient to safeguard these interests and others….

“Contrary to critics who argue that a greater U.S. role in Syria could empower al-Qaeda, it is the lack of strong U.S. assistance to responsible fighters inside the country that is ceding the field to extremists there….

“By continuing to sit on the sidelines of a battle that will help determine the future of the Middle East, we are jeopardizing both our national security interests and our moral standing in the world.”

Editorial / Washington Post

“The defection of Syria’s prime minister to Jordan on Monday prompted yet another White House declaration that the regime of Bashar al-Assad is ‘crumbling.’ While we hope that this is the case, it seems more likely that the administration’s prediction will prove as premature as its previous announcements of Mr. Assad’s imminent downfall, dating back a year. The grim reality is that the regime and the brutal war it is waging in Syria’s cities is likely to go on and on – unless the United States abandons its policy of passivity….

“(This) underlines a point made five months ago by some of the State Department’s own Syria experts: The longer the fighting in the country goes on, the more it evolves toward open sectarian war, promotes extremist ideology and undermines the possibility of an eventual settlement based on pluralism and democratic principles. That’s why the Obama administration was foolish to waste the intervening months backing a feckless UN diplomatic initiative and why its current attempts to promote a ‘managed transition’ from the Assad regime are equally misguided.

“The only workable policy in Syria is one that aims at ending the civil war as quickly as possible with a victory for the opposition. A coup by regime elements that removes Mr. Assad may still be possible, but only if generals perceive that the war is lost. That means supplying the rebels with the arms they need to stop the tanks and planes of the Assad forces. To protect civilians, safe zones can be established along Syria’s borders with Turkey and Jordan, with help from Turkey or NATO.

“Taking such steps would help the United States establish relations and exert influence over those forces that will likely be the next leaders of Syria – the commanders of the Free Syrian Army…

“By refusing to step in, the Obama administration is merely ensuring that Syria’s future leaders will be more resistant to the West and perhaps more open to groups such as al-Qaeda. It is also giving the enduring hard core of the Assad regime the space and the opportunity to fight on.”

Even Nicholas D. Kristof of the New York Times weighed in against the president.

“President Obama’s finest moments in foreign policy, like the Osama bin Laden raid or the Libya intervention, resulted from close engagement and calculated risks.

“His lapses come when he’s passive or AWOL – as in Syria. I’m generally a fan of Obama’s foreign policy, but on Syria there’s a growing puzzlement around the world that he seems stuck behind the curve.”

Iran: Israeli Defense Minister Ehud Barak said Iran’s nuclear moves are becoming more difficult intelligence targets for both Tel Aviv and Washington. Barak issued the remarks on Thursday after a report in the newspaper Haaretz described a new U.S. finding – purportedly contained in a National Intelligence Estimate delivered to President Obama – that Iran had achieved major, unexpected steps in weapon-relevant atomic endeavors.

Barak told Israel Radio: “There probably really is such an American intelligence report…making its way around senior offices (in Washington). As far as we know it brings the American assessment much closer to ours…it makes the Iranian issue even more urgent and (shows it is) less clear and certain that we will know everything in time about their steady progress toward military nuclear capability.” [Reuters]

But Barack added, “There is still no decision, we understand the gravity of the situation, we understand that we do not have all the time in the world to decide,” Haaretz quoted him as saying.

On Monday, Prime Minister Netanyahu said, Tehran could employ nuclear force should it acquire the option.

“This is a regime that has broken every rule in the book. They very likely could use weapons of mass death.” [Jerusalem Post]

Netanyahu was also quoted as telling Shaul Mofaz, the opposition leader, “Obama will not attack Iran – never. In his second term, Obama will care even less about us than he cares now.”

This comes amid a report in the Tel Aviv paper Maariv that an American attack on Iran’s nukes would begin with “hundreds of cruise missiles” meant to demolish Iranian air defenses, intelligence facilities and radar stations. “The missile barrage would be followed by a wave of bunker-buster bombs dropped from B-52s that would destroy the nuclear facilities themselves.

“After the attack, an ultimatum would be issued to Iran to stop its military nuclear program immediately. In return, the West would supply it with peaceful nuclear reactors,” reports Maariv. [Michael Gartland / New York Post]

And there was the following op-ed from Israel’s ambassador to the U.S., which garnered quite a bit of attention.

Michael Oren / Wall Street Journal

“Nearly two decades ago, Israel started alerting the world about Iran’s nuclear program. But the world ignored our warnings, wasting 10 years until the secret nuclear enrichment plant at Natanz was exposed in 2002. Then eight more invaluable years were lost before much of the international community imposed serious sanctions on Iran.

“Throughout that time, the ayatollahs systematically lied about their nuclear operations, installing more than 10,000 centrifuges, a significant number of them in a once-secret underground facility at Qom. Iran has blocked International Atomic Energy Agency (IAEA) inspectors from visiting its nuclear sites, refused to answer questions about the military aspects of its program, and rejected all confidence-building measures. Iran has tested long-range missiles capable of reaching any city in the Middle East and, in the future, beyond.

“Iran is also the world’s leading state sponsor of terror. It has supplied more than 70,000 rockets to terrorist organizations deployed on Israel’s borders and has tried to murder civilians across five continents and 25 countries, including in the United States. In July, Iranian-backed Hizbullah terrorists killed five Israeli tourists, among them a pregnant woman, in Bulgaria. Iran’s forces have attacked American troops in Afghanistan and Iraq. Its agents are operating in Yemen, Africa and South America. By providing fighters and funds, Iran is enabling Syrian dictator Bashar al-Assad to massacre his own people.

“Iran has won all this without nuclear weapons. With them, it can commit incalculable atrocities anywhere in the world, beginning with Israel….

“A combination of truly crippling sanctions and a credible military threat – a threat that the ayatollahs still do not believe today – may yet convince Iran to relinquish its nuclear dreams. But time is dwindling and, with each passing day, the lives of eight million Israelis grow increasingly imperiled. The window that opened 20 years ago is now almost shut.”

Egypt: Egyptian troops and armored vehicles and attack helicopters are pouring into the Sinai desert to root out Islamic militants, the most significant action in the area since the demilitarization of the peninsula as part of the 1979 peace treaty with Israel. This comes after last weekend’s attack by militant Bedouin killed 16 Egyptian soldiers in Sinai near the border with Gaza and Israel. In response, Egypt has killed at least 20 suspected terrorists.

Israel green-lighted Egypt’s surge into the area, a sign that cooperation still exists between the two despite the Muslim Brotherhood’s new role in government. The military holds sway over new President Morsi and the Egyptian army carried out its first strikes in the peninsula as it went after those responsible for the attack on its soldiers.

For his part, Morsi fired his intelligence chief and the governor of northern Sinai.

Afghanistan: Three U.S. Special Forces members were killed by a man in an Afghan army uniform, the third attack on coalition soldiers in a week by Afghans training to take over responsibility for security once international forces pull out in 2014.

Rajiv Chandrasekaran / Washington Post…on how both presidential candidates are ignoring the war.

“The candidates have a shared reason for ignoring Afghanistan. It has stretched into the longest war in U.S. history, and Americans are tired of it. With an anemic economy on the home front, pollsters say that voters want to hear a substantive discussion about jobs, taxes, government spending and health care – not about a murky conflict half a world away.

“But even if voters wanted to confront the war, each candidate would still have his own motives to run from it.

“Obama doesn’t want to remind his liberal base that he more than doubled the number of U.S. troops in Afghanistan…(a move that) was deeply unpopular with Democrats, even though he pledged to begin reducing forces in 2011….

“In my recent book on the Afghan war, ‘Little America,’ I write that a CIA assessment conducted last year concluded that the surge’s successes in the south had been offset by losses in the east and that the country was ‘trending to stalemate.’

“Presenting the case that the surge worked in a few provinces doesn’t make for a rousing victory speech. It is even more difficult when the Taliban continues to attack, sometimes spectacularly, and the Afghan government remains inept and corrupt.”

Romney’s main point has been that the surge troops should have stayed at least until end of the year, but a narrow majority of Republicans now think the war in Afghanistan is no longer worth fighting. Among independents, according to a Washington Post/ABC News poll, disapproval of the war jumps to 66 percent.

Separately, we note the sacrifice of our ally New Zealand, which lost two soldiers in the theatre this week, killed in battle and bringing the country’s death toll in the war to seven. It’s hard for Americans to understand but each one of the seven has had a profound impact on this proud nation.

By all accounts, New Zealand’s troops have done a great job.

China: The wife of Bo Xilai, once one of China’s most powerful politicians, told a People’s Court on Thursday that she waited until a British businessman, Neil Heywood, was incapably drunk and then poured poison down his throat. The trial lasted one day as Gul Kailai did not contest the prosecutors’ version of events in the death of Heywood last November. Two British Embassy officials were among those in attendance at the trial, with Chinese state television releasing footage from inside the courtroom that showed Ms. Gu looking calm. No date for a verdict and sentencing has been announced though the death penalty seems to have been ruled out.

Recall that Heywood’s death was initially recorded as a heart attack, but four months later Mr. Bo’s right-hand man, the police chief, fled to a U.S. consulate to allege murder and a massive cover-up. Bo, once a candidate for one of China’s top jobs, is now under investigation for unspecified “disciplinary violations.”

Speaking of top jobs, the Chinese Communist Party is holding their secret conclave where top officials will finalize plans to hand over power to a new group of leaders. [I’d say ‘new generation,’ except many of the incoming are old and will retire in a few years.]

Xi Jinping, the current vice-president, is expected to replace President Hu Jintao, while Li Keqiang, a vice-premier, should replace Wen Jiabao as premier. Concerns over the military and the desire among some generals to be involved in the policy and political process is a major reason why it is expected that Hu will retain his position as chairman of the Central Military Commission for up to two years after he gives up the presidency in the fall. Xi would then become China’s military boss when Hu leaves the post.

The generals want China to exert more authority in the South China Sea, which I highlight again in my latest “Hot Spots” posting, while the civilian leaders prefer a cautious approach. For his part, Xi is said to have good relations with some top generals, though he is also viewed as a moderate.

Meanwhile, Beijing and Taipei signed another landmark investment pact on Thursday that will provide safeguards, a legal umbrella, for Taiwan companies operating in the mainland including protection against sudden expropriation of property. Customs procedures are also to be sped up.

Since Ma Ying-jeou became Taiwan’s president in 2008 on a Beijing-friendly platform, the two sides have boosted trade and civil exchanges in a big way.

The mainland is Taiwan’s largest trade partner and more than 80,000 Taiwanese companies now operate there, where they have invested $100 billion over the years.

North Korea: Sometime soon, potentially, Pyongyang is going to conduct its third nuclear test and, according to a report this week by the Bulletin of the Atomic Scientists, we could see the possible detonation of multiple devices. North Korea conducted previous tests in 2006 and 2009.

“Satellite imagery shows significant new activity at what has been identified as a likely third nuclear testing tunnel,” the report says. But analysts don’t know if Kim Jong-Un has made the decision to move forward.

Russia: Platon Lebedev, the former business associate of Mikhail Khodorkovsky, is to be freed next March, which would reduce his 13-year sentence on charges of fraud and tax evasion as part of the Yukos affair by more than three years. This does not mean, though, that Khodorkovsky will be released early.

And Deputy Prime Minister Dmitry Rogozin tweeted that Madonna, touring in Russia, was a whore after the pop singer came out in support of the Pussy Riot musicians currently under arrest.  Yup, that’s your classy Kremlin leadership, for you. 

Philippines: As many as two million residents of Manila have been impacted by catastrophic flooding, with at least half the city being submerged at one point. The death toll is at least 23.

Random Musings

--Note: As I go to post, 5:45 AM ET, Sat. morning, it appears Mitt Romney has selected Wisconsin Rep. Paul Ryan to be his running mate. If so, I love the choice.

--In a new Washington Post/ABC News poll, the same 40% hold a favorable opinion of Mitt Romney that did in May, while the negative views of Romney rose from 45% to 49% over the same period.

This is not good…if you are a Romney supporter.

President Obama’s favorable/unfavorable ratio is 53/43.

And among independents, Obama is viewed favorably by a 53-40 margin, while for Romney it’s reversed, 37-50!

--A new CNN/ORC International survey puts Obama ahead of Romney 52% to 45%. [53-42 among independents.] The favorable/unfavorable rating for Obama in this poll is 56-42.

A Fox News poll gave the president a 49-40 lead. A Reuters survey had Obama ahead 49-42.

--Mitt Romney must win Florida, but as The Weekly Standard notes, a recent Latino Decisions poll had Obama leading Romney 53-37 among Hispanics there (63-27 in five swing states with significant Hispanic populations – Arizona, Colorado, Florida, Nevada and Virginia).

In 2008, even though he lost Florida 51-48, John McCain won 42% of the Hispanic vote. In 2004, George W. Bush defeated John Kerry among Florida Hispanics by 56-44 (inflated because Gov. Jeb Bush was popular at the time).

So The Weekly Standard brings this up as a reason to tab Sen. Marco Rubio as Romney’s running mate, seeing as how Romney isn’t winning the state with just 37% of the Hispanic vote. In 2010, Rubio won 55%.

--Robert J. Samuelson / Washington Post

“President Obama and his allies have cast (Mitt) Romney as a wealthy fat cat who’s out of touch with everyday Americans and who would use his presidency to enrich Americans and who would use his presidency to enrich the already rich. To counter this damning image, the last thing you’d expect Romney to do is embrace a tax plan favoring the super-rich.

“Which is exactly what he has done.

“After examining Romney’s proposal, the nonpartisan Tax Policy Center concluded that households with incomes exceeding $200,000 would receive tax cuts; meanwhile, taxes would rise for the other 95 percent of the population. Taxpayers making more than $1 million would receive an average cut of $87,000; those making less than $200,000 would pay an average of $500 more. Romney denies that he would raise taxes on the middle class but has provided no evidence that the Tax Policy Center’s analysis is wrong.

“What can he be thinking?

“It’s not just that the politics are poisonous. The economics don’t make sense, either….

“True, Romney’s basic approach is sound: lowering top rates and offsetting lost revenue by ending tax breaks. Romney would drop the income tax rate from 35 percent to 28 percent and the lowest rate from 10 percent to 8 percent. This would improve incentives to work and invest. People would keep more of their last dollar of earnings. Reducing tax breaks would make the tax code less of a political candy store used to reward and penalize different groups and industries.

“Just which tax breaks would be reduced, Romney hasn’t said. But he has made two decisions benefiting high-income Americans. The first is to repeal the estate tax, which in 2009 applied to only 0.6 percent of adult deaths and raised $21 billion. The second is to retain tax preferences for capital gains and dividends, costing an estimated $85 billion in revenue in 2013. So the wealthy would gain both from lower rates on ordinary income (wages, salaries) and from tax preferences heavily skewed toward them. To keep the package revenue-neutral – raising the same amount as today’s system – would require deeper cuts in middle-class tax breaks….

“Romney’s tax plan calls into question his claimed superiority. The plan seems crafted mostly to satisfy Republican constituencies…but it’s also irrelevant because the plan would be dead on arrival in Congress.”

--Once again showing what an incredibly incompetent staff he has, Mitt Romney’s spokeswoman, Andrea Saul, defended his Massachusetts health care efforts way too aggressively when the campaign has heretofore steered clear of his overhaul there, seeing as conservatives say it mimics Obamacare too closely.

Rush Limbaugh commented: “Andrea Saul’s appearance on Fox was a potential gold mine for Obama supporters. They can say, ‘Romneycare was the basis for our health care.’”

As the Washington Post reported:

“Conservative commentator Erick Erickson called Saul’s remark ‘an unforced error of monumental idiocy’ that revived conservative wariness of Romney.”

Like I said last week…Romney is running an absolutely awful campaign. And what cracks me up is some of the conservative commentators I really admire, such as Charles Krauthammer, try to defend him just because they feel they have to, which only diminishes themselves, in my eyes. 

--Then there is President Obama….

Maureen Dowd / New York Times

“At a fund-raiser for the president at his Westport, Conn., estate Monday night, Harvey Weinstein spoke in a softly lit room shimmering with pink dahlias, gold Oscars, silvery celebrities and black American Express cards.

“ ‘You can make the case,’ Weinstein said of Barack Obama, ‘that he’s the Paul New man of American presidents.’

“I interviewed Paul Newman. I knew Paul Newman. Paul Newman was an acquaintance of mine. Mr. President, except for the eyes, you are sort of like Paul Newman.

“ ‘I’ve been accused of being aloof,’ Newman told me. ‘I’m not. I’m just wary.’

“The star scorned the hoops he was expected to jump through in his profession and did not like feeling beholden. He said he dealt with fame by developing ‘selective insensitivities.’….

“Obama smashed through all the barriers and dysfunction in his life to become a self-made, self-narrating president. His brash 2008 campaign invented a new blueprint to upend the Democratic establishment. So it’s understandable if Obama, with his Shaker aesthetic, is not inclined to play by the rococo rules of politics. Yet, as the president struggles to stay ahead of Moneybags Romney, his selective insensitivities may be hurting him.

“Stories abound of big donors who stopped giving as much or working as hard because Obama never reached out, either with a Clinton-esque warm bath of attention or Romney-esque weekend love fests and Israeli-style jaunts; of celebrities who gave concerts for his campaigns and never received thank-you notes or even his full attention during the performance; of public servants upset because they knocked themselves out at the president’s request and never got a pat on the back; of V.I.P.’s disappointed to get pictures of themselves with the president with the customary signature withheld; of politicians disaffected by the president’s penchant for not letting members of Congress or local pols stand on stage with him when he’s speaking in their state (they often watch from the audience and sometimes have to lobby just to get a shout-out); of power brokers, local and national, who felt that the president insulted them by never seeking their advice or asking them to come to the White House or ride along in the limo for a schmooze….

“Richard Wolffe, the author of Obama portraits…agreed: ‘The very source of his strength as an individual, that he willed himself into being, that he’s a solitary figure who doesn’t need many people, is also clearly a weakness. There are people who’ve worked with him for years who don’t understand why he gives so little back.’”

Now who first told you, long ago, that when it came to the polling data that showed a vast majority of Americans held a favorable view of Obama, the man, it was a joke…because he didn’t like you!

Why it was moi. 

--President Obama, in his stock campaign commercial.

“We tried that top down approach…what caused the mess in the first place.”

Hardly. It’s a lie, but the American people can be pretty stupid at times.

--I’ve been arguing that it is incredible the free pass President Obama is getting on foreign policy.

The Economist weighed in:

“Yes, he killed Osama bin Laden and has rained down drone-powered destruction on al-Qaeda in theatre after theatre, thus impressively addressing America’s single biggest foreign worry. He has also made good on his promise to leave Iraq, even if the place is hardly in a stable state. Afghanistan, though, is a mess, Iran’s nuclear program continues, China is as prickly and unhelpful as ever, and Russia under its yet-again president, Vladimir Putin, is sliding back towards enmity with America, despite the supposed ‘reset’ in relations during the time of Dmitry Medvedev. Many Americans will feel, as this newspaper does, that it was refreshing of Mr. Romney to denounce Russia for faltering on the path ‘toward a free and open society’ at a time when a feminist protest band is on trial and a prominent political activist is being charged with stealing wood. They may, indeed, decide that they prefer a certain Reaganesque muscularity to Mr. Obama’s more emollient approach, which in practical terms has yielded a lot less than he (and we) had hoped for.

“By Mr. Obama’s own lights, of course, there are plenty more failures to add to his account. He did not, as he promised, halt the rise of the oceans, or close the prison camp at Guantanamo within a year of taking office, or bring about peace between Israel and Palestinians, or forge a better relationship with the Muslim world, despite the eloquence of his Cairo speech. But it will be hard for Mr. Romney to gain much traction on any of these, since they are not objectives that he appears to share.”

Michel Gerson / Washington Post

“Syria’s civil war is approaching genocide as the regime shells villages and conducts mass executions. Russia has used the crisis to reassert its diplomatic influence. The United States, in Duke professor Peter Feaver’s description, has gone from ‘leading from behind’ to ‘following from behind.’ A strategy of stern denunciations, UN initiatives and minimal covert support for regime opponents has succeeded only in extending a savage conflict. And this is likely to make eventual retribution by rebels (assuming they win) bloodier, while leaving them more hostile to the United States.

“In Afghanistan, the United States conveys the impression of heading rapidly for the exits in 2014 – raising the serious possibility that the Afghan army will fracture, civil war will resume and the Taliban will return to power….

“ ‘We are not even imagining abandoning Afghanistan,’ says Secretary of State Hillary Clinton. But it doesn’t take much imagination for others: frightened shopkeepers and women in Kabul, hedging Pakistani security officials, determined Taliban warlords. They see the shipping containers packing and leaving.   And they hear Obama, in his stump speech, taking credit for ‘winding down the war in Afghanistan’ and refocusing the United States on nation-building at home.

“In Iran, a strategy of tightened sanctions and nuclear talks remains fruitless….(But) the United States seems to be headed toward some kind of confrontation with Iran, without Obama making any apparent effort to prepare Americans. Unless it is all a disastrous, discrediting bluff.

“Obama’s foreign policy team is sometimes praised for its pragmatism, realism, restraint and strategic modesty….

“But there is a point when ideological detachment becomes inconsistency and irresolution. When caution…becomes paralysis….

“In many parts of the world, the Obama doctrine has become an exercise in kicking the can down the road, avoiding or playing down problems that will only grow more complex and dangerous with time.”

Libya is an exception, “but Fouad Ajami of the Hoover Institution describes the sum as a ‘foreign policy of strategic abdication.’”

--The Wall Street Journal had a story on Dem. Congressman John Barrow of Georgia; as in Barrow is the last white Democratic congressman from the Deep South (defined as Louisiana, Mississippi, Alabama, Georgia and South Carolina). Blacks control the party, while whites control the Republican Party in the region. Barrow faces a very tough race due to redistricting.

In a recent Journal/NBC News poll, by the way, 77% of African-Americans said the government should do more to solve problems and meet people’s needs, while 44% of whites felt that way.

On Obamacare, 67% of blacks consider it a good idea, while only 29% of whites feel the same way.

--There was an environmental disaster this week that gained little attention. As a result of Typhoon Vicente, the worst storm to hit Hong Kong in 13 years, “Hundreds of millions of tiny plastic pellets are washing up on Hong Kong beaches…(sending) ‘white plastic sacks of death’ tumbling off a ship into the sea, environmental group Sea Shepherd Hong Kong said, warning that the spilled pellets could send chemicals up through the food chain.”

Here’s the thing. The pellets themselves are not toxic, but environmentalists warn that “nurdles soak up other chemicals and toxins like sponges, growing more and more stained as they do. Birds, fish and sharks mistake nurdles for fish eggs and consume them, Sea Shepherd Hong Kong said, spreading the toxicity through the food chain to humans.”

I saw some pictures in the South China Morning Post and Los Angeles Times (source of the above quotes) and it’s disgusting, and tragic.

Down the road you could be eating fish in the finest restaurants in Hong Kong, from the seemingly best suppliers, you’re assuming, and it might be toxic.

--“Major crime in New York City rose 12 percent from April through June, while stop-and-frisks fell 34 percent,” as the New York Post editorialized.

“Coincidence? Sure doesn’t seem that way….

“Fewer stops. More guns. More crime.”

Police Commissioner Ray Kelly denies he is surrendering to the political onslaught against stop-and-frisks.

“Yet last month The Post reported that political pressure had indeed made cops ‘collectively afraid’ to stop and frisk.”

--88 percent of the UK population has watched the Games, according to figures released by organizers.

--Can we have a moratorium with a-hole news reporters and anchors who say of a colleague who isn’t on set, “Becky is taking some well-deserved time off.”

What the heck did Becky, or Dick, do that was so special to deserve time off?! You guys are reading off a freakin’ teleprompter for crissakes. Did you go off to war and get shot at for six months? Win 18 gold medals a la Michael Phelps? Now there’s a guy who deserves some time off. Take the next 50 years off, Michael. You deserve it.

--Congress is off for five weeks. Well-deserved? Cue the Peanuts gang making fun of Charlie Brown for picking up the scrawny Christmas tree.

--From The Telegraph of London:

“To look at the scenes of jubilation – the whooping, the hollering and the high fiveing – you would think that Team USA had just picked up a dozen gold medals. But these scenes were taking place more than 5,000 miles away from London in Pasadena, California, and the celebrations were not to mark the fact that someone had run faster, or jumped higher, or thrown further; they signified that perhaps the most audacious and risky mission ever to another planet appeared to have been a stunning success.

“The Mars Curiosity rover is the largest, most expensive, most complicated and most intelligent machine humans have sent to another planet….

“So what does this mean for our understanding of the Red Planet? First, it cannot be stressed too highly that this was make or break for NASA. Last year saw the effective cancellation of the manned space program with the retirement of the shuttles. If Curiosity had ended up as scrap metal, NASA’s planetary science division would have been humiliated, and any requests for funding for future missions would probably have been refused.

“Indeed, according to Mars expert Bob Zubrin, the loss of Curiosity could have meant effectively an end to the U.S. venturing into space for at least a generation, and the keys to the solar system would have been handed to the Chinese. But for now, the Red Planet is firmly in American hands.”

There seems little doubt, before Curiosity really does its thing, that life in some form exists on Mars, though, incredibly, Curiosity is not actually equipped to look for life directly, but merely search for the conditions that would support life.

But if all goes well, Curiosity might be able to climb the three-mile high Mount Aeolis (or Mount Sharp at NASA) which lies in the center of Gale Crater. If it peered over the edge at the top and spied a Trump Mars in the distance, that would explain a lot, especially the hair.

One other item, however. When I saw the clips of the scientists celebrating the landing, jumping with joy, I had one immediate thought of the scene.

Not one African-American was in view. That speaks volumes, as uncomfortable as that might be for some of you.

--Editorial / The Times of London

“(Curiosity) should remind us that it is past time to send human life out into the Universe again for the first time in four decades….

“(The) value of putting humans on Mars is, literally, immeasurable. It is immeasurable in scientific terms because it has not been tried yet, and in terms of humanity’s larger quest for knowledge and self-knowledge because the value of such things has always been impossible to quantify. Narrow cost-benefit analyses did not prevent the Vikings or Vasco da Gama from striking out for new worlds against daunting odds, because it did not occur to the ancient Norsemen or the 15th century Portuguese to make them. Six centuries on, we live in the shadow of accountants’ tower blocks, but we are still the same questing species underneath….

“President Obama has had little choice but to slash budgets across his Administration. His successors will eventually have more freedom. They must find the courage of Kennedy to gird their nation, and others, for the great multinational effort that will be needed to put humans on Mars.”

---

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

God bless America.

---

Gold closed at $1622
Oil, $92.87

Returns for the week 8/6-8/10

Dow Jones +0.8% [13207]
S&P 500 +1.1% [1405]
S&P MidCap +1.8%
Russell 2000 +1.7%
Nasdaq +1.8%   [3020]

Returns for the period 1/1/12-8/10/12

Dow Jones +8.1%
S&P 500 +11.8%
S&P MidCap +9.4%
Russell 2000 +8.2%
Nasdaq +16.0%

Bulls 43.6
Bears 25.5 [Source: Investors Intelligence…or lack thereof]

*Don’t forget the StocksandNews.com iPad app…pair it with a fine chardonnay for your end of summer get together.

Have a great week. I appreciate your support.

Brian Trumbore



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Week in Review

08/11/2012

For the week 8/6-8/10

[Posted 6:00 AM ET]

Europe Is Now On Vacation…sort of

Editorial / The Economist

“What a miserable summer for Europe’s leaders. Away hiking in northern Italy, Angela Merkel spoke by phone to Mario Monti to promise to do ‘everything necessary’ to preserve the euro. The Italian prime minister then toured European capitals seeking help to hold down his country’s borrowing costs…And the man everybody is watching, Mario Draghi, president of the European Central Bank (ECB), promises: ‘I will not be going to Polynesia – it’s too far.’

“But the holiday is already a write-off, September promises to be worse: a rentree chaude, a ‘hot’ return to work. Several things are likely to bring the euro crisis to a head. These include the prospect that Greece may run out of money and drop out of the euro, continuing meltdown in Spain, awkward elections in the Netherlands, a legal challenge in Germany’s constitutional court and political resistance to a more integrated eurozone. All told, the autumn of 2012 may determine the fate of the euro.

“Start with Greece. Come September the wreckage of Greece’s public finances will become more obvious. The matter lies half-hidden behind technical discussions, but the ‘troika’ of officials from the ECB, the European Commission and the IMF will eventually have to produce a report. The word is that the shortfall in Greece comes to tens of billions of euros.

“To stay afloat, Greece needs both more austerity and more money. Both may prove politically impossible. Having already agreed to two bail-outs for Greece, its exasperated creditors are in no mood to provide a third – particularly not one that may require them to forgive a big chunk of Greece’s official debt.”

So Germany is already debating when Greece should be thrown out. And then does Spain, Portugal or Italy follow? Spain, for example, clearly needs a full bail-out, not just one for its banks.

Sept. 12 also looms as a critical day. Germany’s constitutional court rules on the new European Stability Mechanism rescue fund, while the Netherlands holds elections, with “Dutch parties competing in their vehemence against the debtors.”

And whatever shape the rescue funds take, Moody’s has already warned Germany it could lose its AAA status because of the looming bail-outs.

So even if Euro leaders get through August, which is no certainty (Greece has a 3.2 billion euro debt payment to make on Aug. 20, after all, and it doesn’t appear to have the cash), as The Economist concludes “they will soon be confronted by decisions they have tried to avoid. Give the Greeks more money, or let them leave the euro? Share more liabilities, either overtly (through Eurobonds) or covertly (through the ECB)? Surrender more power to EU institutions? Some senior figures think the crisis must get worse before it gets better.

“So enjoy the summer holiday while it lasts. The autumn is likely to be ugly. And history may record the last months of 2012 as the time when the eurozone came together – or fell apart.”

The data on the week was not good. S&P reduced its growth outlook for Greece, as in GDP will decline a whopping 11% over the 2012/2013 period. The unemployment rate in the country for May (the latest available) came in at 23.1% with a youth jobless rate now up to 54.9%. Tragic.

S&P confirmed it was downgrading 15 of Italy’s biggest banks and cut ratings on 15 more, this as industrial production fell 1.4% in June over May. New car registrations (sales) in Italy fell in July to the lowest level since 1978. Italy’s official GDP for the second-quarter over the first was down 0.7% over Q1, down 2.5% from a year ago. 

Germany’s exports in June fell 1.5% from May, while industrial production for the month declined.

Industrial production in the Netherlands declined 0.6% in June.

Industrial production in France for the month was unchanged, worse than expected.

Non-euro Britain saw industrial production decline 2.5% in June over May, but this was partly due to the Queen’s Jubilee. The Bank of England lowered its GDP forecast to zero for 2012 from a previous estimate of up 0.8%.

Euro finance chiefs meet Sept. 3 on Spain and Greece and then the ECB governing council meets Sept. 6, prior to the critical Sept. 12 date.

Next week, Aug. 14, we see the first estimate on eurozone GDP for the second quarter.

This week Italy’s Mario Monti, who is in office just eight more months, said in an interview with Germany’s Der Spiegel:

“The tensions that have accompanied the eurozone in the past years are already showing signs of a psychological dissolution of Europe,” adding the problems “have to be solved quickly now so that there’s no further uncertainty about the eurozone’s ability to overcome the crisis.”

Monti keeps bitching that the spread on Italian bonds vs. German bunds isn’t fair; as in Monti says he’s done everything right – overhauled the pension system, revamped labor laws and imposed austerity on Italians – so why is he paying like 450 basis points more on 10-year paper?

But at the same time, both Spain and Italy don’t want to make a formal aid request from the ECB because they would give up some sovereignty and the market knows they need the aid so they’ll be penalized until they ask. Then you have French President Francois Hollande, who wants the two to ask to protect France from the speculators.

Here’s another issue…an ongoing one for much of the crisis…banks simply aren’t lending to the real economy and talk of another LTRO, long-term refinancing operations, with the promise of more 1% money for the banks for three or more years, wouldn’t help one bit.

You also had a telling story out of the London Times’ Juliet Samuel.

“Royal Dutch Shell is to pull some of its huge cash pile out of European banks because it fears that the Continent’s debt crisis has made it too risky at home.

“The oil group’s decision is a worrying new sign of capital flight from the eurozone, identified by economists as a leading source of stress for European credit markets and businesses.

“The Anglo-Dutch company would rather deposit its $15 billion of cash in non-European assets, such as U.S. Treasuries and American bank accounts its chief financial officer Simon Henry told The Times…

“The energy group is also reviewing credit relationships in its European supply chain. ‘Can banks that finance our suppliers continue to finance them?’ Mr. Henry asked.”

Lastly, on the topic of Greece, 6,000 people were detained last weekend in a sweep trying to identify undocumented immigrants. Of that number, 1,400 did not have proper papers.

There are said to be 800,000 registered immigrants in Greece, and another 350,000 there illegally. The Greek people are ticked, complaining, of course, that the foreign residents are depriving them of jobs and threatening the country’s identity.

The perfect issue for Golden Dawn, the far-right, neo-Nazi group that picked up 7% of the vote in the June parliamentary elections. Golden Dawn calls for the immediate deportation of all immigrants.

French President Hollande made waves on the same front this week when he picked up where former President Sarkozy left off…dismantling Roma (Gypsy) camps in the city of Lille. Good for Hollande.   The Roma are among the nastiest people on the face of the planet. If your pocket is ever picked in Europe, odds are it’s a Roma who targeted you.

Turning to the U.S., it was a week light on major economic data but there were a few decent tidbits, such as another better figure on the weekly jobless claims front and a trade deficit that narrowed because of falling imports (lower oil prices for the recording period) and rising exports to the highest monthly total ever, $185 billion.

Fannie Mae and Freddie Mac reported combined net income of $8 billion for the second quarter due to improving conditions in the housing sector and the two are paying a total of $4.7 billion in dividends to taxpayers. The mortgage giants cited declining delinquency rates and rising prices (though I have other information down below that is less encouraging on the former) and Fannie and Freddie have now paid back $46 billion in dividends on the $190 billion in federal assistance they have required. Isn’t that great?! Well, it’s a start.

Credit card debt fell 5% in June, which is not good when it comes to consumer spending.

And the word on the farm front is downright awful as the drought in much of the country worsens by the hour. The U.S. Department of Agriculture issued its latest forecast for the corn and soybean harvests and it was dreadful, which means rising prices (more below). Corn is hitting one record high after another.

Then you have this whole “fiscal cliff” issue; the combination of tax increases and budget cuts come January unless Congress acts, which we know isn’t happening before the election and isn’t likely to right after, outside of, maybe, a short-term extension of existing tax and spending levels for a month or two until, say, March.

More than 40% of companies surveyed by Morgan Stanley in July said the fiscal cliff was a major reason for their spending restraint. Chief U.S. economist for the investment bank, Vincent Reinhart, said he expects that portion to rise when the poll is repeated this month. [Nelson D. Schwartz / New York Times]

The Wall Street Journal surveyed 47 economists and all but four said that without a deal in Congress, concerns about the fiscal cliff will drag on growth the remainder of the year.

As it is, with GDP rates of 2.0% and 1.5% for the first two quarters of 2012, the consensus of the economists surveyed was that growth would amount to 1.8% in the third quarter and 2.1% in the fourth. Like whoopty-damn-do. Obviously not enough to improve the employment situation much.

If there was no deal at all, economists say you can subtract a full 2.2 percentage points from 2013 growth, which would send us back into recession most likely.

Lastly, there was a slew of data on China this week. For the month of July….

Home sales were down 14.5% over June.

Industrial production was up 9.2% over a year earlier, disappointing and a 3-year low.

Retail sales were up 13.1% from a year earlier and less than expected.

Passenger car sales were up 10.7% over July 2011.   OK.

Exports were up just 1% year over year with exports to Europe down a whopping 16%; up 0.6% to the U.S. [Imports rose just 4.7%.]

None of the above was good and simply confirmed the slowdown.

But the inflation data was helpful with consumer prices rising only 1.8% from a year earlier. The all-important food inflation was up 2.4%, the slowest pace since October 2009. Pork prices fell 19% in July vs. July 2011, when pork was rising at a 57% clip.

Producer prices, though, were actually down 2.9% for the month, sparking some fears of deflation.

Add all of the above up, however, and with the Bank of China having a benchmark lending rate of 6% after two rate cuts since the beginning of June, you can see they have further room to lower rates to stimulate the economy and such a move should come shortly.

Street Bytes

--Stocks finished higher again in what is becoming a truly stupid rally, which I’ll examine in greater detail next week after we see some important data on inflation, retail sales and industrial production. The market is rallying on anticipated further stimulus from the Federal Reserve, the benefit of which will last about ten minutes, if that, while anyone who is suddenly optimistic about the fate of Europe sure as heck hasn’t been reading this column the past 2 ½ years.

Anyway, the Dow Jones rose 0.8% to 13207, just 70 points shy of a December 2007 high, which is indeed impressive, while the S&P 500, in rising 1.1%, is at its best levels since April. Nasdaq tacked on 1.8%.

--U.S. Treasury Yields

6-mo.   0.13% 2-yr. 0.26% 10-yr. 1.66% 30-yr. 2.75%

Fed Chairman Ben Bernanke gives a critical policy speech at Jackson Hole on Aug. 31, ahead of the FOMC meeting Sept. 12-13.

--The UN Food and Agriculture Organization reported that its food price index jumped by 6% in July, owing to rising grain prices with the drought in the U.S. It’s amazing how quickly things flipped. Food prices had declined the prior three months but then the flash drought hit in mid-June, after what was a very good start to the year. The same drought conditions suddenly hit key wheat growing areas such as Russia and Ukraine as well.

Global cereal prices surged 17%, while on a different front, sugar leapt 12% to new highs in July after untimely rains in Brazil. Delayed monsoons in India and poor rains in Australia also contributed to higher prices.

Separately, 69% of Iowa, the top state for production of both corn and soybeans, is in “extreme” drought, up from 30.7%, though the situation in Ohio and Kentucky improved a bit.

Nonetheless, as reported by the National Drought Mitigation Center at the Univ. of Nebraska-Lincoln, the amount of the corn crop in the two worst drought categories has nearly quadrupled from 14% to 53%. [Soybeans, 16% to 50%.]

But as corn continues to hit one record high after another, the UN has called for an immediate suspension of government-mandated U.S. ethanol production, putting further pressure on the Obama administration to change a policy that benefits swing states in the election such as Iowa, while livestock-producing Texas suffers with higher feed prices.

Due to congressional mandates, 40% of the corn crop is diverted to ethanol in spite of “huge damage” to the crop because of the drought, as Jose Graziano da Silva, director general of the UN’s FAO warned.

“An immediate, temporary suspension of that [ethanol] mandate would give some respite to the market and allow more of the crop to be channeled towards food and feed uses.” [Financial Times]

The administration argues that the U.S. biofuel industry had reduced petrol prices and created jobs.

--July was the hottest month on record in the contiguous U.S. since records began in 1895, according to the National Oceanic and Atmospheric Administration. The average for the first seven months of 2012 is yet another record.

In July, the average temperature was 77.6 degrees, or 3.3 degrees warmer than the average for the month. The previous July record was in 1936, the height of the Dust Bowl, 77.4 degrees. The temp in Death Valley, Calif., hit a record 128 degrees on July 12.

--A fire at a Chevron refinery in Richmond, Calif., has led to a big spike in gas prices on the West Coast, with gasoline now averaging at least $3.88 in California and probably headed to $4.25 over the next ten days.

Nationwide, gasoline prices, at $3.66, are essentially where they were a year ago but the recent trend back up (even prior to the fire) spells trouble for President Obama if it begins to attract nightly news attention again. Prices in Illinois, Indiana, Michigan, Wisconsin and Minnesota are up to 39 cents a gallon higher than the national average.

--Standard Chartered Plc CEO Peter Sands said there were “no grounds” for revoking the lender’s license after New York baking regulator Benjamin Lawsky threatened to strip the London-based bank of its right to operate in the state, as part of an investigation into money-laundering and the violation of sanctions against Iranian banks.

After a week of name-calling, it appears the bank may settle for $700 million to resolve the allegations that have been under investigation by various federal agencies for more than two years.

Politicians across the pond are upset that U.S. regulators seem to be targeting British banks. For his part, Sands says “There was no systematic attempt to circumvent sanctions.”

The regulator in its report quoted Standard Chartered’s then executive director of risk, Richard Meddings, as dismissing concerns by his New York colleagues in 2006 that doing business with Iran could sully the bank’s image, saying, “You f---ing Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with the Iranians?”

Standard now says no one made that statement, based on an individual’s recollection of a meeting rather than an e-mail. But e-mails point to outrageous behavior and Lawsky’s Department of Financial Services says Standard covered up $250 billion in roughly 60,000 transactions with Iran over nearly a decade, with Standard acting like “a rogue institution…motivated by greed” where “most senior management designed and implemented an elaborate scheme by which to use its New York branch as a front for prohibited dealings with Iran – dealings that indisputably help sustain a global threat to peace and stability. By definition, any banking institution that engages in such conduct is unsafe and unsound.”

In 2009, a unit of London-based Lloyds settled for $350 million after an investigation into allowing Iran illegal access to the U.S. financial system and in 2010, Barclays paid $298 million to settle claims it violated trade laws in facilitating transactions involving banks from countries under U.S. sanctions including Iran (as well as Libya and Sudan).   HSBC, also based in London, just last month was fined $700 million.

There is no evidence any of the funds were funneled to terrorist organizations.

--Knight Capital largely filled a $440 million hole in its capital base after its computer glitch of August 1st as it reached agreement with six investors, including TD Ameritrade, Jefferies Group, Blackstone Group, Stifel Nicolaus, and Stephens Inc.

After a frantic weekend of talks, however, existing shareholders saw their holdings severely diluted.

Joe Nocera / New York Times

“(Yet) another Wall Street firm most people have never heard of, relying on a computerized trading program that they can’t possibly understand, shook investors’ faith in the market. This is happening a little too frequently, don’t you think?...

“The primary way the government has tried to restore faith in the stock market is by prosecuting a series of high-profile insider-trading cases. That’s fine, but it doesn’t do a thing about the public, sudden events that have shaken investor confidence, like computerized trading glitches. As Jason Zweig pointed out recently in The Wall Street Journal, over the last 13 months, $136 billion has been withdrawn by investors from stock mutual funds. No doubt part of the reason for the withdrawals is that investors are unhappy with their returns. But I suspect that an even more important reason is that between the glitches and the scandals, people have simply had it with the market.

“What makes this particularly painful is that over the last four decades, we have built a society that has become deeply reliant on the stock market. It is how we are supposed to finance our children’s college education and our retirement. With the bursting of the housing bubble, the stock market, in some ways, is all we’ve got left. It is difficult to depend on something that seems so frequently unreliable.

“One wonders if Wall Street itself is beginning to question if it can rely on the monster it has created – and which it no longer seems able to control. In the immortal words of the screenwriter William Goldman, ‘Nobody knows anything.’ He was talking about Hollywood. But the same could be said today for Wall Street and its fixation with computerized trading.”

Lex column / Financial Times

“On the whole, technology is a good thing. It is relieving people of drudgery the world over. But the obsession with HFT [high-frequency trading] and algorithms that their designers claim mimic the behavior of investors is in danger of taking the human dimension out of the stock market. Worse, HFT renders even its creators redundant if it decides to go berserk: nobody at Knight apparently had the sangfroid to turn the switch to off.

“There was a lot wrong with the old trading floor culture but it provided a real and populist arena whose passing may yet be mourned. The kids and the nerds have too much sway on Wall Street and in the City of London. Before another Knight falls, let’s have some adult supervision.”

--China’s Wanxiang Group Corp. is offering struggling lithium battery maker A123 Systems Inc. a $450 million lifeline, with Republican Congressman Cliff Stearns (Fla.), who chairs the House Energy and Commerce Committee’s panel on oversight and investigations, worrying about the deal’s transfer of intellectual property.

“We need to make sure the federal government isn’t an unwitting accomplice to the theft of our own national secrets by providing [foreign-controlled companies] with multimillion-dollar government grants and loans,” he said in a statement.

A123 was originally awarded $249 million in Department of Energy grants. China says it is only looking to bolster its own investment in electric vehicles and infrastructure owing to the nation’s dependence on foreign oil. A123 saw its revenue fall 53% to $17 million in the second quarter. Enter Wanxiang Group.

--In another sign of a slowing Chinese economy, gambling revenue in Macau was up just 1.5% in July from a year earlier, though to be fair a tropical storm impacted numbers and analysts were actually only looking for flat to 1% growth. For the year, gambling revenues in Macau are now expected to rise 10%, far less than originally estimated.

--General Motors reported its sales in China surged to a record 199,500 vehicles in July, defying a market slowdown and moves by some cities to limit traffic/pollution by limiting car numbers. GM’s sales were 15% higher than July 2011.

--Indonesia bucked the slowing Asia trend in reporting second quarter GDP rose 6.4% over a year ago. 

--The U.S. Department of Justice has decided not to charge Goldman Sachs or any of its employees for the subprime mortgage deals (like collateralized debt obligations, CDOs) that helped precipitate the financial crisis. The DoJ said: “After a careful review of the information provided in the [Senate] report and more than a year of thorough investigation [DoJ officials] have determined that, based on the law and evidence as they exist at this time, there is not a viable basis to bring criminal prosecution with respect to Goldman Sachs or its employees in regard to the allegations set forth in the report.”

The SEC also dropped an investigation into another Goldman subprime mortgage deal. Two years ago, Goldman did settle with the agency for $550 million on charges related to the “Abacus” scam.

--In the key California housing market, million-dollar-or-more home sales surged in the second quarter to the highest levels since the third quarter of 2007, according to DataQuick. 7,763 homes sold in this category from April to June. The highest figure for $1-million or up houses since DataQuick began tracking such data was the third quarter of 2005, when 15,898 homes changed hands. That was a bubble, sports fans.

--But the Mortgage Bankers Assn., in looking at the housing market nationwide, said home loans with at least one missed payment but not yet in foreclosure increased in the second quarter to 7.58% of all mortgages, up from the first quarter’s 7.4%. Separately, RealtyTrac Inc. said the number of homes going into foreclosure rose 6% in July compared with a year earlier. Last year, you’ll recall, foreclosures were largely on hold due to the “robo-signing” scandal.

--The U.S. Postal Service reported a quarterly loss of $5.2 billion, with $3.1 billion of it stemming from payments for retirement health benefits. The second-quarter losses were $2.1 billion more than the same period last year. The USPS defaulted on a $5.5 billion payment for future retirement benefits last week and owes $5.6 billion more on Sept. 30. The agency said it was nearly out of cash. Congress has legislation before it to allow the USPS to eliminate Saturday delivery, among other cost-saving measures, but did not act on it before going on vacation.

One positive, aside from the fact election mail and holiday deliveries will lead to a far better revenue picture in the fourth quarter, the USPS’s parcel business rose 9.9% in the second. [First-class mail, however, declined 3.1%.]

--Shares in Priceline.com closed Tuesday at $679 before the company released its latest earnings. On Wednesday they finished at $562, down $117, after the online travel website issued a disappointing forecast for the rest of the year, with revenue guidance in the 9% to 15% range, well below expectations of 20%. Needless to say, many were caught with their pants down. Priceline blamed the turmoil in Europe for curtailing trip reservations to the region. [The shares finished the week at $563.]

--McDonald’s said U.S. same-store sales dipped 0.1% in July, worse than expected, while sales dropped 0.6% in Europe. Globally, sales were flat, vs. an estimate of a 2.4% increase.

--Single copy magazine newsstand sales fell 9.6% in the first half of the year, though paid circulation rose 1.1% during the latest reporting period. Single-copy sales for People magazine plunged 18.6%. Us Weekly saw its sales drop 11.4%. [Crain’s New York Business]

--Revenues at Sirius XM Radio rose 13% to $837.5 million for the quarter, better than expected, while the company raised its outlook for annual earnings, as well as maintaining it would add nearly 1.6 million net subscribers for the year. I have to admit I love having XM in my new car and when the promo offer expires I will definitely re-up.

--Commercial for Optimum online…a couple talking about their new baby.

“She was on Facebook before she was even born…”

Yup, another fake Facebook page among the supposed 955 million users.

--Macy’s continued to take advantage of JC Penney’s problems as profits at Macy’s rose 16% last quarter. JCP said this week that same-store sales for the second quarter declined 21.7%. That is totally unheard of in the retail sector.

--McDonald’s Australia announced it will add the lamb burger to its menu across the country after 18 months of developing the “home-style” recipe. In Japan, Wendy’s is introducing three lobster-based meals to its menu, including the Lobster and Caviar Burger and the Surf and Turf Burger ranging between $16 and $20. I’m drooling…might have to fly to Tokyo this winter for dinner. 

--In the UK, “Fifty Shades of Grey” has become the best-selling book all time, surpassing “Harry Potter and the Deathly Hallows” with sales of 5.3 million copies.

--I want Allyson Felix to get every single endorsement available. She deserves it. OK, Gabby can pick some up as well.

Foreign Affairs

Syria: Government forces appear to have the advantage in the city of Aleppo, supposedly taking a rebel stronghold, while the Syrian army claims to have retaken the last rebel held district of Damascus.

At the same time, Syria’s prime minister defected, accusing President Bashar al-Assad of carrying out “genocide” against his own people. Riad Hijab defected to Jordan and is headed for Qatar. But Assad is hanging on, appearing on television this week for the first time since the July 18 bombing that killed four of his top security officials. Assad was seated with a senior Iranian envoy.

The World Health Organization said the fighting has severely hit the country’s health services, to state the obvious, including the shutdown of 90% of the pharmaceutical plants in Damascus and not so minor stuff as losing 200 ambulances to theft or clashes.

The UN human rights agency said 1.5 million Syrians have been displaced. 21,000 is the latest death toll.

The New York Times reported on Friday that crime is rampant throughout the country as police forces have simply disappeared.

It didn’t have to be this way, I argued from virtually day one.

On Tuesday, the White House urged the rebels to leave key governmental institutions “intact” when they topple Assad, with press secretary Jay Carney saying the administration had learned from the worst errors of the Iraq War. “Contingency planning is the responsible thing to do,” Carney told reporters.

If it wasn’t so tragic this would be laughable. The White House is saying this now?! When it is too late?!

Can you imagine the retribution that will take place in the country, from like a hundred sides?

Opinion…

John McCain, Joseph I. Lieberman and Lindsey O. Graham / Washington Post

“Because we have refused to provide the rebels the assistance that would tip the military balance decisively against Assad, the United States is increasingly seen across the Middle East as acquiescing to the continued slaughter of Arab and Muslim civilians. This reluctance to lead will, we fear – like our failure to stop the slaughter of the Kurds and Shiites under Saddam Hussein in Iraq or of the Tutsis in Rwanda – haunt our nation for years to come.

“Our lack of active involvement on the ground in Syria also means that, when the Assad regime finally does fall, the Syrian people are likely to feel little goodwill toward the United States – in contrast to Libya, where profound gratitude for America’s help in the war against Moammar Gaddafi has laid the foundation for a bright new chapter in relations between our two countries.

“Much more than in Libya, moreover, the United States has significant national security interests at stake in Syria. These include preventing the use or transfer of the regime’s massive chemical- and biological-weapons stockpiles – a real and growing danger – and ensuring that al-Qaeda and its violent brethren are unable to secure a new foothold in the heart of the Middle East. Our decisions and actions have been woefully insufficient to safeguard these interests and others….

“Contrary to critics who argue that a greater U.S. role in Syria could empower al-Qaeda, it is the lack of strong U.S. assistance to responsible fighters inside the country that is ceding the field to extremists there….

“By continuing to sit on the sidelines of a battle that will help determine the future of the Middle East, we are jeopardizing both our national security interests and our moral standing in the world.”

Editorial / Washington Post

“The defection of Syria’s prime minister to Jordan on Monday prompted yet another White House declaration that the regime of Bashar al-Assad is ‘crumbling.’ While we hope that this is the case, it seems more likely that the administration’s prediction will prove as premature as its previous announcements of Mr. Assad’s imminent downfall, dating back a year. The grim reality is that the regime and the brutal war it is waging in Syria’s cities is likely to go on and on – unless the United States abandons its policy of passivity….

“(This) underlines a point made five months ago by some of the State Department’s own Syria experts: The longer the fighting in the country goes on, the more it evolves toward open sectarian war, promotes extremist ideology and undermines the possibility of an eventual settlement based on pluralism and democratic principles. That’s why the Obama administration was foolish to waste the intervening months backing a feckless UN diplomatic initiative and why its current attempts to promote a ‘managed transition’ from the Assad regime are equally misguided.

“The only workable policy in Syria is one that aims at ending the civil war as quickly as possible with a victory for the opposition. A coup by regime elements that removes Mr. Assad may still be possible, but only if generals perceive that the war is lost. That means supplying the rebels with the arms they need to stop the tanks and planes of the Assad forces. To protect civilians, safe zones can be established along Syria’s borders with Turkey and Jordan, with help from Turkey or NATO.

“Taking such steps would help the United States establish relations and exert influence over those forces that will likely be the next leaders of Syria – the commanders of the Free Syrian Army…

“By refusing to step in, the Obama administration is merely ensuring that Syria’s future leaders will be more resistant to the West and perhaps more open to groups such as al-Qaeda. It is also giving the enduring hard core of the Assad regime the space and the opportunity to fight on.”

Even Nicholas D. Kristof of the New York Times weighed in against the president.

“President Obama’s finest moments in foreign policy, like the Osama bin Laden raid or the Libya intervention, resulted from close engagement and calculated risks.

“His lapses come when he’s passive or AWOL – as in Syria. I’m generally a fan of Obama’s foreign policy, but on Syria there’s a growing puzzlement around the world that he seems stuck behind the curve.”

Iran: Israeli Defense Minister Ehud Barak said Iran’s nuclear moves are becoming more difficult intelligence targets for both Tel Aviv and Washington. Barak issued the remarks on Thursday after a report in the newspaper Haaretz described a new U.S. finding – purportedly contained in a National Intelligence Estimate delivered to President Obama – that Iran had achieved major, unexpected steps in weapon-relevant atomic endeavors.

Barak told Israel Radio: “There probably really is such an American intelligence report…making its way around senior offices (in Washington). As far as we know it brings the American assessment much closer to ours…it makes the Iranian issue even more urgent and (shows it is) less clear and certain that we will know everything in time about their steady progress toward military nuclear capability.” [Reuters]

But Barack added, “There is still no decision, we understand the gravity of the situation, we understand that we do not have all the time in the world to decide,” Haaretz quoted him as saying.

On Monday, Prime Minister Netanyahu said, Tehran could employ nuclear force should it acquire the option.

“This is a regime that has broken every rule in the book. They very likely could use weapons of mass death.” [Jerusalem Post]

Netanyahu was also quoted as telling Shaul Mofaz, the opposition leader, “Obama will not attack Iran – never. In his second term, Obama will care even less about us than he cares now.”

This comes amid a report in the Tel Aviv paper Maariv that an American attack on Iran’s nukes would begin with “hundreds of cruise missiles” meant to demolish Iranian air defenses, intelligence facilities and radar stations. “The missile barrage would be followed by a wave of bunker-buster bombs dropped from B-52s that would destroy the nuclear facilities themselves.

“After the attack, an ultimatum would be issued to Iran to stop its military nuclear program immediately. In return, the West would supply it with peaceful nuclear reactors,” reports Maariv. [Michael Gartland / New York Post]

And there was the following op-ed from Israel’s ambassador to the U.S., which garnered quite a bit of attention.

Michael Oren / Wall Street Journal

“Nearly two decades ago, Israel started alerting the world about Iran’s nuclear program. But the world ignored our warnings, wasting 10 years until the secret nuclear enrichment plant at Natanz was exposed in 2002. Then eight more invaluable years were lost before much of the international community imposed serious sanctions on Iran.

“Throughout that time, the ayatollahs systematically lied about their nuclear operations, installing more than 10,000 centrifuges, a significant number of them in a once-secret underground facility at Qom. Iran has blocked International Atomic Energy Agency (IAEA) inspectors from visiting its nuclear sites, refused to answer questions about the military aspects of its program, and rejected all confidence-building measures. Iran has tested long-range missiles capable of reaching any city in the Middle East and, in the future, beyond.

“Iran is also the world’s leading state sponsor of terror. It has supplied more than 70,000 rockets to terrorist organizations deployed on Israel’s borders and has tried to murder civilians across five continents and 25 countries, including in the United States. In July, Iranian-backed Hizbullah terrorists killed five Israeli tourists, among them a pregnant woman, in Bulgaria. Iran’s forces have attacked American troops in Afghanistan and Iraq. Its agents are operating in Yemen, Africa and South America. By providing fighters and funds, Iran is enabling Syrian dictator Bashar al-Assad to massacre his own people.

“Iran has won all this without nuclear weapons. With them, it can commit incalculable atrocities anywhere in the world, beginning with Israel….

“A combination of truly crippling sanctions and a credible military threat – a threat that the ayatollahs still do not believe today – may yet convince Iran to relinquish its nuclear dreams. But time is dwindling and, with each passing day, the lives of eight million Israelis grow increasingly imperiled. The window that opened 20 years ago is now almost shut.”

Egypt: Egyptian troops and armored vehicles and attack helicopters are pouring into the Sinai desert to root out Islamic militants, the most significant action in the area since the demilitarization of the peninsula as part of the 1979 peace treaty with Israel. This comes after last weekend’s attack by militant Bedouin killed 16 Egyptian soldiers in Sinai near the border with Gaza and Israel. In response, Egypt has killed at least 20 suspected terrorists.

Israel green-lighted Egypt’s surge into the area, a sign that cooperation still exists between the two despite the Muslim Brotherhood’s new role in government. The military holds sway over new President Morsi and the Egyptian army carried out its first strikes in the peninsula as it went after those responsible for the attack on its soldiers.

For his part, Morsi fired his intelligence chief and the governor of northern Sinai.

Afghanistan: Three U.S. Special Forces members were killed by a man in an Afghan army uniform, the third attack on coalition soldiers in a week by Afghans training to take over responsibility for security once international forces pull out in 2014.

Rajiv Chandrasekaran / Washington Post…on how both presidential candidates are ignoring the war.

“The candidates have a shared reason for ignoring Afghanistan. It has stretched into the longest war in U.S. history, and Americans are tired of it. With an anemic economy on the home front, pollsters say that voters want to hear a substantive discussion about jobs, taxes, government spending and health care – not about a murky conflict half a world away.

“But even if voters wanted to confront the war, each candidate would still have his own motives to run from it.

“Obama doesn’t want to remind his liberal base that he more than doubled the number of U.S. troops in Afghanistan…(a move that) was deeply unpopular with Democrats, even though he pledged to begin reducing forces in 2011….

“In my recent book on the Afghan war, ‘Little America,’ I write that a CIA assessment conducted last year concluded that the surge’s successes in the south had been offset by losses in the east and that the country was ‘trending to stalemate.’

“Presenting the case that the surge worked in a few provinces doesn’t make for a rousing victory speech. It is even more difficult when the Taliban continues to attack, sometimes spectacularly, and the Afghan government remains inept and corrupt.”

Romney’s main point has been that the surge troops should have stayed at least until end of the year, but a narrow majority of Republicans now think the war in Afghanistan is no longer worth fighting. Among independents, according to a Washington Post/ABC News poll, disapproval of the war jumps to 66 percent.

Separately, we note the sacrifice of our ally New Zealand, which lost two soldiers in the theatre this week, killed in battle and bringing the country’s death toll in the war to seven. It’s hard for Americans to understand but each one of the seven has had a profound impact on this proud nation.

By all accounts, New Zealand’s troops have done a great job.

China: The wife of Bo Xilai, once one of China’s most powerful politicians, told a People’s Court on Thursday that she waited until a British businessman, Neil Heywood, was incapably drunk and then poured poison down his throat. The trial lasted one day as Gul Kailai did not contest the prosecutors’ version of events in the death of Heywood last November. Two British Embassy officials were among those in attendance at the trial, with Chinese state television releasing footage from inside the courtroom that showed Ms. Gu looking calm. No date for a verdict and sentencing has been announced though the death penalty seems to have been ruled out.

Recall that Heywood’s death was initially recorded as a heart attack, but four months later Mr. Bo’s right-hand man, the police chief, fled to a U.S. consulate to allege murder and a massive cover-up. Bo, once a candidate for one of China’s top jobs, is now under investigation for unspecified “disciplinary violations.”

Speaking of top jobs, the Chinese Communist Party is holding their secret conclave where top officials will finalize plans to hand over power to a new group of leaders. [I’d say ‘new generation,’ except many of the incoming are old and will retire in a few years.]

Xi Jinping, the current vice-president, is expected to replace President Hu Jintao, while Li Keqiang, a vice-premier, should replace Wen Jiabao as premier. Concerns over the military and the desire among some generals to be involved in the policy and political process is a major reason why it is expected that Hu will retain his position as chairman of the Central Military Commission for up to two years after he gives up the presidency in the fall. Xi would then become China’s military boss when Hu leaves the post.

The generals want China to exert more authority in the South China Sea, which I highlight again in my latest “Hot Spots” posting, while the civilian leaders prefer a cautious approach. For his part, Xi is said to have good relations with some top generals, though he is also viewed as a moderate.

Meanwhile, Beijing and Taipei signed another landmark investment pact on Thursday that will provide safeguards, a legal umbrella, for Taiwan companies operating in the mainland including protection against sudden expropriation of property. Customs procedures are also to be sped up.

Since Ma Ying-jeou became Taiwan’s president in 2008 on a Beijing-friendly platform, the two sides have boosted trade and civil exchanges in a big way.

The mainland is Taiwan’s largest trade partner and more than 80,000 Taiwanese companies now operate there, where they have invested $100 billion over the years.

North Korea: Sometime soon, potentially, Pyongyang is going to conduct its third nuclear test and, according to a report this week by the Bulletin of the Atomic Scientists, we could see the possible detonation of multiple devices. North Korea conducted previous tests in 2006 and 2009.

“Satellite imagery shows significant new activity at what has been identified as a likely third nuclear testing tunnel,” the report says. But analysts don’t know if Kim Jong-Un has made the decision to move forward.

Russia: Platon Lebedev, the former business associate of Mikhail Khodorkovsky, is to be freed next March, which would reduce his 13-year sentence on charges of fraud and tax evasion as part of the Yukos affair by more than three years. This does not mean, though, that Khodorkovsky will be released early.

And Deputy Prime Minister Dmitry Rogozin tweeted that Madonna, touring in Russia, was a whore after the pop singer came out in support of the Pussy Riot musicians currently under arrest.  Yup, that’s your classy Kremlin leadership, for you. 

Philippines: As many as two million residents of Manila have been impacted by catastrophic flooding, with at least half the city being submerged at one point. The death toll is at least 23.

Random Musings

--Note: As I go to post, 5:45 AM ET, Sat. morning, it appears Mitt Romney has selected Wisconsin Rep. Paul Ryan to be his running mate. If so, I love the choice.

--In a new Washington Post/ABC News poll, the same 40% hold a favorable opinion of Mitt Romney that did in May, while the negative views of Romney rose from 45% to 49% over the same period.

This is not good…if you are a Romney supporter.

President Obama’s favorable/unfavorable ratio is 53/43.

And among independents, Obama is viewed favorably by a 53-40 margin, while for Romney it’s reversed, 37-50!

--A new CNN/ORC International survey puts Obama ahead of Romney 52% to 45%. [53-42 among independents.] The favorable/unfavorable rating for Obama in this poll is 56-42.

A Fox News poll gave the president a 49-40 lead. A Reuters survey had Obama ahead 49-42.

--Mitt Romney must win Florida, but as The Weekly Standard notes, a recent Latino Decisions poll had Obama leading Romney 53-37 among Hispanics there (63-27 in five swing states with significant Hispanic populations – Arizona, Colorado, Florida, Nevada and Virginia).

In 2008, even though he lost Florida 51-48, John McCain won 42% of the Hispanic vote. In 2004, George W. Bush defeated John Kerry among Florida Hispanics by 56-44 (inflated because Gov. Jeb Bush was popular at the time).

So The Weekly Standard brings this up as a reason to tab Sen. Marco Rubio as Romney’s running mate, seeing as how Romney isn’t winning the state with just 37% of the Hispanic vote. In 2010, Rubio won 55%.

--Robert J. Samuelson / Washington Post

“President Obama and his allies have cast (Mitt) Romney as a wealthy fat cat who’s out of touch with everyday Americans and who would use his presidency to enrich Americans and who would use his presidency to enrich the already rich. To counter this damning image, the last thing you’d expect Romney to do is embrace a tax plan favoring the super-rich.

“Which is exactly what he has done.

“After examining Romney’s proposal, the nonpartisan Tax Policy Center concluded that households with incomes exceeding $200,000 would receive tax cuts; meanwhile, taxes would rise for the other 95 percent of the population. Taxpayers making more than $1 million would receive an average cut of $87,000; those making less than $200,000 would pay an average of $500 more. Romney denies that he would raise taxes on the middle class but has provided no evidence that the Tax Policy Center’s analysis is wrong.

“What can he be thinking?

“It’s not just that the politics are poisonous. The economics don’t make sense, either….

“True, Romney’s basic approach is sound: lowering top rates and offsetting lost revenue by ending tax breaks. Romney would drop the income tax rate from 35 percent to 28 percent and the lowest rate from 10 percent to 8 percent. This would improve incentives to work and invest. People would keep more of their last dollar of earnings. Reducing tax breaks would make the tax code less of a political candy store used to reward and penalize different groups and industries.

“Just which tax breaks would be reduced, Romney hasn’t said. But he has made two decisions benefiting high-income Americans. The first is to repeal the estate tax, which in 2009 applied to only 0.6 percent of adult deaths and raised $21 billion. The second is to retain tax preferences for capital gains and dividends, costing an estimated $85 billion in revenue in 2013. So the wealthy would gain both from lower rates on ordinary income (wages, salaries) and from tax preferences heavily skewed toward them. To keep the package revenue-neutral – raising the same amount as today’s system – would require deeper cuts in middle-class tax breaks….

“Romney’s tax plan calls into question his claimed superiority. The plan seems crafted mostly to satisfy Republican constituencies…but it’s also irrelevant because the plan would be dead on arrival in Congress.”

--Once again showing what an incredibly incompetent staff he has, Mitt Romney’s spokeswoman, Andrea Saul, defended his Massachusetts health care efforts way too aggressively when the campaign has heretofore steered clear of his overhaul there, seeing as conservatives say it mimics Obamacare too closely.

Rush Limbaugh commented: “Andrea Saul’s appearance on Fox was a potential gold mine for Obama supporters. They can say, ‘Romneycare was the basis for our health care.’”

As the Washington Post reported:

“Conservative commentator Erick Erickson called Saul’s remark ‘an unforced error of monumental idiocy’ that revived conservative wariness of Romney.”

Like I said last week…Romney is running an absolutely awful campaign. And what cracks me up is some of the conservative commentators I really admire, such as Charles Krauthammer, try to defend him just because they feel they have to, which only diminishes themselves, in my eyes. 

--Then there is President Obama….

Maureen Dowd / New York Times

“At a fund-raiser for the president at his Westport, Conn., estate Monday night, Harvey Weinstein spoke in a softly lit room shimmering with pink dahlias, gold Oscars, silvery celebrities and black American Express cards.

“ ‘You can make the case,’ Weinstein said of Barack Obama, ‘that he’s the Paul New man of American presidents.’

“I interviewed Paul Newman. I knew Paul Newman. Paul Newman was an acquaintance of mine. Mr. President, except for the eyes, you are sort of like Paul Newman.

“ ‘I’ve been accused of being aloof,’ Newman told me. ‘I’m not. I’m just wary.’

“The star scorned the hoops he was expected to jump through in his profession and did not like feeling beholden. He said he dealt with fame by developing ‘selective insensitivities.’….

“Obama smashed through all the barriers and dysfunction in his life to become a self-made, self-narrating president. His brash 2008 campaign invented a new blueprint to upend the Democratic establishment. So it’s understandable if Obama, with his Shaker aesthetic, is not inclined to play by the rococo rules of politics. Yet, as the president struggles to stay ahead of Moneybags Romney, his selective insensitivities may be hurting him.

“Stories abound of big donors who stopped giving as much or working as hard because Obama never reached out, either with a Clinton-esque warm bath of attention or Romney-esque weekend love fests and Israeli-style jaunts; of celebrities who gave concerts for his campaigns and never received thank-you notes or even his full attention during the performance; of public servants upset because they knocked themselves out at the president’s request and never got a pat on the back; of V.I.P.’s disappointed to get pictures of themselves with the president with the customary signature withheld; of politicians disaffected by the president’s penchant for not letting members of Congress or local pols stand on stage with him when he’s speaking in their state (they often watch from the audience and sometimes have to lobby just to get a shout-out); of power brokers, local and national, who felt that the president insulted them by never seeking their advice or asking them to come to the White House or ride along in the limo for a schmooze….

“Richard Wolffe, the author of Obama portraits…agreed: ‘The very source of his strength as an individual, that he willed himself into being, that he’s a solitary figure who doesn’t need many people, is also clearly a weakness. There are people who’ve worked with him for years who don’t understand why he gives so little back.’”

Now who first told you, long ago, that when it came to the polling data that showed a vast majority of Americans held a favorable view of Obama, the man, it was a joke…because he didn’t like you!

Why it was moi. 

--President Obama, in his stock campaign commercial.

“We tried that top down approach…what caused the mess in the first place.”

Hardly. It’s a lie, but the American people can be pretty stupid at times.

--I’ve been arguing that it is incredible the free pass President Obama is getting on foreign policy.

The Economist weighed in:

“Yes, he killed Osama bin Laden and has rained down drone-powered destruction on al-Qaeda in theatre after theatre, thus impressively addressing America’s single biggest foreign worry. He has also made good on his promise to leave Iraq, even if the place is hardly in a stable state. Afghanistan, though, is a mess, Iran’s nuclear program continues, China is as prickly and unhelpful as ever, and Russia under its yet-again president, Vladimir Putin, is sliding back towards enmity with America, despite the supposed ‘reset’ in relations during the time of Dmitry Medvedev. Many Americans will feel, as this newspaper does, that it was refreshing of Mr. Romney to denounce Russia for faltering on the path ‘toward a free and open society’ at a time when a feminist protest band is on trial and a prominent political activist is being charged with stealing wood. They may, indeed, decide that they prefer a certain Reaganesque muscularity to Mr. Obama’s more emollient approach, which in practical terms has yielded a lot less than he (and we) had hoped for.

“By Mr. Obama’s own lights, of course, there are plenty more failures to add to his account. He did not, as he promised, halt the rise of the oceans, or close the prison camp at Guantanamo within a year of taking office, or bring about peace between Israel and Palestinians, or forge a better relationship with the Muslim world, despite the eloquence of his Cairo speech. But it will be hard for Mr. Romney to gain much traction on any of these, since they are not objectives that he appears to share.”

Michel Gerson / Washington Post

“Syria’s civil war is approaching genocide as the regime shells villages and conducts mass executions. Russia has used the crisis to reassert its diplomatic influence. The United States, in Duke professor Peter Feaver’s description, has gone from ‘leading from behind’ to ‘following from behind.’ A strategy of stern denunciations, UN initiatives and minimal covert support for regime opponents has succeeded only in extending a savage conflict. And this is likely to make eventual retribution by rebels (assuming they win) bloodier, while leaving them more hostile to the United States.

“In Afghanistan, the United States conveys the impression of heading rapidly for the exits in 2014 – raising the serious possibility that the Afghan army will fracture, civil war will resume and the Taliban will return to power….

“ ‘We are not even imagining abandoning Afghanistan,’ says Secretary of State Hillary Clinton. But it doesn’t take much imagination for others: frightened shopkeepers and women in Kabul, hedging Pakistani security officials, determined Taliban warlords. They see the shipping containers packing and leaving.   And they hear Obama, in his stump speech, taking credit for ‘winding down the war in Afghanistan’ and refocusing the United States on nation-building at home.

“In Iran, a strategy of tightened sanctions and nuclear talks remains fruitless….(But) the United States seems to be headed toward some kind of confrontation with Iran, without Obama making any apparent effort to prepare Americans. Unless it is all a disastrous, discrediting bluff.

“Obama’s foreign policy team is sometimes praised for its pragmatism, realism, restraint and strategic modesty….

“But there is a point when ideological detachment becomes inconsistency and irresolution. When caution…becomes paralysis….

“In many parts of the world, the Obama doctrine has become an exercise in kicking the can down the road, avoiding or playing down problems that will only grow more complex and dangerous with time.”

Libya is an exception, “but Fouad Ajami of the Hoover Institution describes the sum as a ‘foreign policy of strategic abdication.’”

--The Wall Street Journal had a story on Dem. Congressman John Barrow of Georgia; as in Barrow is the last white Democratic congressman from the Deep South (defined as Louisiana, Mississippi, Alabama, Georgia and South Carolina). Blacks control the party, while whites control the Republican Party in the region. Barrow faces a very tough race due to redistricting.

In a recent Journal/NBC News poll, by the way, 77% of African-Americans said the government should do more to solve problems and meet people’s needs, while 44% of whites felt that way.

On Obamacare, 67% of blacks consider it a good idea, while only 29% of whites feel the same way.

--There was an environmental disaster this week that gained little attention. As a result of Typhoon Vicente, the worst storm to hit Hong Kong in 13 years, “Hundreds of millions of tiny plastic pellets are washing up on Hong Kong beaches…(sending) ‘white plastic sacks of death’ tumbling off a ship into the sea, environmental group Sea Shepherd Hong Kong said, warning that the spilled pellets could send chemicals up through the food chain.”

Here’s the thing. The pellets themselves are not toxic, but environmentalists warn that “nurdles soak up other chemicals and toxins like sponges, growing more and more stained as they do. Birds, fish and sharks mistake nurdles for fish eggs and consume them, Sea Shepherd Hong Kong said, spreading the toxicity through the food chain to humans.”

I saw some pictures in the South China Morning Post and Los Angeles Times (source of the above quotes) and it’s disgusting, and tragic.

Down the road you could be eating fish in the finest restaurants in Hong Kong, from the seemingly best suppliers, you’re assuming, and it might be toxic.

--“Major crime in New York City rose 12 percent from April through June, while stop-and-frisks fell 34 percent,” as the New York Post editorialized.

“Coincidence? Sure doesn’t seem that way….

“Fewer stops. More guns. More crime.”

Police Commissioner Ray Kelly denies he is surrendering to the political onslaught against stop-and-frisks.

“Yet last month The Post reported that political pressure had indeed made cops ‘collectively afraid’ to stop and frisk.”

--88 percent of the UK population has watched the Games, according to figures released by organizers.

--Can we have a moratorium with a-hole news reporters and anchors who say of a colleague who isn’t on set, “Becky is taking some well-deserved time off.”

What the heck did Becky, or Dick, do that was so special to deserve time off?! You guys are reading off a freakin’ teleprompter for crissakes. Did you go off to war and get shot at for six months? Win 18 gold medals a la Michael Phelps? Now there’s a guy who deserves some time off. Take the next 50 years off, Michael. You deserve it.

--Congress is off for five weeks. Well-deserved? Cue the Peanuts gang making fun of Charlie Brown for picking up the scrawny Christmas tree.

--From The Telegraph of London:

“To look at the scenes of jubilation – the whooping, the hollering and the high fiveing – you would think that Team USA had just picked up a dozen gold medals. But these scenes were taking place more than 5,000 miles away from London in Pasadena, California, and the celebrations were not to mark the fact that someone had run faster, or jumped higher, or thrown further; they signified that perhaps the most audacious and risky mission ever to another planet appeared to have been a stunning success.

“The Mars Curiosity rover is the largest, most expensive, most complicated and most intelligent machine humans have sent to another planet….

“So what does this mean for our understanding of the Red Planet? First, it cannot be stressed too highly that this was make or break for NASA. Last year saw the effective cancellation of the manned space program with the retirement of the shuttles. If Curiosity had ended up as scrap metal, NASA’s planetary science division would have been humiliated, and any requests for funding for future missions would probably have been refused.

“Indeed, according to Mars expert Bob Zubrin, the loss of Curiosity could have meant effectively an end to the U.S. venturing into space for at least a generation, and the keys to the solar system would have been handed to the Chinese. But for now, the Red Planet is firmly in American hands.”

There seems little doubt, before Curiosity really does its thing, that life in some form exists on Mars, though, incredibly, Curiosity is not actually equipped to look for life directly, but merely search for the conditions that would support life.

But if all goes well, Curiosity might be able to climb the three-mile high Mount Aeolis (or Mount Sharp at NASA) which lies in the center of Gale Crater. If it peered over the edge at the top and spied a Trump Mars in the distance, that would explain a lot, especially the hair.

One other item, however. When I saw the clips of the scientists celebrating the landing, jumping with joy, I had one immediate thought of the scene.

Not one African-American was in view. That speaks volumes, as uncomfortable as that might be for some of you.

--Editorial / The Times of London

“(Curiosity) should remind us that it is past time to send human life out into the Universe again for the first time in four decades….

“(The) value of putting humans on Mars is, literally, immeasurable. It is immeasurable in scientific terms because it has not been tried yet, and in terms of humanity’s larger quest for knowledge and self-knowledge because the value of such things has always been impossible to quantify. Narrow cost-benefit analyses did not prevent the Vikings or Vasco da Gama from striking out for new worlds against daunting odds, because it did not occur to the ancient Norsemen or the 15th century Portuguese to make them. Six centuries on, we live in the shadow of accountants’ tower blocks, but we are still the same questing species underneath….

“President Obama has had little choice but to slash budgets across his Administration. His successors will eventually have more freedom. They must find the courage of Kennedy to gird their nation, and others, for the great multinational effort that will be needed to put humans on Mars.”

---

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

God bless America.

---

Gold closed at $1622
Oil, $92.87

Returns for the week 8/6-8/10

Dow Jones +0.8% [13207]
S&P 500 +1.1% [1405]
S&P MidCap +1.8%
Russell 2000 +1.7%
Nasdaq +1.8%   [3020]

Returns for the period 1/1/12-8/10/12

Dow Jones +8.1%
S&P 500 +11.8%
S&P MidCap +9.4%
Russell 2000 +8.2%
Nasdaq +16.0%

Bulls 43.6
Bears 25.5 [Source: Investors Intelligence…or lack thereof]

*Don’t forget the StocksandNews.com iPad app…pair it with a fine chardonnay for your end of summer get together.

Have a great week. I appreciate your support.

Brian Trumbore