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09/08/2012

For the week 9/3-9/7

[Posted 6:00 AM ET]

Europe, Washington and Wall Street

It was a week that started with more bad news on the eurozone front as the Organization for Economic Cooperation and Development (OECD…which consists of 34 U.S. and Western European nations) significantly revised down its 2012 GDP forecast for the region from a May guesstimate of up 0.5% to a new projection of a decline of 0.7%, while at the same time cutting Europe’s growth engine, Germany, from up 1.2% to up 0.8%.

In doing so, OECD head Angel Gurria called on the eurozone to take action, knowing the European Central Bank was set to do so a few days later, with interest rates on Italy and Spain far higher than they can afford in the long run.

When asked whether the ECB should buy the two countries’ bonds, Gurria said, “Yes, they should. If you ask when, the answer is the sooner the better,” adding, “I think that the ECB is the bazooka, the firepower, the muscle, the one that has the capacity to impress upon the markets. We have passed the question of moral hazard…now it is the system that is at stake.”

At the same time, the purchasing managers index for the eurozone for the month of August came in at 45.1, the 13th consecutive month below the 50 line, denoting contraction, with Germany’s reading at a most worrisome 44.7.

The fundamental story out of Spain seemed to get worse by the day, with Andalusia becoming the latest of Spain’s 17 autonomous regions to request a bailout, 1 billion in immediate aid, because, like Catalonia and Valencia, which had previously requested 5 billion and 4.5 billion euro, respectively, Andalusia is shut out of the bond market due to their debt crisis.

Spain has 27.5 billion euro in debt due in October, a month in which an audit of its banks is to reveal their true financial condition (an unmitigated disaster, you can be sure), while Moody’s is threatening a downgrade based on the audit.

Depositors, as I’ve noted before, are fleeing Spain in what is being called a bank “jog” rather than a full-fledged bank run, though they are virtually the same, and Spain’s banks can’t lend to each other like a normal banking system. The banks also have collateral issues and are running low on eligible assets.

And with 25% unemployment and a youth rate over 50%, the people of Spain are beginning to revolt over the austerity measures demanded by the likes of the ECB, the European Commission and International Monetary Fund, let alone Germany and the marketplace.

The situation in Spain and its financial system is similar to that of others in the southern eurozone, where borrowing costs for small businesses (and many large ones) are far higher than for their northern euro competitors.

In Greece, the government finally released the official June unemployment rate, 24.4%, with youth unemployment also remaining solidly over 50%. Greece faces an imminent, final crisis, next month. A Financial Times/Harris poll found that only ¼ of Germans think Greece should stay in the eurozone, and only 26% of Germans believe Greece “will ever repay its bailout loans.” [But 77% of Italians believe the Greeks will…another example of the northern/southern divide.]

And you have further rumblings in Finland, where instead of a “Grexit,” a Greek exit from the eurozone, there is increasing talk of a “Fixit,” a Finnish exit for totally opposite reasons. Finland has the lowest debt ratio of any country in the region, but the Finns had a previous banking crisis of their own and are hostile to bail-outs of the kind that will be required to keep the eurozone whole. Plus only 31% of Finland’s exports go to the eurozone (Nokia being 1/5th of its exports, incidentally, which given Nokia’s issues isn’t good).

France, with a floundering new president, Francois Hollande, saw its unemployment rate for the second quarter hit 10.2%.

So all the above set the stage for Thursday, Sept. 6, and the long-anticipated announcement by ECB President Mario Draghi he would fulfill his July 26 promise to do “whatever it takes” to keep the eurozone together and initiate a bond-buying program.

When Draghi made his July pronouncement, Spain’s 10-year bond was trading with a totally unsustainable yield of 7.75% and the 2-year was over 7.00%. But Draghi’s July remark, and a few subsequent comments, moved short-term yields way down and then on Thursday he fulfilled his promise to engage in “outright monetary transactions,” or OMTs, to address “severe distortions” in government bond markets based on “unfounded fears.” 

I hardly think there were unfounded fears after years of inaction during the crisis on the part of the ECB and other parties, but, nonetheless, Draghi continued that the ECB was “strictly within our mandate” of maintaining financial stability by launching its bond-buying scheme, targeting specifically the one- to three-year paper for the likes of Spain and Italy, and Portugal and Ireland as the ECB sees fit it was left unsaid.

The program, Draghi said, “will enable us to address severe distortions in government bond markets which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro. Under appropriate conditions, we will have a fully effective backstop to avoid destructive scenarios with potentially severe challenges for price stability in the euro area.”

The OMTs are to be carried out in conjunction with the two bailout funds, the European Financial Stability Facility and/or the European Stability Mechanism, the latter not being formally enacted as yet.

“Governments must stand ready to activate the EFSF/ESM in the bond market when exceptional financial-market circumstances and risks to financial stability exist – with strict and effective conditionality,” Draghi said, and the ECB reserves the right to terminate bond purchases if governments don’t fulfill their end of the bargain.

And, in order to ensure the ECB’s purchases have a neutral impact on the money supply, purchases will be fully “sterilized,” meaning each bond will be treated with a handi-wipe before being sent out into the banking system. [Just seeing if you’re paying attention. It would, after all, befit a European Union filled with useless bureaucrats to have a team of 600 hand-sterilizing paper, but I digress…for each bond the ECB buys, it will sell another.]

The ECB also said that it will not have seniority, which is important because unlike an earlier situation involving Greece bondholders, the ECB doesn’t want to shut out the private sector which would otherwise avoid bond-buying of its own if ECB paper was higher on the credit scale than their purchases.

So that’s the program in a nutshell.

HOWEVER…the likes of Spain and Italy have to first request a bailout before the ECB triggers its OMT computer program and now Italian Prime Minister Mario Monti and Spanish counterpart Mariano Rajoy are like, well, if the ECB would just enact its bond-buying and thus lower our interest rates, we really don’t need any bailout! Both said they needed more time to study the plan before requesting aid and it’s clear in the case of Rajoy, in particular, he is just playing politics because he has a key regional election next month and his party’s popularity has been sliding on the heels of the austerity program he’s been forced to enact.

It’s the “conditionality” of Draghi’s program that suddenly has Monti and Rajoy with cold feet, even though especially in the case of Spain they desperately need both a bailout and the OMT.

Recall, Spain had already requested a 100 billion euro bailout for its banks while the government seeks to self-finance an 18 billion euro rescue plan for the above-mentioned regions. But again, politically, conditionality, further ECB-mandated austerity cuts and labor reform, is untenable to a majority of Spaniards. And for its part, Germany, which in the form of Chancellor Angela Merkel still has a large amount to say in anything the ECB does, wants more details on Spain’s banking system and the fiscal health of the regions.

One other item of note from before the ECB announcement, in a letter to the Greek government from the “troika” that is to determine whether Greece qualifies for any further bailout funds, that being the EC, ECB and IMF, the eurozone creditors are demanding the government enact a six-day work week as part of any further funding. This could be the final straw for Greece. Needless to say, organized labor has had enough and it is highly doubtful the latest Greek government could survive the protests that would follow.

Some opinion…Financial Times

“Consider what Mr. Draghi is trying to achieve and the means at his disposal. The ECB wants to eliminate ‘convertibility risk,’ a fancy name for the widespread belief among investors that the eurozone will break up. All the central bank can do, however, is undertake a technical operation to buy sovereign bonds in the secondary market, which would bring yields down by pushing up bond prices, and load such actions up with conditions on more structural and fiscal reforms. There is substantial execution risk between technical means and political and existential ends.

“Mr. Draghi has already succeeded in bringing down borrowing costs. Since he said in late July that the ECB would do everything required to save the euro, ‘and believe me, it will be enough,’ Spanish and Italian two-year bond yields have tumbled…The aim of outright monetary transactions, or OMT…is presumably to keep them there (or bring them down further).

“The ECB’s plan will make life exceedingly difficult for the Italian and Spanish governments, which want lower bond yields but not the conditions attached. It also raises a troubling question. The plan is predicated on the conviction among eurozone policy makers that convertibility risk has created false prices in the bond market. Why do they think they are better judges of what bond prices should be than the aggregate of investors? Somebody will have the last laugh here, and it may not be Mr. Draghi.”

Editorial / Wall Street Journal

“Mr. Draghi said any bond purchases under the new program will be sterilized to reduce the risk of inflation from open-ended bond purchases. That’s to the good. But if the ECB does start buying government bonds, it will expose itself again to credit risk on those bonds. In Greece’s restructuring, the ECB cut a side deal to save itself from losses. Under the new program it is explicitly disavowing that possibility so it doesn’t make private bondholders even more nervous. That means more risk for the central bank, and by extension taxpayers in countries like Germany….

“At best, the new program will give Messrs. Monti and Rajoy more time to promote the reforms in labor markets, taxation and other things their countries so desperately need to grow again. At worst, the prospect of the central bank saving the day will merely ease the pressure for reform. In that case, non-Northern Europe’s central problem of slow growth and declining global competitiveness will continue. We hope for the former but history suggests we should anticipate the latter.”

So how did the markets react to Mario Draghi’s move on Thursday? Stocks soared around the world, with Spain and Italy rising 5% and 4%, respectively, while the major U.S. indexes rose 2% with similar moves in Asia.

But then on Friday, the U.S. market had to deal with a putrid jobs report for August, with the economy creating just 96,000 jobs (103,000 in the private sector), and with downward revisions to the figures for June and July. Of the new jobs, taking what the government says at face value, 28,000 were in the low-paying food services sector (more on this below) while 15,000 jobs were lost in manufacturing.

As for the unemployment rate, it fell from 8.3% to 8.1% but this was because an estimated 368,000 people gave up looking for work. The labor participation rate, which is the share of the population that is working or looking for it, distressingly fell to the lowest level since 1981.   Further, a broader measure of unemployment that includes job seekers as well as those in part-time jobs is at 14.7%, though this was down from the previous month’s 15.0%. 

And one more…average hourly earnings actually fell a penny.

Add it all up and it was awful, except with two more jobs reports before the election, including the last one four days before, the White House is praying the unemployment rate hits 7.9%, a critical psychological number even if it masks the true picture. Otherwise, come Election Day they’ll be facing 45 consecutive months of 8% or higher.

Friday’s jobs report also means that the Federal Reserve is very likely to launch another round of easing, QE3, when it gathers next week, Wednesday and Thursday. But after Thursday’s big rally, stocks yawned on Friday even with the prospects of further easing on the heels of the labor report. That should tell you something about the effectiveness of anything the Fed comes up with.

Earlier in the week, the August ISM reading on manufacturing came in at 49.6, the third consecutive month below 50, though the service sector reading for the month was 53.7, better than the 52.6 for July.

But to me there were also two key earnings warnings that spoke volumes; those being from FedEx and Intel. FedEx said for the quarter ended Aug. 31 (released Sept. 18), earnings would come in between $1.37 and $1.43 vs. an earlier estimate of $1.45-$1.60, with the company citing further weakness in the global economy. For its part, Intel announced revenues in the third quarter would be $12.9 to $13.5 billion vs. a previous range of $13.8-$14.8bn, a big difference with Intel also citing global weakness among other factors.

As for President Obama, I discuss the Democratic National Convention and his performance down below. But no doubt he was thanking Mario Draghi for doing his part to kick the can down the road, at least beyond November 6, though before the White House gets too smug, Greece comes to a head in October, let alone Israel could still decide to attack Iran, Bashar Assad could use chemical weapons on his own people in Syria, which would be a huge game-changer, China could opt for military action in one of the South China/East China Sea disputes…you get the picture. In terms of surprises, President Obama is far from being out of the woods.

We also have to get through next week. Forget the FOMC meeting and probable QE3, the German Constitutional Court rules on the legality of the European Stability Mechanism, ESM, which is to be the permanent eurozone bailout fund. I’m guessing they rule it is constitutional, but, they could attach conditions or limits on Germany’s own participation in the funding of same…and that would be a major downer. Also on Wednesday, the Netherlands has a critical national election in which the anti-bailout forces are expected to make further gains. So keep your powder dry, sports fans.

Lastly, I have to note that China started the week with an awful PMI for August, 49.2 (HSBC said its work pegged it at 47.6), but then by week’s end the government had announced a slew of infrastructure spending projects on roads, subways, sewage treatment plants and the like to the tune of $167 billion. The benchmark Shanghai index, which had hit a multi-year low earlier, stormed back 3.7% on Friday with the stimulus news, which also helped the likes of Caterpillar and various commodity plays around the world as well.

China will be reporting a slew of further data on Sunday on items like exports, industrial production and retail sales that no doubt will impact Monday’s market action here.

Street Bytes

--Owing to the ECB’s action, stocks broke a two-week losing streak with the Dow Jones advancing 1.6% to 13306, its highest close since Dec. 2007, while the S&P 500 gained 2.2% to finish at its best mark in four years and Nasdaq, in adding 2.3% to 3136, is at its best levels since 2000.

--U.S. Treasury Yields

6-mo. 0.13% 2-yr. 0.25% 10-yr. 1.67% 30-yr. 2.82%

Treasuries fell (yields rose) due to the ECB’s bond-buying move and renewed euro strength even as the Fed is expected to do some bond-buying of its own. It was a return of the ‘risk on’ trade.

--The OECD sees U.S. growth of 2.3% in 2012.

--Since Mario Draghi said he would do whatever it takes to save the eurozone, stocks there are up 18%. 

--For the first seven months of the year, German exports to other eurozone countries were down 0.6%.

--The economic data this week in the U.K. was decidedly mixed. The August PMI for manufacturing was 49.0 (worse than expected), retail sales for the month were down 0.4% despite the Olympics, while July industrial production surprised to the upside, up 2.9%, though this was after the time off from the Queen’s Jubilee.

--India’s PMI for August fell to 52.8 from 52.9 in July.

--South Korea’s Aug. PMI was 47.5, while Taiwan’s was just 46.1.

--Australia’s PMI for the month was 45.3, with second quarter GDP up 0.6% over Q1, which was up 1.4%. The unemployment rate in Australia ticked down to 5.1%, but, like in the U.S., this owed to a lower participation rate.   Exports declined 1.4% in the second quarter.

--There is growing concern that last year’s catastrophic earthquake in Japan could lead to the eruption of Mt. Fuji as the volcano’s magma chamber is coming under tremendous pressure, according to findings by Japan’s National Research Institute for Earth Science and Disaster Prevention.

The last eruption of Mt. Fuji, and biggest of them all, took place in 1707 and since then you have many medium-sized towns that have sprung up at its base, let alone the Tokyo-Yokohama-Kawasaki urban conglomeration, the biggest in the world, is less than 100 miles away.

Eight years ago a government estimate on the cost of an eruption came in at over $30 billion.

--Apple is expected to launch the iPhone 5 on September 12 and sales could hit 10 million in its first week, according to one analyst. The Street as a whole expects anywhere from 22-26 million units sold in the full September quarter.   Some are talking up to 170 million in the 2013 fiscal year, which begins Oct. 1.

[Separately, shares in Pandora, the streaming-radio service, plunged 20% on reports Apple is in discussions to create its own competing radio-service.]

--Amazon announced updates to the company’s line of Kindle e-readers, including a rival to Apple’s iPad, the Kindle Fire HD that undercuts Apple’s price by $200.   The larger version of the Kindle Fire HD will cost $300 vs. the $500 that a baseline Apple iPad goes for. Amazon CEO Jeff Bezos left little doubt who his company is going after, continually comparing the Kindle Fire to the iPad.

--August auto sales rose 20%, while sales for the year in the United States are up 14.7% over the same period in 2011, this despite higher gas prices this summer.

For the month, General Motors’ U.S. sales grew 10.1% (selling 2,800 Chevy Volts in August, incidentally); Ford’s rose 12.6%; Chrysler’s were up 14.1%.

The big gains came from Toyota, up 45.6% from the same month a year ago, and Honda, up 59.5%. Recall, however, a year ago these two were recovering from Japan’s earthquake and tsunami. But Nissan’s sales rose just 7.6% and Hyundai’s increased only 4.4%. Volkswagen’s soared 63%, its best August since 1973.

--In China, auto sales are slowing but various experts expect China’s sales to exceed those of the U.S., Japan and Germany combined by 2015. The top 10 automakers have announced over $38 billion of investments to expand operations in China in just the past two years. Ford, for example, will spend $4.9 billion to build eight factories and debut 15 new models there by 2015, as reported by Bloomberg. GM is investing $7 billion over the same period.

--According to real estate data provider CoreLogic, nationwide home prices rose 3.8% in July, making this the largest year-over-year increase since 2006. Arizona led the country in price appreciation, up 16.6%, while Delaware had the steepest slide, down 4.8%.

--The U.S. Department of Justice accused BP of a “culture of corporate recklessness” before the 2010 Deepwater Horizon disaster as it prepares to go to trial in New Orleans.

“The behavior, words and actions of (BP executives) would not be tolerated in a middling size company manufacturing dry goods for sale in a suburban mall,” wrote government lawyers.

If the DoJ can establish gross negligence, the penalties could add up to as much as $21 billion, though this is contingent on proving how much oil was spilled.

Ironically, Hurricane Isaac stirred up the oil on the floor of the Gulf of Mexico and sent some of it in the form of tar balls back onto the beaches.

BP estimates its settlement with gulf fishermen and other private sector victims is costing it $7.8 billion. The Financial Times estimates the company is seeking a settlement in the neighborhood of $15 billion.

--An editorial in the official Chinese newspaper Xinhua said foreign short-sellers targeting Chinese companies listed in the U.S. are engaged in a “malicious act.” The editorial was titled “U.S. firms poison reputations of China start-ups for profit” and represented the first time the government has taken on short-sellers, with the commentary calling on the SEC to investigate outfits like Citron Research.

“With the U.S. economy floundering for so long, the United States cannot afford to have capital markets that attract little interest or participation from Chinese companies.”

But then this week the SEC charged China Sky One Medical Inc. with falsely inflating earnings as the past two years investors have fled Chinese small caps. My own experience in this regard has been a disaster.

--Back on Dec. 31, 2007, China had four of the world’s ten largest companies based on market value, topped by No. 1 PetroChina. But as of Aug. 29, 2012, only PetroChina remained in the top ten, at No. 4, as the top three were Apple, Exxon Mobil and Microsoft. [Bloomberg/Businessweek]

--My favorite barometer for economic activity in China, Macau’s gambling revenues, rose 5.5% in August to $3.3 billion, after revenues in July increased just 1.5%. The August figure was the second-highest ever for Macau casinos, topped only by October 2011.

--Samsung Electronics said it would inspect 250 Chinese companies that make products for it to ensure labor laws are being properly enforced after New York-based China Labor Watch reported children under 16 were working in a factory making phones and DVD players for Samsung. Think Apple and allegations earlier this year that contract manufacturer Foxconn was violating labor laws.

--Germany’s biggest airline, Lufthansa, has faced a series of rolling strikes among its cabin crew this week, forcing the cancellation of hundreds of flights each day the strike has been enforced. The union wants a 5% pay increase and guarantees against outsourcing, while the company’s offer is for a 3.5% wage increase in exchange for longer hours. It does appear a settlement is in the works and the airline is back in business on Saturday.

--Facebook began to finally fight back against its hemorrhaging share price as CEO Mark Zuckerberg said he would not sell his shares or options for at least another year, while allowing some employees to sell their stock earlier than scheduled. Facebook closed at $17.73 on Tuesday but rose smartly after the announcements (finishing the week at $19.00), though now employees and early investors will be able to sell hundreds of millions of shares at the end of October, while another window opens up in mid-November, then December, and finally next May. So Facebook could easily be under constant selling pressure.

--Shares in Google topped $700 for the first time since 2007 (closing Friday at $706). The all-time high is $741 reached on Nov. 6, 2007. Company management appears to be very positive about some of their initiatives.

--As reported by Don Lee of the Los Angeles Times, “Nearly 1 in 5 Americans ages 65 and older are working or looking for jobs – the highest in almost half a century.”

--Jim Puzzanghera / Los Angeles Times:

“Whereas 6 in 10 jobs lost during the Great Recession paid mid-level wages, the majority of jobs created in the recovery – positions such as store clerks, laborers and home healthcare aides – pay much less,” according to a study by the National Employment Law Project.

“Lower-paying jobs, with median hourly wages from $7.69 to $13.83, accounted for just 21% of the job losses during the recession. But they’ve made up about 58% of the job growth from the end of the recession in late 2009 through early 2012.”

--CBS announced its Super Bowl ad slots are more than 90% sold out, with 30-second spots going for a record $3.7 million to $3.8 million vs. an average $3.5 million during the 2012 broadcast on NBC. Among the biggest repeat advertisers: Anheuser-Busch, PepsiCo, Frito-Lay and Hyundai.

--Inflation Alert: New York City taxi fares went up 17% on Tuesday. Fares to JFK Airport rose to $52 from $45. Some drivers aren’t happy; concerned the tips will be less.

--Deflation Watch: “Tonight Show” host Jay Leno took a 50% pay cut as part of NBC’s budget-cutting efforts, taking Leno’s salary down to $15 million. The show’s budget was reduced 20% to $80 million. Ad revenue has fallen to $159 million from $255 million in 2007, according to Kantar Media, while the “Late Show with David Letterman” saw its revenue fall to $155 million from $205 million over the same period.

[“Today” show anchor Matt Lauer is apparently under big pressure to reduce his own $25 million annual salary to save jobs at that struggling show as well, according to the New York Post. ABC’s “Good Morning America” is back ahead of “Today” following the latter’s Olympics boost.]

--This summer’s movie box office sales were down 2.8% from last year. The Olympics hurt, as did the opening-night shooting for “The Dark Knight Rises.”

--Pssst…Workday, a company focused on human-resources software, is going to be a potentially hot IPO in October as the seven-year old outfit is a distinct competitor of Oracle and SAP in the enterprise software sector. Seeing as your editor isn’t a fan of Oracle’s Larry Ellison, we hope Workday continues to kick butt as the founders are the same team that ran PeopleSoft when Oracle acquired it in a hostile takeover.   Having old relationships, Workday is now picking them off one at a time. Ellison isn’t sleeping well. I love it.

Of course the IPO’s initial success will depend on the overall equity environment when it comes to market.

--Lastly, I’ve lost my enthusiasm for spewing venom at JPMorgan Chase but here’s the story. Thanks to my father, my brother and I received some shares in a private company, Sage Electrochromics, Inc., that Dad once played a leading role in after its founding. They manufacture smart glass (smart windows and such).

We received our shares, thinking one day they’d be worth something when Sage went public.

Alas, that was way back in 1998. But a few months ago we received notice a French company was acquiring Minnesota-based Sage and, whaddya know, our shares were worth $0.40! Yippee!

Anyway, it was something…more than just a few beers, though less than the cost of a car, so all three of us had to fill out some documents and before sending them off to escrow agent JPMorgan Chase, at their Brooklyn location, we duly called both Sage and JPM to make sure we were filling out the documents correctly. All three of us were told by Chase we didn’t have to fill out Exhibit B and on June 18, in my case, I expressed my package off to Brooklyn with the understanding I would receive my check “within approximately three business days after the proper delivery and receipt by the Paying Agent.”

So I’m thinking a week. But weeks go by, I didn’t necessarily need the money to buy my yogurt and domestic beer, my two main staples these days, and I patiently waited…and waited…

Finally, on July 30, I called JPM in Brooklyn, asked ‘Wassup?’ and learned they had indeed received my documents but Exhibit B needed to be filled out.

“Well why the [heck] didn’t you call me right away or send the freakin’ documents back!” I half-shouted. “I called this same department before mailing them out and was told I didn’t have to.” [In the interim the other family members also had to sign Exhibit B…all three of us being given the wrong instructions.]

So on July 31, I expressed Exhibit B and was told that “my request would be expedited.”

And I waited…and waited…and around about this time I needed to buy more yogurt and domestic and was starting to get a little pissed. So I called and left a voicemail with the fellow I had dealt with before and after two days he hadn’t returned my call so I picked up the phone and tried again, this time getting a different person. “What happened to Mr. X?” I started off. “He no longer works here,” came the reply.   [I had actually surmised that…I was just incredulous JPM hadn’t disconnected his voicemail…he’s still probably getting calls.]

Then, on August 20, about two months after I should have received my money, I get a certified packet from JPM I have to sign off on at the post office.

These idiots returned everything I had submitted, including the correctly signed Exhibit B along with the certificate, etc.!

So I picked up the phone…[one ringy dingy….two ringy dingy…]…got the same woman I had last chatted up…err, chatted with…and said, “What the [garbled…more garbling…] are you doing?! You just sent everything back to me!” “Hold on, Mr. Trumbore….Yes, that was our mistake. We’ll expedite your request.”

Finally, Aug. 29 I received the check.

When I was in Ireland I was telling a friend of my episode and he said he had had the exact same issue with JPM’s escrow department.

So to Jamie Dimon, CEO and Boy Wonder, you can take your bank and shove it….

I’ll stick with Wachovia, err, Wells Fargo. I think that’s who I’m banking with these days.

Foreign Affairs

Syria: The killing continues, now estimated at anywhere from 23,000 to 26,000 in the civil war, with the UN pegging the official refugee figure at over 230,000 (the unofficial number far higher), which is destabilizing to neighbors Turkey, Iraq, Jordan and Lebanon, while there is a true humanitarian catastrophe developing in Syria itself as 1.2 million have been displaced and 2.5 million are in dire need of aid. I’ll just say this in terms of the political debate taking place in the U.S. One of the Democrats’ campaign slogans is “Bin Laden is dead and GM is alive.” It needs to be pointed out that at least 20,000 of the Syrian deaths could have been prevented if the White House had taken coordinated humanitarian action with Turkey early on. Not a military invasion but just the establishment of safe havens and the Obama administration could have significantly reduced the human toll.

But it’s too late now. We missed our opportunity. The situation is indeed far more dangerous.

It was the same situation in 2009 when President Obama missed an opportunity in Iran to support the Greens, but instead when the United States just sat back, the mullahs crushed the uprising and now look where we are there.

It’s pathetic. It’s what infuriates me about how the president is getting a pass on his foreign policy.

Meanwhile, there are heightening anxieties over the security of Syria’s chemical weapons stockpiles and not a lot of confidence among Western intelligence sources that they know where everything is being stored. Plus you have the collapse of government control in several Syrian provinces, so sources tell the Washington Post that preparations for securing known sites with foreign troops are being hastened. Among the chief fears are the hundreds of tons of battlefield-ready sarin, the deadly nerve agent. Remember, Syria has the world’s third-largest stockpile of chemical weapons behind the U.S. and Russia, but while both Washington and Moscow are dismantling their arsenals, Syria has been building theirs up for a war against Israel.

In Ankara, Turkish Prime Minister Erdogan accused the outside world of indifference on Syria, adding “The regime in Syria has now become a terrorist state.” Turkey has been conducting more military exercises on the border to intimidate the Syrians.

Lebanon’s Prime Minister Najib Mikati warned his country’s fractious communities will “all drown” together if they let Syria’s civil strife spill over the border. More than a dozen Lebanese have died recently in shelling from Syria into their communities across the border.

But amid all the tension, Pope Benedict XVI is still coming to Lebanon on Sept. 14 and Sheikh Nasrallah said Hizbullah welcomed the visit and would participate in all phases of his trip, “to show our respect.” Former Prime Minister Saad Hariri said the Pope’s visit will shed light on the coexistence in the country between Christians and Muslims.

Iran / Israel: Israeli Prime Minister Benjamin Netanyahu is considering the use of polygraph tests to determine the source of a leak at a security cabinet meeting this week, Tuesday, where he made the unprecedented step of adjourning it shortly after a discussion on dealing with Iran began. According to a statement issued by his office, Netanyahu said at the outset of the meeting that “something grave happened shortly after the conclusion of the meeting yesterday: leaks from the security cabinet meeting.” It was an annual meeting to assess the country’s latest intelligence on Iran.

The problem is a headline in an Israeli paper read: “Disagreement about Iran among the intelligence agencies.” Specifically, members of the security cabinet were apparently shocked to hear that Mossad, Shin Bet and Army Intelligence do not agree about the extent of the Iranian threat, with debate focusing on the “zone of immunity,” “that period where the Iranians will have progressed on their nuclear program beyond the point where an Israeli attack would be effective.” [Jerusalem Post]

Of course for its part the White House is desperately trying to get Israel to hold off attacking Iran until after the election.

Editorial / New York Post

“The time to stop Iran from getting a nuclear bomb is growing short – and so, apparently, are tempers in Jerusalem and Washington.

“On Friday (Aug. 31), Israel’s largest newspaper reported that Prime Minister Netanyahu got into an angry – and decidedly undiplomatic – shouting match with U.S. Ambassador Dan Shapiro. The issue: President Obama’s handling of Iran’s increasingly dangerous nuclear capabilities – and his administration’s mounting criticism of Israel’s complaint that too little is being done about it.

“ ‘Time has run out,’ Netanyahu reportedly told Shapiro. And when the envoy reminded the PM that Obama had vowed not to let Iran acquire WMDs, Netanyahu replied: ‘Instead of effectively pressuring Iran, Obama and his people are pressuring us not to attack.’…

“Netanyahu’s anger is understandable – and justified. Four months ago, Team Obama assured everyone that negotiations and sanctions would soon bring about a deal that would allay Israel’s fears.

“They haven’t: Instead, the latest report from the International Atomic Energy Agency asserts that Iran’s nuclear program is picking up steam….

“Of course, it’s not clear how much time really is left. But what’s plain is that Obama has yet to convince the Israeli leader that he’ll stop Iran before it’s too late.

“No wonder Netanyahu is nervous. A lot of other folks, too.”

Editorial / Wall Street Journal

“The irony for the Administration is that its head-in-the-sand performance is why many Israeli decision-makers believe they had better strike sooner than later. Not only is there waning confidence that Mr. Obama is prepared to take military action on his own, but there’s also a fear that a re-elected President Obama will take a much harsher line on an Israeli attack than he would before the first Tuesday in November….

“Since coming to office, Obama Administration policy toward Israel has alternated between animus and incompetence. We don’t know what motivated Gen. (Martin) Dempsey’s (recent) outburst, but a President who really had Israel’s back would publicly contradict it.”*

*Referring to Chairman of the Joint Chiefs Gen. Martin Dempsey’s comment, “I don’t want to be complicit” if Israel chooses to strike Iran. [WIR 9/1]

On Friday, Canada closed its embassy in Iran and will expel all remaining Iranian diplomats in Canada within five days, with Foreign Minister John Baird citing Iran’s nuclear program and its hostility towards Israel, as well as Iranian military assistance for Syrian President Assad. Kudos to Canadian Prime Minister Stephen Harper.

Lastly, Iran and North Korea have signed a scientific and technological cooperation agreement, signifying even closer ties than already existed. The U.S. has repeatedly accused Pyongyang of supplying Iran with advanced missiles capable of targeting Western European capitals. Iran has denied UN reports that the two have been exchanging ballistic missile parts and technology.

Afghanistan: After Afghan personnel have killed at least 45 foreign troops this year, the Afghan military says it has arrested or sacked hundreds of Afghan soldiers in an attempt to stop the green-on-blue carnage.  

Separately, the U.S. military announced its Special Operations forces had suspended training for about 1,000 Afghan police recruits to vet existing members, some 27,000 Afghan troops under its charge, more thoroughly.

And Prince Harry has returned to Afghanistan on a four-month, high-pressure tour to kill Taliban as part of an Apache helicopter team. Known as Captain Wales, this is what the prince has always wanted; to be back with the boys.   It also helps explain his antics in Las Vegas as he clearly knew of his pending deployment.

Last time Harry was serving in Afghanistan, it was supposed to be secret but when his anonymity was broken he was forced to return home early. This time his mission is out in the open and the Taliban will be gunning for him. 

Pakistan: According to the Express Tribune newspaper in Pakistan, the government is reinforcing protections around a primary nuclear site because of indications it could be targeted by Taliban fighters in the region. A complex not far from the city of Dera Ghazi Khan is at a “serious” risk of attack. The site “houses uranium extraction and milling operations as well as a uranium hexafluoride conversion plant.”

Pakistan’s intelligence service apparently intercepted a phone call among Pakistani Taliban who were discussing final plans for assaults on sites at D.G. Khan.

According to the paper and Global Security Newswire, “There is a track record for Pakistani Taliban attacks occurring within three days after their details have been learned through phone conversation eavesdropping.” [This story came out Sept. 6]

And on Friday, it was reported the Obama administration is prepared to label the Pakistan-based Haqqani militant network a terrorist organization; the group being behind some of the most spectacular attacks on American forces in Afghanistan.

The Pakistani intelligence apparatus has ties to the network, a charge that the government in Islamabad denies, so the move makes an already fragile relationship between our two governments even more so.

China: Secretary of State Hillary Clinton was given a hard time on her visit to China and she left with little to show on divisive issues such as Syria and territorial disputes in the South China Sea. Beijing continues to resist putting pressure on Syrian President Assad’s regime, saying the crisis must be resolved through negotiations. Beijing also wants to resolve South China Sea disputes through negotiation with its neighbors directly, not multilaterally as the U.S. wants.

Premier Wen Jiabao told Clinton, “I feel that our two countries should maintain political mutual respect and strategic mutual trust. The United States should respect China’s sovereignty and territorial integrity.”

China is highly suspicious of increased U.S. activity in the region, including in the East China Sea, where Japan says the government reached agreement on a deal to buy the disputed Senkaku islands (Diaoyu in China) even as China claims them.

Meanwhile, the Chinese Communist Party is finally going to unveil its new generation of leaders in mid-October as officials struggle to keep the veil of secrecy over the occasion. Incoming president Xi Jinpinq, though, mysteriously canceled a meeting with Sec. of State Clinton, in a move seen as a purposeful slight over U.S. policy.

As for the disgraced Politburo member Bo Xilai, his fate has yet to be determined. It had been expected Bo would be removed from the National People’s Congress but the formal request to do so has yet to be filed. Despite the delay, few believe Bo will be staging any kind of political comeback, especially after his wife Gu was given a suspended death sentence last month in the murder of a British businessman.

Finally, Taiwan believes China has increased the number of missiles targeting the island by 200 since 2011 to a total of 1,600. It is suspected most of the new missiles are mobile, making them harder to target.

France: What an awful murder mystery in the picturesque French Alps as authorities struggle to come up with a motive for the “savage” slayings of four adults in a shooting rampage with all four having been shot in the head. The bodies were found in a car by a passing cyclist, with a 7-year-old girl hospitalized after being shot and brutally beaten.

What was even more incredible was it took authorities eight hours to discover a four-year-old girl had survived and was lying under the bodies!

At last word, though, the family, from Britain, may have been the victim of a family feud of some sort involving the Iraqi husband. Or, they were simply in the wrong place at the wrong time. The two daughters are under police care. The four-year-old will hopefully be able to tell police what she saw, though as of now she’s unable to do so.

Venezuela: Crime is so bad here, in metropolitan Caracas, 66 police officers have been killed in the line of duty this year compared to the 72 killed in the United States during all of 2011. Ahead of the Oct. 7 presidential election, crime is the number one topic. The overall murder rate in Venezuela is 13 times that of the U.S. and it’s the most violent country in South America. Homicides rose to 19,336 last year compared with 4,550 in 1998. At the same time, arrests of suspects have fallen by more than half. For his part, President Hugo Chavez has long belittled the police.

Canada: A masked gunman, apparently acting alone, appears to have targeted Quebec’s new premier, Pauline Marois of the separatist Parti Quebecois. She was not hit but one bystander was killed in the back of the hall where Marois was giving a victory speech. Her party, despite its goal of wanting to break away from Canada, did not achieve a parliamentary majority. Previous referendums on the topic have been defeated.

Random Musings

--Mitt Romney received zero bounce from the Republican National Convention, statistically speaking. For example, a CNN/ORC survey released as the Republican convention got underway had it 49-47 Obama. In a poll conducted the four days afterwards, it was 48-48.   Romney did gain among independents, going from a 48-45 margin to 52-42.

--According to an ABC News/Washington Post survey, President Obama had the lowest pre-convention personal popularity of an incumbent president since the 1980s. Just 47% of registered voters see Obama favorably, while 49% rate him unfavorably.

“The decline has occurred entirely among women registered voters – from 57-39 favorable-unfavorable in April to a numerically negative 46-50 percent now. That’s Obama’s lowest score among women voters…Unusually, his rating among men, 50-47 percent favorable-unfavorable, is numerically better than it is among women, albeit not by a significant margin.”

In 2008, Obama won women by 13 points, 56-43 percent.

Only 40 percent see Romney favorably, 47 percent unfavorably, but better than the previous week’s 35-51 split.

--Barack Obama, in his acceptance speech on Thursday:

“On every issue, the choice you face won’t be just between two candidates or two parties. It will be a choice between two different paths for America.”

It’s going to be about turnout and which base is more enthusiastic in the battleground states, most prominent of which are Ohio and Florida.

--David Brooks / New York Times…on the Democrats…

“At its base, this is a party with a protective agenda, not a change agenda – dedicated to defending government in all its forms….

“The country that exists is not on the right track. It has a completely dysfunctional political system. What was there in (Obama’s) speech that will make us think the next few years will be any different? America will only be governable again if there is a leader who breaks the mold and reframes the debate. Romney is unlikely to do that, and Obama’s speech didn’t offer much either.

“In short, change is still the issue, and the focus of his solid but not extraordinary speech was incremental improvement. The next president has to do three big things, which are in tension with one another: increase growth, reduce debt and increase social equity. President Obama has the intelligence, the dexterity and the sense of balance to navigate these crosscutting challenges. But he apparently lacks the creativity to break out of the partisan categories, the trench warfare gridlock.”

--Editorial / Washington Post

“ ‘I won’t pretend the path I’m offering is quick or easy,’ President Obama said Thursday night in accepting the Democratic nomination for a second term. ‘I never have. You didn’t elect me to tell you what you wanted to hear. You elected me to tell you the truth.’

“But as with Republicans in Tampa a week ago, the content of Mr. Obama’s remarks was short on those hard truths….

“An acceptance speech is not a State of the Union laundry list of specific proposals. Its role is to set out a vision of the country’s future path….

“Mr. Obama sketched a tempting array of expensive benefits and changes: eliminating overcrowded classrooms and crumbling schools; preserving the strongest military in the world; making certain that children can afford college. But he did not offer a whiff of explanation of how those programs can be paid for and the mounting national debt brought under control….

“Mr. Obama boasted of foreign-policy achievements and challenged his opponent’s views and credentials in that area. Some of his boasts were justified, others less so; it had to be galling for Syrians to hear him present himself as a champion of ‘the rights and dignity of all human beings’ without mentioning their country, where civilians are slaughtered by the thousands while the United States stands by. As with his domestic promises, he offered no new vision for challenges that have resisted his first-team efforts, such as Iran’s march toward acquiring a nuclear weapon.”

--Editorial / New York Post

“Early in his presidency, Barack Obama said of the economy: ‘If we can’t get this done in three years, this is going to be a one-term proposition.’

“Last night, accepting renomination, he complained, ‘It will take more than a few years to solve challenges that have built up over decades.’

“In 2008, Obama told the Democratic convention: ‘We measure progress by how many people can find a job that pays the mortgage, whether you can put a little money away at the end of each month.’

“Last night, with more than 13 million Americans still unemployed, he demanded that the American people be patient – and wait for him to try ‘bold, persistent experimentation,’ like Franklin D. Roosevelt.

“Four years ago, he warned, ‘You don’t protect Israel and deter Iran just by talking tough in Washington.’

“Today, he’s – well, trying to deter Iran by just talking tough in Washington. And who knows where he stands on Israel?....

“The president did get one thing right: In the coming election, voters ‘will face the clearest choice of any time in a generation.’

“ ‘It will be a choice between two different paths for America,’ Obama said. ‘A choice between two fundamentally different visions for the future.’

“We couldn’t have said it better….

“Yes, Americans last night heard some fiery oratory and promises about a brighter future from Obama.

“But they’ve heard it all before. At the end of the day, the president offered nothing new – nothing that will change America’s course for the better.”

--Jennifer Rubin / Washington Post

“It would have been better had he not spoken. Seriously. Like an aging rock star, President Obama, in a downsized venue, with downsized proposals and spewing downsized rhetoric only reminded us how far he has fallen from the heady days of 2008. The man, the agenda and the aura are faint imitations of their 2008 incarnations. And most importantly, he put forth an agenda that was entirely, and obviously, lacking, one that didn’t begin to match the demands of our time….

“No matter how desperately the Obama team spins, there is no getting away from this simple fact. He has no credible plan to reduce the debt or intention of attacking the drivers of debt, namely entitlement spending. For those Democrats and independents who thought he would eventually get serious about our most serious problem, the answer tonight was: ‘You’ve been had.’

“What followed was one spending program after another, as if no debt crisis loomed and as if the key to jump-starting the economy was to spend more money. (Recall we have spent trillions and trillions already.) It was, to put it mildly, shockingly weak and rather dull. Before our eyes, Obama has become the anti-reformer, the defender of the status quo and the throw back to mid-20th century liberalism….

“The Romney camp will breathe a sigh of relief. There is nothing in the speech we have not heard, nor is there any sense that Obama has grown in the job, is ready to tell his own party (let alone the public, as he claims he has done) hard truths or do what may be unpopular but is nevertheless essential. He leaves the field wide open for Mitt Romney to be the adult in the race, the responsible leader. If Romney can fully embrace that role, the presidency will be his.”

--Jennifer Rubin / Washington Post

“Bill Clinton, don’t get me wrong, was the best speaker Wednesday night. But that is largely because the rest of the evening was atrocious. Clinton was hoarse, and he seemed to holler for no reason at all. He decried those meanie Republicans of today (the favorite ploy of partisan Democrats is to praise every Republican no longer in office), and he repeated the tropes that Republicans want you to be on your own, want a ‘winner-take-all’ society and want to help only the rich. Yawn.

“At times his defense of President Obama strained credulity: Obama, he said, is bipartisan because he hired Republicans in government jobs and he is willing to work ‘cooperatively.’ The Obama record is so obviously at odds with that sentiment (unilateral action on immigration and on welfare and the refusal to make a deal on entitlements or address the fiscal cliff) that Clinton’s argument seemed unserious.

“At his most effective, Clinton said that no president could have fixed in four years the economy that Obama inherited. And he extolled the belief that America ‘always comes back.’ Unfortunately, Obama promised to fix the economy in his first term. And the Obama recovery is the weakest in history. The comparison between the two presidents’ records was obvious, leaving one to consider if Clinton’s mere presence was a reminder of Obama’s weaknesses….

“Clinton’s Medicare spiel was downright disingenuous, claiming that Obama’s $716 billion in Medicare cuts don’t affect benefits. But of course, payments to providers will be cut, making treatment less accessible, and a quarter of Medicare Advantage patients will be dropped from the program….

“Mostly, it seemed that Bill was paving the way for a potential Hillary presidential run. He talked fondly of her, of course, and gave a passing and remarkably vague defense of Obama’s foreign policy. He did not mention Israel.

“Now, Clinton did sing the praises of lots of government spending. It was a reminder of how wedded to big government the Democratic Party has become since Clinton declared the era of big government to be over. Alas, he did not explain why the economy is still so weak and what Obama would do differently in a second term. But that is not his fault. Obama hasn’t told us.   Could it be that he doesn’t have any new policies?”

--Editorial / New York Post

“(Bill Clinton) proved that he can make a case for President Obama better than pretty much any other Democrat.

“But then, just about any time Clinton said ‘I’m not making this up’ – in fact, he was. Certainly his declaration that Obama ‘is still committed to cooperation’ will come as a huge surprise to anyone who’s actually been following Washington since 2009….

“Clinton and other speakers pushed the theme of ‘shared responsibility’ – which is also popular with the base.

“What’s it mean? More government control – and less individual freedom….

“Sometimes the party just dropped the ball – and sent officials scurrying for cover. As they did following Tuesday night’s welcoming video, with its astonishing claim that ‘government is the only thing we all belong to.’

“So much for government ‘of the people, by the people, for the people’ – this was ‘government owns the people.’”

--Michael Barone / New York Post

“ ‘One question, Mr. President,’ read the words on the front cover of this week’s Economist, behind a silhouette of the back of Barack Obama’s head, ‘just what would you do with another four years?’

“It’s a good question….

“Other presidents seeking re-election have usually provided a more or less convincing answer. George W. Bush said he would try to reform Social Security and advance energy independence. Bill Clinton said he would provide ‘a bridge to the 21st century,’ which turned out to include significant tax cuts and a lunge toward Medicare reform.

“Bush failed to deliver on Social Security, and Clinton failed to deliver on Medicare, but both tried to pivot from a first-term to a second-term agenda.

“The first George Bush, in contrast, didn’t seem to pivot. He gave the impression he’d just keep going on. That wasn’t good enough for voters.

“Obama similarly hasn’t pivoted. Unlike Clinton, he didn’t shift ground when his party was rejected in the off-year election. For a second term, he has been calling for more infrastructure stimulus, more unionized teachers and (though he has said it’s harmful in a time of economic sluggishness) higher tax rates on high earners….

“The partisan playing field has changed a lot since 2008. But Obama’s polices have not. There has been no pivot. It will be interesting to see how loudly and often the delegates cheer, ‘Four more years!’”

[Ed. Not many, it turned out.]

--The Department of Agriculture reported that 46,670,373 Americans are now on food stamps, an all-time record, at an annual cost of $71.8 billion, $770 billion over a decade.

To be fair, though, as the Wall Street Journal pointed out in an editorial, “The food-stamp boom began with the George W. Bush Republicans, who expanded benefits in the appalling 2002 farm bill.”

But the fact is one in every seven Americans is now dependent on food stamps, “a sign of economic failure.”

--The New York Post’s John Podhoretz wrote Democratic Party keynoter, San Antonio Mayor Julian Castro, “came across as staggeringly false – a grinning, glad-handing post-bailout salesman just trying to get you into a Chevy Volt today and telling you he really, really likes the way you buy a car.”

Separately, I agree with Mr. Podhoretz that in the purest sense of a good political speech, Massachusetts Gov. Deval Patrick gave a barnburner.

In fact, going back through the years, the convention speeches I distinctly remember were by Democrats, including one by Julian Bond when I was all of 10 years old in 1968, plus the great speeches by Mario Cuomo and Jesse Jackson. 

--The video in honor of the late Edward Kennedy made me cringe when I heard the line, “That concern and regard for the plight of others…”

Yeah, like for Mary Jo Kopechne, Chappaquiddick, 7/18/69….

--Bill Clinton still has Rwanda as part of his legacy. For Obama it will be Syria.

--The Clinton campaign commercial for Obama is really an effective ad. 

--Former President Jimmy Carter, in his video message, said because of Barack Obama the United States is “more respected around the world.” I don’t know what planet Mr. Carter is on. Perhaps we should have sent him off on the Curiosity Mars mission. Upon landing, “Run along now, Mr. President.”

--I had an upper-middle class upbringing, in case you were wondering. As some of the Fox commentators had fun with, it seems as if every single convention speaker, from the president on down, both parties, had a rough childhood with mothers scrubbing floors just to make ends meet. Things were cleaner then. We, on the other hand, had veal cutlet once a week. Gee, thanks, Mom! [Of course the price we had to pay came in the form of liver once a week as well, until we learned it could kill you.]

--From a Wall Street Journal piece on how Obama’s foreign policy continues to get such high marks:

“Critics see an overreliance on drones [when looking at Pakistan, among others.] Jonah Blank, a former Senate aide to Joe Biden and [Sen. John] Kerry who worked on the 2008 Obama campaign, cites a downside to hitting low-level fighters.

“ ‘‘Mowing the grass’ – that is, cutting down targets guilty of nothing more than being men of military age – is dangerously counterproductive,’ said Mr. Blank, now at the Rand Corporation think tank. ‘Yes, it keeps al Qaeda somewhat off balance, but is that a good trade-off for the hatred of 185 million people in Pakistan and many more throughout the Muslim world?’”

--I can’t stand Obama aide Valerie Jarrett so I read with interest Jo Becker’s piece in the New York Times on her. Jarrett rules the White House.

“Aides say she never uses her private time with the president to relitigate decisions. Even so, the White House is organized around the principle that the president’s time is an administration’s most valuable commodity, not to be spent on low-priority matters or those not fully vetted. Yet several officials say that is what happened with one of Ms. Jarrett’s pet projects, Chicago’s bid for the 2016 Olympics.

“Based on her assurances that his personal appeal to the Olympic committee could clinch the deal, the president flew to Copenhagen. During the flight back, CNN reported that Chicago had not survived the first round of voting.

“ ‘There was total silence,’ one official recalled. ‘It was a long trip home.’

“Ms. Jarrett cuts an elegant figure in the West Wing, with her pixie haircut and designer clothes. Aides say she can be thoughtful in little ways that matter, enlisting the president to rally staff members on personal setbacks. [Ed. whatever…like I care….] But she can also be imperious – at one event ordering a drink from a four-star general she mistook for a waiter – and attached to the trappings of power in a way some in the White House consider unseemly for a member of the staff. [Ed. See, this is what I mean…she’s supposed to be thoughtful but acts like a b----.]

“A case in point is her full-time Secret Service detail. The White House refuses to disclose the number of agents or their cost, citing security concerns. But the appearance so worried some aides that two were dispatched to urge her to give the detail up.

“She listened politely, one said, but the agents stayed.”

Like I said, she’s a….

--Thomas Friedman / New York Times

“Sitting through all the speeches [at the Republican National Convention], it was clear to me that people who think Romney, having accepted the nomination, is now going to pivot to the center are fooling themselves.   There is no organic connection between Romney and the G.O.P. base. You could feel it in the hall. He is renting the party to fulfill his dream of becoming president, and they’re renting him to get rid of President Obama. But this is not Romney’s party. I don’t see him taking it back to his moderate past.

“Ann Romney promised, in her speech, that her husband ‘will not fail.’ But she never said at doing what. That’s not an accident.”

--Kyle Smith / New York Post

“Why is it that the Democrats can’t stop telling us that ‘If you’ve got a business – you didn’t build that’ is not what the president meant to say? Could it be that they’re afraid this clumsy attempt at an ad lib by Teleprompter Man could be dooming their chances this November?

“Rarely does a day go by without some Democratic Party house newsletter…screechingly informing us how unfair Republicans are being in quoting President Obama’s infamous speech at the Roanoke Fire Department on July 13. If Mitt Romney wins, there will be a plaque there, kinda like the one near the Chicago Baskin-Robbins where Barack Obama and Michelle Robinson had their first kiss….

“The full quotation that liberals find perfectly reasonable is this: ‘If you were successful, somebody along the line gave you some help,’ Obama said. ‘There was a great teacher somewhere in your life. Somebody helped to create this unbelievable system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business, you didn’t build that. Somebody else made that happen.’…

“ ‘Somebody else’ is responsible for the success of successful entrepreneurs.

“This is exactly backwards. Some 46% of Americans pay no federal income tax at all.

“The top 1 percent pay 37% of all federal income taxes. So each of those horrible selfish plutocrats, along with the burden of their monocles and top hats, is carrying 36 other Americans on their back.”

--On Friday, Aug. 31, Cardinal Carlo Maria Martini passed away at the age of 85. Cardinal Martini was once thought to be in line to be Pope.

But just hours after he died, the leading daily paper in his native Milan, where he had served as archbishop, printed his final interview, which it is believed he wished to be published following his death.

In it Cardinal Martini issued a damning indictment of the church.

“Our culture has aged, our churches are big and empty and the church bureaucracy rises up, our rituals and our cassocks are pompous.

“The church must admit its mistakes and begin a radical change, starting from the Pope and the bishops. The paedophilia scandals oblige us to take a journey of transformation.”

--I have one question for Republican vice presidential candidate Paul Ryan. How the heck can you lie about your marathon time as you did? How stupid can you be? I’m a runner. I’ve run marathons and a slew of half-marathons and it is impossible to lie about your time as you did. I lost a lot of respect for you off of this one move, Mr. Congressman.

I told you last week how ticked I was that Paul Ryan also misrepresented his role on the Simpson-Bowles commission. And here I thought he was the best of the four.

I’m sick of the kinds of candidates we’re producing these last 20 years since George H.W. Bush, the last man truly qualified to be president.

--On a lighter note, your 54-year-old editor lost a golf match at the world famous Summit Muni Golf Club to 84-year-old Dr. Bortrum. A rematch is scheduled for this coming week, weather permitting.

--Hey, why don’t we end on a truly disgusting note this week, shall we? If you are squeamish, just move on to another site.

From Michael Winter / USA TODAY

“More than 15,000 large, semi-aquatic rodents killed by Hurricane Isaac have washed ashore on Mississippi beaches, creating a cleanup nightmare, according to news reports.

“Some beaches in Hancock County have closed while front-end loaders and workers in hazmat suits slowly collect the bloated, rotting carcasses of dead nutria, known as swamp rats, the Associated Press says. In Harrison County, crews collected and removed nearly 16 tons of dead animals from beaches over the weekend, and local officials said they were still washing ashore today or floating on the Gulf of Mexico surface.

“The Sun Herald reports that a federal contractor, U.S. Environmental Services, is handling the cleanup of an estimated 16,000 to 18,000 dead nutria and other animals….

“The stinking, stomach-churning work has proved…..”

OK, that’s enough. I’m just trying to figure out how, if the nutria can swim, they all died, know what I’m sayin’?

A female nutria, by the way, not only averages five babies per litter, it can have up to three litters per year.

Yet another reason to always sleep with one eye open.

---

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

God bless America.
---

Gold closed at $1733…up $120 in three weeks
Oil, $96.33…four straight weeks closing at $96

Returns for the week 9/3-9/7

Dow Jones +1.6% [13306]
S&P 500 +2.2% [1437]
S&P MidCap   +3.4%
Russell 2000 +3.7%
Nasdaq   +2.3% [3136]

Returns for the period 1/1/12-9/7/12

Dow Jones +8.9%
S&P 500 +14.3%
S&P MidCap +14.3%
Russell 2000 +13.7%
Nasdaq +20.4%

Bulls 51.0
Bears 24.5 [Source: Investors Intelligence]

Dr. Bortrum posted a new column.

Don’t forget the StocksandNews iPad app. Take it to your college football tailgate and wow your friends.

Have a great week. I appreciate your support.

Brian Trumbore



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Week in Review

09/08/2012

For the week 9/3-9/7

[Posted 6:00 AM ET]

Europe, Washington and Wall Street

It was a week that started with more bad news on the eurozone front as the Organization for Economic Cooperation and Development (OECD…which consists of 34 U.S. and Western European nations) significantly revised down its 2012 GDP forecast for the region from a May guesstimate of up 0.5% to a new projection of a decline of 0.7%, while at the same time cutting Europe’s growth engine, Germany, from up 1.2% to up 0.8%.

In doing so, OECD head Angel Gurria called on the eurozone to take action, knowing the European Central Bank was set to do so a few days later, with interest rates on Italy and Spain far higher than they can afford in the long run.

When asked whether the ECB should buy the two countries’ bonds, Gurria said, “Yes, they should. If you ask when, the answer is the sooner the better,” adding, “I think that the ECB is the bazooka, the firepower, the muscle, the one that has the capacity to impress upon the markets. We have passed the question of moral hazard…now it is the system that is at stake.”

At the same time, the purchasing managers index for the eurozone for the month of August came in at 45.1, the 13th consecutive month below the 50 line, denoting contraction, with Germany’s reading at a most worrisome 44.7.

The fundamental story out of Spain seemed to get worse by the day, with Andalusia becoming the latest of Spain’s 17 autonomous regions to request a bailout, 1 billion in immediate aid, because, like Catalonia and Valencia, which had previously requested 5 billion and 4.5 billion euro, respectively, Andalusia is shut out of the bond market due to their debt crisis.

Spain has 27.5 billion euro in debt due in October, a month in which an audit of its banks is to reveal their true financial condition (an unmitigated disaster, you can be sure), while Moody’s is threatening a downgrade based on the audit.

Depositors, as I’ve noted before, are fleeing Spain in what is being called a bank “jog” rather than a full-fledged bank run, though they are virtually the same, and Spain’s banks can’t lend to each other like a normal banking system. The banks also have collateral issues and are running low on eligible assets.

And with 25% unemployment and a youth rate over 50%, the people of Spain are beginning to revolt over the austerity measures demanded by the likes of the ECB, the European Commission and International Monetary Fund, let alone Germany and the marketplace.

The situation in Spain and its financial system is similar to that of others in the southern eurozone, where borrowing costs for small businesses (and many large ones) are far higher than for their northern euro competitors.

In Greece, the government finally released the official June unemployment rate, 24.4%, with youth unemployment also remaining solidly over 50%. Greece faces an imminent, final crisis, next month. A Financial Times/Harris poll found that only ¼ of Germans think Greece should stay in the eurozone, and only 26% of Germans believe Greece “will ever repay its bailout loans.” [But 77% of Italians believe the Greeks will…another example of the northern/southern divide.]

And you have further rumblings in Finland, where instead of a “Grexit,” a Greek exit from the eurozone, there is increasing talk of a “Fixit,” a Finnish exit for totally opposite reasons. Finland has the lowest debt ratio of any country in the region, but the Finns had a previous banking crisis of their own and are hostile to bail-outs of the kind that will be required to keep the eurozone whole. Plus only 31% of Finland’s exports go to the eurozone (Nokia being 1/5th of its exports, incidentally, which given Nokia’s issues isn’t good).

France, with a floundering new president, Francois Hollande, saw its unemployment rate for the second quarter hit 10.2%.

So all the above set the stage for Thursday, Sept. 6, and the long-anticipated announcement by ECB President Mario Draghi he would fulfill his July 26 promise to do “whatever it takes” to keep the eurozone together and initiate a bond-buying program.

When Draghi made his July pronouncement, Spain’s 10-year bond was trading with a totally unsustainable yield of 7.75% and the 2-year was over 7.00%. But Draghi’s July remark, and a few subsequent comments, moved short-term yields way down and then on Thursday he fulfilled his promise to engage in “outright monetary transactions,” or OMTs, to address “severe distortions” in government bond markets based on “unfounded fears.” 

I hardly think there were unfounded fears after years of inaction during the crisis on the part of the ECB and other parties, but, nonetheless, Draghi continued that the ECB was “strictly within our mandate” of maintaining financial stability by launching its bond-buying scheme, targeting specifically the one- to three-year paper for the likes of Spain and Italy, and Portugal and Ireland as the ECB sees fit it was left unsaid.

The program, Draghi said, “will enable us to address severe distortions in government bond markets which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro. Under appropriate conditions, we will have a fully effective backstop to avoid destructive scenarios with potentially severe challenges for price stability in the euro area.”

The OMTs are to be carried out in conjunction with the two bailout funds, the European Financial Stability Facility and/or the European Stability Mechanism, the latter not being formally enacted as yet.

“Governments must stand ready to activate the EFSF/ESM in the bond market when exceptional financial-market circumstances and risks to financial stability exist – with strict and effective conditionality,” Draghi said, and the ECB reserves the right to terminate bond purchases if governments don’t fulfill their end of the bargain.

And, in order to ensure the ECB’s purchases have a neutral impact on the money supply, purchases will be fully “sterilized,” meaning each bond will be treated with a handi-wipe before being sent out into the banking system. [Just seeing if you’re paying attention. It would, after all, befit a European Union filled with useless bureaucrats to have a team of 600 hand-sterilizing paper, but I digress…for each bond the ECB buys, it will sell another.]

The ECB also said that it will not have seniority, which is important because unlike an earlier situation involving Greece bondholders, the ECB doesn’t want to shut out the private sector which would otherwise avoid bond-buying of its own if ECB paper was higher on the credit scale than their purchases.

So that’s the program in a nutshell.

HOWEVER…the likes of Spain and Italy have to first request a bailout before the ECB triggers its OMT computer program and now Italian Prime Minister Mario Monti and Spanish counterpart Mariano Rajoy are like, well, if the ECB would just enact its bond-buying and thus lower our interest rates, we really don’t need any bailout! Both said they needed more time to study the plan before requesting aid and it’s clear in the case of Rajoy, in particular, he is just playing politics because he has a key regional election next month and his party’s popularity has been sliding on the heels of the austerity program he’s been forced to enact.

It’s the “conditionality” of Draghi’s program that suddenly has Monti and Rajoy with cold feet, even though especially in the case of Spain they desperately need both a bailout and the OMT.

Recall, Spain had already requested a 100 billion euro bailout for its banks while the government seeks to self-finance an 18 billion euro rescue plan for the above-mentioned regions. But again, politically, conditionality, further ECB-mandated austerity cuts and labor reform, is untenable to a majority of Spaniards. And for its part, Germany, which in the form of Chancellor Angela Merkel still has a large amount to say in anything the ECB does, wants more details on Spain’s banking system and the fiscal health of the regions.

One other item of note from before the ECB announcement, in a letter to the Greek government from the “troika” that is to determine whether Greece qualifies for any further bailout funds, that being the EC, ECB and IMF, the eurozone creditors are demanding the government enact a six-day work week as part of any further funding. This could be the final straw for Greece. Needless to say, organized labor has had enough and it is highly doubtful the latest Greek government could survive the protests that would follow.

Some opinion…Financial Times

“Consider what Mr. Draghi is trying to achieve and the means at his disposal. The ECB wants to eliminate ‘convertibility risk,’ a fancy name for the widespread belief among investors that the eurozone will break up. All the central bank can do, however, is undertake a technical operation to buy sovereign bonds in the secondary market, which would bring yields down by pushing up bond prices, and load such actions up with conditions on more structural and fiscal reforms. There is substantial execution risk between technical means and political and existential ends.

“Mr. Draghi has already succeeded in bringing down borrowing costs. Since he said in late July that the ECB would do everything required to save the euro, ‘and believe me, it will be enough,’ Spanish and Italian two-year bond yields have tumbled…The aim of outright monetary transactions, or OMT…is presumably to keep them there (or bring them down further).

“The ECB’s plan will make life exceedingly difficult for the Italian and Spanish governments, which want lower bond yields but not the conditions attached. It also raises a troubling question. The plan is predicated on the conviction among eurozone policy makers that convertibility risk has created false prices in the bond market. Why do they think they are better judges of what bond prices should be than the aggregate of investors? Somebody will have the last laugh here, and it may not be Mr. Draghi.”

Editorial / Wall Street Journal

“Mr. Draghi said any bond purchases under the new program will be sterilized to reduce the risk of inflation from open-ended bond purchases. That’s to the good. But if the ECB does start buying government bonds, it will expose itself again to credit risk on those bonds. In Greece’s restructuring, the ECB cut a side deal to save itself from losses. Under the new program it is explicitly disavowing that possibility so it doesn’t make private bondholders even more nervous. That means more risk for the central bank, and by extension taxpayers in countries like Germany….

“At best, the new program will give Messrs. Monti and Rajoy more time to promote the reforms in labor markets, taxation and other things their countries so desperately need to grow again. At worst, the prospect of the central bank saving the day will merely ease the pressure for reform. In that case, non-Northern Europe’s central problem of slow growth and declining global competitiveness will continue. We hope for the former but history suggests we should anticipate the latter.”

So how did the markets react to Mario Draghi’s move on Thursday? Stocks soared around the world, with Spain and Italy rising 5% and 4%, respectively, while the major U.S. indexes rose 2% with similar moves in Asia.

But then on Friday, the U.S. market had to deal with a putrid jobs report for August, with the economy creating just 96,000 jobs (103,000 in the private sector), and with downward revisions to the figures for June and July. Of the new jobs, taking what the government says at face value, 28,000 were in the low-paying food services sector (more on this below) while 15,000 jobs were lost in manufacturing.

As for the unemployment rate, it fell from 8.3% to 8.1% but this was because an estimated 368,000 people gave up looking for work. The labor participation rate, which is the share of the population that is working or looking for it, distressingly fell to the lowest level since 1981.   Further, a broader measure of unemployment that includes job seekers as well as those in part-time jobs is at 14.7%, though this was down from the previous month’s 15.0%. 

And one more…average hourly earnings actually fell a penny.

Add it all up and it was awful, except with two more jobs reports before the election, including the last one four days before, the White House is praying the unemployment rate hits 7.9%, a critical psychological number even if it masks the true picture. Otherwise, come Election Day they’ll be facing 45 consecutive months of 8% or higher.

Friday’s jobs report also means that the Federal Reserve is very likely to launch another round of easing, QE3, when it gathers next week, Wednesday and Thursday. But after Thursday’s big rally, stocks yawned on Friday even with the prospects of further easing on the heels of the labor report. That should tell you something about the effectiveness of anything the Fed comes up with.

Earlier in the week, the August ISM reading on manufacturing came in at 49.6, the third consecutive month below 50, though the service sector reading for the month was 53.7, better than the 52.6 for July.

But to me there were also two key earnings warnings that spoke volumes; those being from FedEx and Intel. FedEx said for the quarter ended Aug. 31 (released Sept. 18), earnings would come in between $1.37 and $1.43 vs. an earlier estimate of $1.45-$1.60, with the company citing further weakness in the global economy. For its part, Intel announced revenues in the third quarter would be $12.9 to $13.5 billion vs. a previous range of $13.8-$14.8bn, a big difference with Intel also citing global weakness among other factors.

As for President Obama, I discuss the Democratic National Convention and his performance down below. But no doubt he was thanking Mario Draghi for doing his part to kick the can down the road, at least beyond November 6, though before the White House gets too smug, Greece comes to a head in October, let alone Israel could still decide to attack Iran, Bashar Assad could use chemical weapons on his own people in Syria, which would be a huge game-changer, China could opt for military action in one of the South China/East China Sea disputes…you get the picture. In terms of surprises, President Obama is far from being out of the woods.

We also have to get through next week. Forget the FOMC meeting and probable QE3, the German Constitutional Court rules on the legality of the European Stability Mechanism, ESM, which is to be the permanent eurozone bailout fund. I’m guessing they rule it is constitutional, but, they could attach conditions or limits on Germany’s own participation in the funding of same…and that would be a major downer. Also on Wednesday, the Netherlands has a critical national election in which the anti-bailout forces are expected to make further gains. So keep your powder dry, sports fans.

Lastly, I have to note that China started the week with an awful PMI for August, 49.2 (HSBC said its work pegged it at 47.6), but then by week’s end the government had announced a slew of infrastructure spending projects on roads, subways, sewage treatment plants and the like to the tune of $167 billion. The benchmark Shanghai index, which had hit a multi-year low earlier, stormed back 3.7% on Friday with the stimulus news, which also helped the likes of Caterpillar and various commodity plays around the world as well.

China will be reporting a slew of further data on Sunday on items like exports, industrial production and retail sales that no doubt will impact Monday’s market action here.

Street Bytes

--Owing to the ECB’s action, stocks broke a two-week losing streak with the Dow Jones advancing 1.6% to 13306, its highest close since Dec. 2007, while the S&P 500 gained 2.2% to finish at its best mark in four years and Nasdaq, in adding 2.3% to 3136, is at its best levels since 2000.

--U.S. Treasury Yields

6-mo. 0.13% 2-yr. 0.25% 10-yr. 1.67% 30-yr. 2.82%

Treasuries fell (yields rose) due to the ECB’s bond-buying move and renewed euro strength even as the Fed is expected to do some bond-buying of its own. It was a return of the ‘risk on’ trade.

--The OECD sees U.S. growth of 2.3% in 2012.

--Since Mario Draghi said he would do whatever it takes to save the eurozone, stocks there are up 18%. 

--For the first seven months of the year, German exports to other eurozone countries were down 0.6%.

--The economic data this week in the U.K. was decidedly mixed. The August PMI for manufacturing was 49.0 (worse than expected), retail sales for the month were down 0.4% despite the Olympics, while July industrial production surprised to the upside, up 2.9%, though this was after the time off from the Queen’s Jubilee.

--India’s PMI for August fell to 52.8 from 52.9 in July.

--South Korea’s Aug. PMI was 47.5, while Taiwan’s was just 46.1.

--Australia’s PMI for the month was 45.3, with second quarter GDP up 0.6% over Q1, which was up 1.4%. The unemployment rate in Australia ticked down to 5.1%, but, like in the U.S., this owed to a lower participation rate.   Exports declined 1.4% in the second quarter.

--There is growing concern that last year’s catastrophic earthquake in Japan could lead to the eruption of Mt. Fuji as the volcano’s magma chamber is coming under tremendous pressure, according to findings by Japan’s National Research Institute for Earth Science and Disaster Prevention.

The last eruption of Mt. Fuji, and biggest of them all, took place in 1707 and since then you have many medium-sized towns that have sprung up at its base, let alone the Tokyo-Yokohama-Kawasaki urban conglomeration, the biggest in the world, is less than 100 miles away.

Eight years ago a government estimate on the cost of an eruption came in at over $30 billion.

--Apple is expected to launch the iPhone 5 on September 12 and sales could hit 10 million in its first week, according to one analyst. The Street as a whole expects anywhere from 22-26 million units sold in the full September quarter.   Some are talking up to 170 million in the 2013 fiscal year, which begins Oct. 1.

[Separately, shares in Pandora, the streaming-radio service, plunged 20% on reports Apple is in discussions to create its own competing radio-service.]

--Amazon announced updates to the company’s line of Kindle e-readers, including a rival to Apple’s iPad, the Kindle Fire HD that undercuts Apple’s price by $200.   The larger version of the Kindle Fire HD will cost $300 vs. the $500 that a baseline Apple iPad goes for. Amazon CEO Jeff Bezos left little doubt who his company is going after, continually comparing the Kindle Fire to the iPad.

--August auto sales rose 20%, while sales for the year in the United States are up 14.7% over the same period in 2011, this despite higher gas prices this summer.

For the month, General Motors’ U.S. sales grew 10.1% (selling 2,800 Chevy Volts in August, incidentally); Ford’s rose 12.6%; Chrysler’s were up 14.1%.

The big gains came from Toyota, up 45.6% from the same month a year ago, and Honda, up 59.5%. Recall, however, a year ago these two were recovering from Japan’s earthquake and tsunami. But Nissan’s sales rose just 7.6% and Hyundai’s increased only 4.4%. Volkswagen’s soared 63%, its best August since 1973.

--In China, auto sales are slowing but various experts expect China’s sales to exceed those of the U.S., Japan and Germany combined by 2015. The top 10 automakers have announced over $38 billion of investments to expand operations in China in just the past two years. Ford, for example, will spend $4.9 billion to build eight factories and debut 15 new models there by 2015, as reported by Bloomberg. GM is investing $7 billion over the same period.

--According to real estate data provider CoreLogic, nationwide home prices rose 3.8% in July, making this the largest year-over-year increase since 2006. Arizona led the country in price appreciation, up 16.6%, while Delaware had the steepest slide, down 4.8%.

--The U.S. Department of Justice accused BP of a “culture of corporate recklessness” before the 2010 Deepwater Horizon disaster as it prepares to go to trial in New Orleans.

“The behavior, words and actions of (BP executives) would not be tolerated in a middling size company manufacturing dry goods for sale in a suburban mall,” wrote government lawyers.

If the DoJ can establish gross negligence, the penalties could add up to as much as $21 billion, though this is contingent on proving how much oil was spilled.

Ironically, Hurricane Isaac stirred up the oil on the floor of the Gulf of Mexico and sent some of it in the form of tar balls back onto the beaches.

BP estimates its settlement with gulf fishermen and other private sector victims is costing it $7.8 billion. The Financial Times estimates the company is seeking a settlement in the neighborhood of $15 billion.

--An editorial in the official Chinese newspaper Xinhua said foreign short-sellers targeting Chinese companies listed in the U.S. are engaged in a “malicious act.” The editorial was titled “U.S. firms poison reputations of China start-ups for profit” and represented the first time the government has taken on short-sellers, with the commentary calling on the SEC to investigate outfits like Citron Research.

“With the U.S. economy floundering for so long, the United States cannot afford to have capital markets that attract little interest or participation from Chinese companies.”

But then this week the SEC charged China Sky One Medical Inc. with falsely inflating earnings as the past two years investors have fled Chinese small caps. My own experience in this regard has been a disaster.

--Back on Dec. 31, 2007, China had four of the world’s ten largest companies based on market value, topped by No. 1 PetroChina. But as of Aug. 29, 2012, only PetroChina remained in the top ten, at No. 4, as the top three were Apple, Exxon Mobil and Microsoft. [Bloomberg/Businessweek]

--My favorite barometer for economic activity in China, Macau’s gambling revenues, rose 5.5% in August to $3.3 billion, after revenues in July increased just 1.5%. The August figure was the second-highest ever for Macau casinos, topped only by October 2011.

--Samsung Electronics said it would inspect 250 Chinese companies that make products for it to ensure labor laws are being properly enforced after New York-based China Labor Watch reported children under 16 were working in a factory making phones and DVD players for Samsung. Think Apple and allegations earlier this year that contract manufacturer Foxconn was violating labor laws.

--Germany’s biggest airline, Lufthansa, has faced a series of rolling strikes among its cabin crew this week, forcing the cancellation of hundreds of flights each day the strike has been enforced. The union wants a 5% pay increase and guarantees against outsourcing, while the company’s offer is for a 3.5% wage increase in exchange for longer hours. It does appear a settlement is in the works and the airline is back in business on Saturday.

--Facebook began to finally fight back against its hemorrhaging share price as CEO Mark Zuckerberg said he would not sell his shares or options for at least another year, while allowing some employees to sell their stock earlier than scheduled. Facebook closed at $17.73 on Tuesday but rose smartly after the announcements (finishing the week at $19.00), though now employees and early investors will be able to sell hundreds of millions of shares at the end of October, while another window opens up in mid-November, then December, and finally next May. So Facebook could easily be under constant selling pressure.

--Shares in Google topped $700 for the first time since 2007 (closing Friday at $706). The all-time high is $741 reached on Nov. 6, 2007. Company management appears to be very positive about some of their initiatives.

--As reported by Don Lee of the Los Angeles Times, “Nearly 1 in 5 Americans ages 65 and older are working or looking for jobs – the highest in almost half a century.”

--Jim Puzzanghera / Los Angeles Times:

“Whereas 6 in 10 jobs lost during the Great Recession paid mid-level wages, the majority of jobs created in the recovery – positions such as store clerks, laborers and home healthcare aides – pay much less,” according to a study by the National Employment Law Project.

“Lower-paying jobs, with median hourly wages from $7.69 to $13.83, accounted for just 21% of the job losses during the recession. But they’ve made up about 58% of the job growth from the end of the recession in late 2009 through early 2012.”

--CBS announced its Super Bowl ad slots are more than 90% sold out, with 30-second spots going for a record $3.7 million to $3.8 million vs. an average $3.5 million during the 2012 broadcast on NBC. Among the biggest repeat advertisers: Anheuser-Busch, PepsiCo, Frito-Lay and Hyundai.

--Inflation Alert: New York City taxi fares went up 17% on Tuesday. Fares to JFK Airport rose to $52 from $45. Some drivers aren’t happy; concerned the tips will be less.

--Deflation Watch: “Tonight Show” host Jay Leno took a 50% pay cut as part of NBC’s budget-cutting efforts, taking Leno’s salary down to $15 million. The show’s budget was reduced 20% to $80 million. Ad revenue has fallen to $159 million from $255 million in 2007, according to Kantar Media, while the “Late Show with David Letterman” saw its revenue fall to $155 million from $205 million over the same period.

[“Today” show anchor Matt Lauer is apparently under big pressure to reduce his own $25 million annual salary to save jobs at that struggling show as well, according to the New York Post. ABC’s “Good Morning America” is back ahead of “Today” following the latter’s Olympics boost.]

--This summer’s movie box office sales were down 2.8% from last year. The Olympics hurt, as did the opening-night shooting for “The Dark Knight Rises.”

--Pssst…Workday, a company focused on human-resources software, is going to be a potentially hot IPO in October as the seven-year old outfit is a distinct competitor of Oracle and SAP in the enterprise software sector. Seeing as your editor isn’t a fan of Oracle’s Larry Ellison, we hope Workday continues to kick butt as the founders are the same team that ran PeopleSoft when Oracle acquired it in a hostile takeover.   Having old relationships, Workday is now picking them off one at a time. Ellison isn’t sleeping well. I love it.

Of course the IPO’s initial success will depend on the overall equity environment when it comes to market.

--Lastly, I’ve lost my enthusiasm for spewing venom at JPMorgan Chase but here’s the story. Thanks to my father, my brother and I received some shares in a private company, Sage Electrochromics, Inc., that Dad once played a leading role in after its founding. They manufacture smart glass (smart windows and such).

We received our shares, thinking one day they’d be worth something when Sage went public.

Alas, that was way back in 1998. But a few months ago we received notice a French company was acquiring Minnesota-based Sage and, whaddya know, our shares were worth $0.40! Yippee!

Anyway, it was something…more than just a few beers, though less than the cost of a car, so all three of us had to fill out some documents and before sending them off to escrow agent JPMorgan Chase, at their Brooklyn location, we duly called both Sage and JPM to make sure we were filling out the documents correctly. All three of us were told by Chase we didn’t have to fill out Exhibit B and on June 18, in my case, I expressed my package off to Brooklyn with the understanding I would receive my check “within approximately three business days after the proper delivery and receipt by the Paying Agent.”

So I’m thinking a week. But weeks go by, I didn’t necessarily need the money to buy my yogurt and domestic beer, my two main staples these days, and I patiently waited…and waited…

Finally, on July 30, I called JPM in Brooklyn, asked ‘Wassup?’ and learned they had indeed received my documents but Exhibit B needed to be filled out.

“Well why the [heck] didn’t you call me right away or send the freakin’ documents back!” I half-shouted. “I called this same department before mailing them out and was told I didn’t have to.” [In the interim the other family members also had to sign Exhibit B…all three of us being given the wrong instructions.]

So on July 31, I expressed Exhibit B and was told that “my request would be expedited.”

And I waited…and waited…and around about this time I needed to buy more yogurt and domestic and was starting to get a little pissed. So I called and left a voicemail with the fellow I had dealt with before and after two days he hadn’t returned my call so I picked up the phone and tried again, this time getting a different person. “What happened to Mr. X?” I started off. “He no longer works here,” came the reply.   [I had actually surmised that…I was just incredulous JPM hadn’t disconnected his voicemail…he’s still probably getting calls.]

Then, on August 20, about two months after I should have received my money, I get a certified packet from JPM I have to sign off on at the post office.

These idiots returned everything I had submitted, including the correctly signed Exhibit B along with the certificate, etc.!

So I picked up the phone…[one ringy dingy….two ringy dingy…]…got the same woman I had last chatted up…err, chatted with…and said, “What the [garbled…more garbling…] are you doing?! You just sent everything back to me!” “Hold on, Mr. Trumbore….Yes, that was our mistake. We’ll expedite your request.”

Finally, Aug. 29 I received the check.

When I was in Ireland I was telling a friend of my episode and he said he had had the exact same issue with JPM’s escrow department.

So to Jamie Dimon, CEO and Boy Wonder, you can take your bank and shove it….

I’ll stick with Wachovia, err, Wells Fargo. I think that’s who I’m banking with these days.

Foreign Affairs

Syria: The killing continues, now estimated at anywhere from 23,000 to 26,000 in the civil war, with the UN pegging the official refugee figure at over 230,000 (the unofficial number far higher), which is destabilizing to neighbors Turkey, Iraq, Jordan and Lebanon, while there is a true humanitarian catastrophe developing in Syria itself as 1.2 million have been displaced and 2.5 million are in dire need of aid. I’ll just say this in terms of the political debate taking place in the U.S. One of the Democrats’ campaign slogans is “Bin Laden is dead and GM is alive.” It needs to be pointed out that at least 20,000 of the Syrian deaths could have been prevented if the White House had taken coordinated humanitarian action with Turkey early on. Not a military invasion but just the establishment of safe havens and the Obama administration could have significantly reduced the human toll.

But it’s too late now. We missed our opportunity. The situation is indeed far more dangerous.

It was the same situation in 2009 when President Obama missed an opportunity in Iran to support the Greens, but instead when the United States just sat back, the mullahs crushed the uprising and now look where we are there.

It’s pathetic. It’s what infuriates me about how the president is getting a pass on his foreign policy.

Meanwhile, there are heightening anxieties over the security of Syria’s chemical weapons stockpiles and not a lot of confidence among Western intelligence sources that they know where everything is being stored. Plus you have the collapse of government control in several Syrian provinces, so sources tell the Washington Post that preparations for securing known sites with foreign troops are being hastened. Among the chief fears are the hundreds of tons of battlefield-ready sarin, the deadly nerve agent. Remember, Syria has the world’s third-largest stockpile of chemical weapons behind the U.S. and Russia, but while both Washington and Moscow are dismantling their arsenals, Syria has been building theirs up for a war against Israel.

In Ankara, Turkish Prime Minister Erdogan accused the outside world of indifference on Syria, adding “The regime in Syria has now become a terrorist state.” Turkey has been conducting more military exercises on the border to intimidate the Syrians.

Lebanon’s Prime Minister Najib Mikati warned his country’s fractious communities will “all drown” together if they let Syria’s civil strife spill over the border. More than a dozen Lebanese have died recently in shelling from Syria into their communities across the border.

But amid all the tension, Pope Benedict XVI is still coming to Lebanon on Sept. 14 and Sheikh Nasrallah said Hizbullah welcomed the visit and would participate in all phases of his trip, “to show our respect.” Former Prime Minister Saad Hariri said the Pope’s visit will shed light on the coexistence in the country between Christians and Muslims.

Iran / Israel: Israeli Prime Minister Benjamin Netanyahu is considering the use of polygraph tests to determine the source of a leak at a security cabinet meeting this week, Tuesday, where he made the unprecedented step of adjourning it shortly after a discussion on dealing with Iran began. According to a statement issued by his office, Netanyahu said at the outset of the meeting that “something grave happened shortly after the conclusion of the meeting yesterday: leaks from the security cabinet meeting.” It was an annual meeting to assess the country’s latest intelligence on Iran.

The problem is a headline in an Israeli paper read: “Disagreement about Iran among the intelligence agencies.” Specifically, members of the security cabinet were apparently shocked to hear that Mossad, Shin Bet and Army Intelligence do not agree about the extent of the Iranian threat, with debate focusing on the “zone of immunity,” “that period where the Iranians will have progressed on their nuclear program beyond the point where an Israeli attack would be effective.” [Jerusalem Post]

Of course for its part the White House is desperately trying to get Israel to hold off attacking Iran until after the election.

Editorial / New York Post

“The time to stop Iran from getting a nuclear bomb is growing short – and so, apparently, are tempers in Jerusalem and Washington.

“On Friday (Aug. 31), Israel’s largest newspaper reported that Prime Minister Netanyahu got into an angry – and decidedly undiplomatic – shouting match with U.S. Ambassador Dan Shapiro. The issue: President Obama’s handling of Iran’s increasingly dangerous nuclear capabilities – and his administration’s mounting criticism of Israel’s complaint that too little is being done about it.

“ ‘Time has run out,’ Netanyahu reportedly told Shapiro. And when the envoy reminded the PM that Obama had vowed not to let Iran acquire WMDs, Netanyahu replied: ‘Instead of effectively pressuring Iran, Obama and his people are pressuring us not to attack.’…

“Netanyahu’s anger is understandable – and justified. Four months ago, Team Obama assured everyone that negotiations and sanctions would soon bring about a deal that would allay Israel’s fears.

“They haven’t: Instead, the latest report from the International Atomic Energy Agency asserts that Iran’s nuclear program is picking up steam….

“Of course, it’s not clear how much time really is left. But what’s plain is that Obama has yet to convince the Israeli leader that he’ll stop Iran before it’s too late.

“No wonder Netanyahu is nervous. A lot of other folks, too.”

Editorial / Wall Street Journal

“The irony for the Administration is that its head-in-the-sand performance is why many Israeli decision-makers believe they had better strike sooner than later. Not only is there waning confidence that Mr. Obama is prepared to take military action on his own, but there’s also a fear that a re-elected President Obama will take a much harsher line on an Israeli attack than he would before the first Tuesday in November….

“Since coming to office, Obama Administration policy toward Israel has alternated between animus and incompetence. We don’t know what motivated Gen. (Martin) Dempsey’s (recent) outburst, but a President who really had Israel’s back would publicly contradict it.”*

*Referring to Chairman of the Joint Chiefs Gen. Martin Dempsey’s comment, “I don’t want to be complicit” if Israel chooses to strike Iran. [WIR 9/1]

On Friday, Canada closed its embassy in Iran and will expel all remaining Iranian diplomats in Canada within five days, with Foreign Minister John Baird citing Iran’s nuclear program and its hostility towards Israel, as well as Iranian military assistance for Syrian President Assad. Kudos to Canadian Prime Minister Stephen Harper.

Lastly, Iran and North Korea have signed a scientific and technological cooperation agreement, signifying even closer ties than already existed. The U.S. has repeatedly accused Pyongyang of supplying Iran with advanced missiles capable of targeting Western European capitals. Iran has denied UN reports that the two have been exchanging ballistic missile parts and technology.

Afghanistan: After Afghan personnel have killed at least 45 foreign troops this year, the Afghan military says it has arrested or sacked hundreds of Afghan soldiers in an attempt to stop the green-on-blue carnage.  

Separately, the U.S. military announced its Special Operations forces had suspended training for about 1,000 Afghan police recruits to vet existing members, some 27,000 Afghan troops under its charge, more thoroughly.

And Prince Harry has returned to Afghanistan on a four-month, high-pressure tour to kill Taliban as part of an Apache helicopter team. Known as Captain Wales, this is what the prince has always wanted; to be back with the boys.   It also helps explain his antics in Las Vegas as he clearly knew of his pending deployment.

Last time Harry was serving in Afghanistan, it was supposed to be secret but when his anonymity was broken he was forced to return home early. This time his mission is out in the open and the Taliban will be gunning for him. 

Pakistan: According to the Express Tribune newspaper in Pakistan, the government is reinforcing protections around a primary nuclear site because of indications it could be targeted by Taliban fighters in the region. A complex not far from the city of Dera Ghazi Khan is at a “serious” risk of attack. The site “houses uranium extraction and milling operations as well as a uranium hexafluoride conversion plant.”

Pakistan’s intelligence service apparently intercepted a phone call among Pakistani Taliban who were discussing final plans for assaults on sites at D.G. Khan.

According to the paper and Global Security Newswire, “There is a track record for Pakistani Taliban attacks occurring within three days after their details have been learned through phone conversation eavesdropping.” [This story came out Sept. 6]

And on Friday, it was reported the Obama administration is prepared to label the Pakistan-based Haqqani militant network a terrorist organization; the group being behind some of the most spectacular attacks on American forces in Afghanistan.

The Pakistani intelligence apparatus has ties to the network, a charge that the government in Islamabad denies, so the move makes an already fragile relationship between our two governments even more so.

China: Secretary of State Hillary Clinton was given a hard time on her visit to China and she left with little to show on divisive issues such as Syria and territorial disputes in the South China Sea. Beijing continues to resist putting pressure on Syrian President Assad’s regime, saying the crisis must be resolved through negotiations. Beijing also wants to resolve South China Sea disputes through negotiation with its neighbors directly, not multilaterally as the U.S. wants.

Premier Wen Jiabao told Clinton, “I feel that our two countries should maintain political mutual respect and strategic mutual trust. The United States should respect China’s sovereignty and territorial integrity.”

China is highly suspicious of increased U.S. activity in the region, including in the East China Sea, where Japan says the government reached agreement on a deal to buy the disputed Senkaku islands (Diaoyu in China) even as China claims them.

Meanwhile, the Chinese Communist Party is finally going to unveil its new generation of leaders in mid-October as officials struggle to keep the veil of secrecy over the occasion. Incoming president Xi Jinpinq, though, mysteriously canceled a meeting with Sec. of State Clinton, in a move seen as a purposeful slight over U.S. policy.

As for the disgraced Politburo member Bo Xilai, his fate has yet to be determined. It had been expected Bo would be removed from the National People’s Congress but the formal request to do so has yet to be filed. Despite the delay, few believe Bo will be staging any kind of political comeback, especially after his wife Gu was given a suspended death sentence last month in the murder of a British businessman.

Finally, Taiwan believes China has increased the number of missiles targeting the island by 200 since 2011 to a total of 1,600. It is suspected most of the new missiles are mobile, making them harder to target.

France: What an awful murder mystery in the picturesque French Alps as authorities struggle to come up with a motive for the “savage” slayings of four adults in a shooting rampage with all four having been shot in the head. The bodies were found in a car by a passing cyclist, with a 7-year-old girl hospitalized after being shot and brutally beaten.

What was even more incredible was it took authorities eight hours to discover a four-year-old girl had survived and was lying under the bodies!

At last word, though, the family, from Britain, may have been the victim of a family feud of some sort involving the Iraqi husband. Or, they were simply in the wrong place at the wrong time. The two daughters are under police care. The four-year-old will hopefully be able to tell police what she saw, though as of now she’s unable to do so.

Venezuela: Crime is so bad here, in metropolitan Caracas, 66 police officers have been killed in the line of duty this year compared to the 72 killed in the United States during all of 2011. Ahead of the Oct. 7 presidential election, crime is the number one topic. The overall murder rate in Venezuela is 13 times that of the U.S. and it’s the most violent country in South America. Homicides rose to 19,336 last year compared with 4,550 in 1998. At the same time, arrests of suspects have fallen by more than half. For his part, President Hugo Chavez has long belittled the police.

Canada: A masked gunman, apparently acting alone, appears to have targeted Quebec’s new premier, Pauline Marois of the separatist Parti Quebecois. She was not hit but one bystander was killed in the back of the hall where Marois was giving a victory speech. Her party, despite its goal of wanting to break away from Canada, did not achieve a parliamentary majority. Previous referendums on the topic have been defeated.

Random Musings

--Mitt Romney received zero bounce from the Republican National Convention, statistically speaking. For example, a CNN/ORC survey released as the Republican convention got underway had it 49-47 Obama. In a poll conducted the four days afterwards, it was 48-48.   Romney did gain among independents, going from a 48-45 margin to 52-42.

--According to an ABC News/Washington Post survey, President Obama had the lowest pre-convention personal popularity of an incumbent president since the 1980s. Just 47% of registered voters see Obama favorably, while 49% rate him unfavorably.

“The decline has occurred entirely among women registered voters – from 57-39 favorable-unfavorable in April to a numerically negative 46-50 percent now. That’s Obama’s lowest score among women voters…Unusually, his rating among men, 50-47 percent favorable-unfavorable, is numerically better than it is among women, albeit not by a significant margin.”

In 2008, Obama won women by 13 points, 56-43 percent.

Only 40 percent see Romney favorably, 47 percent unfavorably, but better than the previous week’s 35-51 split.

--Barack Obama, in his acceptance speech on Thursday:

“On every issue, the choice you face won’t be just between two candidates or two parties. It will be a choice between two different paths for America.”

It’s going to be about turnout and which base is more enthusiastic in the battleground states, most prominent of which are Ohio and Florida.

--David Brooks / New York Times…on the Democrats…

“At its base, this is a party with a protective agenda, not a change agenda – dedicated to defending government in all its forms….

“The country that exists is not on the right track. It has a completely dysfunctional political system. What was there in (Obama’s) speech that will make us think the next few years will be any different? America will only be governable again if there is a leader who breaks the mold and reframes the debate. Romney is unlikely to do that, and Obama’s speech didn’t offer much either.

“In short, change is still the issue, and the focus of his solid but not extraordinary speech was incremental improvement. The next president has to do three big things, which are in tension with one another: increase growth, reduce debt and increase social equity. President Obama has the intelligence, the dexterity and the sense of balance to navigate these crosscutting challenges. But he apparently lacks the creativity to break out of the partisan categories, the trench warfare gridlock.”

--Editorial / Washington Post

“ ‘I won’t pretend the path I’m offering is quick or easy,’ President Obama said Thursday night in accepting the Democratic nomination for a second term. ‘I never have. You didn’t elect me to tell you what you wanted to hear. You elected me to tell you the truth.’

“But as with Republicans in Tampa a week ago, the content of Mr. Obama’s remarks was short on those hard truths….

“An acceptance speech is not a State of the Union laundry list of specific proposals. Its role is to set out a vision of the country’s future path….

“Mr. Obama sketched a tempting array of expensive benefits and changes: eliminating overcrowded classrooms and crumbling schools; preserving the strongest military in the world; making certain that children can afford college. But he did not offer a whiff of explanation of how those programs can be paid for and the mounting national debt brought under control….

“Mr. Obama boasted of foreign-policy achievements and challenged his opponent’s views and credentials in that area. Some of his boasts were justified, others less so; it had to be galling for Syrians to hear him present himself as a champion of ‘the rights and dignity of all human beings’ without mentioning their country, where civilians are slaughtered by the thousands while the United States stands by. As with his domestic promises, he offered no new vision for challenges that have resisted his first-team efforts, such as Iran’s march toward acquiring a nuclear weapon.”

--Editorial / New York Post

“Early in his presidency, Barack Obama said of the economy: ‘If we can’t get this done in three years, this is going to be a one-term proposition.’

“Last night, accepting renomination, he complained, ‘It will take more than a few years to solve challenges that have built up over decades.’

“In 2008, Obama told the Democratic convention: ‘We measure progress by how many people can find a job that pays the mortgage, whether you can put a little money away at the end of each month.’

“Last night, with more than 13 million Americans still unemployed, he demanded that the American people be patient – and wait for him to try ‘bold, persistent experimentation,’ like Franklin D. Roosevelt.

“Four years ago, he warned, ‘You don’t protect Israel and deter Iran just by talking tough in Washington.’

“Today, he’s – well, trying to deter Iran by just talking tough in Washington. And who knows where he stands on Israel?....

“The president did get one thing right: In the coming election, voters ‘will face the clearest choice of any time in a generation.’

“ ‘It will be a choice between two different paths for America,’ Obama said. ‘A choice between two fundamentally different visions for the future.’

“We couldn’t have said it better….

“Yes, Americans last night heard some fiery oratory and promises about a brighter future from Obama.

“But they’ve heard it all before. At the end of the day, the president offered nothing new – nothing that will change America’s course for the better.”

--Jennifer Rubin / Washington Post

“It would have been better had he not spoken. Seriously. Like an aging rock star, President Obama, in a downsized venue, with downsized proposals and spewing downsized rhetoric only reminded us how far he has fallen from the heady days of 2008. The man, the agenda and the aura are faint imitations of their 2008 incarnations. And most importantly, he put forth an agenda that was entirely, and obviously, lacking, one that didn’t begin to match the demands of our time….

“No matter how desperately the Obama team spins, there is no getting away from this simple fact. He has no credible plan to reduce the debt or intention of attacking the drivers of debt, namely entitlement spending. For those Democrats and independents who thought he would eventually get serious about our most serious problem, the answer tonight was: ‘You’ve been had.’

“What followed was one spending program after another, as if no debt crisis loomed and as if the key to jump-starting the economy was to spend more money. (Recall we have spent trillions and trillions already.) It was, to put it mildly, shockingly weak and rather dull. Before our eyes, Obama has become the anti-reformer, the defender of the status quo and the throw back to mid-20th century liberalism….

“The Romney camp will breathe a sigh of relief. There is nothing in the speech we have not heard, nor is there any sense that Obama has grown in the job, is ready to tell his own party (let alone the public, as he claims he has done) hard truths or do what may be unpopular but is nevertheless essential. He leaves the field wide open for Mitt Romney to be the adult in the race, the responsible leader. If Romney can fully embrace that role, the presidency will be his.”

--Jennifer Rubin / Washington Post

“Bill Clinton, don’t get me wrong, was the best speaker Wednesday night. But that is largely because the rest of the evening was atrocious. Clinton was hoarse, and he seemed to holler for no reason at all. He decried those meanie Republicans of today (the favorite ploy of partisan Democrats is to praise every Republican no longer in office), and he repeated the tropes that Republicans want you to be on your own, want a ‘winner-take-all’ society and want to help only the rich. Yawn.

“At times his defense of President Obama strained credulity: Obama, he said, is bipartisan because he hired Republicans in government jobs and he is willing to work ‘cooperatively.’ The Obama record is so obviously at odds with that sentiment (unilateral action on immigration and on welfare and the refusal to make a deal on entitlements or address the fiscal cliff) that Clinton’s argument seemed unserious.

“At his most effective, Clinton said that no president could have fixed in four years the economy that Obama inherited. And he extolled the belief that America ‘always comes back.’ Unfortunately, Obama promised to fix the economy in his first term. And the Obama recovery is the weakest in history. The comparison between the two presidents’ records was obvious, leaving one to consider if Clinton’s mere presence was a reminder of Obama’s weaknesses….

“Clinton’s Medicare spiel was downright disingenuous, claiming that Obama’s $716 billion in Medicare cuts don’t affect benefits. But of course, payments to providers will be cut, making treatment less accessible, and a quarter of Medicare Advantage patients will be dropped from the program….

“Mostly, it seemed that Bill was paving the way for a potential Hillary presidential run. He talked fondly of her, of course, and gave a passing and remarkably vague defense of Obama’s foreign policy. He did not mention Israel.

“Now, Clinton did sing the praises of lots of government spending. It was a reminder of how wedded to big government the Democratic Party has become since Clinton declared the era of big government to be over. Alas, he did not explain why the economy is still so weak and what Obama would do differently in a second term. But that is not his fault. Obama hasn’t told us.   Could it be that he doesn’t have any new policies?”

--Editorial / New York Post

“(Bill Clinton) proved that he can make a case for President Obama better than pretty much any other Democrat.

“But then, just about any time Clinton said ‘I’m not making this up’ – in fact, he was. Certainly his declaration that Obama ‘is still committed to cooperation’ will come as a huge surprise to anyone who’s actually been following Washington since 2009….

“Clinton and other speakers pushed the theme of ‘shared responsibility’ – which is also popular with the base.

“What’s it mean? More government control – and less individual freedom….

“Sometimes the party just dropped the ball – and sent officials scurrying for cover. As they did following Tuesday night’s welcoming video, with its astonishing claim that ‘government is the only thing we all belong to.’

“So much for government ‘of the people, by the people, for the people’ – this was ‘government owns the people.’”

--Michael Barone / New York Post

“ ‘One question, Mr. President,’ read the words on the front cover of this week’s Economist, behind a silhouette of the back of Barack Obama’s head, ‘just what would you do with another four years?’

“It’s a good question….

“Other presidents seeking re-election have usually provided a more or less convincing answer. George W. Bush said he would try to reform Social Security and advance energy independence. Bill Clinton said he would provide ‘a bridge to the 21st century,’ which turned out to include significant tax cuts and a lunge toward Medicare reform.

“Bush failed to deliver on Social Security, and Clinton failed to deliver on Medicare, but both tried to pivot from a first-term to a second-term agenda.

“The first George Bush, in contrast, didn’t seem to pivot. He gave the impression he’d just keep going on. That wasn’t good enough for voters.

“Obama similarly hasn’t pivoted. Unlike Clinton, he didn’t shift ground when his party was rejected in the off-year election. For a second term, he has been calling for more infrastructure stimulus, more unionized teachers and (though he has said it’s harmful in a time of economic sluggishness) higher tax rates on high earners….

“The partisan playing field has changed a lot since 2008. But Obama’s polices have not. There has been no pivot. It will be interesting to see how loudly and often the delegates cheer, ‘Four more years!’”

[Ed. Not many, it turned out.]

--The Department of Agriculture reported that 46,670,373 Americans are now on food stamps, an all-time record, at an annual cost of $71.8 billion, $770 billion over a decade.

To be fair, though, as the Wall Street Journal pointed out in an editorial, “The food-stamp boom began with the George W. Bush Republicans, who expanded benefits in the appalling 2002 farm bill.”

But the fact is one in every seven Americans is now dependent on food stamps, “a sign of economic failure.”

--The New York Post’s John Podhoretz wrote Democratic Party keynoter, San Antonio Mayor Julian Castro, “came across as staggeringly false – a grinning, glad-handing post-bailout salesman just trying to get you into a Chevy Volt today and telling you he really, really likes the way you buy a car.”

Separately, I agree with Mr. Podhoretz that in the purest sense of a good political speech, Massachusetts Gov. Deval Patrick gave a barnburner.

In fact, going back through the years, the convention speeches I distinctly remember were by Democrats, including one by Julian Bond when I was all of 10 years old in 1968, plus the great speeches by Mario Cuomo and Jesse Jackson. 

--The video in honor of the late Edward Kennedy made me cringe when I heard the line, “That concern and regard for the plight of others…”

Yeah, like for Mary Jo Kopechne, Chappaquiddick, 7/18/69….

--Bill Clinton still has Rwanda as part of his legacy. For Obama it will be Syria.

--The Clinton campaign commercial for Obama is really an effective ad. 

--Former President Jimmy Carter, in his video message, said because of Barack Obama the United States is “more respected around the world.” I don’t know what planet Mr. Carter is on. Perhaps we should have sent him off on the Curiosity Mars mission. Upon landing, “Run along now, Mr. President.”

--I had an upper-middle class upbringing, in case you were wondering. As some of the Fox commentators had fun with, it seems as if every single convention speaker, from the president on down, both parties, had a rough childhood with mothers scrubbing floors just to make ends meet. Things were cleaner then. We, on the other hand, had veal cutlet once a week. Gee, thanks, Mom! [Of course the price we had to pay came in the form of liver once a week as well, until we learned it could kill you.]

--From a Wall Street Journal piece on how Obama’s foreign policy continues to get such high marks:

“Critics see an overreliance on drones [when looking at Pakistan, among others.] Jonah Blank, a former Senate aide to Joe Biden and [Sen. John] Kerry who worked on the 2008 Obama campaign, cites a downside to hitting low-level fighters.

“ ‘‘Mowing the grass’ – that is, cutting down targets guilty of nothing more than being men of military age – is dangerously counterproductive,’ said Mr. Blank, now at the Rand Corporation think tank. ‘Yes, it keeps al Qaeda somewhat off balance, but is that a good trade-off for the hatred of 185 million people in Pakistan and many more throughout the Muslim world?’”

--I can’t stand Obama aide Valerie Jarrett so I read with interest Jo Becker’s piece in the New York Times on her. Jarrett rules the White House.

“Aides say she never uses her private time with the president to relitigate decisions. Even so, the White House is organized around the principle that the president’s time is an administration’s most valuable commodity, not to be spent on low-priority matters or those not fully vetted. Yet several officials say that is what happened with one of Ms. Jarrett’s pet projects, Chicago’s bid for the 2016 Olympics.

“Based on her assurances that his personal appeal to the Olympic committee could clinch the deal, the president flew to Copenhagen. During the flight back, CNN reported that Chicago had not survived the first round of voting.

“ ‘There was total silence,’ one official recalled. ‘It was a long trip home.’

“Ms. Jarrett cuts an elegant figure in the West Wing, with her pixie haircut and designer clothes. Aides say she can be thoughtful in little ways that matter, enlisting the president to rally staff members on personal setbacks. [Ed. whatever…like I care….] But she can also be imperious – at one event ordering a drink from a four-star general she mistook for a waiter – and attached to the trappings of power in a way some in the White House consider unseemly for a member of the staff. [Ed. See, this is what I mean…she’s supposed to be thoughtful but acts like a b----.]

“A case in point is her full-time Secret Service detail. The White House refuses to disclose the number of agents or their cost, citing security concerns. But the appearance so worried some aides that two were dispatched to urge her to give the detail up.

“She listened politely, one said, but the agents stayed.”

Like I said, she’s a….

--Thomas Friedman / New York Times

“Sitting through all the speeches [at the Republican National Convention], it was clear to me that people who think Romney, having accepted the nomination, is now going to pivot to the center are fooling themselves.   There is no organic connection between Romney and the G.O.P. base. You could feel it in the hall. He is renting the party to fulfill his dream of becoming president, and they’re renting him to get rid of President Obama. But this is not Romney’s party. I don’t see him taking it back to his moderate past.

“Ann Romney promised, in her speech, that her husband ‘will not fail.’ But she never said at doing what. That’s not an accident.”

--Kyle Smith / New York Post

“Why is it that the Democrats can’t stop telling us that ‘If you’ve got a business – you didn’t build that’ is not what the president meant to say? Could it be that they’re afraid this clumsy attempt at an ad lib by Teleprompter Man could be dooming their chances this November?

“Rarely does a day go by without some Democratic Party house newsletter…screechingly informing us how unfair Republicans are being in quoting President Obama’s infamous speech at the Roanoke Fire Department on July 13. If Mitt Romney wins, there will be a plaque there, kinda like the one near the Chicago Baskin-Robbins where Barack Obama and Michelle Robinson had their first kiss….

“The full quotation that liberals find perfectly reasonable is this: ‘If you were successful, somebody along the line gave you some help,’ Obama said. ‘There was a great teacher somewhere in your life. Somebody helped to create this unbelievable system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business, you didn’t build that. Somebody else made that happen.’…

“ ‘Somebody else’ is responsible for the success of successful entrepreneurs.

“This is exactly backwards. Some 46% of Americans pay no federal income tax at all.

“The top 1 percent pay 37% of all federal income taxes. So each of those horrible selfish plutocrats, along with the burden of their monocles and top hats, is carrying 36 other Americans on their back.”

--On Friday, Aug. 31, Cardinal Carlo Maria Martini passed away at the age of 85. Cardinal Martini was once thought to be in line to be Pope.

But just hours after he died, the leading daily paper in his native Milan, where he had served as archbishop, printed his final interview, which it is believed he wished to be published following his death.

In it Cardinal Martini issued a damning indictment of the church.

“Our culture has aged, our churches are big and empty and the church bureaucracy rises up, our rituals and our cassocks are pompous.

“The church must admit its mistakes and begin a radical change, starting from the Pope and the bishops. The paedophilia scandals oblige us to take a journey of transformation.”

--I have one question for Republican vice presidential candidate Paul Ryan. How the heck can you lie about your marathon time as you did? How stupid can you be? I’m a runner. I’ve run marathons and a slew of half-marathons and it is impossible to lie about your time as you did. I lost a lot of respect for you off of this one move, Mr. Congressman.

I told you last week how ticked I was that Paul Ryan also misrepresented his role on the Simpson-Bowles commission. And here I thought he was the best of the four.

I’m sick of the kinds of candidates we’re producing these last 20 years since George H.W. Bush, the last man truly qualified to be president.

--On a lighter note, your 54-year-old editor lost a golf match at the world famous Summit Muni Golf Club to 84-year-old Dr. Bortrum. A rematch is scheduled for this coming week, weather permitting.

--Hey, why don’t we end on a truly disgusting note this week, shall we? If you are squeamish, just move on to another site.

From Michael Winter / USA TODAY

“More than 15,000 large, semi-aquatic rodents killed by Hurricane Isaac have washed ashore on Mississippi beaches, creating a cleanup nightmare, according to news reports.

“Some beaches in Hancock County have closed while front-end loaders and workers in hazmat suits slowly collect the bloated, rotting carcasses of dead nutria, known as swamp rats, the Associated Press says. In Harrison County, crews collected and removed nearly 16 tons of dead animals from beaches over the weekend, and local officials said they were still washing ashore today or floating on the Gulf of Mexico surface.

“The Sun Herald reports that a federal contractor, U.S. Environmental Services, is handling the cleanup of an estimated 16,000 to 18,000 dead nutria and other animals….

“The stinking, stomach-churning work has proved…..”

OK, that’s enough. I’m just trying to figure out how, if the nutria can swim, they all died, know what I’m sayin’?

A female nutria, by the way, not only averages five babies per litter, it can have up to three litters per year.

Yet another reason to always sleep with one eye open.

---

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

God bless America.
---

Gold closed at $1733…up $120 in three weeks
Oil, $96.33…four straight weeks closing at $96

Returns for the week 9/3-9/7

Dow Jones +1.6% [13306]
S&P 500 +2.2% [1437]
S&P MidCap   +3.4%
Russell 2000 +3.7%
Nasdaq   +2.3% [3136]

Returns for the period 1/1/12-9/7/12

Dow Jones +8.9%
S&P 500 +14.3%
S&P MidCap +14.3%
Russell 2000 +13.7%
Nasdaq +20.4%

Bulls 51.0
Bears 24.5 [Source: Investors Intelligence]

Dr. Bortrum posted a new column.

Don’t forget the StocksandNews iPad app. Take it to your college football tailgate and wow your friends.

Have a great week. I appreciate your support.

Brian Trumbore