Week in Review

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Week in Review

04/21/2012

For the week 4/16-4/20

Europe, Washington and Wall Street

As much as some want to ignore Europe and its ongoing debt crisis, you can’t. But we’ll start out with some good news. The International Monetary Fund raised its global growth forecast for 2012 from 3.3% to 3.5%! And 4.1% in 2013! And on Friday, the IMF received commitments from G-20 nations, not including the United States, for $430 billion in funding to bring the IMF’s emergency fund pool to $700 billion, which could augment the European Union’s and European Central Bank’s existing rescue facilities for the eurozone’s sick. I’ll have more on this next week but the devil could be in the details, as in some of those committing to further contributions may not be totally reliable.

Any funds flowing into the IMF’s coffers could be badly needed because the organization also said this week Spain’s economy would tank 1.8% this year and Italy’s 1.9%; both dreadful. The IMF forecasts the entire euro area will see GDP decline 0.3%.

[Separately, the IMF is calling for China to grow 8.2% and Japan a respectable 2.0%; at least 2.0% is good for the Land of the Setting Sun. I’ll discuss the U.S. figures in a minute.]

When it comes to Europe and, specifically, Spain, the story is not going to get any better anytime soon and a bailout seems a certainty. I’m guessing much sooner than later.

Bad bank loans in Spain rose to their highest level since October 1994, according to the Bank of Spain, which recently said its net lending to its banks in March soared to 228 billion euro, up from 152 billion a month earlier. This comes from all that three-year emergency loan cash we’ve been talking about ad nauseam, the LTROs, which means the European Central Bank lent it to national central banks, which in turn lent it to commercial banks, who would buy their country’s debts and bring borrowing costs down.

Which worked for a spell but now, to beat a dead horse, the banks are relying on the cheap loans just to stay afloat.

I mean I told you over seven years ago about Spain’s housing bubble. Now consider house prices there fell another 7.2% in the first quarter, according to the Public Works Ministry. As in the real estate sector is still collapsing and more than half of Spanish banks’ home loans are “problematic,” underwater. And that’s just what I’ve read. It is definitely worse than that if home prices are falling 7% in three months even today.

Italy, witness the IMF’s projection for growth in 2012, isn’t doing any better. Supposed superstar fake Prime Minister Mario Monti is backtracking on his budget pledges and when it comes to implementation of austerity programs, in both Italy and Spain, you can kiss it goodbye.

Car sales in Italy, by the way, plunged 26.7% in March and were down 7% across the EU for a sixth consecutive month of declines. [Germany bucked the trend, up 3.4%, while the UK’s rose 1.8%.]

Europe needs growth, but the European banks are under immense pressure to preserve capital and thus they are slashing lending. IMF chief Christine Lagarde said Spain et al need to focus on growth first and foremost, whereas German fiscal types continue to insist austerity comes first in order to win back the markets’ trust. Personally, I’ve long maintained that the German stance, as best exhibited by Britain’s policies under Prime Minister David Cameron, is the way to go. Once the market is convinced you are serious about deficit reduction, the cash will flood in, which has also been my stance for years now regarding the U.S. deficit debacle.

But when austerity programs aren’t implemented, as is the case with Greece, and likely to be the same for Italy and Spain, then you have the worst of both worlds…no growth, no deficit reduction, no credibility, and soaring bond yields that lead to a bailout and loss of sovereignty.

Speaking of Greece, their elections on May 6 promise to lead to a hung parliament. Now do you think a hung parliament is conducive to implementing austerity measures? Hardly. It will be chaos…far worse than before.

And then there’s France’s presidential vote this Sunday. More on that looming fiscal catastrophe below.

Washington and Wall Street

Back to the IMF, it now forecasts the U.S. economy will grow 2.1% this year and 2.4% in 2013; not disastrous (and not disastrous normally for equities), but hardly the robust growth that leads to large numbers swelling the ranks of the employed.

The current state of the economy was best exemplified by March retail sales, up a robust 0.8% and far better than expected, while at the same time, data on housing starts and existing home sales for March were far worse than expected, and in both cases down. So the consumer continues to hang in there, despite $4.00 gasoline, but you aren’t going to have 3% to 4% growth without a solid housing sector.

The same dynamic is taking place within corporate America and the first-quarter earnings releases thus far. The bottom line, eps, is coming in at a 3.5% to 4.0% pace for S&P 500 companies when 0% to 1% was expected, but revenues are only growing about 4%, which is far below the 14-year average of 7%+.

So stocks are holding up just fine because corporations are once again doing a good job of managing expectations, but demand isn’t that great. Put it all together and you get a 2% economy. Coming off the worst recession since the Great Depression, this is pathetic.

And on the demand front, you can’t help but be worried when two tech heavyweights, Intel and IBM, reported revenues that were up a whopping 0.3% and 0.5% year-over-year, respectively. Gartner cut its forecasts for worldwide info tech spending to 2.5% from 3.7% in 2012. Sure, both IBM and Intel beat on the bottom line but nothing exciting about their stories.

Speaking of revenues, or lack thereof, the largest investment banks reporting this week saw revenues plummet, whether it was Goldman Sachs, Bank of America, or Morgan Stanley. Less than a month ago, everyone was giddy BofA was trading over $10.00. It closed the week at $8.35. The other names have similar recent price action.  Sayonara rally in financials. 

One other item on the economy. The trend in weekly jobless claims has turned decidedly bearish. Instead of hugging the 350K line, the last two weeks we’re back over 385,000. This has to have the White House nervous as it tries to will the unemployment rate below 8% by November.

And a note on the “Buffett Rule,” the minimum tax rate of 30% for households earning more than $1 million a year. A CNN/ORC poll shows that 7 in 10 support such a measure, so you can count on it being in every Democratic campaign pitch even though it has zero chance of passing with the makeup of the current Congress. Plus, as we all know by now, the version currently proposed would bring in a scant $47 billion over 10 years, assuming that the Bush tax cuts for upper-income earners expire on schedule. So less than $5 billion a year.

Well the Senate rejected consideration of the rule as Democrats were only able to get 51 of the 60 votes they needed to break a filibuster and proceed to full consideration (the vote being 51-45). Republican Sen. Susan Collins of Maine voted with Democrats to allow the measure to proceed, while Democratic Sen. Mark Pryor (Ark.) voted to block it.

Senate Minority Leader Mitch McConnell (R-Ky.) said, “By wasting so much time on this political gimmick that even Democrats admit won’t solve our larger problems, it’s shown the president is more interested in misleading people than he is in leading.” Democrats said they would bring it up again before the election.

As for the House, it rammed through a $46 billion tax cut for business, also along party lines, 235-173, even though it now moves to the Senate, where Democrats will ignore it.

Street Bytes

--Stocks finished mixed on the week, dealing with both earnings and Europe, as the Dow Jones and S&P 500 broke two-week losing streaks, up 1.4% and 0.6%, respectively, while Nasdaq, largely on the heels of Apple’s sloppy performance, fell 0.4% for a third straight weekly decline.

--U.S. Treasury Yields

6-mo. 0.12% 2-yr. 0.26% 10-yr. 1.96% 30-yr. 3.12%

The 10-year rallied yet again on the heels of Europe’s difficulties.

--China increased its holdings of U.S. debt for a second straight month in February, according to the Treasury Dept., to $1.178 trillion. Japan, which has been adding significantly, is next at $1.095 trillion.

China also is freeing up trading of its currency, which has been a major sticking point for global trade relations, not just with the United States, as keeping the renminbi (yuan) artificially low gave Chinese exporters an unfair advantage. Plus it’s been criticizing state-run banks of late.

U.S. Treasury Secretary Timothy Geithner said of China’s moves, “The cumulative effect…is very significant and very promising. It signals a continued commitment by Chinese authorities to a broad change” in economic strategy.

Among the benefits for China a more flexible yuan provides is the ability to control inflation. Economist Stephen Roach said, “The government is confident that China will avoid a hard landing, otherwise why would they introduce the possibility of greater foreign-exchange volatility?”

--Japan’s exports for the month of March rose 5.9% from a year earlier, the best growth rate in a year; further bolstering the IMF’s forecast, per the above, that Japan’s economy will grow 2% in 2012. Car exports to the U.S. were a big contributor.

--Tensions between Madrid and Buenos Aires boiled over this week as Argentina suddenly seized a majority stake in YPF, the nation’s largest oil company, which is majority-owned currently by Spanish energy company, Repsol YPF. Spain announced on Friday it would retaliate by cutting off Argentine biodiesel, which had accounted for 45% of Spain’s consumption and $991 million for the Argentines.

Cristina Fernandez de Kirchner, Argentina’s president, said the expropriation of YPF, a company founded by Argentina’s government in the 1920s and privatized in the 1990s, was a “recovery of sovereignty and control.”

Repsol said it would seek at least $10.5 billion in compensation for the nationalization of its operations there. Argentina said it owes Repsol nothing.

A spokesperson for the U.S. State Department said, “These kinds of actions against foreign investors can ultimately have an adverse effect on the Argentine economy and could further dampen the investment climate in Argentina.”

The European Union signaled it would throw its full diplomatic weight behind the Spanish government.

The move against YPF would represent the largest renationalization in the energy sector since Russia seized Yukos more than a decade ago.

“What is certain is that the renationalization of YPF by the government of President Cristina Fernandez will guarantee that it is not only the share price of YPF and 57% owner Repsol that are heading south. Argentina simply cannot afford the $25 billion a year needed to develop new fields containing up to 22 billion barrels of shale oil and gas. Which oil company will now lend its expertise?

“It is already embarrassing that long-suffering but energy-rich Argentina has to spend 7% of its annual budget on energy imports…And Argentina can kiss goodbye being treated seriously again by investors for another generation.”

Recall, Argentina is already shut out of sovereign bond markets because of its 2001 default. Argentina attracted just $2.4 billion in foreign direct investment last year, compared to Brazil which brought in $44 billion.

--U.K. retail sales rose 1.5% in March, ex-fuel, owing to the warmest March since 1957. Never discount the importance of weather.

--More stats on the $1 trillion student-loan debt ticking time bomb, courtesy of Barron’s Jonathan R. Laing.

“Ever-rising tuitions are the biggest part of the problem…tuition and fees at four-year schools rocketed up by 300% from 1990 through 2011. Over the same period, broad inflation was just 75% and health-care costs rose 150%.

“However you apportion blame, it boils down to this: Two-thirds of the college seniors who graduated in 2010 had student loans averaging $25,250, according to estimates in a survey by the Institute for College Access & Success, an independent watchdog group….

“Federal Reserve Chairman Ben Bernanke turned some heads in an aside during congressional testimony last month when he said that his son, who is in medical school, would probably accumulate total debt of $400,000 before completing his studies.”

Laing points out, on the other hand, that Ivy League schools, while charging room and board of $50,000 to $57,000, use their large endowments to give out sizable sums of student aid. “As a result, students graduating from elite schools like Princeton, Yale, and Williams College are able to graduate with total debt under $10,000, making them among the lowest-debt colleges and universities in the country.

“But the Ivies can’t be absolved of all blame in the current debt mess. They began the sticker-price arms race in the early 1980s, reasoning correctly, it turns out, that they could boost prices with impunity because of the scarcity value, social cachet and quality of the education they offer. They’ve led the charge ever since, even getting caught by the U.S. Justice Department for colluding on tuition increases and grant offers to applicants in the early ‘90s. They signed a consent decree neither admitting to nor denying the charges….

“The student-debt crisis is emblematic of issues bedeviling the U.S. as a whole, such as income inequality and declining social mobility. For as scholarship money is increasingly diverted from the needy to achievers with high grade-point averages and test scores, boosting institutional rankings, the perhaps less-privileged applicant is thrust into the position of having to take on gobs of debt, indirectly subsidizing the education of more affluent classmates. The race to the career top is likely over long before graduation.

“Student debt also helps sustain many school hierarchies that are virtually bereft of cost controls – the high-salaried tenured professorates, million-dollar-a-year presidents and provosts, huge administrative bureaucracies, and lavish physical plants.

“The game will continue until students and their families revolt or run out of additional borrowing capacity. Don’t expect the educational establishment to rein in its spending. Things have been too cushy for too long.”

Of course the massive debt load threatens to impede overall economic growth in the U.S.

--Microsoft reported solid earnings relative to expectations, with revenue beating as well, as sales of Windows rose 4% in the quarter and overall revenue was up 7%, this as the company prepares to roll out the eagerly awaited Windows 8 operating system. On the downside, Microsoft’s entertainment division was hit hard as Xbox sales plummeted 16%.

--Shares in Apple closed 2011 at $405 and had soared to a closing high of $636 on April 9 ($644 intraday, April 10) before five consecutive down days took it to $580 at Monday’s close. It then extended the losing streak to 8 of 9 sessions, finishing the week at $573, or down 9.9% from the high. With the company to report next week, there are all sorts of rumors on shortfalls vs. expectations for iPhones, for example. Shareholders, and the Street, will be on pins and needles.

--American Airlines wants to eliminate another 1,200 jobs as part of its bankruptcy procedure, which would mean an overall target of 14,200 positions being jettisoned out of a workforce of 73,000.

But U.S. Airways is methodically trying to put a deal together for AMR, negotiating separately with some of AMR’s unions as part of a deal that CEO Doug Parker says could save about half the jobs AMR is looking to cut.

--TransCanada submitted a new series of proposed routes to Nebraska environmental officials for the Keystone XL pipeline in order to avoid the sensitive Sandhills region. Nebraska said they would speed up the approval process, giving President Obama absolutely no reason to further block it, except to maintain his environmental base for November. This will be interesting.

--California’s unemployment rate in March ticked up to 11.0% from 10.9% as more workers entered the labor force. Nevada continued to have the highest jobless rate, 12.0%, while on the other end, North Dakota’s is 3.1% and Nebraska’s 4.0%.

--Rich Ross, chairman of Walt Disney Co.’s film unit, resigned, joining the ranks of the unemployed in California, following the disastrous “John Carter” sci-fi flick that resulted in a loss of $200 million for the studio.

--EBay reported yet another solid quarter on Wednesday, with revenue climbing 29% to $3.3 billion. The company has been trying to position itself as more than an online auction site to a retailer that can compete with the likes of Amazon. EBay’s PayPal acquisition continues to pay off big time with their revenue increasing 32%. Half of PayPal’s business is now coming from overseas.

--Yahoo finally appears to be getting its act together, reporting a first-quarter profit of $286 million, a 28% jump from a year ago, though once again the revenue story was less than exciting, up 1%. Facebook gained 14% of online display ad revenue in 2011 to Yahoo’s 10.8%, according to research firm eMarketer.

--According to the American Association of University Women, women in the U.S. earned 77% of what men earned in 2010 (women’s annual median earnings were $36,931, compared with $47,715 for men). 

The gender pay gap is smallest in Washington, D.C., where full-time working women earned 91% of what men earned. The largest disparities were in Wyoming (64%) and Louisiana (67%).

--Speaking of income inequality, Citigroup shareholders, in a rare revolt, voted down the bank’s $15 million pay package for CEO Vikram Pandit; the first time this has happened at one of the large financial institutions. The vote isn’t binding, but certainly sends a shot across the bow to other banks increasing the pay of their undeserving top executives.

Mike Mayo, a leading bank analyst, said: “This is a milestone for corporate America. When shareholders speak up about issues on which they’ve been complacent, it’s definitely a wake-up call. The only question is what took so long?”

--Moody’s Investors Service is threatening to downgrade some of the largest banks, with Morgan Stanley among the most vulnerable of 17 global financial institutions under review. This could be a big blow to those downgraded as it could lead to far less trading with customers demanding a minimum level of creditworthiness for counterparties. 

--Billionaire hedge fund manager John Paulson is shorting German government bonds in a bet the eurozone debt crisis will deepen soon. He told investors in a call on Monday he sees the eurozone deteriorating severely. German bunds have been trading with record low yields, Germany being viewed as the safe haven for the region. While Paulson has had a shaky time of it recently, his longer-term record remains among the best.

--President Obama demanded more “cops on the beat” to go after what he calls oil market manipulators by calling on Congress to increase penalties for offenders. But his proposal to spend an extra $52 million on enforcement is going nowhere. Just another election year gimmick…especially when it’s all about Iran!

--Speaking of oil and gas, 2012 will be the third year in the past five with historically high oil prices, but consumption has dropped 6% from 2007 through 2011, according to the Energy Information Administration. “The Federal Highway Administration adds that the number of vehicle miles driven over a 12-month period ending January was lower than in any year since 2004.” [Steven Mufson / Washington Post]

--First Solar announced it was stopping all of its German production as part of a global restructuring that will see it cut the work force by 30 percent, or 2,000 workers. It’s so bad in Germany, with lower government subsidies and weakening demand, that “First Solar said it will return a $30 million government grant, write off at least $150 million in assets and spend as much as $55 million on severance payments to its workers there to pull out.” [Diane Cardwell / New York Times]

--As reported by USA TODAY, more and more states are ending the requirement that phone companies must provide everyone land-line service. I don’t like this one bit. My landline is reliable and the quality good, compared to the crap you hear on cellphones.

A spokesman for AT&T countered, “(Such legislation removing a carrier’s obligation to provide land line service) levels the playing field for traditional land-line providers in a competitive environment. Relief of these regulations encourages additional investment in the new technologies that customers are demanding.”

As of last June, nearly 32% of U.S. households were wireless only. It’s the rural families without good wireless who could really get screwed.

--Berkshire Hathaway CEO Warren Buffett told shareholders he has early stage prostate cancer but “feels great” and will continue to run the show. Buffett, 81, said his condition is “not remotely life-threatening or even debilitating in any meaningful way.”

--Kim Jong Kim, a Korean-born American and president of Dartmouth College, is the new president of the World Bank; the U.S. traditionally holding this position while a European gets the IMF top post, much to the chagrin of developing nations who once again failed to muster enough support for one of their candidates. Kim is a physician and anthropologist, which, needless to say, had more than a few people uttering, “And this qualifies him for the position because…?”

--My portfolio: Over five years ago, incredibly, I started investing in a biodiesel/specialty chemical plant in Fujian province, China. I visited the company there twice; once to look at the old facility and once to make sure they were really building the far bigger second plant on the coast that was the key to all shareholders’ success. Once it became fully operational in 2010, all seemed good. At least the results were solid and the company was highly profitable.

Share price was another matter, though I chalked it up to the awful sentiment for Chinese stocks, which was exacerbated by the growing reports of fraud, see Sino-Forest.

But as I would tell you from time to time, I was patient and, after all, with the stock trading at a P/E of about one by last fall, I figured that sometime in 2012 sentiment would change and perhaps a little hot money would come back to begin to juice the performance. Had it traded with a multiple of just 4-5, I was set for a long, long time. Imagine; similar chemical companies in the U.S. trade at multiples of 11-13. I wasn’t asking for much. Plus the location of the plant is superb…the closest point to Taipei, so you had that angle going as well.

Last November, though, right before release of third quarter earnings, my company (which I still refuse to name) acquired a feedstock company, as discussed for the better part of a year, in order to get a better handle on costs. I, like many other shareholders, questioned the price paid but what do we know being here in the States for the most part?

The next day, if I remember right, there was a conference call to discuss earnings, which while not as good as before were still more than OK. I opened the questioning, there was another question, and then the operator cut it off. Shareholders were ticked at the abrupt finish.

I got together with the CFO in New York shortly thereafter for a fourth time in about a year. He never turned down my requests for meetings and our dinners were actually delightful. He was always forthright. I thought we had also reached an agreement that the company would hold kind of a makeup call to placate shareholders miffed over the handling of the prior one. This was supposed to be in December but I understood when the company said it wanted to wait until after the holidays. But then communication got spotty, at best. I got ticked, other shareholders got ticked, and relations between us went south.

Normally, small companies like this don’t report Q4 results until the end of March (it also being the far more comprehensive 10K, or annual). Reporting requirements for small caps are a killer these days; both time-consuming and costly. The CFO had told me that he was going to China (he split his time between New York and there) to look at the acquisition with the auditors in February. Fine, I thought.

On March 30, the company filed for a two-week extension to get the 10K together. Nothing unusual here, especially given the complexity of the acquisition.

On April 5, the share price suddenly popped 33% to levels not seen in 2012.

On April 11, there was a terse announcement my CFO friend had resigned, though a replacement with more company experience was immediately promoted to the slot. Nonetheless, not a good sign.

There has been nothing since except confirmation a scheduled conference call to discuss results was canceled. The company has gone dark. The PR firm and auditors left.

I have heard from informed sources that everything was all lined up to be signed off on as of April 10 and the auditors and company couldn’t agree on the valuation of the acquisition. I do not know for certain what the deal is. Again, as the share price has now slid back into oblivion, it is not good.

All those investing with me in this one have the same dark thoughts. The cash was never real. The sales were never there. What I do know is what I saw with my own eyes and my discussions with management, face-to-face. I know, for example, that some changes were in the works in terms of the players involved, but I must leave it at that.

The company could go silent for quite a long time until it gets a new team in place. To say I’m frustrated, and infuriated, is an understatement. Traveling this week, with many long drives, hasn’t helped matters, especially in terms of communication.

So that’s all on this topic for now, but I owed those of you playing along with me my thoughts. I feel terrible about it but at this point can only hope for the best. I’ll only comment further as information becomes available. Moving along…because I still have a job to do…

--ABC’s “Good Morning America” topped NBC’s “Today” in the morning ratings the week ending April 13 for the first time in 16 years.

--As reported by Mike Vallo of Barron’s, a study by Worldwatch Institute out of Washington finds that the world’s farm animal population has increased 23% from 1980 to 2010, to 4.3 billion, which means one thing, sports fans…lots of gas…greenhouse gases, that is. Back in 2007, a UN study found that farm animals account for 18% of greenhouse-gas emissions; more than the 14% contributed by cars, trucks and other modes of transportation.

--And we note the passing of American music and television mogul Dick Clark; an amazing success story who truly had his finger on the pulse of America from “Bandstand” to “$10,000 Pyramid.” And since 1972, he helped us ring in the New Year. He leaves one of the great legacies of all time.

Foreign Affairs

France: Sunday is the first round of balloting in the presidential vote and as no candidate is going to capture 50%, the runoff among the first two vote getters is May 6; which means that barring a cataclysmic upset (which has happened before in France), Socialist Party candidate Francois Hollande will be squaring off against President Nicolas Sarkozy.

The last polls had Hollande with a 29.5-27.5 lead in the first round (BVA poll…29-24, Hollande, in a CSA survey), with Hollande then winning the second round 56-44 (BVA) and 58-42 (CSA).

National Front candidate Marine Le Pen was in third in both polls at 17%.

Regardless of who ends up the victor on May 6, the loser is the French people as both Hollande and Sarkozy have failed to address the very real economic dangers the country faces, and/or are promoting policies that will only make things far worse, such as Hollande’s proposal for a 75% tax rate on those earning more than 1 million euro ($1.3 million), which would spark a wealth exodus of immense proportions.

Then again, when Hollande proclaims, “Why continue what has failed?” he has a point. Sarkozy has virtually zero successes he can point to outside cooperation with Germany on European Union issues.

At the same time, Hollande’s proposal to renegotiate the EU fiscal compact that is designed to limit government overspending would be a disaster of a different kind at this point. Hollande, aside from his income redistribution platform, seeks to add 60,000 civil servants and teachers, as well as reverse Sarkozy’s minimal increase in the pension age from 60 to 62.

Meanwhile, Sarkozy is pandering to every voting bloc possible and is threatening his people with the example of Spain. ‘See, this is where we’ll be if you elect Hollande. Look at Spain’s seven-year Socialist experiment.’

Iran: What a joke. The P5+1 (once again…the United States, Britain, France, Russia, China and Germany) met with the Iranians last weekend in Istanbul and Catherine Ashton, the inept foreign policy chief for the European Union, described the talks as constructive. “We want to now move to a sustained process of dialogue.” The parties agreed to meet in five weeks in Baghdad, May 23. Not in two weeks, but five.

A U.S. official said, “While the atmosphere today was positive and good enough to warrant a second round, we continue to stress that there is urgency for concrete progress and that the window for diplomatic resolution is closing.” But why five weeks?

The chief Iranian negotiator said Iran had no intention of accepting any demand to halt plans to enrich uranium to 20%, which is far beyond the quality needed to generate electricity. “The next talks should be based on confidence building measures which would build the confidence of Iranians.”

Iranian Foreign Minister Ali Akbar Salehi said his nation was prepared to resolve the nuclear dispute in Baghdad, hinting that the chief negotiator was wrong…that Iran might be willing to change its enrichment policy.

But don’t you see? This is all part of Iran’s stall game. Months and months of negotiations as to just how Iran might change its policy, and where the current 20% enriched uranium would go, and how, and on and on.

If the Washington Post’s David Ignatius is right, we have a lot to fear, Mr. Ignatius believing that a deal is imminent.

“The Iranians seem to be preparing their public for a deal that limits enrichment while preserving the right to enrich. In an interview Monday with the Iranian student news agency, Foreign Minister (Salehi) explained that ‘making 20% fuel is our right,’ but that ‘if they guarantee that they will provide us with the different levels of enriched fuel that we need, then that would be another issue.’ Salehi seemed to be reviving a 2009 Turkish plan to export Iran’s low-enriched uranium abroad, and receive back 20% fuel for its Tehran research reactor, supposedly to make the isotopes. That earlier deal collapsed because of opposition from (Ayatollah) Khamenei, who apparently is now ready to bargain….

“Translation: The Iranians expect to be paid, in ‘step-by-step’ increments, as they move toward a deal. At a minimum, they will want a delay of the U.S. and European sanctions that take full effect June 28 and July 1, respectively. That timetable gives the West leverage, too – to keep the threatened sanctions in place until the Iranians have made the required concessions. It’s a well-prepared negotiation, in other words, and it seems likely to succeed if each side keeps to the script and doesn’t muff its lines.”

This is unadulterated bulls---. Ayatollah Khamenei, peacemaker? Not one word in Ignatius’ widely read column, syndicated around the world, on Iran’s chief export, terror, and the hundreds of American lives that have been lost to Iran and its acolytes.

I’m sorry…the regime must be taken out, preferably through the toughest sanctions imaginable, as the U.S. Congress proposes (not the president).

But at the end of the day, the sands of the hourglass are dwindling to a precious few and the P5+1 is looking more and more like it wants to be party to Iran’s lies and deceit (as Ehud Barak knows all too well…see below).

Israeli Prime Minister Benjamin Netanyahu said of the Istanbul, and soon Baghdad, talks, “My initial impression is that Iran has been given a freebie.” Iran now has “five weeks to continue enrichment without any limitation, any inhibition. I think Iran should take immediate steps to stop all enrichment, take out all enrichment material and dismantle the nuclear facility at Qom.”

President Obama replied the U.S. hasn’t “given away anything” to Iran.

Israeli Defense Minister Ehud Barak also said Iran bought five weeks.

“I am realistic enough to not be so optimistic about talks with Iran. The Iranians have a history of deceiving the world, something through steps like this. So we are a little bit skeptical.”

Barak mentioned a Muslim notion called Takia, which he said grants Muslims the right to lie in order to deceive non-Muslims, for the sake of the religion.

“It is clear that the Iranians are focused on reaching nuclear capability, and they are ready to defy and deceive the whole world,” he said.

Barak added he did not think Ayatollah Khamenei had yet given the order to start actually building a bomb, but only because he feared a military strike.

Barak also reiterated that “all options are on the table,” meaning it was still possible Israel could strike before the Baghdad talks. [Yoni Dayan / Jerusalem Post]

Israel’s ambassador to the United States, Michael Oren, told the Jerusalem Post:

“We have to prevent a second Holocaust from happening. When Iran says it wants to destroy the state of Israel, which just happens to have six million Jews, we have to take it seriously.”

Oren stressed that “we can never compare the Holocaust to anything. It’s in a league by itself. It’s uniquely horrific.”

But he added, “We also have to look for similarities.”

Egypt: I told you last time the presidential election here, slated for May 23-24, was highly confusing. Now, after the five-judge High Election Commission eliminated 10 candidates, including the three most prominent, it becomes even more so. I told you before that ultraconservative Salafist Hazem Abu Ismail faced elimination because his mother was an American citizen and the judges so ruled after a lower court approved his bid; and that Muslim Brotherhood candidate Khairat el-Shater faced problems due to a past criminal conviction for which he hadn’t been formally pardoned, and so the judges ruled against him as well.

The case of former Mubarak intelligence chief and vice president Omar Suleiman was different. Suleiman was ruled ineligible because he fell 31 signatures short of the 30,000 needed to get on the ballot. At least that is one explanation I saw. Understand that the judges were all picked by Mubarak so for them to deny the favored candidate of the old establishment shows an encouraging amount of independence.

But, the final list of candidates is to be revealed April 26 and while all three appealed, and were then turned down again, some say Suleiman may yet be on the approved list.

After Friday prayers, large demonstrations took place in Tahrir Square to dispute the judges’ ruling, though in the case of Abu Ismail, his supporters have absolutely no leg to stand on.

What you’re now left with is Amr Moussa, a former diplomat and secretary-general of the Arab League who is preferred by the ruling Supreme Council and is known for his hardline stance on Israel, and Mohammed Mursi, the Muslim Brotherhood’s backup candidate. At least as of today, those would be the main frontrunners.

But then you still have confusion over the new constitution and who is to write it, this after a court disbanded the first panel, which the Brotherhood was also deeply unhappy about. Shater has accused the Supreme (military) Council of attempting to fix the election and the constitution.

It’s really all pretty fascinating, if it wasn’t so dangerous.

Syria: The cease-fire has been an unmitigated disaster. Sure, the level of killing is down some, but Syria hasn’t complied in terms of moving its military out of the cities as was part of the agreement and UN General-Secretary Ban Ki Moon wants 300 observers in the country, though this would require Syrian government support and security.

To give you a sense of President Bashar Assad’s campaign of terror, some Syrian Army defectors talked to the London Times’ Martin Fletcher, telling him the Syrian military wanted for nothing when it came to weapons, equipment and food. “We had everything in the army…The Russians keep delivering supplies,” the sergeant said.

Another said, “The leadership told us everything we loot is ours. They told us we were free to take anything and nobody will punish you.”

“Omar” said he defected after being ordered to fire on civilians. He knew five colleagues who had been killed by military security forces, including a friend who was shot in the back for refusing to fire on protesters.

“If you hesitate to shoot, they shoot you right away. You have only seconds,” said another young defector.

North Korea: Kim Jong Un gave his first public address, which is highly significant. Consider that his father, Kim Jong Il, gave just one his entire tenure. That’s kind of startling. They also say the kid seemed relaxed and comfortable in his 20-minute speech before a crowd celebrating Kim Il Sung’s 100th birthday, and the new leader’s address was carried live on television.

In the speech, Kim vowed to keep the military as the top priority, with the North earlier declaring that following its failed rocket launch, it was ready “to take retaliatory measures” after the UN Security Council condemned the test as a “serious violation” of UN sanctions, while demanding Pyongyang suspend all further activities related to the ballistic missile program, let alone all work on its nuclear program.

But it was not even a full resolution, which carries more force, and instead a presidential declaration; not that the UN’s resolutions are worth the paper they’re written on. China wouldn’t agree to a fuller condemnation.

Bottom line, the February deal between the U.S. and North Korea, exchanging food for a suspension of all activity at Yongbyon and the allowance of International Atomic Energy Agency inspectors back into the country is off.

Separately, at the military parade on Sunday, the North unveiled a large new missile that was conveyed on a road-mobile launch platform, which observers said shares many similarities to a transporter-erector-launcher developed by China; so the United Nations is probing whether China exported the technology to North Korea in contravention of multiple UN Security Council resolutions. Nothing, of course, will happen to China even if they did break the rules. [U.S. Defense Secretary Leon Panetta told House lawmakers China was indeed supplying ballistic missile support.]

China: The death of British businessman Neil Heywood last November, now tied to disgraced politician Bo Xilai’s wife, Gu Kailai, is getting murkier and murkier, with a senior Chinese journalist telling the BBC that Heywood’s death, initially declared to be the result of alcohol poisoning, was covered up immediately; after police realized the case could be tied to Bo and Gu.

It was at this point that Chongqing police chief Wang Lijun told his boss, Bo, that he believed Gu may have been involved in the murder. Gu, it seems, was not having an affair with Heywood as first reported, but rather she was upset he spurned her plan to launder massive amounts of funds through Heywood and she became afraid Heywood was about to tell authorities.

Wang, upon being sacked, sought refuge in the American consulate in Chengdu, where he reportedly told U.S. authorities about the murder and attempted to defect.

But as the New York Times reports, the Obama administration wanted nothing to do with the case. Wang was eventually turned over to Beijing police, instead of the Chongqing authorities who wanted his head, but no one knows what has happened to Wang in Beijing, so the U.S. has its prints all over this case as much as British authorities do, they being blamed for not following up on Heywood’s death right away. Wang could be put to death for giving secrets to the United States.

This, friends, is a freakin’ mess…and also right out of the movies. But it’s the biggest political scandal to hit China in years and it comes smack in the midst of a leadership change.

“In the case of Mr. Bo and his wife, the regime will probably manage it: Show trials are, after all, a Communist specialty. Other party chieftains will probably also get the message to keep a low profile for themselves and their families, at least for the time being.

“But patterns of authoritarian behavior – particularly nepotism, corruption and rent-seeking – are hard to put down in the absence of the accountability mechanisms China so notably lacks: a vigorous free media, periodic elections, economic competition, a bias toward transparency, the rule of law. Instead, the only mechanism the regime has is the purge. It may work in the short-term for eliminating enemies or satisfying bloodlusts. It won’t work in the long-term for shoring up the regime’s waning legitimacy.

“Meantime, China’s economy is slowing as income inequality grows – historically an explosive combination. Foreigners in China report that trying to do business is often futile when it isn’t outright dangerous. Wealthy Chinese are leaving the country in growing numbers, a de facto vote of no-confidence in an economy whose prospects are supposedly limitless.

“This is not a country on its way to global supremacy. The Bo scandal may pass soon enough, but what it has revealed will prove increasingly difficult to ignore.”

Afghanistan: The Taliban’s sophisticated attack last weekend on Kabul and other provinces was impressive in its scope, with the assault starting precisely at 1:45 p.m. But, equally impressive, was the performance of Afghan security forces, a good sign. In the end, it appears 39 militants were killed, five civilians, and 11 Afghan troops.

But, as NATO reached agreement with the Afghan government on both a timetable for withdrawal and needed ongoing support to maintain the security forces (an estimated $4 billion a year, for which the U.S. will probably commit $2.2 billion of it; the Afghans picking up $500 million and the rest of NATO the remaining $1.3 billion), the issue is, what happens when NATO pulls out? Heck, for starters, the Aussies are pulling out their 1,500 troops by year end, a full year early.

Russian Foreign Minister Sergei Lavrov said there should be no timetable; that NATO forces shouldn’t withdraw until Afghan government forces are fully ready.

India: New Delhi successfully tested an advanced long-range missile that extends the range of India’s nuclear deterrent to 5,000 km (3,100 miles), meaning it could reach Beijing and Shanghai for the first time…not that the Agni-V is operationally capable of sending a nuclear warhead as yet. China’s state-run Global Times warned India not to be “arrogant during disputes with China. India should be clear that China’s nuclear power is stronger and more reliable. For the foreseeable future, India would stand no chance in an overall arms race with China.” Notice how, otherwise, no one in the world complained about India’s test, compared to North Korea’s failed one.

Mexico / The Americas: Forget the largely failed Summit of the Americas in Cartagena; did you see Mexican customs inspectors seized 268,000 rounds of assault rifle ammunition found in a truck at a border crossing in Ciudad Juarez?! The guy from Dallas was trying to drive across from El Paso and after the fellow said he had no goods to declare, a gamma-ray inspection of the truck’s cargo compartment revealed metal canisters holding the ammo, the largest such seizure in memory.

As for the Summit, forget the Secret Service distraction, albeit a major one. President Obama did reach an accord over labor rights with Colombian President Santos, clearing the way for the free trade agreement that was previously concluded between our two nations to take effect May 15. But he angered American union leaders in the process, while at the same time refusing to sign a statement that would have called for the next summit meeting to include Cuba, so he avoided antagonizing his Cuban-American base in Florida…think November.

Even Mexico and Brazil said Cuba should attend the next summit in 2015. Of course it should. 

Random Musings

--The first real polls pitting President Obama head-to-head with Mitt Romney since the departure of Rick Santorum from the race are now flooding in. [Nationwide, registered voters]

Gallup…Romney 48-44
Fox News…Romney 46-44
CNN/ORC…Obama 52-43
Pew Research Center…Obama 49-45
Quinnipiac…Obama 46-42
ABC News/Washington Post…Obama 51-44
NBC News /Wall Street Journal…Obama 49-43
CBS News/New York Times…46-46

In the NBC/WSJ survey, taken in late February and early March, Mitt Romney’s positive rating was just 28% and now it’s up to 33%, some progress. 48% have a positive view of President Obama, basically in line with the winter’s data. By a six-point margin, more Americans saw Romney rather than Obama as having good ideas for improving the economy.

Obama’s overall approval rating stood at 49% in the NBC/WSJ poll. [The low in this survey was 44% from August through November.] Among independents, 47% approve, 43% disapprove.

But one major headwind for the president; 59% still believe the country is on the wrong track, though down from a high under Obama of 74% in October.

--In the Pew survey, 86% said the economy was the most important issue.

--In the CBS/N.Y. Times poll, Obama was favored by women 49-43, but was tied 43-43 among independents.

--In the CNN/ORC survey, Obama was favored by women 55-39, and 48-43 among independents. 

--In the Pew poll, Obama beats Romney 67-27 among Hispanic voters. In 2008, Obama defeated Sen. John McCain 67-31 among this group. The RNC recently announced it would target Hispanic voters with an outreach program in Florida, New Mexico, Colorado, Virginia, North Carolina and Nevada. Look for the Dos Equis if you opt to attend an event. Or rather, demand it.

--In the Quinnipiac poll, New Jersey Gov. Chris Christie is the choice among Republicans to be Romney’s running mate at 31%, ahead of 24% for Florida Sen. Marco Rubio and 23% for Wisconsin Rep. Paul Ryan.

“For reasons that don’t interest me much, ‘girl fights’ have always had a particular tug on our imaginations.

“Thus, when consultant/pundit/Democrat Hilary Rosen commented on CNN that Ann Romney had never held a job (and therefore was ill-suited to advise her husband on women’s employment concerns), the body politic convulsed in paroxysms of outrage.

“Stay-at-home moms (SAHMs) allegedly were insulted. Working mothers who allegedly envy SAHMs recoiled from the blinding truth of Rosen’s observation. Single moms with mouths to feed and no jobs allegedly were furious at the Romneys’ apparent cluelessness.

“Regular folks, meanwhile, who know better than to argue about ‘women issues’ when the political masses are engaged, somehow managed to get through another night without pondering whether the gender gap can ever be bridged….

“President Obama, reminding folks that he was raised by a single mom, noted that women who stay home with children are doing hard work and that anyone who argues otherwise should ‘rethink their statement.’ Rosen quickly rethunk and apologized for saying something true, which is never allowed in politics – but the heat is still high….

“Only gravel doesn’t know that the women’s vote is all-important this election season. Never mind the perennial insult that women are monolithic and vote only as their female parts dictate. Women, as Ann Romney has tried to point out, care about jobs and the economy because they are sentient human beings who do, in fact, work (57.7% of those over 16), or want to. And they do, in fact, worry that there will be no recognizable nation left if we don’t get serious about the debt and deficit in ways that don’t split the country into warring factions of haves and have-nots. Nothing like using women to emotionalize and distract from the hard work of governance.

“Women and men should be angry, all right, but not at Ann Romney or Hilary Rosen, who are entitled to both their opinions and their choices without fear of censure or condemnation. Anger is better directed at those who take tiny utterances and inflate them into phony distractions. Visitors to preschool playgrounds have witnessed disagreements of greater import.”

“I had to catch a train in Washington last week. The paved street in the traffic circle around Union Station was in such poor condition that I felt as though I was on a roller coaster. I traveled on the Amtrak Acela, our sorry excuse for a fast train, on which I had so many dropped calls on my cellphone that you’d have thought I was on a remote desert island, not traveling from Washington to New York City. When I got back to Union Station, the escalator in the parking garage was broken. Maybe you’ve gotten used to all this and have stopped noticing. I haven’t. Our country needs a renewal.

“And that is why I still hope Michael Bloomberg will reconsider running for president as an independent candidate, if only to participate in the presidential debates and give our two-party system the shock it needs….

“After his mayoral term is over in 2013, Bloomberg will apparently spend more time running his foundation. That’s commendable. But the single greatest act of philanthropy he could do for the country is right now: run for president as an independent…If he doesn’t, and this turns into a presidential race to the bottom, he could donate every dollar he has to fix things in America and they’d be wasted, or, more accurately, overwhelmed by our mounting problems. The most patriotic thing Bloomberg could do is become an unpaid lobbyist for the country – and for the next generation of Americans.”

--It’s really amazing how the Secret Service scandal in Cartagena could have gone down, and how these supposed professionals could have allowed themselves to be vulnerable to blackmail and thus risk the security of the president and others they are charged with protecting. And as we learn more about these clowns that we grew up once respecting, it’s amazing that you have the guy who had been responsible for vice presidential candidate Sarah Palin’s security actually commenting on her physical appearance on his Facebook page.

“Things like this don’t happen once if they didn’t happen before…

“We have got to ask, ‘where are the systems in place to prevent this in the future?’ It’s the reason that the investigation will not be about the 11 to 20 or more involved. It will be about how did this happen and how often has this happened before?...

“It’s not about whether the president was in danger this time. It’s whether or not you need to make changes so the American people can have confidence in their (entire) workforce.”

“We’re representing the people of the United States, and when we travel to another country, I expect us to observe the highest standards, because we’re not just representing ourselves, we’re here on behalf of our people.”

--George Zimmerman’s bail was set at $150,000 and he could be free in a few days. He’ll be required to wear a GPS device. In a hearing, he told Trayvon Martin’s parents, “I wanted to say I am sorry for the loss of your son.”

--Two years after the BP oil spill, there is no doubt some prized fish such as grouper and red snapper are diseased, which kind of sucks.

--Across Africa more than 300 million people are said not to have access to safe drinking water, but now scientists say they have discovered the volume of water in aquifers underground is 100 times the amount on the surface, according to BBC News. Some of the largest underground water sources are said to be in Libya, Algeria and Chad. The scientists disagree on the best ways of accessing the supply; with some saying large-scale borehole developments could actually rapidly deplete the resource. Emphasis, instead, should be placed on slower means of extraction to support drinking and community irrigation.

--A report out of Yale University and George Mason University finds that 69% of Americans agree that global warming is affecting weather in the United States. 70% or more believe it was responsible for the unusually warm 2011-2012 winter and the record high temperatures in 2011.

Separately, Richard Alley, a glaciologist at Penn State University, had some of the following in an op-ed for USA TODAY.

“Out in the climate, the dice are being loaded to favor some unusual events. We can’t prove that global warming caused any single new record, just as we can’t prove that the weighted dice caused a run of double-sixes. But for many extreme weather events such as record heat, it is much harder to prove that our CO2 is innocent, just as it is very hard to prove that loaded dice didn’t affect the game.

“Science doesn’t have a good understanding of warming’s impact on the occurrence and strength of small, fierce storms such as tornadoes, so it would be very difficult to show a human fingerprint in the severity of the recent outbreaks. But extra heat and water vapor are up there, so it could be harder to show that we haven’t boosted the destructive power.

“More important, if we continue to burn fossil fuels and release the CO2 to the air, we’re loading the dice more and more….Today’s youngsters might live to see so much warming that the hottest summer now on record becomes commonplace or even cool in many places….

“Even so, the best science is clear. We get many benefits from burning fossil fuels, but the CO2 is projected to change the climate in costly ways. As the easy fossil fuels are exhausted, more and more we will want sustainable alternatives.

“Careful lottery players check the jackpot and their cash reserves before buying the next ticket. But though the scientific community is working to calculate the odds in the climate game, society is still rolling the increasingly loaded dice through accelerating fossil-fuel burning.”

--That was pretty cool to learn that Antarctica has twice as many emperor penguins as once thought after an extensive British and U.S. study using satellite imaging. As in there are 595,000 living in 46 colonies along the coast of the place, compared with previous estimates of 270,000 to 350,000.

Maybe they’ll band together and attack worthless Argentina. 

“As the space shuttle Discovery flew three times around Washington, a final salute before landing at Dulles airport for retirement in a museum, thousands on the ground gazed upward with marvel and pride. Yet what they were witnessing, for all its elegance, was a funeral march.

“The shuttle was being carried – its pallbearer, a 747 – because it cannot fly, nor will it ever again. It was being sent for interment. Above ground, to be sure. But just as surely embalmed as Lenin in Red Square.

“Is there a better symbol of willed American decline? The pity is not Discovery’s retirement – beautiful as it was, the shuttle proved too expensive and risky to operate – but that it died without a successor. The planned follow-on – the Constellation rocket-capsule program to take humans back into orbit and from there to the moon – was suddenly canceled in 2010. And with that, control of manned spaceflight was gratuitously ceded to Russia and China….

“Who cares, you say? What is national greatness, scientific prestige or inspiring the young – legacies of NASA – when we are in economic distress? Okay. But if we’re talking jobs and growth, science and technology, R&D and innovation – what President Obama insists are the keys to ‘an economy built to last’ – why on earth cancel an incomparably sophisticated, uniquely American technological enterprise?

“We lament the decline of American manufacturing, yet we stop production of the most complex machine ever made by man – and cancel the successor meant to return us to orbit. The result? Abolition of thousands of the most highly advanced aerospace jobs anywhere – its workforce abruptly unemployed and drifting away from space flight, never to be reconstituted….

“There are always excuses for putting off strenuous national endeavors; deficits, joblessness, poverty, whatever. But they shall always be with us. We’ve had exactly five balanced budgets since Alan Shepard rode Freedom 7 in 1961. If we had put off space exploration until these earthbound social and economic conundrums were solved, our rocketry would be about where North Korea’s is today….

“NASA will tell you that it’s got a new program to go way beyond low-Earth orbit and, as per Obama’s instructions, land on an asteroid by the mid-2020s. Considering that Constellation did not last even five years between birth and cancellation, don’t hold your breath for the asteroid landing.

“Nor for the private sector to get us back into orbit, as Obama assumes it will. True, hauling MREs up and trash back down could be done by private vehicles. But manned flight is infinitely more complex and risky, requiring massive redundancy and inevitably larger expenditures. Can private entities really handle that? And within the next lost decade or two?....

“Neil Armstrong, James Lovell and Gene Cernan…called Obama’s cancellation of Constellation a ‘devastating’ decision that ‘destines our nation to become one of second or even third rate stature.’

“ ‘Without the skill and experience that actual spacecraft operation provides,’ they warned, ‘the USA is far too likely to be on a long downhill slide to mediocrity.’ This, from ‘the leading space faring nation for nearly half a century.’….

“(Today) we can’t even do what John Glenn did in 1962, let alone fly a circa-1980 shuttle.”

--Finally, I’m in Johnson City, Tenn., for no other reason than I needed a decent place to bang out a column and the Carnegie Hotel where I’m staying is one of the more pleasant surprises of my recent travels. 

I’ve done a lot of history sightseeing this week, particularly Lexington, Virginia; Appomattox and Bedford, Va., the last one where the National D-Day memorial resides.

Lexington is home to Washington & Lee University and VMI, as well as the final resting place for Robert E. Lee (president of W&L the last five years of his life) and Confederate Gen. Stonewall Jackson, who taught at VMI before he was called into service.

But George Washington was the original benefactor of W&L and among his many firsts, call him the first education president. In 1784, he said:

“…the best means of forming a manly, virtuous and happy people, will be found in the right education of youth. Without this foundation, every other means, in my opinion, must fail.”

“Knowledge is in every Country the surest basis of public happiness.”

VMI was also where George C. Marshall went to school and there is an excellent museum to honor one of the Greatest Americans of all time. I didn’t realize he was born on West Main Street in Uniontown, PA (being familiar with the area). He lived near George Washington’s Ft. Necessity, so Marshall’s father, George Sr., would take him there often which instilled in his boy a love and respect for history.

But in touring the Marshall museum, I was struck by this one quote of his.

“Discouraged people are in sore need of the inspiration of Great Principles. Such leadership can be the rallying point against intolerance, against distrust, against that fatal insecurity that leads to war. It is to be hoped that democratic nations can provide the necessary leadership.”

Lastly, as we roll through the 150th anniversary of the Civil War from 2011-2015, I hope many of you get to go to Appomattox. Leave enough time to walk the historic trail and visit the cemetery about a ½-mile from McLean House (where the surrender took place).

For ten years I’ve had an essay written by the late Dr. Joseph Harsh, who was a Professor of History at George Mason University. He used to teach a summer course that ended with his students sitting around Stonewall Jackson’s tomb in Lexington, a beautiful spot where 144 Confederate veterans are also buried. Here is just some of what he would tell those students, as published in Hallowed Ground, summer 2002.

They are all gone now.

The dewy cheeked boys, who left home before their first shave; their older brothers, who marched away from young wives clutching infants in their arms; and their grizzled fathers, whose gray streaked hair and beards belied arms as stout as their hearts.

They are all gone.

The men who discovered at Bull Run that war was not a lark, but a vulture; who crept through the Bloody Cornfield and knelt in the Bloody Lane; who crawled through the snows on Marye’s Heights; who would not yield on Little Round top and who climbed the post-and-rail fence on the Emmittsburg Pike amidst a hail of bullets; they who lay among the burning trees of the Wilderness; and who endured the dank, stinking trenches of Petersburg.

They who surrendered at Appomattox, and they who did not jeer the vanquished there.

They are all gone….

We who are their great, and great-great, and great-great-great-grandchildren can never know them now. We can never see them, or hear them, or touch them.

We can know them only through the ancient photographs of faded brown and white, where they stand mute, unmoving, mysterious to our gaze….

And the least that we can do – and, sadly, the most that we can do – to reach back through fast receding years and thank them for the pain, the suffering, the sacrifice, to thank them for our United States, is to preserve, to protect, and to defend the ground they hallowed.

But our obligation is much greater than to thank them. Our most sacred duty, our ultimate loyalty, is to remember, to keep alive, and to pass on their willingness to sacrifice, their love of country, their devotion to freedom.

We are the future now, but ultimately we are only a link between the past and the future. This generation may never be called upon to make huge, soul-wrenching sacrifices of life and fortune.

But someday – and it is as inevitable as the rising of the sun – a future generation will again be touched by fire and will be summoned to defend our country and our freedom.

If your children, or grandchildren, or great-grandchildren, when that call comes, are too soft, too lazy, too uncaring to meet the challenge, not only will they fail, but we fail also, and so will fail every generation which has preceded us.

Antietam, Gettysburg and Appomattox will have been in vain.

Yes, they are all gone now.

And soon – in a blink of the cosmic eye of time – we also will all be gone. But we are all connected.

The Civil War is not a closed book.

It is a continuing story that never ends.

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

Gold closed at $1642
Oil, $103.88

Returns for the week 4/16-4/20

Dow Jones +1.4% [13029]
S&P 500 +0.6% [1378]
S&P MidCap +1.2%
Russell 2000 +1.0%
Nasdaq -0.4% [3000]

Returns for the period 1/1/12-4/20/12

Dow Jones +6.6%
S&P 500 +9.6%
S&P MidCap +11.0%
Russell 2000 +8.5%
Nasdaq +15.2%

Bulls 44.1
Bears 23.7 [Source: Investors Intelligence]

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