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10/13/2012

For the week 10/8-10/12

[Posted 12:00 AM ET]

Europe, China, Wall Street and Cyberterror

“The global economic recovery is on the ropes, battered by political conflicts within and across countries, lack of decisive policy actions, and governments’ inability to tackle deep-seated problems such as unsustainable public finances that are stifling growth.”
--Professor Eswar Prasad of the Brookings Institution [Financial Times]

This was a week where the International Monetary Fund and World Bank held their annual meetings and there were a slew of revisions to worldwide growth. While the IMF and WB have never been the best of forecasters, their projections are important in terms of looking at trends and the trends today continue to look miserable.

For example, the IMF lowered its 2012 global growth forecast to 3.3% from July’s 3.5% estimate and the 2013 outlook from 3.9% to 3.6%. While the United States was raised to 2.2% in 2012, overall, the outlook for the advanced economies’ GDP is up just 1.3% in 2012, 1.5% in 2013.

The IMF projects eurozone GDP will contract this year 0.4% and rise just 0.2% in 2013. Non-euro Britain was lowered to down 0.4% in 2012 from a prior estimate of up 0.2%.

China was lowered to 7.8% in 2012, 8.2% in 2013 (the World Bank has China at 7.7% and 8.2%) which many would take in a heartbeat amid further concerns China is slipping far faster than consensus. China at least had a better PMI on its service sector for September, according to HSBC, 54.3.

But it was a few weeks ago that I mentioned the dangers to the global economy with the growing tensions in the East China Sea between Japan and China and this week Japanese Prime Minister Noda, whose popularity at home is sliding precipitously, urged talks with Beijing over the Senkaku (Diaoyu to the Chinese) islands but China is undergoing a leadership change and Japan could be looking at its 7th prime minister since 2006 if elections are called, as expected, over the coming months.

Noda said, “These are the second and third largest economies in the world and our interdependence is deepening. If our ties cool, particularly economic ones, then it isn’t a question of one or the other country suffering. Both countries lose out.”

A Chinese foreign ministry spokesman said Japan should “correct its wrongdoing of violating China’s sovereignty and return to the track of solving the issue through dialogue and negotiation.” But only dialogue as China sees it.

Japanese companies pour in tons of direct investment into China, $5.1 billion in the first eight months of 2012, second only to Hong Kong.

An IMF official said, “If the territorial dispute escalates further, it could become a risk for both Japan and China’s economies, and eventually for the global economy.” As discussed below, and over the past few weeks, Japan is already suffering.

Japan won’t compromise on its ownership claim when it comes to the Senkaku islands. China calls this “outrageous.”

China, in a snit, decided to snub the IMF and World Bank meetings because they were being held in Tokyo. Very mature, guys. Japan’s foreign minister, Koichiro Gemba, said China’s non-attendance was “not only bad for Japan-China relations, but also for the global economy. I believe it also won’t be a plus for China, considering how the international community will view such moves.”

Plus you have the trade disputes between the United States and China, such as the latest effort on the part of Washington to hit the Chinese solar industry with steep duties, which elicited the following from a Chinese Commerce Ministry spokesman: “The United States is provoking trade friction in the new energy sector, and sending a negative signal to the world that stirs global trade protectionism and obstructs the sector’s developments.” No doubt, China is dumping solar cells and panels onto the U.S. market but it’s the tit-for-tat that threatens to get out of control.

As for Europe, the latest EU summit takes place next Thursday and Friday and the issue of a single bank supervisor, once viewed so favorably last June, is now in disarray. The odds of coming up with a system built around this concept by the hoped for January 1st deadline is nil.

Of course beforehand you still have the immediate concerns of Greece and Spain.

Greece says it will run out of money by the end of November. German Chancellor Angela Merkel visited Athens for the first time in five years to try and buck up the Greeks, only she was met by protesters who despise Germany ever since the Germans demanded the harsh austerity terms, let alone memories of World War II which aren’t about to fade away. So some of those decrying Merkel’s presence on their soil wore Nazi uniforms.

At a joint news conference, Greek Prime Minister Antonis Samaras said: “The visit of Angela Merkel proves that we are ending the international isolation that we have been experiencing because of our mistakes…I told the Chancellor that the Greek people are bleeding at the moment but are determined to stay within the eurozone and win the battle. It has been recognized by everyone that Greece has turned a page and that its image has been changed…So anybody who has bet on a Greek collapse and misfortune will lose that bet.”

For her part, Merkel, knowing that Greece must receive the next 31.5 billion tranche of its bailout or its bye-bye euro, said she did not come to Athens as a “taskmaster” but as a “partner, friend, fellow member of the EU and eurozone and member of NATO….I have full and firm awareness that the period Greece is going through is especially difficult for the people of Greece and many are suffering. But much of the path is behind you. We witness on a daily basis that you are making progress. Although this is a difficult path it will prove worthwhile.”

But then Merkel said, “(The) problems arose over many years and cannot be tackled with the wave of a magic wand.”

In other words, don’t expect any breaks in the demands we have already laid down if you want to continue to receive funding.

But while Merkel was playing both sides, the IMF’s Christine Lagarde said Greece should get two more years to meet its fiscal targets, while at the same time the IMF indicated it won’t be supplying Greece with anymore aid. All this while the troika, the IMF, ECB and EC still haven’t released a final report on whether Greece deserves the 31.5 billion installment (to which the IMF may not even contribute). Confused? You should be. It’s why it remains a joke when people talk of the eurozone being close to a final solution for their crisis. Also notice how none of the above is about growing the region’s economy, which needs to be first and foremost, especially on the periphery.

Oh, and Greece’s unemployment rate hit 25.1%, officially (July, the latest data) and 54% for the 15-24 age category.

In Spain, Prime Minister Mariano Rajoy continues to resist making a formal bailout request, much as everyone on the continent knows Spain needs one. October 21 is the date for key regional elections and as I write, it’s still expected Rajoy will hold off until after the vote.

Spain is falling hopelessly behind its deficit targets as falling tax revenues and rising unemployment benefits make hitting them impossible, none of which was helped by a credit rating downgrade from S&P to one level above junk. Should it fall to junk, then many funds will have to sell their Spanish paper, either due to mandates or Spain’s exit from various bond benchmarks. Moody’s is expected to follow suit by the end of the month. Last Sunday there were protests against austerity in 56 cities across the country.

Germany’s economy is also increasingly under the microscope. Four German think tanks issued a report slashing projected 2013 GDP from 2% to 1%, though at least August exports rose as orders from outside the EU surged (they are up 20% to the U.S. for the first seven months of the year), though current manufacturing trends in Germany are not good.

Speaking before the European parliament in Brussels, Mario Draghi, president of the ECB, warned that capital flight, especially in the periphery (Greece, Spain, Portugal, Italy, as well as parts of Eastern Europe) underscores the need for structural reforms.

“You can’t have a union when you have certain countries that are permanent creditors and a set of countries that are permanent debtors. So part of this rebalancing will be achieved by regaining competitiveness.”

Which is why Draghi touts the ECB’s bond-buying plan – designed to tackle the disparity in interest rates paid by companies in, say, Spain vs. Germany. But Spain hasn’t applied for the help.

Economist Robert Samuelson, writing from his Washington Post perch:

“What we are witnessing in Europe – and what may loom for the United States – is the exhaustion of the modern social order. Since the early 1800s, industrial societies rested on a marriage of economic growth and political stability. Economic progress improved people’s lives and anchored their loyalty to the state. Wars, depressions, revolutions and class conflicts interrupted the cycle. But over time, prosperity fostered stable democracies in the United States, Europe and parts of Asia. The present economic crisis might reverse this virtuous process. Slower economic expansion would feed political instability and vice versa. This would be a historic and ominous break from the past.”

Samuelson then brings up a paper by economist Robert Gordon of Northwestern University who speculates that productivity increases have peaked.

“Gordon identifies three industrial ‘revolutions.’ The first began in England around 1750 and featured cotton spinning, the steam engine and railroads. The second, dating from 1870 to 1900, was the most significant and involved the harnessing of electricity, the invention of the internal combustion engine and the advent of indoor plumbing with running water. These, he contends, triggered other advances: appliances, highways, suburbs, airplanes, elevators and modern communications (telephones, televisions).

“Gordon is less impressed with the third revolution: computers, starting around 1960 when big companies first used ‘mainframes.’ True, they automated airline reservations, banking transactions and clerical work. Secretaries ‘began to disappear.’ More recently, e-commerce has exploded. But Gordon sees the Internet, smartphones and tablets as tilted toward entertainment, not labor-saving. High productivity gains from cybertechnologies ‘had faded away by 2004,’ he argues.

“Technological innovation, though faltering, will continue, Gordon writes. Think more driverless cars and new cancer drugs. But he argues that the effects on average American living standards will be muted. Less-skilled workers from lackluster schools will cut productivity and wage growth further. Greater inequality will steer some gains to the wealthy. Higher taxes to cover budget deficits and transfers to the elderly will squeeze take-home pay. Health insurance costs (which he does not mention) would do the same. Though not preordained, Gordon’s prophecies suggest a long era of stunted economic growth.”

Super.

The news from Wall Street was so-so as the first few earnings reports trickled in. Alcoa led off and while it beat earnings expectations, its guidance was murky and the company cut its global consumption outlook for aluminum by 1 percent, citing China. JPMorgan Chase handily beat Wall Street’s estimates as CEO Jamie Dimon, noting a surge in mortgage business, said “we believe the housing market has turned the corner.” Wells Fargo, on the other hand, disappointed.

The Federal Reserve’s Beige Book of regional economic activity noted the “fiscal cliff,” the combination of tax increases and spending cuts looming first of the year unless Congress acts beforehand, is restraining hiring, a fact backed up by a survey from the Manufacturers Alliance for Productivity and Innovation, a research group, that found 17% of executives had reduced or shelved capital investments because of yearend concerns.

A Wall Street Journal survey of 48 economists projects that the current 7.8% official jobless rate will remain as is through June of 2013, while GDP in the first half will be below 2%. So zero improvement…just more stagnation.

And on Friday, the Treasury Department said the budget deficit for fiscal 2012 came in at $1.089 trillion, call it $1.09T, down from $1.3 trillion in 2011 but nonetheless the fourth straight $1 trillion+ deficit under President Obama. Congratulations, Mr. President. Amazing consistency.

Revenues did pick up 6.4% and spending was down, owing to the unwinding of the war in Iraq. But total government debt is now at $16.119 trillion, just shy of the statutory borrowing limit of $16.394 trillion, so we hit this end of December. Just in time for New Year’s festivities.

Finally, U.S. Defense Secretary Leon Panetta warned in a speech on Thursday that the United States faces a cyberattack that could “paralyze the nation,” using the starkest language yet of any member of the Obama administration when it comes to the threat posed by the enemies of the U.S. Panetta added that before Sept. 11, 2001, the warning had been there, but “we weren’t organized, we weren’t ready and we suffered terribly for that.”

“We cannot let that happen again. This is a pre-9/11 moment. The attackers are plotting. Our systems will never be impenetrable, just like our physical defenses are not perfect, but more can be done to improve them.”

Painting the worst scenario, he said an “aggressor nation or extremist group” could gain control of critical switches and derail passenger trains or freight trains loaded with lethal chemicals.

“The most destructive scenarios involve cyber actors launching several attacks on our critical infrastructure at once, in combination with a physical attack on our country,” Panetta continued.

“The collective result of these kinds of attacks could be a ‘cyber Pearl Harbor,’ an attack that would cause physical destruction and loss of life, paralyze and shock the nation and create a profound sense of vulnerability,” he warned.

And, while not directly linking Iran to recent cyberattacks that devastated Persian Gulf oil and gas companies (Aramco lost 30,000 computers due to the Shamoon virus), Panetta said Tehran has “undertaken a concerted effort to use cyberspace to its advantage,” concluding in part:

“Potential aggressors should be aware that the United States has the capacity to locate them and hold them accountable for actions that harm America or its interests.”

The message was clear to Tehran. We know who you are. Watch it.

Street Bytes

--Stocks had their worst week in four months, the third losing one in the last four, as concerns over global growth, particularly in Europe and China, as well as a soft earnings picture trumped anything monetary authorities are doing worldwide on the stimulus front (or the best Univ. of Michigan consumer confidence figure in five years).

The Dow Jones fell 2.1% to 13328, the S&P 500 declined 2.2% and Nasdaq tumbled 2.9%.

Tuesday, Oct. 9, marked the five- and ten-year anniversaries of market cycle lows and historic highs.

A look back at some key benchmarks.

S&P 500

3/24/00…1527 [then all-time high]
10/9/02…..776
10/9/07…1565 [new all-time high]
3/9/09……676
10/12/12…1428

Nasdaq

3/10/00…5048 [all-time high]
10/9/02…1114
10/9/09…2803
3/9/09…..1268
10/12/12…3044

Dow Jones

1/14/00…11722 [then all-time high]
10/9/02…..7286
10/9/07…14164 [new all-time high]
3/9/09……6547
10/12/12…13328

Tokyo Nikkei

3/24/00…19958
10/9/02…..8539
10/9/07…17159
3/9/09……7086
10/12/12…8534

I include the Japanese market because many believe this is where the United States is headed, prolonged periods of stagnation. And a reminder…back on 12/29/89, the Nikkei hit its all-time high of 38916.

--U.S. Treasury Yields

6-mo. 0.15% 2-yr. 0.26% 10-yr. 1.66% 30-yr. 2.83%

The long end of the curve rallied anew on the punk outlook from the IMF, the ongoing uncertainty regarding the eurozone, and flat out buying of Treasuries by our Federal Reserve, ‘cuz that’s what they do these days, sports fans.

The producer price index for September showed an increase of 1.1%, but ex-food and energy the PPI was unchanged. For the last 12 months, the PPI is up 2.1% and up 2.3% on core. Next week consumer prices.

--The House Intelligence Committee concluded following an investigation into Chinese telecom equipment makers Huawei Technologies and ZTE that U.S. companies should avoid doing business with the two, or risk being the target of Chinese cyber-espionage. Panel chairman Republican Mike Rogers said Canada was also at risk, so Ottawa indicated a day later that it would exclude Huawei from developing major government communications systems alongside domestic operators Telus and Bell Canada. At the same time, the Canadian government continues to review CNOOC’s (China National Offshore Oil Corporation) $15.1 billion takeover of Calgary-based oil and gas producer Nexen.

A draft report from the House said in part: “The Committee…received internal Huawei documentation from former Huawei employees showing that Huawei provides special network services to an entity the employee believes to be an elite cyberwarfare unit within the PLA [People’s Liberation Army].”

The two largest U.S. telecom companies, AT&T and Verizon, don’t use Huawei equipment in their networks. Two years ago, Sprint excluded Huawei and ZTE from a mega contract owing to national-security concerns in Washington.

For its part, Huawei, which was also featured in a report last Sunday on “60 Minutes,” said the House committee’s actions were little more than China-bashing, with a spokesman adding, “The political agenda was one of poking China in the eye and holding hostage an innocent, independent, employee-owned company.”

A spokesman for China’s commerce ministry said the U.S. report “violated its long-held free-market principles and would undermine cooperation and development between the two countries.”

--The government sued Wells Fargo & Co., charging the nation’s largest mortgage lender with running a decade-long mortgage fraud program involving “reckless” lending and bilking the Federal Housing Administration (FHA) of “hundreds of millions of dollars,” a bill footed by taxpayers. The suit alleges Wells knowingly hid 6,000 suspect loans from 2002 to 2010, resulting in the claims being paid out by the FHA. The government will no doubt extract a penalty in the $hundreds of millions.

--Business-software company Workday Inc. priced its IPO at $28, $637 million, the largest tech offering since Facebook, and then saw its first-day price soar to nearly $49 at the close on Friday. Workday was priced above expectations largely due to the fact four IPOs offered Thursday surged 20% in their first day of trading; Realogy Holdings Corp., Shutterstock Inc., Intercept Pharmaceuticals Inc., and Kythera Biopharmaceuticals Inc. According to the Wall Street Journal, it was the first time since December 2000 that four IPOs booked similar gains simultaneously.

Workday was co-founded by David Duffield, who ran PeopleSoft before Oracle moved in in a 2004 hostile takeover. A longtime friend of mine is an employee of Workday and, seeing as how I’ve also never been a fan of Larry Ellison, you’ll have to excuse my cheerleading for Workday from time to time.

--Japanese mobile phone company Softbank is in takeover talks with Sprint Nextel, which if it went through would make Softbank one of the world’s three biggest mobile operators. Softbank is also supposedly looking at another U.S. operator, MetroPCS Communications. 

Softbank is looking to buy as much as 70% of Sprint, according to some reports, and should the deals go through they would be the biggest overseas acquisitions by a Japanese company, but shares in Softbank fell sharply on the news as shareholders of that company were none too pleased about the prospects of adding a lot of debt.

--Merger talks between European defense giants BAE Systems and EADS fell apart, with Germany, specifically Chancellor Angela Merkel, being blamed by many for the collapse owing to a disagreement between the French and German governments, who control 45 percent of the shares of EADS.

Separately, U.K.-based BAE said U.S. spending cuts in the sector cloud the outlook for the company; BAE receiving 40% of its revenues from the Pentagon.

--Toyota announced it was recalling a whopping 2.5 million vehicles in the U.S. (another 5 million globally) to fix a faulty power window switch amid several hundred reports of smoke and fire. Apparently, the National Highway Traffic Safety Administration opened up a probe into the problem four months ago. It’s a big blow to Toyota, which was just beginning to recover from the tsunami and earthquake, let alone damage from a 2010 sudden acceleration issue that panicked drivers. The U.S. recall impacts vehicles such as the Camry from 2007 to 2009.

Separately, Toyota’s September deliveries in China fell 49% from a year ago owing to the above-mentioned territorial dispute between Beijing and Tokyo, while Nissan’s fell 35% and Honda’s 41%.

--Passenger car sales overall in China fell 0.3% in September from a year earlier, according to the China Association of Automobile Manufacturers. They had risen 7.9% in August.

--Gambling revenue in Macau for the month of September (ahead of the Golden Week national holiday) rose a worse than expected 12.3%. Revenue was the second weakest this year. The visitor trends are down.

--The IMF reduced its outlook for India’s economy to growth of just 4.9% this year and 6.2% in 2013 vs. previous estimates of 6.2% and 6.6%, respectively. Brazil’s projected GDP was lowered from a prior 2.5% for 2012 to just 1.5%.

--The IMF said that Ireland is the only bailout country in the eurozone likely to post any growth this year, 0.4%, and will grow 1.4% in 2013. On the housing front in Ireland, a majority of properties bought at auction are all-cash purchases at prices 65% lower than the peak, the Central Bank found.

--According to research outfits IDC and Gartner, PC shipments in the third quarter fell more than 8% from a year earlier, the steepest drop since at least 2001. A combination of rising tablet sales and a sluggish global economy is killing the market. The big drop also can’t be laid solely at the feet of consumers and businesses looking to wait until the launch of Windows 8. Last week, the head of Hewlett-Packard’s PC business said “the core PC market is expected to stay flat, potentially through 2015.”

--Meanwhile, Lenovo (a client of Workday, incidentally) has toppled HP to become the number one PC maker in the world for the first time in its history, according to Gartner. The Chinese company had 15.7 percent of the market in the third-quarter vs. 15.5 percent for HP. IDC, however, said HP still has a slight lead, 15.9 to 15.7. Dell is third in worldwide PC rankings according to both research firms. Acer and Asus of Taiwan round out the top five. I’ve never heard of Asus. I feel so stupid. [I have an Acer laptop these days.]

--Yum Brands, owner of the Taco Bell, Pizza Hut and KFC chains, reported stronger than expected net income for its fiscal third-quarter owing to a fast-growing China division and higher demand in the U.S. 

It was the China comments that caught everyone’s attention, with Yum saying it opened 192 new locations and expects to add at least 750 stores there this year, up from a prior forecast of 700. Yum shares rose on the solid report and forecast. I still wish I had a KFC near my home.

--Foreclosure activity hit a five-year low in September, according to RealtyTrac, another solid sign of a recovering housing market, though no one should get carried away just yet.

--The International Energy Agency forecast a significantly slower increase in oil demand the next five years than previously projected, with demand in developed countries expected to keep contracting while emerging market growth is looking less robust than previously forecast. But geopolitics will continue to play a major role in price, of course.

Iraq is slated to account for 45% of the anticipated growth in global oil supply over the next decade. Should this come to pass, Iraq would overtake both Iran and Venezuela to be the second most influential member of OPEC next to Saudi Arabia. In September, Iraq’s oil exports rose to 2.6m barrels a day, the highest in more than three decades.

-Merck is moving its global headquarters from one location in New Jersey to Summit, right across the street from where your humble editor resides. So this means increased traffic for my Dunkin’ Donuts, among other local retailers, as Merck is adding about 300-400 workers to the existing 1,800.

This was a good week for Summit. It’s also the headquarters of Celgene, which received some great news from the FDA on one of its cancer drugs on Friday. 

--A study of Treasury Secretary Tim Geithner’s diary during an 18-month period by the Financial Times reveals that Geithner called Larry Fink, CEO of financial giant BlackRock, more than the heads of the six largest U.S. banks by assets combined. Just sayin’. Not that anyone is claiming BlackRock received special favors or inside information. [cough cough]

--Digital advertising revenues rose 14% in the first half of the year over year-ago levels, according to an IAB Advertising Report. Search advertising accounts for 47% of the total internet ad pie. Mobile ad revenues, while still small at $661 million, are up 92% from a year ago. [Matthew Flamm / Crain’s New York Business]

--Here’s something that will gross you out. From Nguyen Dien Tu Uyen and William Bi / Bloomberg News:

“At Ngoc Sing Seafoods Trading & Processing Export Enterprise, a seafood exporter on Vietnam’s southern coast, workers stand on a dirty floor sorting shrimp one hot September day. There’s trash on the floor, and flies crawl over baskets of processed shrimp stacked in an unchilled room in Ca Mau.

“Elsewhere in Ca Mau, Nguyen Van Hoang packs shrimp headed for the U.S. in dirty plastic tubs. He covers them in ice made with tap water that the Vietnamese Health Ministry says should be boiled before drinking because of the risk of contamination from bacteria. Vietnam ships 100 million pounds of shrimp a year to the U.S. That’s almost 8 percent of the shrimp Americans eat.”

Said one expert interviewed by Bloomberg, “Those conditions – ice made from dirty water, animals near the farms, pigs – are unacceptable.”

I get shrimp once a week. Now I’ll wonder where it’s from since where I shop it isn’t always labeled like other fish are. Of course I’ve long written that I hate buying farmed fish because it’s disgusting how it’s raised. As in the following…

“At Chen Qiang’s tilapia farm in Yangjiang city in China’s Guangdong province…Chen feeds fish partly with feces from hundreds of pigs and geese. That practice is dangerous for American consumers, says Michael Doyle, director of the University of Georgia’s Center for Food Safety.”

Well, I told you of my experiences in China, driving past all the disgusting duck farms at a time bird flu was prevalent.

“About 27 percent of the seafood Americans eat comes from China,” and the FDA “inspects only about 2.7 percent of imported food.”

I’m sticking with beer made from Rocky Mountain spring water and Chex Mix.

Foreign Affairs

Syria / Turkey: Turkey intercepted a Syrian passenger plane with 37 on board and forced it to land in Ankara. Turkey had received information beforehand that the plane, bound for Damascus from Moscow, was filled with military cargo. After about 24 hours, Turkish Prime Minister Erdogan said officials had discovered “equipment and ammunition (bound for) the Syrian Defense Ministry” from a Russian military supplies producer. Russia said the cargo was a legal shipment of radar equipment. Erdogan said “necessary” steps would be taken following a full investigation of the cargo, though didn’t specify what those steps would be. So now we have a war of words between Russia and the Turks.

Turkey’s Foreign Minister Ahmet Davutoglu said: “We are determined to control weapons transfers to a regime that carries out such brutal massacres against civilians. It is unacceptable that such a transfer is made using our airspace.”

After nine hours, the plane, with all of its passengers, was allowed to leave Ankara.

Meanwhile, shelling between Turkey and Syria continues, this as jihadists flood in from the Gulf and the Caucasus. It is deeply disturbing that the “rebels” are using suicide car bombs as a weapon. [A jihadist group was responsible for blowing up the government’s Air Force Intelligence complex in Harasta, and on Friday, Al-Jazeera reported an extremist group with ties to al-Qaeda captured a government missile defense base loaded with a large quantity of missiles.]  

Because the Obama administration refused to get involved at the start of the conflict and establish safe zones, working hand in hand with Turkey, the civil war has gotten away from us and the United States will have little influence over the government that eventually emerges when Bashar Assad is taken out.

David Ignatius of the Washington Post made it into Syria to file a report from Aleppo.

“(A scene from here) captured several basic facts about the war in Syria, which is pulverizing a city that in calmer days was one of the jewels of the Arab world. First, there aren’t enough weapons for the rebels to defeat Assad’s forces, and almost every Syrian I talked to thinks this is America’s fault; second, the commanders of the Free Syrian Army are trying to exercise better command and control over what has been a disorganized, ragtag operation; and third, in this chaotic and under-resourced fight, the power of the Salafist jihadists – who ask only to be martyrs – appears to be growing.”

Fouad Ajami / Wall Street Journal

“As Turkish forces along the Syrian border exchange fire with the army of Bashar Assad, and Syrian refugees pour into Turkey, Prime Minister Recep Tayyip Erdogan, a proud Islamist, might better appreciate the wisdom of Mustafa Kemal Ataturk. The secular founder of modern Turkey advised his countrymen: Look West, leave the old lands of the Ottoman Empire to their feuds and backwardness.

“For Mr. Erdogan, so near the Syrian killing fields in Aleppo and Idlib, there is now no easy way out of this entanglement…. Erdogan warned: ‘We’re not interested in war, but we’re not far from it either.’

“Not far, indeed….NATO recently announced that it has drawn up plans to defend Turkey, a member since 1952, if necessary.

“Damascus and Ankara have been at odds for some time. The rebellions that broke upon the Arab world in 2010-11 presented Mr. Erdogan with a grand temptation. Those countries that had risen in revolt had been old, Ottoman provinces. For centuries, until the end of World War I, Tunisia, Egypt, Libya and even more so neighboring Syria had been ruled from Istanbul. Now the doctrines of Arab nationalism that had guided them have come undone….

“ ‘One has to be ready for war at every moment, if it becomes necessary,’ the Turkish prime minister said recently. ‘If you are not ready, you are not a state and cannot be a nation.’ But Turkey is also a NATO member of long standing. The Turks’ burden in Syria could be eased if NATO established a no-fly zone within Syria. But that would require strong U.S. leadership, which is sorely lacking of late.

“On the face of it, the Turkish state will not be drawn into a war with the Syrian regime. The promise of Mr. Erdogan’s order has been the provision of prosperity for his population. A war that would undermine Turkey’s trade and tourism is anathema to the rulers in Ankara. But it could still come to war, especially if Assad grants the Kurdish terrorist organization, the PKK, sworn enemy of Ankara, free run in Syrian Kurdistan.

“It didn’t have to come to this terrible choice: a big war or acquiescence in the face of Assad’s crimes. A resolute American policy could have toppled the Syrian regime, without boots on the ground. We might have spared the Turks this insoluble dilemma. We surely could have spared the Syrians the bloodletting – some 30,000 lives in 18 months – that wrecked and radicalized their country.”

I hope all the above sounds familiar. It’s why I’ve long said Syria is on Obama. His legacy is shattered.

[One final aside, the U.S. sent 150 military personnel to Jordan, at Amman’s request, to help in the event of an Assad collapse and a rush of refugees across the border, let alone possible smuggling of chemical weapons into the country if the stockpiles are broken into. As for the growing protests in Jordan, as a Muslim Brotherhood member told the Los Angeles Times the other day, “If there are no real reforms on top, there will be chaos. This message is strong and loud, and it is the last message. After that the consequences will be dire.”]

Iran: The Institute for Science and International Security (Isis) said Tehran has the capacity to manufacture enough weapons grade material for a single atomic bomb within two to four months, though it would then need further time to create a nuclear warhead small enough to fit on a missile.

“Iran would thus need many additional months to manufacture a nuclear device suitable for underground testing and even longer to make a reliable warhead for a ballistic missile,” Isis said.

The Isis report is all about “breakout time,” the period between when the Ayatollah, supposedly, gives the ‘go’ signal and the moment Iran conducts a nuclear test.

U.S. officials have long said Iran needs 12 to 18 months to build an atomic weapon if Khamenei gives the order. I love how we just assume between our intelligence and the Israelis’ we will know when Khamenei gives it. Remember, intel didn’t pick up India or Pakistan’s nuclear tests beforehand years ago.

As for the Ayatollah, he told his people this week that when it comes to the sanctions levied on the country, “They are saying that if the [Iranian] nation gives up on their rights to nuclear energy, then the sanctions will end. They are lying.”

Khamenei said the main reason for the banking and oil sanctions was “brutality, spite, and hatred of the Iranian nation.” [Jerusalem Post]

Iran did, according to the Times of London, withdraw 275 elite Quds force troops from Syria due to the economic crisis amid mounting criticism among the people as to the cost of supporting their ally, while on the oil front, the International Energy Agency said Iran’s exports fell to a new low of 860,000 bpd in September, a mammoth decline from the 2.2 million bpd pace of December 2011.

Israel: As I noted last time would be the case, Prime Minister Netanyahu called for early elections, probably next February, or sooner, saying the reason was a failure of his coalition to agree on a budget.

“It is preferable for Israel to have a short election campaign of three months rather than what would effectively end up a yearlong campaign that would damage the Israeli economy.”

The opposition is fragmented and Netanyahu is expected to cruise to victory.

The prime minister wants everyone to believe it is about the economy, but it’s really about building consensus for the coming conflict with Iran.

Separately, Hizbullah leader Sheikh Nasrallah acknowledged his group was responsible for an unarmed drone that entered Israeli airspace before being shot down by Israeli Defense Forces. Air Force Maj-Gen. Amir Eshel told a group of about 100 new officers on Thursday that the intrusion was part of a daily battle being waged against Israel.

“The environment in which we live is changing quickly,” Eshel said. “Part of [the region] rejects our values and our right to exist.

“Now, too, leaders declare their intention to destroy us, while to our north, tens of thousands of people are being butchered and the world is standing on the sidelines.” [Jerusalem Post]

Pakistan: Schoolgirl Malala Yousafzai, 14, was shot in the head and neck by the Taliban after being targeted for speaking out about girls’ education in the Swat Valley in northwestern Pakistan, an area where the Taliban has a heavy presence and opposes school for girls. Malala, at last word, while in critical condition and unconscious, must have had a guardian angel in the form of the Pakistani doctors who miraculously, it seems, saved her life.

This could be a huge moment in Pakistani history, though we need to wait “24 hours.” For now it has united the country like few things have in the recent past. Both government and the media have expressed outrage over the assassination attempt and there is a large reward for the capture of the assassin, while the Taliban is vowing to finish the job.

Malala said in a recent interview: “I realized the importance of education when it was banned in Swat. I wanted to be able to attend school again. I wished for peace in Swat and that I could go to school.”

Can the women of Pakistan keep up the demonstrations against the Taliban that we’ve seen since Malala was shot? What impact will this all have on the wives of the Taliban? Unfortunately, as one analyst with the London School of Economics told USA TODAY:

“The news (Taliban) supporters get is probably filtered through the Taliban sources so in some sense this girl may have been made out to be a monster or sort of a Western agent,” said S. Athat Hussain. “At the same time, it was a show of force (by the Taliban) to say they can control people and for even a small disagreement with them, they can take revenge. It was demonstrating to the government and the public how powerful they are.”

Light a candle for Malala. The women and children of Pakistan deserve the widespread support of the American people. Writing in the Washington Post this week, Laura Bush offered:

“Speaking out after an atrocious act…isn’t enough. Malala inspires us because she had the courage to defy the totalitarian mind-set others would have imposed on her. Her life represents a brighter future for Pakistan and the region. We must speak up before these acts occur…and keep our courage to continue to resist the ongoing cruelty and barbarism of the Taliban. Malala Yousafzai refused to look the other way. We owe it to her courage and sacrifice to do the same.”

Libya: To show you what a mess this place is, Libyan lawmakers dismissed the first democratically chosen prime minister on Sunday after a whopping four weeks on the job. So Libya faces its first constitutional crisis. Currently, the speaker of parliament, Mohamed Megriaf, serves as the president or head of state.

Meanwhile, militias are laying siege to various parts of the country, such as Bani Walid, where Gaddafi loyalists are holed up.

As for the Congressional investigation into the Benghazi attack on the U.S. Embassy that killed Ambassador Chris Stevens and three other Americans, the State Department acknowledged it rejected appeals for more security as State trotted out some bumbling idiots to try to defend the move, as well as the initial press statements that an anti-Islamic video was to blame for the coordinated attack by what we all know now (and I knew from the start) was an al-Qaeda linked group.

Editorial / Wall Street Journal

“For more than a week afterwards, Obama Administration officials said the attacks were the result of a demonstration triggered by anger over a YouTube video, as were protests earlier in the day in Cairo. ‘What happened in Benghazi was in fact initially a spontaneous reaction to what had just transpired hours before in Cairo, almost a copycat of the demonstrations against our facility in Cairo, prompted by the video,’ said U.S. Ambassador to the United Nations Susan Rice on September 16 on NBC’s ‘Meet the Press.’

“On Tuesday night, a State Department official said, ‘That was not our conclusion.’…

“The State Department denied repeated requests to improve security at the Libyan mission. It kept the consulate in Benghazi open after Britain and the Red Cross had pulled out of the city after security deteriorated this year. No special security measures were in place for the anniversary of 9/11.

“Lt. Col. Wood said he had argued to extend his team’s tour in Libya but was pulled out in August. The State Department approved a 30% ‘danger pay’ bonus for Americans working in Libya, but it turned down an Embassy request to keep a DC-3 plane in the country for security support.

“Eric Nordstrom, a State official who was the regional security officer in Libya until June, told the committee about a ‘complete and total absence of planning’ for security….

“Oversight and Government Reform Chairman Darrell Issa has forced the Administration to start to answer for this stunning and deadly assault on U.S. sovereign soil in Libya, but a lot of questions demand further investigation….

“The most immediate question concerns the Administration’s response, and this is where electoral politics deserves to come in. Ms. Rice has defended her false and misleading statements by saying she was reading off a script prepared by U.S. intelligence – apparently a script not shared with the State Department she formally reports to….

“In a campaign speech Monday night, President Obama kept at it, saying that ‘al Qaeda is on its heels and Osama bin Laden is no more.’ The second half of the sentence is true. But the more we learn about what happened in Benghazi, the more the first sounds like fantasy, and the less Americans can trust this White House to tell them the truth.”

WIR…3/24/12…I said the following of Susan Rice:

“This is truly pathetic. The U.N. Security Council endorsed former U.N. Secretary General Kofi Annan’s six-point peace plan on Wednesday and U.S. ambassador Susan Rice proclaimed, ‘Annan’s proposal is the best way to put an end to the violence, facilitate much-needed humanitarian assistance and advance a Syrian-led political transition.’

“Susan Rice is one of the all-time lightweights. She is not qualified for this job in any fashion at this particular dangerous time in world history.”

Egypt: Mohammed Mursi has been president for 100 days and on Friday, the largest demonstrations against his regime broke out as protesters criticized his attempts to remove the country’s top prosecutor, while at the same time there was the acquittal of 24 accused of attacks on protesters during last year’s uprising. Supporters of Mursi then attacked the protesters and all hell has broken loose.

Afghanistan: The head of the International Committee of the Red Cross warned he was “filled with concern” after seven years in Afghanistan and that hope for the future had been “steadily declining.” Reto Stocker said that since he arrived in 2005, “local armed groups have proliferated, civilians have been caught between not just one but multiple front lines, and it has become increasingly difficult for ordinary Afghans to obtain healthcare.”

The same day, the senior Afghan analyst for the International Crisis Group, Candace Rondeaux, said: “There is a real risk that the regime in Kabul could collapse upon NATO’s withdrawal in 2014. The window for remedial action is closing fast.”

Not that these conclusions are any surprise, but it’s also clear the 2014 presidential election in Afghanistan, the vote to replace Hamid Karzai, is going to be a disaster and will be the launching point for the coming civil war.

And here’s a story from AFP and the Sydney Morning Herald that is sickening.

“Two schoolchildren, including a nine-year-old girl, have been shot dead by militants in Afghanistan after their father refused to quit his job as a policeman, officials say.

“Henna and her 16-year-old brother Zelgai were killed by two gunmen on motorcycles late on Saturday (Oct. 6) while in their father’s car in Ghazni province, in the south of the country.

“ ‘They were playing inside my car, and the Taliban maybe thought it was me in the car. They opened fire at the car and killed my children,’ the father, Zalmai, said on Sunday.

“He said the Taliban had warned him several times in the past that his family would be at risk if he did not leave his job.”

China: Incoming leader Xi Jinping, who will replace Hu Jintao as president, faces economic malaise and deepening unrest, according to a think tank that is known to supply government leaders with policy blueprints.

“There is a potential crisis in China’s model for economic growth,” said a paper from Strategy and Reform.

“The next decade might be the last opportunity for actively pursuing reform, and we should treasure this last chance.

“China is confronting a perilous jump, one that it can neither hide from nor avoid no matter what.”

The Party Congress is still slated for Nov. 8, just days after our election.

North/South Korea: Pyongyang said it felt freer to test-fire long-range ballistic missiles now that Washington is allowing Seoul to increase its ballistic missile reach, putting all of the North within its range.

At the same time, the agreement between the U.S. and the South, would put Russia, China and Japan within range as well, which is bound to ratchet up tensions when relatively small disputes pop up, like territorial ones over piles of rock.

Venezuela: Hugo Chavez won reelection in defeating his challenger, Henrique Capriles, 54-45, in what appears to have been a relatively clean vote. Capriles was gracious in defeat.

So after 14 years in power, Hugo gets another six though who knows if he’ll even last one given the state of his health; Chavez, however, saying he is cancer free these days. Chavez tapped a former bus driver and union activist, Nicolas Maduro, to be his next vice president, meaning probable successor. 

Here’s what I care about. Hizbullah has long had sanctuary in Venezuela. Iran has a friend just a two-hour flight from the U.S.

And boo to Argentine President Cristina Fernandez de Kirchner, another pain in the ass, who tweeted of Chavez’s win: “Your victory is our victory! And the victory of South America and the Caribbean!” [BBC News]

Oh brother.

Russia: One of the three members of the punk group Pussy Riot was released from prison with a Moscow judge suspending her verdict and putting her on probation after a new lawyer for the defense argued the girl had not taken part in the protest inside Moscow’s Christ the Savior Cathedral. 

So the lawyer’s name is Irina Khrunova. I’m going to keep it handy in case I get back to Moscow and need legal help. Clearly, Irina is good. Very, very good.

And Vladimir Putin turned 60 last Saturday. I’m standing by my prediction he doesn’t last the year.

Meanwhile, a Russian state TV expose garnered a lot of publicity. It purports to show opposition leader Sergei Udaltsov receiving funds from an ally of Georgian President Mikhail Saakashvili.    Other opposition figures such as Alexei Navalny have faced various legal problems since initiating an aggressive anti-Putin campaign.

One political analyst told the Moscow Times, however, that it was unclear if the footage in the documentary, “Anatomy of a Protest 2,” was doctored. [Of course it was.]

Speaking of Georgia, new Prime Minister Bidzina Ivanishvili unveiled his Cabinet and the new foreign minister is Maia Panjikidze. So let’s practice these two names over the weekend while drinking some good Georgian wine, shall we? 

By the way, when you show up at Georgia’s Tbilisi airport, after the immigration official hands you back your passport you receive a bottle of red wine, packed in a crimson gift box and stamped: “Welcome to the Land of 8,000 Vintages.” [So I read this week.]

Mexico: Top Zetas drug cartel leader Heriberto Lazcano was apparently killed in a firefight, a major coup for President Felipe Calderon as he prepares to turn over power, but get this. After officials fingerprinted and photographed the body, they handed it over to local authorities and transported it to a funeral parlor, from which gunmen promptly showed up and seized the body; thus depriving the government of being able to parade the body before the world’s media. Sounds like something Homer Simpson would have been involved in.

Random Musings

--Various polls:

RealClearPolitics weighted average of national polls has Romney now with a 47-46 lead.

Reuters/Ipsos national survey of likely voters has Romney ahead 45-44.

Pew Research Center national poll has Romney ahead 49-45. In mid-Sept. it was 51-43 Obama. Same survey in Sept. gave Obama the women’s vote 56-38. Now it is 47-47.

Battleground states

Virginia…NBC/Wall Street Journal has Romney now leading 48-47 (previously same poll had it 48-46 Obama). But a new CBS News/New York Times/Quinnipiac University poll in Virginia has it 51-46 Obama.

Florida…NBC/WSJ has it 48-47 Obama.

Ohio…NBC/WSJ has Obama with a 51-45 lead, a slight narrowing. A CNN/ORC survey in the state has Obama leading 51-47. ARG, 48-47 Romney.

Colorado…CBS/NYT/Quinnipiac poll has it 48-47 Romney. ARG has it 50-46 Romney.

New Hampshire…WMUR/UNH has Obama ahead 47-41.
Wisconsin…CBS/NYT/Quinnipiac puts Obama ahead 50-47.

Pennsylvania…Siena has it 43-40 Obama and Susquehanna puts it 47-45 Obama. 

--I subscribe to Army Times as a way of keeping up on things and a Military Times poll of active duty, National Guard and Reserve members has Mitt Romney ahead of Barack Obama 49-24 when respondents were asked, “Which candidate do you believe is sincere about his stated policy positions?”

When asked, “If the presidential election were held today, for whom would you vote?” Romney leads Obama 66-26.

When asked what the most important issues are:

The economy…41%
The candidate’s character…26%
National security…16%
Social issues…7%

--The Veep Debate…opinion…

David Brooks / New York Times

“So it was ‘The Honeymooners’ versus ‘Family Ties’; Ed Norton versus Alex Keating. What we saw Thursday night in the vice-presidential debate wasn’t only an argument about policy, it was a look at two different eras in American family life.

“Vice President Joe Biden, of course, could stand on Neptune and distract attention away from the sun. He entered the Senate in 1973, back when the old Democratic giants from the New Deal era still roamed the earth. Every sentimental tone of voice, every ebullient and condescending grin brought you back to the kitchen tables in working-class Catholic neighborhoods of places like Scranton, Pa., Chicago, San Francisco, Providence, R.I., and Philadelphia.

“That was a time, much more so than now, when there were still regional manners, regional accents and greater distance from the homogenizing influence of mass culture. That was a culture in which emotion was put out there on display – screaming matches between family members who could erupt in chest-poking fury one second and then loyalty until death affection the next.

“Biden gave America the full opera Thursday night, and I suspect there will be as many reactions as there are partisan flavors. Democrats will obviously be cheered by his aggressive, impassioned and offensive performance.

“It will be the crowning irony of the No Drama Obama campaign that it took a man who exudes more drama than a decade of Latin American soap operas to get Democrats out of their funk.

“Biden clearly ended the psychic slide. He took it to Representative Paul Ryan on the inexplicability of the Republican tax plan. He had his best moments on the subjects in which Ryan is strongest, like budgets.

“At the same time, my in-box was filled with a certain number of people who would be happy if they could spend the next few weeks delivering some punches to Biden, and not just Republicans. What do independents want most? They want people who will practice a more respectful brand of politics, who will behave the way most Americans try to behave in their dealings: respectfully, maybe even pausing to listen for a second. To them, Biden will seem like an off-putting caricature of the worst of old-style politics.

“This is not just an issue of manners. It is: How are we going to practice the kind of politics that will help us avert the so-called fiscal cliff? How are we going to balance the crosscutting challenges, like increasing growth while reducing long-term debt?....

“Ryan hails from a different era, not the era of the 1950s diner, but the era of the workout gym….

“This is a generation armed with self-awareness. In this generation, you roll your eyes at anyone who is quite so flamboyantly demonstrative as the vice president.

“In addition, Ryan was nurtured by the conservative policy apparatus, and he had a tendency Thursday night to talk about policy even when he was asked about character. I would not say he defined a personality as firmly as he might have, but he did an excellent job of demonstrating policy professionalism….

“By the end, voters will have noticed one large irony. Emotionally, Biden dominated the night. Democrats were wondering if the Obama administration was a spent force, too exhausted to carry on. They don’t have to wonder about that anymore. But, substantively, it is the Romney-Ryan proposals that were the center of attention. Some of those proposals are unpopular (Medicare, which was woefully undercovered). Some are popular (taxes). But most of the discussion was on Romney plans because the other side just doesn’t have many.

“This was a battle of generations. The age difference was the undercurrent of every exchange. The older man had the virility, but, in a way, that will seem antique to many.”

Editorial / Wall Street Journal

“So now we know what Team Obama’s comeback plan was following last week’s defeat in the Presidential debate. Unleash Joe Biden to interrupt, filibuster, snarl, smirk and otherwise show contempt for Paul Ryan. The carnival act contributed to the least illuminating presidential or vice presidential debate of our lifetimes.

“From the opening bell, Mr. Biden seemed to take to heart the interpretation that President Obama offered this week of his debate performance – that he had been ‘too polite.’ That was not a problem for the Veep, whose marching orders were clearly to steamroll the overmatched moderator Martha Raddatz and dismiss everything Mr. Ryan said with a condescending sneer.

“By unofficial media counts, Mr. Biden interrupted the Republican some 80 to 100 times. Mr. Ryan let the bully get away with too much for our tastes, at least until he finally pushed back on the interruptions or until Mr. Biden lost steam in the last half hour. But as anyone who’s been in a tavern past midnight understands, it’s hard to win a fight with a guy who is shouting from the corner bar stool….

“(This) 90 minutes wasn’t about an exchange of ideas or a debate over policies. It was a Democratic show of contempt for the opposition, an attempt to claim by repetitive assertion that Messrs. Ryan and Romney are radicals who want to destroy ‘the middle class.’ Mr. Ryan’s cool under assault was a visual rebuttal of that claim, and we certainly know who looked more presidential.”

John Podhoretz / New York Post

“Biden dominated. At every moment, every second, he was the pivot around whom the debate revolved. When he spoke, he mostly yelled, until the last third, when he began to whisper.

“His emotions controlled the mood; when he was supposed to be silent he muttered; when he wasn’t muttering he was grimacing, laughing, rolling his eyes, throwing up his hands.

“He was hot, Ryan was cool. He was aggressive, Ryan was modulated. Biden ate his Wheaties; Ryan had a salad.

“The Democrats needed the jolt they got. Republicans might have gotten a little energized themselves – by just how repugnant they thought Biden’s conduct was.

“Ryan was fine; Biden was something special. I’m not sure that was a good thing.”

Jennifer Rubin / Washington Post

“Sitting side by side at the debate table, Ryan and Biden began with the Benghazi debacle. Biden looked stern, saying he’d get to the bottom of it and find the perpetrators. He then went off topic as soon as possible, migrating to Iran, Iraq and just about anything else. Ryan went back in and laid into Ambassador Susan Rice and President Obama (who went to the U.N. to talk about the anti-Muslim video). Ryan then scored big by telling Biden he was the one who railed to get a status of forces agreement. Biden rebutted, calling Ryan a liar (‘malarkey’). He got grilled by moderator Martha Raddatz as to what he knew and when he knew it; Biden deflected, saying that he was given wrong information by the intelligence community. It was a crash course for the American people in the Benghazi debacle, not a subject that is in any way helpful to the administration.

“As they moved on to Iran, Biden’s habit of smirking and laughing and being dismissive came across as disrespectful, even nasty. Ryan largely ignored the jabs. Ryan patiently laid out the facts on everything from the failure of the sanctions to Obama’s decision to go on a TV show rather than meet with Prime Minister Bibi Netanyahu at the United Nations. Biden sneered back, repeating that Romney-Ryan wanted to start a war. Repeatedly laughing at his opponent, Biden forfeited his likability and whatever stature he held. Ryan pounded away at the Obama administration’s acts of weakness on everything from showing daylight between Israel and the United States to watering down sanctions. Ryan more than held his own; if nothing else, Biden’s demeanor lost him support, I strongly suspect. The split screen replays will be deadly….

“In the closing rounds, Ryan spoke calmly, chiding the president for divisiveness and broken promises. Biden nearly comically told us he never said anything he didn’t mean. Ryan gave a classic closing statement, actually asking viewers for their votes. Biden whined about getting shortened on time. Raddatz must have been exhausted. Any audience members hanging on certainly were.

“It was the most bizarre performance in any debate in my memory. Biden was so obnoxious, so over-the-top, that it is hard to see how independent voters, especially women, would find him tolerable, let alone effective. Arguing with the female moderator, jabbing his finger and constantly interrupting both Raddatz and Ryan, he came across like a bully.”

A CNN flash poll showed 48% giving the edge to Ryan, 44% to Biden. “Saturday Night Live” will have a field day.

--The mother of a former Navy SEAL killed in the Benghazi attack called on Mitt Romney to stop talking about how he had met her son at a Christmas party two or three years ago. I have to admit, I assumed when I saw how he was bringing Glen Doherty up that he had asked for and received permission to do so. Romney used him to enhance his image and show a softer side. Barbara Doherty, Glen’s mother, told a Boston television station that she didn’t trust Romney. “He shouldn’t make my son’s death part of his political agenda.”

Romney spokesman Rick Gorka said: “Gov. Romney was inspired by the memory of meeting Glen Doherty and shared his story and that memory, but we respect the wishes of Mrs. Doherty.”

I’ll tell you why this gets me. Recently I met with an official at a certain corporation to tell them ahead of time that down the road I may be taking certain actions wherein they are named, but that I would never blindside them. It’s just simple courtesy.  

--And so you have President Obama and the Big Bird ad, which accuses Mitt Romney of threatening to cut public funding for Sesame Street, “while failing to promise public vengeance on the Wall Street crooks who prospered during the 2008 banking meltdown,” as an editorial in The Times of London put it. Continuing…

“The trouble with this response to a debate that swiftly erased Mr. Obama’s long-held poll lead is that it reminds voters of a debate that swiftly erased Mr. Obama’s long-held poll lead. It emphasizes how fragile that lead was; reinforces the view that Mr. Obama is not just exhausted but out of touch; and suggests strongly that he has fewer ideas than Mr. Romney on how to bring America back to full employment and make its middle class feel prosperous again.”

--Editorial / New York Post

“Four years ago, presidential nominee Barack Obama told the Democratic National Convention:

“ ‘If you don’t have a record to run on, then you paint your opponent as someone people should run from. You make a big election about small things.’

“Fast-forward to Big Bird – a minuscule issue in a massively significant election.

“Obama can’t seem to find anything else to talk about these days except that outsized piece of puppet poultry.

“That, and how Mitt Romney wants to cut the federal subsidy to PBS.

“As the Republican National Committee notes, Obama has mentioned Big Bird and Tickle Me Elmo no less than 13 times since losing the Denver debate last week [Ed. thru Tuesday]. 

“In the same period, he hasn’t uttered word one about the terrorist attack that took four Americans’ lives in Benghazi….”

--Maureen Dowd / New York Times, Sunday, her first chance to opine on the initial debate.

“When he speaks at rallies, (Obama) doesn’t want the stage cluttered with other officeholders. When he rides in his limo, he isn’t prone to give local pols a lift. He wants to feel that he doesn’t owe his ascension to anyone else – not a rich daddy, not a spouse or father who was president, not even those who helped at pivotal moments. He believes he could do any job in his White House or campaign, from speechwriter to policy director, better than those holding the jobs.

“So Obama knows that he alone is responsible for his unfathomable retreat into his own head while 70 million people watched. He hadn’t been nailing it in debate prep either, taking a break to visit the Hoover Dam, and worried aides knew his head wasn’t in it. When the president realized what a dud he was, he apologized to flummoxed and irritated advisers….

“Even though Obama was urged not to show his pompous side, he arrived at the podium cloaked in layers of disdain; a disdain for debates, which he regards as shams, a venue, as the Carter White House adviser Gerry Rafshoon puts it, where ‘people prefer a good liar to a bad performer.’…

“Just as Poppy Bush didn’t try as hard as he should have because he assumed voters would reject Slick Willie, Obama lapsed into not trying because he assumed voters would reject Cayman Mitt….

“Obama has been coddled by Valerie Jarrett, the adviser who sat next to Michelle at the debate, instead of the more politically strategic choice of local pols and their spouses. Jarrett believes that everyone must woo the prodigy who deigns to guide us, not the other way around….

“His latest fund-raising plea is marked ‘URGENT.’ But in refusing to muster his will and energy, and urgently sell his vision, he underscores his own lapses in leadership and undermines arguments for four more years.”

--A new study from the Pew Research Center shows that 19.6 percent of Americans say they are “nothing in particular,” agnostic or atheist, up from 8 percent in 1990. For the first time, Pew also reported the number of Americans identifying themselves as Protestant dipped below half, at 48 percent. 79 percent, though, identify with an established faith group.

--Edward Luce / Financial Times

“From the Great Lakes to the Rio Grande, a ghoul is stalking America. Sometimes it wears the stars and stripes. At others, it whistles ‘The Star-Spangled Banner.’ It can recite the first amendment backwards. It pretends to love the country but is working against its better angels. Honorable reader, we live in an age of dishonesty, in which politicians distort the words of others and sometimes quote them out of context.

“Can the Republic endure?

“Readers who share my pessimism about the health of U.S. politics might wonder at the sarcasm. Those alarmed about the mental health of the Republican Party may even recoil. Yet there are times when moral sensibility misses the wood for the trees. The 2012 election is one of them

“America’s intelligentsia is in quiet torment about the decline in the quality of public standards. Politicians, such as Mitt Romney, discard and adopt new positions as though in a department store….

“In addition to all the conspiracy talk, consensus is breaking down over the most basic definition of knowledge – America is not just suffering from partisan loathing, it is going through an epistemic crisis. Science is mistaken for faith by many on the right, and evidence for anything – whether it be fiscal policy or a weather forecast – is in the eye of the beholder.”

--The Nobel Peace Prize was awarded to the European Union. You can’t make this [malarkey] up.

--So the other day I’m at my nice A&P supermarket and head back to the large bakery area that I never go through, looking for some Italian bread, and that’s when it hit me…I had no idea how much food was going to waste in this one area, including shelves and shelves of cakes that I’m guessing 90% were never purchased.

So I mention this to fellow A&P shopper Dr. Bortrum and we agree it’s just amazing how much food is wasted in America.

Then on Thursday I get my High Plains Journal, a weekly for the farm community, and there is a story titled:

“America trashes 40 percent of food supply”

“Americans are throwing away 40 percent of food in the U.S., the equivalent of $165 billion in uneaten food each year, according to a new analysis by the Natural Resources Defense Council. In a time of drought and skyrocketing food prices, NRDC outlines opportunities to reduce wasted food and money on the farm, in the grocery store and at home.

“ ‘As a country, we’re essentially tossing every other piece of food that crosses our path – that’s money and precious resources down the drain,’ said Dana Gunders, NRDC project scientist with the food and agriculture program. ‘With the price of food continuing to grow, and drought jeopardizing farmers nationwide, now is the time to embrace all the tremendous untapped opportunities to get more out of our food system. We can do better.’”

NRDC also reported some of the following:

The average American family trashes the equivalent of $2,275 annually in food.

Food waste is the single largest component of solid waste in U.S. landfills.

“Just a 15 percent reduction in losses in the U.S. food supply would save enough food to feed 25 million Americans annually; and…

“There has been a 50 percent jump in U.S. food waste since the 1970s.”

Get this, grocery stores and other retail sellers lose as much as $15 billion annually in unsold fruit and vegetables. I mean half of the fresh produce in the country is lost.

Now admittedly, half of that which is wasted is from both restaurants and home kitchens.

So for starters, while I know many of you are thinking, ‘Yeah, so what? I have bigger issues.’ Take your extra portions from the restaurant home.  

And seriously, there’s nothing wrong with a little government involvement in the form of public service announcements or something like that. The Stop and Shop grocery chain launched an effort on this front and is saving an estimated $100 million a year after analyzing its losses on the fresh produce side in particular.

Now don’t laugh, given the problems it is having these days, but the European Union (through the EU Parliament, which does a lot of bad otherwise), set a goal of reducing food waste 50 percent by 2020. The U.K. adopted a campaign, “Love Food Hate Waste,” that has already contributed to an 18 percent reduction in avoidable food waste.

--Finally, also on the food front, we’ve always known the positive impact of lycopene – an antioxidant found in tomatoes, but in a study published in the Oct. 9 issue of the journal Neurology, not only does a diet that includes tomatoes lower the chance of having a stroke, but I was struck by the following, as reported by the Wall Street Journal’s Jennifer Corbett Dooren.

“A cup of ready-to-serve marinara sauce has more than 31,000 micrograms of lycopene while the average raw tomato has about 3,165 micrograms, according to the USDA. A slice of fast food pizza has 2,074 micrograms of lycopene.”

I’m just surprised at the difference between a raw tomato and a cup of sauce. So I’m making a big plate of pasta later, while hoping my “wild” salmon for Salmon Sunday is actually wild and not from a feces filled fish farm in China or Vietnam.

---

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

God bless America.
---

Gold closed at $1759
Oil, $91.86

Returns for the week 10/8-10/12

Dow Jones -2.1% [13328]
S&P 500 -2.2% [1428]
S&P MidCap -2.1%
Russell 2000 -2.3%
Nasdaq -2.9% [3044]

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

Dow Jones +9.1%
S&P 500 +13.6%
S&P MidCap +11.0%
Russell 2000 +11.1%
Nasdaq +16.8%

Bulls  45.7
Bears 25.5 [Source: Investors Intelligence…correction…last week the bear reading was also 25.5, not the 27.7 I listed…II’s report was confusing. Sorry for the mistake. But…this now means 8 straight weeks with a bear reading between 24.5 and 25.5, which is highly unusual to have this kind of stability. Reminder, it’s treated by most as a contrarian indicator.]

Don’t forget the StocksandNews iPad app. When you care to give her the very best, guys, surprise her with the depressing news found only in Week in Review.

*And next time, a special announcement concerning this site.

Have a great week. I appreciate your support.

Brian Trumbore



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Week in Review

10/13/2012

For the week 10/8-10/12

[Posted 12:00 AM ET]

Europe, China, Wall Street and Cyberterror

“The global economic recovery is on the ropes, battered by political conflicts within and across countries, lack of decisive policy actions, and governments’ inability to tackle deep-seated problems such as unsustainable public finances that are stifling growth.”
--Professor Eswar Prasad of the Brookings Institution [Financial Times]

This was a week where the International Monetary Fund and World Bank held their annual meetings and there were a slew of revisions to worldwide growth. While the IMF and WB have never been the best of forecasters, their projections are important in terms of looking at trends and the trends today continue to look miserable.

For example, the IMF lowered its 2012 global growth forecast to 3.3% from July’s 3.5% estimate and the 2013 outlook from 3.9% to 3.6%. While the United States was raised to 2.2% in 2012, overall, the outlook for the advanced economies’ GDP is up just 1.3% in 2012, 1.5% in 2013.

The IMF projects eurozone GDP will contract this year 0.4% and rise just 0.2% in 2013. Non-euro Britain was lowered to down 0.4% in 2012 from a prior estimate of up 0.2%.

China was lowered to 7.8% in 2012, 8.2% in 2013 (the World Bank has China at 7.7% and 8.2%) which many would take in a heartbeat amid further concerns China is slipping far faster than consensus. China at least had a better PMI on its service sector for September, according to HSBC, 54.3.

But it was a few weeks ago that I mentioned the dangers to the global economy with the growing tensions in the East China Sea between Japan and China and this week Japanese Prime Minister Noda, whose popularity at home is sliding precipitously, urged talks with Beijing over the Senkaku (Diaoyu to the Chinese) islands but China is undergoing a leadership change and Japan could be looking at its 7th prime minister since 2006 if elections are called, as expected, over the coming months.

Noda said, “These are the second and third largest economies in the world and our interdependence is deepening. If our ties cool, particularly economic ones, then it isn’t a question of one or the other country suffering. Both countries lose out.”

A Chinese foreign ministry spokesman said Japan should “correct its wrongdoing of violating China’s sovereignty and return to the track of solving the issue through dialogue and negotiation.” But only dialogue as China sees it.

Japanese companies pour in tons of direct investment into China, $5.1 billion in the first eight months of 2012, second only to Hong Kong.

An IMF official said, “If the territorial dispute escalates further, it could become a risk for both Japan and China’s economies, and eventually for the global economy.” As discussed below, and over the past few weeks, Japan is already suffering.

Japan won’t compromise on its ownership claim when it comes to the Senkaku islands. China calls this “outrageous.”

China, in a snit, decided to snub the IMF and World Bank meetings because they were being held in Tokyo. Very mature, guys. Japan’s foreign minister, Koichiro Gemba, said China’s non-attendance was “not only bad for Japan-China relations, but also for the global economy. I believe it also won’t be a plus for China, considering how the international community will view such moves.”

Plus you have the trade disputes between the United States and China, such as the latest effort on the part of Washington to hit the Chinese solar industry with steep duties, which elicited the following from a Chinese Commerce Ministry spokesman: “The United States is provoking trade friction in the new energy sector, and sending a negative signal to the world that stirs global trade protectionism and obstructs the sector’s developments.” No doubt, China is dumping solar cells and panels onto the U.S. market but it’s the tit-for-tat that threatens to get out of control.

As for Europe, the latest EU summit takes place next Thursday and Friday and the issue of a single bank supervisor, once viewed so favorably last June, is now in disarray. The odds of coming up with a system built around this concept by the hoped for January 1st deadline is nil.

Of course beforehand you still have the immediate concerns of Greece and Spain.

Greece says it will run out of money by the end of November. German Chancellor Angela Merkel visited Athens for the first time in five years to try and buck up the Greeks, only she was met by protesters who despise Germany ever since the Germans demanded the harsh austerity terms, let alone memories of World War II which aren’t about to fade away. So some of those decrying Merkel’s presence on their soil wore Nazi uniforms.

At a joint news conference, Greek Prime Minister Antonis Samaras said: “The visit of Angela Merkel proves that we are ending the international isolation that we have been experiencing because of our mistakes…I told the Chancellor that the Greek people are bleeding at the moment but are determined to stay within the eurozone and win the battle. It has been recognized by everyone that Greece has turned a page and that its image has been changed…So anybody who has bet on a Greek collapse and misfortune will lose that bet.”

For her part, Merkel, knowing that Greece must receive the next 31.5 billion tranche of its bailout or its bye-bye euro, said she did not come to Athens as a “taskmaster” but as a “partner, friend, fellow member of the EU and eurozone and member of NATO….I have full and firm awareness that the period Greece is going through is especially difficult for the people of Greece and many are suffering. But much of the path is behind you. We witness on a daily basis that you are making progress. Although this is a difficult path it will prove worthwhile.”

But then Merkel said, “(The) problems arose over many years and cannot be tackled with the wave of a magic wand.”

In other words, don’t expect any breaks in the demands we have already laid down if you want to continue to receive funding.

But while Merkel was playing both sides, the IMF’s Christine Lagarde said Greece should get two more years to meet its fiscal targets, while at the same time the IMF indicated it won’t be supplying Greece with anymore aid. All this while the troika, the IMF, ECB and EC still haven’t released a final report on whether Greece deserves the 31.5 billion installment (to which the IMF may not even contribute). Confused? You should be. It’s why it remains a joke when people talk of the eurozone being close to a final solution for their crisis. Also notice how none of the above is about growing the region’s economy, which needs to be first and foremost, especially on the periphery.

Oh, and Greece’s unemployment rate hit 25.1%, officially (July, the latest data) and 54% for the 15-24 age category.

In Spain, Prime Minister Mariano Rajoy continues to resist making a formal bailout request, much as everyone on the continent knows Spain needs one. October 21 is the date for key regional elections and as I write, it’s still expected Rajoy will hold off until after the vote.

Spain is falling hopelessly behind its deficit targets as falling tax revenues and rising unemployment benefits make hitting them impossible, none of which was helped by a credit rating downgrade from S&P to one level above junk. Should it fall to junk, then many funds will have to sell their Spanish paper, either due to mandates or Spain’s exit from various bond benchmarks. Moody’s is expected to follow suit by the end of the month. Last Sunday there were protests against austerity in 56 cities across the country.

Germany’s economy is also increasingly under the microscope. Four German think tanks issued a report slashing projected 2013 GDP from 2% to 1%, though at least August exports rose as orders from outside the EU surged (they are up 20% to the U.S. for the first seven months of the year), though current manufacturing trends in Germany are not good.

Speaking before the European parliament in Brussels, Mario Draghi, president of the ECB, warned that capital flight, especially in the periphery (Greece, Spain, Portugal, Italy, as well as parts of Eastern Europe) underscores the need for structural reforms.

“You can’t have a union when you have certain countries that are permanent creditors and a set of countries that are permanent debtors. So part of this rebalancing will be achieved by regaining competitiveness.”

Which is why Draghi touts the ECB’s bond-buying plan – designed to tackle the disparity in interest rates paid by companies in, say, Spain vs. Germany. But Spain hasn’t applied for the help.

Economist Robert Samuelson, writing from his Washington Post perch:

“What we are witnessing in Europe – and what may loom for the United States – is the exhaustion of the modern social order. Since the early 1800s, industrial societies rested on a marriage of economic growth and political stability. Economic progress improved people’s lives and anchored their loyalty to the state. Wars, depressions, revolutions and class conflicts interrupted the cycle. But over time, prosperity fostered stable democracies in the United States, Europe and parts of Asia. The present economic crisis might reverse this virtuous process. Slower economic expansion would feed political instability and vice versa. This would be a historic and ominous break from the past.”

Samuelson then brings up a paper by economist Robert Gordon of Northwestern University who speculates that productivity increases have peaked.

“Gordon identifies three industrial ‘revolutions.’ The first began in England around 1750 and featured cotton spinning, the steam engine and railroads. The second, dating from 1870 to 1900, was the most significant and involved the harnessing of electricity, the invention of the internal combustion engine and the advent of indoor plumbing with running water. These, he contends, triggered other advances: appliances, highways, suburbs, airplanes, elevators and modern communications (telephones, televisions).

“Gordon is less impressed with the third revolution: computers, starting around 1960 when big companies first used ‘mainframes.’ True, they automated airline reservations, banking transactions and clerical work. Secretaries ‘began to disappear.’ More recently, e-commerce has exploded. But Gordon sees the Internet, smartphones and tablets as tilted toward entertainment, not labor-saving. High productivity gains from cybertechnologies ‘had faded away by 2004,’ he argues.

“Technological innovation, though faltering, will continue, Gordon writes. Think more driverless cars and new cancer drugs. But he argues that the effects on average American living standards will be muted. Less-skilled workers from lackluster schools will cut productivity and wage growth further. Greater inequality will steer some gains to the wealthy. Higher taxes to cover budget deficits and transfers to the elderly will squeeze take-home pay. Health insurance costs (which he does not mention) would do the same. Though not preordained, Gordon’s prophecies suggest a long era of stunted economic growth.”

Super.

The news from Wall Street was so-so as the first few earnings reports trickled in. Alcoa led off and while it beat earnings expectations, its guidance was murky and the company cut its global consumption outlook for aluminum by 1 percent, citing China. JPMorgan Chase handily beat Wall Street’s estimates as CEO Jamie Dimon, noting a surge in mortgage business, said “we believe the housing market has turned the corner.” Wells Fargo, on the other hand, disappointed.

The Federal Reserve’s Beige Book of regional economic activity noted the “fiscal cliff,” the combination of tax increases and spending cuts looming first of the year unless Congress acts beforehand, is restraining hiring, a fact backed up by a survey from the Manufacturers Alliance for Productivity and Innovation, a research group, that found 17% of executives had reduced or shelved capital investments because of yearend concerns.

A Wall Street Journal survey of 48 economists projects that the current 7.8% official jobless rate will remain as is through June of 2013, while GDP in the first half will be below 2%. So zero improvement…just more stagnation.

And on Friday, the Treasury Department said the budget deficit for fiscal 2012 came in at $1.089 trillion, call it $1.09T, down from $1.3 trillion in 2011 but nonetheless the fourth straight $1 trillion+ deficit under President Obama. Congratulations, Mr. President. Amazing consistency.

Revenues did pick up 6.4% and spending was down, owing to the unwinding of the war in Iraq. But total government debt is now at $16.119 trillion, just shy of the statutory borrowing limit of $16.394 trillion, so we hit this end of December. Just in time for New Year’s festivities.

Finally, U.S. Defense Secretary Leon Panetta warned in a speech on Thursday that the United States faces a cyberattack that could “paralyze the nation,” using the starkest language yet of any member of the Obama administration when it comes to the threat posed by the enemies of the U.S. Panetta added that before Sept. 11, 2001, the warning had been there, but “we weren’t organized, we weren’t ready and we suffered terribly for that.”

“We cannot let that happen again. This is a pre-9/11 moment. The attackers are plotting. Our systems will never be impenetrable, just like our physical defenses are not perfect, but more can be done to improve them.”

Painting the worst scenario, he said an “aggressor nation or extremist group” could gain control of critical switches and derail passenger trains or freight trains loaded with lethal chemicals.

“The most destructive scenarios involve cyber actors launching several attacks on our critical infrastructure at once, in combination with a physical attack on our country,” Panetta continued.

“The collective result of these kinds of attacks could be a ‘cyber Pearl Harbor,’ an attack that would cause physical destruction and loss of life, paralyze and shock the nation and create a profound sense of vulnerability,” he warned.

And, while not directly linking Iran to recent cyberattacks that devastated Persian Gulf oil and gas companies (Aramco lost 30,000 computers due to the Shamoon virus), Panetta said Tehran has “undertaken a concerted effort to use cyberspace to its advantage,” concluding in part:

“Potential aggressors should be aware that the United States has the capacity to locate them and hold them accountable for actions that harm America or its interests.”

The message was clear to Tehran. We know who you are. Watch it.

Street Bytes

--Stocks had their worst week in four months, the third losing one in the last four, as concerns over global growth, particularly in Europe and China, as well as a soft earnings picture trumped anything monetary authorities are doing worldwide on the stimulus front (or the best Univ. of Michigan consumer confidence figure in five years).

The Dow Jones fell 2.1% to 13328, the S&P 500 declined 2.2% and Nasdaq tumbled 2.9%.

Tuesday, Oct. 9, marked the five- and ten-year anniversaries of market cycle lows and historic highs.

A look back at some key benchmarks.

S&P 500

3/24/00…1527 [then all-time high]
10/9/02…..776
10/9/07…1565 [new all-time high]
3/9/09……676
10/12/12…1428

Nasdaq

3/10/00…5048 [all-time high]
10/9/02…1114
10/9/09…2803
3/9/09…..1268
10/12/12…3044

Dow Jones

1/14/00…11722 [then all-time high]
10/9/02…..7286
10/9/07…14164 [new all-time high]
3/9/09……6547
10/12/12…13328

Tokyo Nikkei

3/24/00…19958
10/9/02…..8539
10/9/07…17159
3/9/09……7086
10/12/12…8534

I include the Japanese market because many believe this is where the United States is headed, prolonged periods of stagnation. And a reminder…back on 12/29/89, the Nikkei hit its all-time high of 38916.

--U.S. Treasury Yields

6-mo. 0.15% 2-yr. 0.26% 10-yr. 1.66% 30-yr. 2.83%

The long end of the curve rallied anew on the punk outlook from the IMF, the ongoing uncertainty regarding the eurozone, and flat out buying of Treasuries by our Federal Reserve, ‘cuz that’s what they do these days, sports fans.

The producer price index for September showed an increase of 1.1%, but ex-food and energy the PPI was unchanged. For the last 12 months, the PPI is up 2.1% and up 2.3% on core. Next week consumer prices.

--The House Intelligence Committee concluded following an investigation into Chinese telecom equipment makers Huawei Technologies and ZTE that U.S. companies should avoid doing business with the two, or risk being the target of Chinese cyber-espionage. Panel chairman Republican Mike Rogers said Canada was also at risk, so Ottawa indicated a day later that it would exclude Huawei from developing major government communications systems alongside domestic operators Telus and Bell Canada. At the same time, the Canadian government continues to review CNOOC’s (China National Offshore Oil Corporation) $15.1 billion takeover of Calgary-based oil and gas producer Nexen.

A draft report from the House said in part: “The Committee…received internal Huawei documentation from former Huawei employees showing that Huawei provides special network services to an entity the employee believes to be an elite cyberwarfare unit within the PLA [People’s Liberation Army].”

The two largest U.S. telecom companies, AT&T and Verizon, don’t use Huawei equipment in their networks. Two years ago, Sprint excluded Huawei and ZTE from a mega contract owing to national-security concerns in Washington.

For its part, Huawei, which was also featured in a report last Sunday on “60 Minutes,” said the House committee’s actions were little more than China-bashing, with a spokesman adding, “The political agenda was one of poking China in the eye and holding hostage an innocent, independent, employee-owned company.”

A spokesman for China’s commerce ministry said the U.S. report “violated its long-held free-market principles and would undermine cooperation and development between the two countries.”

--The government sued Wells Fargo & Co., charging the nation’s largest mortgage lender with running a decade-long mortgage fraud program involving “reckless” lending and bilking the Federal Housing Administration (FHA) of “hundreds of millions of dollars,” a bill footed by taxpayers. The suit alleges Wells knowingly hid 6,000 suspect loans from 2002 to 2010, resulting in the claims being paid out by the FHA. The government will no doubt extract a penalty in the $hundreds of millions.

--Business-software company Workday Inc. priced its IPO at $28, $637 million, the largest tech offering since Facebook, and then saw its first-day price soar to nearly $49 at the close on Friday. Workday was priced above expectations largely due to the fact four IPOs offered Thursday surged 20% in their first day of trading; Realogy Holdings Corp., Shutterstock Inc., Intercept Pharmaceuticals Inc., and Kythera Biopharmaceuticals Inc. According to the Wall Street Journal, it was the first time since December 2000 that four IPOs booked similar gains simultaneously.

Workday was co-founded by David Duffield, who ran PeopleSoft before Oracle moved in in a 2004 hostile takeover. A longtime friend of mine is an employee of Workday and, seeing as how I’ve also never been a fan of Larry Ellison, you’ll have to excuse my cheerleading for Workday from time to time.

--Japanese mobile phone company Softbank is in takeover talks with Sprint Nextel, which if it went through would make Softbank one of the world’s three biggest mobile operators. Softbank is also supposedly looking at another U.S. operator, MetroPCS Communications. 

Softbank is looking to buy as much as 70% of Sprint, according to some reports, and should the deals go through they would be the biggest overseas acquisitions by a Japanese company, but shares in Softbank fell sharply on the news as shareholders of that company were none too pleased about the prospects of adding a lot of debt.

--Merger talks between European defense giants BAE Systems and EADS fell apart, with Germany, specifically Chancellor Angela Merkel, being blamed by many for the collapse owing to a disagreement between the French and German governments, who control 45 percent of the shares of EADS.

Separately, U.K.-based BAE said U.S. spending cuts in the sector cloud the outlook for the company; BAE receiving 40% of its revenues from the Pentagon.

--Toyota announced it was recalling a whopping 2.5 million vehicles in the U.S. (another 5 million globally) to fix a faulty power window switch amid several hundred reports of smoke and fire. Apparently, the National Highway Traffic Safety Administration opened up a probe into the problem four months ago. It’s a big blow to Toyota, which was just beginning to recover from the tsunami and earthquake, let alone damage from a 2010 sudden acceleration issue that panicked drivers. The U.S. recall impacts vehicles such as the Camry from 2007 to 2009.

Separately, Toyota’s September deliveries in China fell 49% from a year ago owing to the above-mentioned territorial dispute between Beijing and Tokyo, while Nissan’s fell 35% and Honda’s 41%.

--Passenger car sales overall in China fell 0.3% in September from a year earlier, according to the China Association of Automobile Manufacturers. They had risen 7.9% in August.

--Gambling revenue in Macau for the month of September (ahead of the Golden Week national holiday) rose a worse than expected 12.3%. Revenue was the second weakest this year. The visitor trends are down.

--The IMF reduced its outlook for India’s economy to growth of just 4.9% this year and 6.2% in 2013 vs. previous estimates of 6.2% and 6.6%, respectively. Brazil’s projected GDP was lowered from a prior 2.5% for 2012 to just 1.5%.

--The IMF said that Ireland is the only bailout country in the eurozone likely to post any growth this year, 0.4%, and will grow 1.4% in 2013. On the housing front in Ireland, a majority of properties bought at auction are all-cash purchases at prices 65% lower than the peak, the Central Bank found.

--According to research outfits IDC and Gartner, PC shipments in the third quarter fell more than 8% from a year earlier, the steepest drop since at least 2001. A combination of rising tablet sales and a sluggish global economy is killing the market. The big drop also can’t be laid solely at the feet of consumers and businesses looking to wait until the launch of Windows 8. Last week, the head of Hewlett-Packard’s PC business said “the core PC market is expected to stay flat, potentially through 2015.”

--Meanwhile, Lenovo (a client of Workday, incidentally) has toppled HP to become the number one PC maker in the world for the first time in its history, according to Gartner. The Chinese company had 15.7 percent of the market in the third-quarter vs. 15.5 percent for HP. IDC, however, said HP still has a slight lead, 15.9 to 15.7. Dell is third in worldwide PC rankings according to both research firms. Acer and Asus of Taiwan round out the top five. I’ve never heard of Asus. I feel so stupid. [I have an Acer laptop these days.]

--Yum Brands, owner of the Taco Bell, Pizza Hut and KFC chains, reported stronger than expected net income for its fiscal third-quarter owing to a fast-growing China division and higher demand in the U.S. 

It was the China comments that caught everyone’s attention, with Yum saying it opened 192 new locations and expects to add at least 750 stores there this year, up from a prior forecast of 700. Yum shares rose on the solid report and forecast. I still wish I had a KFC near my home.

--Foreclosure activity hit a five-year low in September, according to RealtyTrac, another solid sign of a recovering housing market, though no one should get carried away just yet.

--The International Energy Agency forecast a significantly slower increase in oil demand the next five years than previously projected, with demand in developed countries expected to keep contracting while emerging market growth is looking less robust than previously forecast. But geopolitics will continue to play a major role in price, of course.

Iraq is slated to account for 45% of the anticipated growth in global oil supply over the next decade. Should this come to pass, Iraq would overtake both Iran and Venezuela to be the second most influential member of OPEC next to Saudi Arabia. In September, Iraq’s oil exports rose to 2.6m barrels a day, the highest in more than three decades.

-Merck is moving its global headquarters from one location in New Jersey to Summit, right across the street from where your humble editor resides. So this means increased traffic for my Dunkin’ Donuts, among other local retailers, as Merck is adding about 300-400 workers to the existing 1,800.

This was a good week for Summit. It’s also the headquarters of Celgene, which received some great news from the FDA on one of its cancer drugs on Friday. 

--A study of Treasury Secretary Tim Geithner’s diary during an 18-month period by the Financial Times reveals that Geithner called Larry Fink, CEO of financial giant BlackRock, more than the heads of the six largest U.S. banks by assets combined. Just sayin’. Not that anyone is claiming BlackRock received special favors or inside information. [cough cough]

--Digital advertising revenues rose 14% in the first half of the year over year-ago levels, according to an IAB Advertising Report. Search advertising accounts for 47% of the total internet ad pie. Mobile ad revenues, while still small at $661 million, are up 92% from a year ago. [Matthew Flamm / Crain’s New York Business]

--Here’s something that will gross you out. From Nguyen Dien Tu Uyen and William Bi / Bloomberg News:

“At Ngoc Sing Seafoods Trading & Processing Export Enterprise, a seafood exporter on Vietnam’s southern coast, workers stand on a dirty floor sorting shrimp one hot September day. There’s trash on the floor, and flies crawl over baskets of processed shrimp stacked in an unchilled room in Ca Mau.

“Elsewhere in Ca Mau, Nguyen Van Hoang packs shrimp headed for the U.S. in dirty plastic tubs. He covers them in ice made with tap water that the Vietnamese Health Ministry says should be boiled before drinking because of the risk of contamination from bacteria. Vietnam ships 100 million pounds of shrimp a year to the U.S. That’s almost 8 percent of the shrimp Americans eat.”

Said one expert interviewed by Bloomberg, “Those conditions – ice made from dirty water, animals near the farms, pigs – are unacceptable.”

I get shrimp once a week. Now I’ll wonder where it’s from since where I shop it isn’t always labeled like other fish are. Of course I’ve long written that I hate buying farmed fish because it’s disgusting how it’s raised. As in the following…

“At Chen Qiang’s tilapia farm in Yangjiang city in China’s Guangdong province…Chen feeds fish partly with feces from hundreds of pigs and geese. That practice is dangerous for American consumers, says Michael Doyle, director of the University of Georgia’s Center for Food Safety.”

Well, I told you of my experiences in China, driving past all the disgusting duck farms at a time bird flu was prevalent.

“About 27 percent of the seafood Americans eat comes from China,” and the FDA “inspects only about 2.7 percent of imported food.”

I’m sticking with beer made from Rocky Mountain spring water and Chex Mix.

Foreign Affairs

Syria / Turkey: Turkey intercepted a Syrian passenger plane with 37 on board and forced it to land in Ankara. Turkey had received information beforehand that the plane, bound for Damascus from Moscow, was filled with military cargo. After about 24 hours, Turkish Prime Minister Erdogan said officials had discovered “equipment and ammunition (bound for) the Syrian Defense Ministry” from a Russian military supplies producer. Russia said the cargo was a legal shipment of radar equipment. Erdogan said “necessary” steps would be taken following a full investigation of the cargo, though didn’t specify what those steps would be. So now we have a war of words between Russia and the Turks.

Turkey’s Foreign Minister Ahmet Davutoglu said: “We are determined to control weapons transfers to a regime that carries out such brutal massacres against civilians. It is unacceptable that such a transfer is made using our airspace.”

After nine hours, the plane, with all of its passengers, was allowed to leave Ankara.

Meanwhile, shelling between Turkey and Syria continues, this as jihadists flood in from the Gulf and the Caucasus. It is deeply disturbing that the “rebels” are using suicide car bombs as a weapon. [A jihadist group was responsible for blowing up the government’s Air Force Intelligence complex in Harasta, and on Friday, Al-Jazeera reported an extremist group with ties to al-Qaeda captured a government missile defense base loaded with a large quantity of missiles.]  

Because the Obama administration refused to get involved at the start of the conflict and establish safe zones, working hand in hand with Turkey, the civil war has gotten away from us and the United States will have little influence over the government that eventually emerges when Bashar Assad is taken out.

David Ignatius of the Washington Post made it into Syria to file a report from Aleppo.

“(A scene from here) captured several basic facts about the war in Syria, which is pulverizing a city that in calmer days was one of the jewels of the Arab world. First, there aren’t enough weapons for the rebels to defeat Assad’s forces, and almost every Syrian I talked to thinks this is America’s fault; second, the commanders of the Free Syrian Army are trying to exercise better command and control over what has been a disorganized, ragtag operation; and third, in this chaotic and under-resourced fight, the power of the Salafist jihadists – who ask only to be martyrs – appears to be growing.”

Fouad Ajami / Wall Street Journal

“As Turkish forces along the Syrian border exchange fire with the army of Bashar Assad, and Syrian refugees pour into Turkey, Prime Minister Recep Tayyip Erdogan, a proud Islamist, might better appreciate the wisdom of Mustafa Kemal Ataturk. The secular founder of modern Turkey advised his countrymen: Look West, leave the old lands of the Ottoman Empire to their feuds and backwardness.

“For Mr. Erdogan, so near the Syrian killing fields in Aleppo and Idlib, there is now no easy way out of this entanglement…. Erdogan warned: ‘We’re not interested in war, but we’re not far from it either.’

“Not far, indeed….NATO recently announced that it has drawn up plans to defend Turkey, a member since 1952, if necessary.

“Damascus and Ankara have been at odds for some time. The rebellions that broke upon the Arab world in 2010-11 presented Mr. Erdogan with a grand temptation. Those countries that had risen in revolt had been old, Ottoman provinces. For centuries, until the end of World War I, Tunisia, Egypt, Libya and even more so neighboring Syria had been ruled from Istanbul. Now the doctrines of Arab nationalism that had guided them have come undone….

“ ‘One has to be ready for war at every moment, if it becomes necessary,’ the Turkish prime minister said recently. ‘If you are not ready, you are not a state and cannot be a nation.’ But Turkey is also a NATO member of long standing. The Turks’ burden in Syria could be eased if NATO established a no-fly zone within Syria. But that would require strong U.S. leadership, which is sorely lacking of late.

“On the face of it, the Turkish state will not be drawn into a war with the Syrian regime. The promise of Mr. Erdogan’s order has been the provision of prosperity for his population. A war that would undermine Turkey’s trade and tourism is anathema to the rulers in Ankara. But it could still come to war, especially if Assad grants the Kurdish terrorist organization, the PKK, sworn enemy of Ankara, free run in Syrian Kurdistan.

“It didn’t have to come to this terrible choice: a big war or acquiescence in the face of Assad’s crimes. A resolute American policy could have toppled the Syrian regime, without boots on the ground. We might have spared the Turks this insoluble dilemma. We surely could have spared the Syrians the bloodletting – some 30,000 lives in 18 months – that wrecked and radicalized their country.”

I hope all the above sounds familiar. It’s why I’ve long said Syria is on Obama. His legacy is shattered.

[One final aside, the U.S. sent 150 military personnel to Jordan, at Amman’s request, to help in the event of an Assad collapse and a rush of refugees across the border, let alone possible smuggling of chemical weapons into the country if the stockpiles are broken into. As for the growing protests in Jordan, as a Muslim Brotherhood member told the Los Angeles Times the other day, “If there are no real reforms on top, there will be chaos. This message is strong and loud, and it is the last message. After that the consequences will be dire.”]

Iran: The Institute for Science and International Security (Isis) said Tehran has the capacity to manufacture enough weapons grade material for a single atomic bomb within two to four months, though it would then need further time to create a nuclear warhead small enough to fit on a missile.

“Iran would thus need many additional months to manufacture a nuclear device suitable for underground testing and even longer to make a reliable warhead for a ballistic missile,” Isis said.

The Isis report is all about “breakout time,” the period between when the Ayatollah, supposedly, gives the ‘go’ signal and the moment Iran conducts a nuclear test.

U.S. officials have long said Iran needs 12 to 18 months to build an atomic weapon if Khamenei gives the order. I love how we just assume between our intelligence and the Israelis’ we will know when Khamenei gives it. Remember, intel didn’t pick up India or Pakistan’s nuclear tests beforehand years ago.

As for the Ayatollah, he told his people this week that when it comes to the sanctions levied on the country, “They are saying that if the [Iranian] nation gives up on their rights to nuclear energy, then the sanctions will end. They are lying.”

Khamenei said the main reason for the banking and oil sanctions was “brutality, spite, and hatred of the Iranian nation.” [Jerusalem Post]

Iran did, according to the Times of London, withdraw 275 elite Quds force troops from Syria due to the economic crisis amid mounting criticism among the people as to the cost of supporting their ally, while on the oil front, the International Energy Agency said Iran’s exports fell to a new low of 860,000 bpd in September, a mammoth decline from the 2.2 million bpd pace of December 2011.

Israel: As I noted last time would be the case, Prime Minister Netanyahu called for early elections, probably next February, or sooner, saying the reason was a failure of his coalition to agree on a budget.

“It is preferable for Israel to have a short election campaign of three months rather than what would effectively end up a yearlong campaign that would damage the Israeli economy.”

The opposition is fragmented and Netanyahu is expected to cruise to victory.

The prime minister wants everyone to believe it is about the economy, but it’s really about building consensus for the coming conflict with Iran.

Separately, Hizbullah leader Sheikh Nasrallah acknowledged his group was responsible for an unarmed drone that entered Israeli airspace before being shot down by Israeli Defense Forces. Air Force Maj-Gen. Amir Eshel told a group of about 100 new officers on Thursday that the intrusion was part of a daily battle being waged against Israel.

“The environment in which we live is changing quickly,” Eshel said. “Part of [the region] rejects our values and our right to exist.

“Now, too, leaders declare their intention to destroy us, while to our north, tens of thousands of people are being butchered and the world is standing on the sidelines.” [Jerusalem Post]

Pakistan: Schoolgirl Malala Yousafzai, 14, was shot in the head and neck by the Taliban after being targeted for speaking out about girls’ education in the Swat Valley in northwestern Pakistan, an area where the Taliban has a heavy presence and opposes school for girls. Malala, at last word, while in critical condition and unconscious, must have had a guardian angel in the form of the Pakistani doctors who miraculously, it seems, saved her life.

This could be a huge moment in Pakistani history, though we need to wait “24 hours.” For now it has united the country like few things have in the recent past. Both government and the media have expressed outrage over the assassination attempt and there is a large reward for the capture of the assassin, while the Taliban is vowing to finish the job.

Malala said in a recent interview: “I realized the importance of education when it was banned in Swat. I wanted to be able to attend school again. I wished for peace in Swat and that I could go to school.”

Can the women of Pakistan keep up the demonstrations against the Taliban that we’ve seen since Malala was shot? What impact will this all have on the wives of the Taliban? Unfortunately, as one analyst with the London School of Economics told USA TODAY:

“The news (Taliban) supporters get is probably filtered through the Taliban sources so in some sense this girl may have been made out to be a monster or sort of a Western agent,” said S. Athat Hussain. “At the same time, it was a show of force (by the Taliban) to say they can control people and for even a small disagreement with them, they can take revenge. It was demonstrating to the government and the public how powerful they are.”

Light a candle for Malala. The women and children of Pakistan deserve the widespread support of the American people. Writing in the Washington Post this week, Laura Bush offered:

“Speaking out after an atrocious act…isn’t enough. Malala inspires us because she had the courage to defy the totalitarian mind-set others would have imposed on her. Her life represents a brighter future for Pakistan and the region. We must speak up before these acts occur…and keep our courage to continue to resist the ongoing cruelty and barbarism of the Taliban. Malala Yousafzai refused to look the other way. We owe it to her courage and sacrifice to do the same.”

Libya: To show you what a mess this place is, Libyan lawmakers dismissed the first democratically chosen prime minister on Sunday after a whopping four weeks on the job. So Libya faces its first constitutional crisis. Currently, the speaker of parliament, Mohamed Megriaf, serves as the president or head of state.

Meanwhile, militias are laying siege to various parts of the country, such as Bani Walid, where Gaddafi loyalists are holed up.

As for the Congressional investigation into the Benghazi attack on the U.S. Embassy that killed Ambassador Chris Stevens and three other Americans, the State Department acknowledged it rejected appeals for more security as State trotted out some bumbling idiots to try to defend the move, as well as the initial press statements that an anti-Islamic video was to blame for the coordinated attack by what we all know now (and I knew from the start) was an al-Qaeda linked group.

Editorial / Wall Street Journal

“For more than a week afterwards, Obama Administration officials said the attacks were the result of a demonstration triggered by anger over a YouTube video, as were protests earlier in the day in Cairo. ‘What happened in Benghazi was in fact initially a spontaneous reaction to what had just transpired hours before in Cairo, almost a copycat of the demonstrations against our facility in Cairo, prompted by the video,’ said U.S. Ambassador to the United Nations Susan Rice on September 16 on NBC’s ‘Meet the Press.’

“On Tuesday night, a State Department official said, ‘That was not our conclusion.’…

“The State Department denied repeated requests to improve security at the Libyan mission. It kept the consulate in Benghazi open after Britain and the Red Cross had pulled out of the city after security deteriorated this year. No special security measures were in place for the anniversary of 9/11.

“Lt. Col. Wood said he had argued to extend his team’s tour in Libya but was pulled out in August. The State Department approved a 30% ‘danger pay’ bonus for Americans working in Libya, but it turned down an Embassy request to keep a DC-3 plane in the country for security support.

“Eric Nordstrom, a State official who was the regional security officer in Libya until June, told the committee about a ‘complete and total absence of planning’ for security….

“Oversight and Government Reform Chairman Darrell Issa has forced the Administration to start to answer for this stunning and deadly assault on U.S. sovereign soil in Libya, but a lot of questions demand further investigation….

“The most immediate question concerns the Administration’s response, and this is where electoral politics deserves to come in. Ms. Rice has defended her false and misleading statements by saying she was reading off a script prepared by U.S. intelligence – apparently a script not shared with the State Department she formally reports to….

“In a campaign speech Monday night, President Obama kept at it, saying that ‘al Qaeda is on its heels and Osama bin Laden is no more.’ The second half of the sentence is true. But the more we learn about what happened in Benghazi, the more the first sounds like fantasy, and the less Americans can trust this White House to tell them the truth.”

WIR…3/24/12…I said the following of Susan Rice:

“This is truly pathetic. The U.N. Security Council endorsed former U.N. Secretary General Kofi Annan’s six-point peace plan on Wednesday and U.S. ambassador Susan Rice proclaimed, ‘Annan’s proposal is the best way to put an end to the violence, facilitate much-needed humanitarian assistance and advance a Syrian-led political transition.’

“Susan Rice is one of the all-time lightweights. She is not qualified for this job in any fashion at this particular dangerous time in world history.”

Egypt: Mohammed Mursi has been president for 100 days and on Friday, the largest demonstrations against his regime broke out as protesters criticized his attempts to remove the country’s top prosecutor, while at the same time there was the acquittal of 24 accused of attacks on protesters during last year’s uprising. Supporters of Mursi then attacked the protesters and all hell has broken loose.

Afghanistan: The head of the International Committee of the Red Cross warned he was “filled with concern” after seven years in Afghanistan and that hope for the future had been “steadily declining.” Reto Stocker said that since he arrived in 2005, “local armed groups have proliferated, civilians have been caught between not just one but multiple front lines, and it has become increasingly difficult for ordinary Afghans to obtain healthcare.”

The same day, the senior Afghan analyst for the International Crisis Group, Candace Rondeaux, said: “There is a real risk that the regime in Kabul could collapse upon NATO’s withdrawal in 2014. The window for remedial action is closing fast.”

Not that these conclusions are any surprise, but it’s also clear the 2014 presidential election in Afghanistan, the vote to replace Hamid Karzai, is going to be a disaster and will be the launching point for the coming civil war.

And here’s a story from AFP and the Sydney Morning Herald that is sickening.

“Two schoolchildren, including a nine-year-old girl, have been shot dead by militants in Afghanistan after their father refused to quit his job as a policeman, officials say.

“Henna and her 16-year-old brother Zelgai were killed by two gunmen on motorcycles late on Saturday (Oct. 6) while in their father’s car in Ghazni province, in the south of the country.

“ ‘They were playing inside my car, and the Taliban maybe thought it was me in the car. They opened fire at the car and killed my children,’ the father, Zalmai, said on Sunday.

“He said the Taliban had warned him several times in the past that his family would be at risk if he did not leave his job.”

China: Incoming leader Xi Jinping, who will replace Hu Jintao as president, faces economic malaise and deepening unrest, according to a think tank that is known to supply government leaders with policy blueprints.

“There is a potential crisis in China’s model for economic growth,” said a paper from Strategy and Reform.

“The next decade might be the last opportunity for actively pursuing reform, and we should treasure this last chance.

“China is confronting a perilous jump, one that it can neither hide from nor avoid no matter what.”

The Party Congress is still slated for Nov. 8, just days after our election.

North/South Korea: Pyongyang said it felt freer to test-fire long-range ballistic missiles now that Washington is allowing Seoul to increase its ballistic missile reach, putting all of the North within its range.

At the same time, the agreement between the U.S. and the South, would put Russia, China and Japan within range as well, which is bound to ratchet up tensions when relatively small disputes pop up, like territorial ones over piles of rock.

Venezuela: Hugo Chavez won reelection in defeating his challenger, Henrique Capriles, 54-45, in what appears to have been a relatively clean vote. Capriles was gracious in defeat.

So after 14 years in power, Hugo gets another six though who knows if he’ll even last one given the state of his health; Chavez, however, saying he is cancer free these days. Chavez tapped a former bus driver and union activist, Nicolas Maduro, to be his next vice president, meaning probable successor. 

Here’s what I care about. Hizbullah has long had sanctuary in Venezuela. Iran has a friend just a two-hour flight from the U.S.

And boo to Argentine President Cristina Fernandez de Kirchner, another pain in the ass, who tweeted of Chavez’s win: “Your victory is our victory! And the victory of South America and the Caribbean!” [BBC News]

Oh brother.

Russia: One of the three members of the punk group Pussy Riot was released from prison with a Moscow judge suspending her verdict and putting her on probation after a new lawyer for the defense argued the girl had not taken part in the protest inside Moscow’s Christ the Savior Cathedral. 

So the lawyer’s name is Irina Khrunova. I’m going to keep it handy in case I get back to Moscow and need legal help. Clearly, Irina is good. Very, very good.

And Vladimir Putin turned 60 last Saturday. I’m standing by my prediction he doesn’t last the year.

Meanwhile, a Russian state TV expose garnered a lot of publicity. It purports to show opposition leader Sergei Udaltsov receiving funds from an ally of Georgian President Mikhail Saakashvili.    Other opposition figures such as Alexei Navalny have faced various legal problems since initiating an aggressive anti-Putin campaign.

One political analyst told the Moscow Times, however, that it was unclear if the footage in the documentary, “Anatomy of a Protest 2,” was doctored. [Of course it was.]

Speaking of Georgia, new Prime Minister Bidzina Ivanishvili unveiled his Cabinet and the new foreign minister is Maia Panjikidze. So let’s practice these two names over the weekend while drinking some good Georgian wine, shall we? 

By the way, when you show up at Georgia’s Tbilisi airport, after the immigration official hands you back your passport you receive a bottle of red wine, packed in a crimson gift box and stamped: “Welcome to the Land of 8,000 Vintages.” [So I read this week.]

Mexico: Top Zetas drug cartel leader Heriberto Lazcano was apparently killed in a firefight, a major coup for President Felipe Calderon as he prepares to turn over power, but get this. After officials fingerprinted and photographed the body, they handed it over to local authorities and transported it to a funeral parlor, from which gunmen promptly showed up and seized the body; thus depriving the government of being able to parade the body before the world’s media. Sounds like something Homer Simpson would have been involved in.

Random Musings

--Various polls:

RealClearPolitics weighted average of national polls has Romney now with a 47-46 lead.

Reuters/Ipsos national survey of likely voters has Romney ahead 45-44.

Pew Research Center national poll has Romney ahead 49-45. In mid-Sept. it was 51-43 Obama. Same survey in Sept. gave Obama the women’s vote 56-38. Now it is 47-47.

Battleground states

Virginia…NBC/Wall Street Journal has Romney now leading 48-47 (previously same poll had it 48-46 Obama). But a new CBS News/New York Times/Quinnipiac University poll in Virginia has it 51-46 Obama.

Florida…NBC/WSJ has it 48-47 Obama.

Ohio…NBC/WSJ has Obama with a 51-45 lead, a slight narrowing. A CNN/ORC survey in the state has Obama leading 51-47. ARG, 48-47 Romney.

Colorado…CBS/NYT/Quinnipiac poll has it 48-47 Romney. ARG has it 50-46 Romney.

New Hampshire…WMUR/UNH has Obama ahead 47-41.
Wisconsin…CBS/NYT/Quinnipiac puts Obama ahead 50-47.

Pennsylvania…Siena has it 43-40 Obama and Susquehanna puts it 47-45 Obama. 

--I subscribe to Army Times as a way of keeping up on things and a Military Times poll of active duty, National Guard and Reserve members has Mitt Romney ahead of Barack Obama 49-24 when respondents were asked, “Which candidate do you believe is sincere about his stated policy positions?”

When asked, “If the presidential election were held today, for whom would you vote?” Romney leads Obama 66-26.

When asked what the most important issues are:

The economy…41%
The candidate’s character…26%
National security…16%
Social issues…7%

--The Veep Debate…opinion…

David Brooks / New York Times

“So it was ‘The Honeymooners’ versus ‘Family Ties’; Ed Norton versus Alex Keating. What we saw Thursday night in the vice-presidential debate wasn’t only an argument about policy, it was a look at two different eras in American family life.

“Vice President Joe Biden, of course, could stand on Neptune and distract attention away from the sun. He entered the Senate in 1973, back when the old Democratic giants from the New Deal era still roamed the earth. Every sentimental tone of voice, every ebullient and condescending grin brought you back to the kitchen tables in working-class Catholic neighborhoods of places like Scranton, Pa., Chicago, San Francisco, Providence, R.I., and Philadelphia.

“That was a time, much more so than now, when there were still regional manners, regional accents and greater distance from the homogenizing influence of mass culture. That was a culture in which emotion was put out there on display – screaming matches between family members who could erupt in chest-poking fury one second and then loyalty until death affection the next.

“Biden gave America the full opera Thursday night, and I suspect there will be as many reactions as there are partisan flavors. Democrats will obviously be cheered by his aggressive, impassioned and offensive performance.

“It will be the crowning irony of the No Drama Obama campaign that it took a man who exudes more drama than a decade of Latin American soap operas to get Democrats out of their funk.

“Biden clearly ended the psychic slide. He took it to Representative Paul Ryan on the inexplicability of the Republican tax plan. He had his best moments on the subjects in which Ryan is strongest, like budgets.

“At the same time, my in-box was filled with a certain number of people who would be happy if they could spend the next few weeks delivering some punches to Biden, and not just Republicans. What do independents want most? They want people who will practice a more respectful brand of politics, who will behave the way most Americans try to behave in their dealings: respectfully, maybe even pausing to listen for a second. To them, Biden will seem like an off-putting caricature of the worst of old-style politics.

“This is not just an issue of manners. It is: How are we going to practice the kind of politics that will help us avert the so-called fiscal cliff? How are we going to balance the crosscutting challenges, like increasing growth while reducing long-term debt?....

“Ryan hails from a different era, not the era of the 1950s diner, but the era of the workout gym….

“This is a generation armed with self-awareness. In this generation, you roll your eyes at anyone who is quite so flamboyantly demonstrative as the vice president.

“In addition, Ryan was nurtured by the conservative policy apparatus, and he had a tendency Thursday night to talk about policy even when he was asked about character. I would not say he defined a personality as firmly as he might have, but he did an excellent job of demonstrating policy professionalism….

“By the end, voters will have noticed one large irony. Emotionally, Biden dominated the night. Democrats were wondering if the Obama administration was a spent force, too exhausted to carry on. They don’t have to wonder about that anymore. But, substantively, it is the Romney-Ryan proposals that were the center of attention. Some of those proposals are unpopular (Medicare, which was woefully undercovered). Some are popular (taxes). But most of the discussion was on Romney plans because the other side just doesn’t have many.

“This was a battle of generations. The age difference was the undercurrent of every exchange. The older man had the virility, but, in a way, that will seem antique to many.”

Editorial / Wall Street Journal

“So now we know what Team Obama’s comeback plan was following last week’s defeat in the Presidential debate. Unleash Joe Biden to interrupt, filibuster, snarl, smirk and otherwise show contempt for Paul Ryan. The carnival act contributed to the least illuminating presidential or vice presidential debate of our lifetimes.

“From the opening bell, Mr. Biden seemed to take to heart the interpretation that President Obama offered this week of his debate performance – that he had been ‘too polite.’ That was not a problem for the Veep, whose marching orders were clearly to steamroll the overmatched moderator Martha Raddatz and dismiss everything Mr. Ryan said with a condescending sneer.

“By unofficial media counts, Mr. Biden interrupted the Republican some 80 to 100 times. Mr. Ryan let the bully get away with too much for our tastes, at least until he finally pushed back on the interruptions or until Mr. Biden lost steam in the last half hour. But as anyone who’s been in a tavern past midnight understands, it’s hard to win a fight with a guy who is shouting from the corner bar stool….

“(This) 90 minutes wasn’t about an exchange of ideas or a debate over policies. It was a Democratic show of contempt for the opposition, an attempt to claim by repetitive assertion that Messrs. Ryan and Romney are radicals who want to destroy ‘the middle class.’ Mr. Ryan’s cool under assault was a visual rebuttal of that claim, and we certainly know who looked more presidential.”

John Podhoretz / New York Post

“Biden dominated. At every moment, every second, he was the pivot around whom the debate revolved. When he spoke, he mostly yelled, until the last third, when he began to whisper.

“His emotions controlled the mood; when he was supposed to be silent he muttered; when he wasn’t muttering he was grimacing, laughing, rolling his eyes, throwing up his hands.

“He was hot, Ryan was cool. He was aggressive, Ryan was modulated. Biden ate his Wheaties; Ryan had a salad.

“The Democrats needed the jolt they got. Republicans might have gotten a little energized themselves – by just how repugnant they thought Biden’s conduct was.

“Ryan was fine; Biden was something special. I’m not sure that was a good thing.”

Jennifer Rubin / Washington Post

“Sitting side by side at the debate table, Ryan and Biden began with the Benghazi debacle. Biden looked stern, saying he’d get to the bottom of it and find the perpetrators. He then went off topic as soon as possible, migrating to Iran, Iraq and just about anything else. Ryan went back in and laid into Ambassador Susan Rice and President Obama (who went to the U.N. to talk about the anti-Muslim video). Ryan then scored big by telling Biden he was the one who railed to get a status of forces agreement. Biden rebutted, calling Ryan a liar (‘malarkey’). He got grilled by moderator Martha Raddatz as to what he knew and when he knew it; Biden deflected, saying that he was given wrong information by the intelligence community. It was a crash course for the American people in the Benghazi debacle, not a subject that is in any way helpful to the administration.

“As they moved on to Iran, Biden’s habit of smirking and laughing and being dismissive came across as disrespectful, even nasty. Ryan largely ignored the jabs. Ryan patiently laid out the facts on everything from the failure of the sanctions to Obama’s decision to go on a TV show rather than meet with Prime Minister Bibi Netanyahu at the United Nations. Biden sneered back, repeating that Romney-Ryan wanted to start a war. Repeatedly laughing at his opponent, Biden forfeited his likability and whatever stature he held. Ryan pounded away at the Obama administration’s acts of weakness on everything from showing daylight between Israel and the United States to watering down sanctions. Ryan more than held his own; if nothing else, Biden’s demeanor lost him support, I strongly suspect. The split screen replays will be deadly….

“In the closing rounds, Ryan spoke calmly, chiding the president for divisiveness and broken promises. Biden nearly comically told us he never said anything he didn’t mean. Ryan gave a classic closing statement, actually asking viewers for their votes. Biden whined about getting shortened on time. Raddatz must have been exhausted. Any audience members hanging on certainly were.

“It was the most bizarre performance in any debate in my memory. Biden was so obnoxious, so over-the-top, that it is hard to see how independent voters, especially women, would find him tolerable, let alone effective. Arguing with the female moderator, jabbing his finger and constantly interrupting both Raddatz and Ryan, he came across like a bully.”

A CNN flash poll showed 48% giving the edge to Ryan, 44% to Biden. “Saturday Night Live” will have a field day.

--The mother of a former Navy SEAL killed in the Benghazi attack called on Mitt Romney to stop talking about how he had met her son at a Christmas party two or three years ago. I have to admit, I assumed when I saw how he was bringing Glen Doherty up that he had asked for and received permission to do so. Romney used him to enhance his image and show a softer side. Barbara Doherty, Glen’s mother, told a Boston television station that she didn’t trust Romney. “He shouldn’t make my son’s death part of his political agenda.”

Romney spokesman Rick Gorka said: “Gov. Romney was inspired by the memory of meeting Glen Doherty and shared his story and that memory, but we respect the wishes of Mrs. Doherty.”

I’ll tell you why this gets me. Recently I met with an official at a certain corporation to tell them ahead of time that down the road I may be taking certain actions wherein they are named, but that I would never blindside them. It’s just simple courtesy.  

--And so you have President Obama and the Big Bird ad, which accuses Mitt Romney of threatening to cut public funding for Sesame Street, “while failing to promise public vengeance on the Wall Street crooks who prospered during the 2008 banking meltdown,” as an editorial in The Times of London put it. Continuing…

“The trouble with this response to a debate that swiftly erased Mr. Obama’s long-held poll lead is that it reminds voters of a debate that swiftly erased Mr. Obama’s long-held poll lead. It emphasizes how fragile that lead was; reinforces the view that Mr. Obama is not just exhausted but out of touch; and suggests strongly that he has fewer ideas than Mr. Romney on how to bring America back to full employment and make its middle class feel prosperous again.”

--Editorial / New York Post

“Four years ago, presidential nominee Barack Obama told the Democratic National Convention:

“ ‘If you don’t have a record to run on, then you paint your opponent as someone people should run from. You make a big election about small things.’

“Fast-forward to Big Bird – a minuscule issue in a massively significant election.

“Obama can’t seem to find anything else to talk about these days except that outsized piece of puppet poultry.

“That, and how Mitt Romney wants to cut the federal subsidy to PBS.

“As the Republican National Committee notes, Obama has mentioned Big Bird and Tickle Me Elmo no less than 13 times since losing the Denver debate last week [Ed. thru Tuesday]. 

“In the same period, he hasn’t uttered word one about the terrorist attack that took four Americans’ lives in Benghazi….”

--Maureen Dowd / New York Times, Sunday, her first chance to opine on the initial debate.

“When he speaks at rallies, (Obama) doesn’t want the stage cluttered with other officeholders. When he rides in his limo, he isn’t prone to give local pols a lift. He wants to feel that he doesn’t owe his ascension to anyone else – not a rich daddy, not a spouse or father who was president, not even those who helped at pivotal moments. He believes he could do any job in his White House or campaign, from speechwriter to policy director, better than those holding the jobs.

“So Obama knows that he alone is responsible for his unfathomable retreat into his own head while 70 million people watched. He hadn’t been nailing it in debate prep either, taking a break to visit the Hoover Dam, and worried aides knew his head wasn’t in it. When the president realized what a dud he was, he apologized to flummoxed and irritated advisers….

“Even though Obama was urged not to show his pompous side, he arrived at the podium cloaked in layers of disdain; a disdain for debates, which he regards as shams, a venue, as the Carter White House adviser Gerry Rafshoon puts it, where ‘people prefer a good liar to a bad performer.’…

“Just as Poppy Bush didn’t try as hard as he should have because he assumed voters would reject Slick Willie, Obama lapsed into not trying because he assumed voters would reject Cayman Mitt….

“Obama has been coddled by Valerie Jarrett, the adviser who sat next to Michelle at the debate, instead of the more politically strategic choice of local pols and their spouses. Jarrett believes that everyone must woo the prodigy who deigns to guide us, not the other way around….

“His latest fund-raising plea is marked ‘URGENT.’ But in refusing to muster his will and energy, and urgently sell his vision, he underscores his own lapses in leadership and undermines arguments for four more years.”

--A new study from the Pew Research Center shows that 19.6 percent of Americans say they are “nothing in particular,” agnostic or atheist, up from 8 percent in 1990. For the first time, Pew also reported the number of Americans identifying themselves as Protestant dipped below half, at 48 percent. 79 percent, though, identify with an established faith group.

--Edward Luce / Financial Times

“From the Great Lakes to the Rio Grande, a ghoul is stalking America. Sometimes it wears the stars and stripes. At others, it whistles ‘The Star-Spangled Banner.’ It can recite the first amendment backwards. It pretends to love the country but is working against its better angels. Honorable reader, we live in an age of dishonesty, in which politicians distort the words of others and sometimes quote them out of context.

“Can the Republic endure?

“Readers who share my pessimism about the health of U.S. politics might wonder at the sarcasm. Those alarmed about the mental health of the Republican Party may even recoil. Yet there are times when moral sensibility misses the wood for the trees. The 2012 election is one of them

“America’s intelligentsia is in quiet torment about the decline in the quality of public standards. Politicians, such as Mitt Romney, discard and adopt new positions as though in a department store….

“In addition to all the conspiracy talk, consensus is breaking down over the most basic definition of knowledge – America is not just suffering from partisan loathing, it is going through an epistemic crisis. Science is mistaken for faith by many on the right, and evidence for anything – whether it be fiscal policy or a weather forecast – is in the eye of the beholder.”

--The Nobel Peace Prize was awarded to the European Union. You can’t make this [malarkey] up.

--So the other day I’m at my nice A&P supermarket and head back to the large bakery area that I never go through, looking for some Italian bread, and that’s when it hit me…I had no idea how much food was going to waste in this one area, including shelves and shelves of cakes that I’m guessing 90% were never purchased.

So I mention this to fellow A&P shopper Dr. Bortrum and we agree it’s just amazing how much food is wasted in America.

Then on Thursday I get my High Plains Journal, a weekly for the farm community, and there is a story titled:

“America trashes 40 percent of food supply”

“Americans are throwing away 40 percent of food in the U.S., the equivalent of $165 billion in uneaten food each year, according to a new analysis by the Natural Resources Defense Council. In a time of drought and skyrocketing food prices, NRDC outlines opportunities to reduce wasted food and money on the farm, in the grocery store and at home.

“ ‘As a country, we’re essentially tossing every other piece of food that crosses our path – that’s money and precious resources down the drain,’ said Dana Gunders, NRDC project scientist with the food and agriculture program. ‘With the price of food continuing to grow, and drought jeopardizing farmers nationwide, now is the time to embrace all the tremendous untapped opportunities to get more out of our food system. We can do better.’”

NRDC also reported some of the following:

The average American family trashes the equivalent of $2,275 annually in food.

Food waste is the single largest component of solid waste in U.S. landfills.

“Just a 15 percent reduction in losses in the U.S. food supply would save enough food to feed 25 million Americans annually; and…

“There has been a 50 percent jump in U.S. food waste since the 1970s.”

Get this, grocery stores and other retail sellers lose as much as $15 billion annually in unsold fruit and vegetables. I mean half of the fresh produce in the country is lost.

Now admittedly, half of that which is wasted is from both restaurants and home kitchens.

So for starters, while I know many of you are thinking, ‘Yeah, so what? I have bigger issues.’ Take your extra portions from the restaurant home.  

And seriously, there’s nothing wrong with a little government involvement in the form of public service announcements or something like that. The Stop and Shop grocery chain launched an effort on this front and is saving an estimated $100 million a year after analyzing its losses on the fresh produce side in particular.

Now don’t laugh, given the problems it is having these days, but the European Union (through the EU Parliament, which does a lot of bad otherwise), set a goal of reducing food waste 50 percent by 2020. The U.K. adopted a campaign, “Love Food Hate Waste,” that has already contributed to an 18 percent reduction in avoidable food waste.

--Finally, also on the food front, we’ve always known the positive impact of lycopene – an antioxidant found in tomatoes, but in a study published in the Oct. 9 issue of the journal Neurology, not only does a diet that includes tomatoes lower the chance of having a stroke, but I was struck by the following, as reported by the Wall Street Journal’s Jennifer Corbett Dooren.

“A cup of ready-to-serve marinara sauce has more than 31,000 micrograms of lycopene while the average raw tomato has about 3,165 micrograms, according to the USDA. A slice of fast food pizza has 2,074 micrograms of lycopene.”

I’m just surprised at the difference between a raw tomato and a cup of sauce. So I’m making a big plate of pasta later, while hoping my “wild” salmon for Salmon Sunday is actually wild and not from a feces filled fish farm in China or Vietnam.

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

God bless America.
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Gold closed at $1759
Oil, $91.86

Returns for the week 10/8-10/12

Dow Jones -2.1% [13328]
S&P 500 -2.2% [1428]
S&P MidCap -2.1%
Russell 2000 -2.3%
Nasdaq -2.9% [3044]

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

Dow Jones +9.1%
S&P 500 +13.6%
S&P MidCap +11.0%
Russell 2000 +11.1%
Nasdaq +16.8%

Bulls  45.7
Bears 25.5 [Source: Investors Intelligence…correction…last week the bear reading was also 25.5, not the 27.7 I listed…II’s report was confusing. Sorry for the mistake. But…this now means 8 straight weeks with a bear reading between 24.5 and 25.5, which is highly unusual to have this kind of stability. Reminder, it’s treated by most as a contrarian indicator.]

Don’t forget the StocksandNews iPad app. When you care to give her the very best, guys, surprise her with the depressing news found only in Week in Review.

*And next time, a special announcement concerning this site.

Have a great week. I appreciate your support.

Brian Trumbore