Educate Yourself

Week in Review
For the week 3/26/2007 - 3/30/2007
Brian Trumbore
President/Editor, StocksandNews.com

While the Iranian hostage crisis unfolded, with little real news to report thus far, the bigger story the past few days involves the Saudis and their toying with the rest of us.

First, in his speech to the Summit of the League of Arab States, Saudi King Abdullah said:

"In the beloved Iraq, blood is spilled between brothers under an illegitimate foreign occupation and despicable sectarianism that threatens civil war." A none too subtle shot at the White House.

"If Israel refuses (the Saudi peace plan), that means it doesn't want peace and it places everything back into the hands of fate. They will be putting their future not in the hands of the peacemakers but in the hands of the lords of war."

The prince went on to add, "It has never been proven that reaching out to Israel achieves anything. Other Arab countries have recognized Israel and what has that achieved? The largest Arab country, Egypt, recognized Israel and what was the result? Not one iota of change happened in the attitude of Israel towards peace."

Last week King Abdullah also abruptly canceled an invitation to the White House for a state dinner in April. The Washington Post's Jim Hoagland has some unsettling thoughts on this snub.

"Abdullah's bowing out of the April 17 event is?one more warning sign that the Bush administration's downward spiral at home is undermining its ability to achieve its policy objectives abroad. Friends as well as foes see the need, or the chance, to distance themselves from the politically besieged Bush.

"Official versions discount that possibility, of course. Bandar bin Sultan, the Saudi national security adviser, flew to Washington last week to explain to Bush that April 17 posed a scheduling problem?.

"But administration sources report that Bush and his senior advisers were not convinced by Bandar's vagueness - especially since it followed Saudi decisions to seek common ground with Iran and the radicals of Hizbullah and Hamas instead of confronting them as part of Rice's proposed 'realignment' of the Middle East into moderates and extremists.

"Abdullah's reluctance to be seen socializing at the White House this spring reflects two related dynamics: a scampering back by the Saudis to their traditional caution in trying to balance regional forces, and their displeasure with negative U.S. reaction to their decision to return to co-opting or placating foes?.

"A few months ago, Bandar was championing the confrontational 'realignment' approach in Saudi family councils: Iran's power would be broken, the Syrians would have to give up hegemonic designs on Lebanon, etc., etc. Now the Saudi prince visits Tehran and Moscow regularly. He helped set the stage for the Palestinians' Mecca accord, which has caused Israel to reduce what little cooperation it felt it could extend to Abbas?.

"But the Saudis, too, know how to read election returns. They see Bush swimming against a tide of scandal and stench that engulfs his most trusted aides. In the traditional Saudi worldview, this is a moment to hedge, not to indulge in the kind of leadership needed to break the Israeli-Palestinian deadlock or the deadly morass of Iraq."

And then there is this. Jordan's King Abdullah, according to Hoagland, has let the White House know he can't make his own state visit discussed for September. "Can you do 2008? the king asks instead."

Ralph Peters, in an op-ed for the New York Post, has another take on the Saudis.

"Abdullah?dragged out the Palestinian issue again, damning Israel. Of course, the Saudis have always been willing to fight to the last Palestinian, while keeping the people of the West Bank and Gaza on starvation rations.

"Saudi money's always available to spread hatred, but not to build world-class universities, hospitals or industries for the Palestinians.

"For good measure, our pal Abdullah deplored the violence in Darfur - for which he blamed 'foreign interests,' suggesting that the aid agencies and international observers, not the Khartoum government, are to blame for the ongoing genocide. [It's all Angelina Jolie's fault!] Meanwhile, the Egyptian regime is reinforcing its despotism, while Syria's looking at Lebanon and salivating again."

That is certainly the case, at least today. And with the White House in total disarray on a number of levels, most importantly in terms of its foreign policy, and with a leader who simply doesn't have a grasp of the world, nor does he often seem to care, it's no wonder that moderates such as Lebanese professor and opinion shaper Rami Khouri often come down along the lines of the following, as Khouri wrote in his column for the Daily Star:

"I sensed something was slightly unreal about the Jordanian capital Amman when I was there on Monday. The distorted reality, I quickly discovered, reflected the presence in town of U.S. Secretary of State Condoleezza Rice, whose Middle East diplomatic efforts increasingly look like a self-deceiving world of mirrors and make-believe. As she intensified the elusive search for 'moderate Sunni Arabs' to share in her adventure, Rice also launched a process of 'parallel talks' with Israeli and Palestinian leaders who have gotten nowhere talking to each other once every few months?.It's hard to decide if this is a comedy or a horror show.

"The most galling thing about Rice's and Washington's approach is its fundamental dishonesty. The Bush administration spent its first six years avoiding any serious engagement in the Arab- Israeli conflict, or decisively siding with the Israelis on most key contested points, like refugees, security or settlements. Now - with little time left for Rice, President George W. Bush on the ropes, his administration in tatters, America's army in trouble in Iraq, Washington's credibility shattered in the region and around the world, and the Middle East slipping into greater strife and dislocation - we are asked to believe that she will dedicate her remaining time in office to securing the establishment of a Palestinian state.

"Does Rice take us in the Arab world for robotic idiots - simply another generation of hapless Arabs who have no options and must go along docilely with every American-Israeli initiative, no matter how insulting, insincere or desperate it may be?"

"Critics who lambasted the administration's unilateral campaign against an 'axis of evil' a few years ago ought to be applauding the return to conventional diplomacy. We, too, think it's worth pursuing, especially when combined with steps short of a military attack to push back against Iranian aggression in the region. Still, two years after President Bush embraced the effort, it has to be noted: The diplomatic strategy so far has been no more successful than the previous 'regime change' policy in stopping Iran's drive for a nuclear weapon."

"(The) Middle East itself is no monolithic bloc of support for Iranian President Mahmoud Ahmadinejad. Israel, of course, is a natural ally in gaining intelligence and lining up support against the Iranian regime. But Iran is bent on destabilizing and dominating the Arabian Peninsula from Lebanon through Gaza into Iraq with a stopover in Bahrain. That makes Saudi Arabia as well as Jordan potentially strong - if not overt - allies in countering Iranian influence. The situation has gotten so serious that King Abdullah of Jordan called it a Shia crescent sweeping across the Arabian Peninsula and King Abdullah of Saudi Arabia summoned Vice President Cheney to Riyadh last fall.

"If we demonstrate that we are sufficiently serious in countering Iran, we could form a coalition of the willing with Saudi Arabia, Jordan, Egypt, the Gulf States, Turkey, Australia and those European allies with the courage to consider what their region will look like with a nuclear-armed Iran within missile range."

With all due respect, it's as if the general pulled this analysis off Wikipedia. Don't get me wrong, there is truth in what McInerny wrote, but these are the talking points of an administration official from last fall; not the reality of today as the earlier discussion on Saudi Arabia shows. And as for the Post editorial, there is nothing to be applauded in terms of administration diplomacy whatsoever. Since last summer, Iran hasn't been stopped for a minute in its pursuit of nuclear weapons.

What all the debate this past week totally ignored is an event coming up in May. I wrote the following three weeks ago, 3/10/07, which bears repeating.

"And if we play our cards right, remember this coming May 22; the day the Iranian government will finally raise the price of gasoline, fixed for the past three years at 9 cents a liter. As I've been writing, Iran's domestic consumption of oil has been skyrocketing and it's not only depriving the treasury of potentially more export dollars, it's costing the treasury dearly in increased subsidies. The mullahs must bring down consumption and raising the price is Econ. 101.

"But the people aren't going to be happy. The economy isn't doing well to begin with and they have long viewed cheap oil as a birth-right. Look for major protests, possibly bloody ones, if the government follows through. The U.S. can benefit; but if you knew this wouldn't you be talking to the opposition today, as I've advocated?"

There's the rub. The White House and its lackeys haven't a clue. And so instead we find ourselves perilously close to an accidental/intentional war. Conventional wisdom, as spelled out by the Washington Post, would tell you the administration pulled out all the stops and it still hasn't worked. I've been writing these times called for unconventional means and negotiations. But I've also said with regards to Iran's nuclear efforts, it's probably too late.

President Bush?floundering and a lame duck.
British Prime Minister Tony Blair?floundering and a lame duck.
Israeli Prime Minister Ehud Olmert?floundering and a lame duck.

Lastly, with regards to Iraq, the Senate joined the House in approving measures that set timetables for withdrawing most U.S. forces; March 31, 2008, in the Senate version and Aug. 31, 2008, for the House bill. After returning from their recess, the appropriations committees for both will convene to rectify their respective pieces of legislation, at which point some sort of deadline will be incorporated as Congress and the president reconcile their differences (forget the threatened veto) and come up with a compromise, or the military faces a real cash squeeze on its operations in both Iraq and Afghanistan. The problem with a veto, which would not be overridden, is the calendar. President Bush can't afford to send the final bill back to Congress to start all over again because that would drag it far into May. Funding of some sort has to be acceptable to all and the Democrats have worked the timetable for withdrawal into the legislation; much to the delight of our enemies.

In all the discussion, though, and I admit I don't spend 24/7 watching or listening to talk shows, I didn't hear one person state the obvious:

If President Bush had fired Donald Rumsfeld in September, Republicans wouldn't be in such a box. There is no doubt that the Democrats captured Congress, certainly at the very least the Senate, because of Bush's failure to act well before the election and send our nation's worst defense secretary packing.

Merrill Lynch chief economist David Rosenberg summed up the current mood perfectly. "You either believe the housing story has more chapters to be written or you think it's over and done with."

"Those who are trying to convince us housing has bottomed?are nuts. There is absolutely no way housing, at least as expressed by prices, has a good 2007."

And so we've completed the first quarter of the year and I've seen nothing to change my mind. This week the data on new home sales for February was released and it was awful, down 4% and a huge miss by analysts. Just as importantly, inventories rose to another new high.

Josh P. sent in a note from San Diego County where defaults were 3,150 for the fourth quarter of last year vs. 1,173 for the fourth quarter of '05; while in New York City, foreclosures are on pace to more than double from two years ago, and this in one of the more healthy markets around. Of course as you'd also expect the foreclosure wave in urban areas is hitting minorities particularly hard. As the New York Daily News adds; to make matters worse "Loan companies are going out and bombarding (subprime mortgage holders), many of them senior citizens, to convince them to take home equity loans," said a local official in Queens. "How do you give someone a loan when the monthly payment on that loan is higher than the person's income? It's a disgrace."

There's a different issue that is now coming to the forefront; tax revenues. In Florida, receipts are falling for the first time since 1975 amidst the slump in housing and construction, which in turn results in less sales tax revenue, for starters. Other states are also suffering and not only is this condition going to get much worse (resulting in massive layoffs at the state level, of course), but it comes at a time when states have been ramping up on the spending side of the ledger.

But wait, there's more! Mr. Bubble Popper, Yale economist Robert Shiller, reiterated that home prices will decline on a non- inflation adjusted basis by 20% to 30% over the next five to ten years [Barron's], while even Federal Reserve Chairman Ben Bernanke told a Joint Committee of Congress prospects for housing "remain uncertain." This is a major pronouncement for him as he had to finally admit housing would remain a drag on growth for some time to come.

I was reading the Sydney Morning Herald, looking for something on a totally different topic, when I saw this headline from Tuesday's edition.

"Home affordability is at a bit of a tipping point," said Fujitsu Australia managing director Martin North. Of the 1,500 people who were contemplating buying a property for the first time, according to his research 30% said they could not actually afford it, up from 17% at the same time last year. Recall that it was the affordability issue of 2006 in the States that foretold the collapse here. The real estate bubble is global, as I've repeated ad nauseum.

But here's a nifty twist on a mortgage. From the same article I see that Adelaide Bank unveiled one that allows up to 20% of the purchase value to be held by the bank in exchange for 40% of any capital gain. The lender would absorb 20% of any loss. All I've got to say is I'm just glad I purchased my current home with the old 20% down and took out a 30-year fixed at an attractive rate.

By the way, in a poll conducted by Bankrate.com, fully 34% of American homeowners don't have a clue as to what kind of mortgage they have in the first place.

Meanwhile, it is still far from clear just what level of exposure Wall Street, and its siblings around the country, have to CDOs, or collateralized debt obligations that represent the repackaging of bonds backed by mortgages. According to a survey by Deloitte, as noted in the Financial Times, much of the banking industry lags "behind the explosive growth of credit derivatives and their attendant risks." In other words, "Even the most sophisticated participants in the markets find the risk management challenges associated with these instruments daunting. This raises the prospect of unanticipated losses," according to Timothy Geithner, president of the Federal Reserve Bank of New York and a real expert on the topic from way back. In fact, fewer than half of the respondents to the Deloitte survey said they regularly "stress-test," an attempt to measure what the systemic risk is in a severe market disturbance??like a crash.

Former U.S. Treasury Secretary Lawrence Summers had the following thoughts in an op-ed for the Financial Times.

"Three months ago I was able to write in this space that in economics 'the main thing we have to fear is the lack of fear itself.' This is no longer true today. With clear evidence of a crisis in the subprime U.S. housing sector, risks of its spread to other credit markets, sharp increases in market volatility, reminders of the fragility of global carry trades and signs of slowing economic growth, there is enough apprehension to go around.

"While it would be premature to predict a U.S. recession, there are now strong grounds for predicting that the U.S. economy will slow down very significantly in 2007. Whether in retrospect 2007 will prove to have been a 'pause that refreshed' a nearly decade-long expansion like the growth slowdown in 1986 and 1995 or whether it will see the end of the expansion is not yet clear?.

"Those in the rest of the world who have been insisting on the global imperative of increased U.S. saving and a reduced U.S. current account deficit should fear getting what they want too quickly. So also should those U.S. observers who have insisted that foreign countries stop artificially holding their currencies down by purchasing dollar assets. While U.S. current account adjustment is a medium-term imperative, an effort to bring it about rapidly in the face of an already declining economy could turn a soft landing into a hard one."

Lastly, I do have to note that once again, the American consumer stepped up and spent in February, twice the consensus estimate of economists. Those of us who are bears and calling for a spending slowdown, due to housing in particular, have to at the same time acknowledge that there will be no recession (and I didn't call for one this year) until employment reverses. As long as we have jobs we'll continue to spend because the impact of the slide in housing will take a while to sink in. If 34% don't even know what kind of mortgage they have, you can be sure 75% haven't figured out the impact of their leading asset stagnating, at best, for years to come. That day of self-revelation will come, however. Rising unemployment will also eventually work its way into the equation. Like they always say, trouble comes to those who wait; he typed, tongue in cheek.

--We're in a new pattern of one week up, one week down. In fact in the case of the three major benchmarks, we haven't had three weeks in the same direction since the start of the year. [Nasdaq was up the last week in December and the first two in January.] This time the Dow Jones, S&P 500 and Nasdaq all lost 1.0%.

When I made my predictions for the year I opted for an admittedly wimpy plus or minus 3% for 2007 and with 90 days on the books, the Dow, S&P and Nasdaq are all up or down less than 1%. Of course I'm not going to be in the least bit surprised if we are down 15% for the year at some point, it's just that in forecasting the stock market for 12 months, you're really at the whims of the end of the year dynamics and can go from bang on to looking foolish in the blink of an eye around Christmas, as we've learned the past decade or so.

That said, I also called for growth in the economy of 1.5% for '07 vs. a consensus at the time of 2.6%. That consensus has now drifted down to 2.4% according to the latest Wall Street Journal survey of economists. My point has also been that this year is more about setting the stage for 2008, when the impact of the housing slump hits home from a wealth effect standpoint and all manner of geopolitical events come home to roost, including a rather important election, maybe, in Russia, let alone in the U.S., plus the impact, both positive and negative, of the Beijing Olympics.

It was another week with bonds ending up pretty much where they started, this despite Chairman Bernanke's rather hawkish comments on the inflation front, plus economic data, outside housing and durable goods, that was positive. Personal income and consumer spending were both up 0.6% for February, construction spending was up, and the Chicago Purchasing Managers manufacturing index soared to 61.7 from a recession like 47.9 the month before. Frankly, I don't buy it; as in I think it has to be a mistake because it was the biggest reversal in the 14-year history of this key economic barometer and just makes zero sense.

--Oil shot up to $66 ($68 in an overnight flash of hysteria) on fears Iran would do something stupider than it already has. Gasoline futures also soared, to $2.11, which translates to a national average of around $2.80-$3.00 in about 30 days. But just as was the case last year, consumers don't appear to be letting this impact their spending in other areas.

--The administration, under increasing pressure from Congress, announced it was imposing preliminary tariffs on Chinese sheet paper ranging from 11% to 20%, thus protecting jobs, perhaps, in the U.S. paper industry, while encouraging retaliation of some sort on the part of the Chinese. As this happened on Friday, I'm going to hold off on further comment until I see reaction from China, which as yet is not forthcoming; but suffice it to say protectionism has resulted in some of our nation's worst economic crises. One thing is for sure, the dollar will bear watching.

--In a widely anticipated report out of the U.S. Dept. of Agriculture, it is estimated the nation's farmers will plant 90.5 million acres of corn this year, up a whopping 15% from 2006, thanks to the ethanol bubble. [Just wanted to be the first to go on record as calling it such.] In turn, corn on the futures market (as opposed to corn on the cob) fell 5%, the daily limit, on fears that Sen. Grassley of Iowa and his friends will flood our nation's highways and byways, let alone our grain elevators, with the stuff. Nonetheless, it is still $3.70 a bushel, or almost double the average of $2 for the seven years, 1998-2005.

The report does have major implications across a wide spectrum of industries, aside from ethanol, including farm equipment and seed suppliers. I'll have more next week when we see where corn settles out.

--One quarter into the year and we already have our "Corporate Dirtball" award winner for 2007?ITT Corp.

ITT agreed to pay a $100 million penalty for illegally making classified night-vision goggle technology available to the likes of China. U.S. Attorney John Brownlee said "The criminal actions of this corporation had threatened to turn on the lights on the modern battlefield for our enemies and expose American soldiers to great harm." No individuals have yet been charged but we are told the investigation is continuing.

China has been living off our secrets and yet it's a story that isn't being told. I complained awhile back that when China knocked down their aging satellite with a ballistic missile, it was undoubtedly accomplished with much of our technology. I wrote a journalist I've communicated with in the past, asking him to write more on a topic with which he is very familiar, and he has yet to do so. The New York Times' William Safire used to be all over this topic, but he's semi-retired and for some reason refuses to do a special op-ed. It's frustrating. Night vision equipment is the least of our worries.

--In a crucial study of over 2,200 heart patients dubbed Courage, cardiologists have concluded that heart disease should first be treated with cholesterol and blood pressure-lowering medicine rather than with angioplasty.

In an interview with Bloomberg News, Judith Hochman, director of cardiovascular clinical research at New York University School of Medicine, said "Patients expect angioplasty to either make them live longer or reduce the risk of heart attacks or death, to fix them beyond just making them feel better. It didn't, which was a surprise to many people."

Hochman suggests patients give intensive drug therapy three to six months before undergoing an artery-clearing procedure.

Dr. William E. Bowden, director of the study, said "The data are compelling. We do too many of these procedures."

However, to be clear, researchers stress that if you are in the throes of a heart attack or at a very high risk of one, angioplasty is the first step. But once a patient is stable, medical therapy is just as effective at reducing the major risks.

These findings are of course critical to the likes of Boston Scientific and Johnson & Johnson, makers of the stents, and their share prices declined on the news.

But on a related topic, I found an interview in the Star-Ledger with the president of the American College of Cardiology, Dr. Stephen Nissen of the Cleveland Clinic, to be quite telling.

A: We need to think if we've moved too quickly away from bypass surgery. There are so few today, medical schools have not filled their surgery residencies in the specialty. There is a shortage of students willing to go into a field they think is a dead end."

--What an increasing amount of students will be going into is radiology, this much seems clear. Two reports were issued this week, for example, that call for greatly expanded use of M.R.I. scans in women who have breast cancer or are at high risk for it; thus creating a demand that radiologists are not yet equipped to meet. The cost, often ten times that of a mammogram, creates a different obstacle.

Ironically, Paul C. Lauterbur, who shared the Nobel Prize in Medicine for developing M.R.I. technology, died this week. Dr. Lauterbur had worked at the University of Illinois for 22 years and a colleague said "Paul's influence is felt around the world every day, every time an M.R.I. saves the life of a daughter or a son, a mother or a father."

--China is on track to become the second-largest consumer of Venezuela's oil next to the United States. By 2012, China is expected to import one million barrels per day vs. a current tally of 150,000. Venezuela currently ships about 1.5 mmbd to the U.S. Venezuelan President Hugo Chavez told reporters that "as a power, the United States is going down, while China is moving up."

--Because of drought, water levels in China's Yangtze River are at historic lows, raising concerns the Three Gorges dam will be able to generate enough power for those it was built to serve. 10 million face an imminent water shortage as well.

--In an incredibly harsh move, consumer electronics leader Circuit City announced it was replacing 3,400 employees who are "paid well above the market-based salary range for their role" with new workers "compensated in the current market range for their role." One analyst told the Financial Times she was surprised at the decision to dismiss the staff because it was likely to disrupt operations and threaten Circuit City's competitive position. It's also got to be depressing as hell to work there.

--The owner of T.J. Maxx, Marshall's and other stores in North America, TJX Cos., disclosed that an identity theft issue first disclosed in January was far broader than anyone was led to believe?.like try 45.7 million credit and debit cards stolen over an 18-month period. However, if we are to believe the company, 75 percent of the compromised cards either were expired or had data from their magnetic strips masked using asterisks rather than numbers. Regardless, it's "the biggest card heist ever," in the words of advisory company Gartner Inc.

--Dell once again delayed the filing of its annual 10-K report because it has uncovered further unstated accounting irregularities. The Feds continue to investigate as well.

--Internet-telephony outfit Vonage remains on life support, though I don't understand why its share price is still around $3 instead of zero. Even Citigroup, which just nine months ago helped bring the company public, has issued a "sell" rating on the stock; an unheard of event. Citigroup concludes Vonage faces bankruptcy owing to recent Court rulings barring it from using Verizon's patents.

--More tidbits on The Blackstone Group and its coming IPO. The 57 senior managing directors pocketed an average of $27.8 million in pay last year, according to the prospectus, while the other 710 employees, including administrative staffers, received an average of $350,000 in cash and prizes. I'm thinking of applying for a job in the mailroom there.

"Here's your copy of The Economist, Mr. Schwarzman."
"Thanks, Bob."
"It's Brian."
"Whatever."

Two other items of note. Blackstone's 770 employees generated nine times more earnings per person in 2006 than their counterparts at Goldman. And to those thinking of purchasing shares in the private equity firm once it goes public, Newsweek's Allan Sloan brings up an important point.

Remember, you would be purchasing units in a partnership, and Blackstone itself is already warning that unitholders would need to file for an extension on their taxes each year because it won't get the information out before April 15. Those of you who have purchased limited partnerships before know just what kind of nightmare this can be.

--Citigroup may be laying off 5% of its employees worldwide, or 15,000; but this is somewhat deceiving in that 30,000-50,000 leave each year so the actual pain may not be that bad. The banking giant also announced it wants to grow its international revenues from 44% to 60%.

--According to Golf World and a local publication in Scotland, home values on the narrow roadway adjacent to the Old Course at St. Andrews are the highest in the country; like $3 million for a modest place. Just 20 years ago, I bet it was under $100,000, having seen firsthand what's happened to values in similar spots in Ireland.

--According to the New York Post, tuition, room and board (plus books and such) at NYU will hit $49,996 next fall. NYU is as popular as any school in the country and only 12% of applicants are accepted. Parents are undoubtedly hoping their son or daughter chooses DeVry Technical Institute instead?.not that there is anything wrong with this joint.

--Note to my farmer friends. Would some of you please grow some wheat?! The price of my beer keeps going up. Thank you.

Zimbabwe: On Tuesday, opposition leader Morgan Tsvangirai said he would boycott a presidential election slated for next year, unless the voting is carried out under a new democratic constitution. The next day police stormed his party's offices and brutally arrested Tsvangirai and about 20 of his associates as President Robert Mugabe defied international criticism. Tsvangirai was later released but the others remain in prison.

What is sickening is that the 14 leaders of the South African Development Community, meeting in Tanzania where Mugabe was seen dancing joyously, amazingly reaffirmed their solidarity with him. As reported by the London Times, Mugabe clapped his hands gleefully and proclaimed "Excellent meeting" before returning to his dead nation. What an incredible dereliction of duty on the part of South African President Thabo Mbeki, a truly pitiful leader.

Equally pitiful is this op-ed from the Washington Post by Desmond Tutu and Madeleine Albright. In part:

"The crisis in Zimbabwe raises familiar questions about the responsibilities of the international community. Some argue that the world has no business interfering with, or even commenting on, the internal affairs of a sovereign state. [Ed. Not me, mon.] This principle is exceptionally convenient for dictators and for people who do not wish to be bothered about the well-being of others. It is a principle that paved the way for the rise of Hitler and Stalin and for the murders ordered by Idi Amin. It is a principle that, if consistently observed, would have shielded the apartheid government in South Africa from external criticism and from the economic sanctions and political pressure that forced it to change. It is a principle that would have prevented racist Rhodesia from becoming Zimbabwe and Robert Mugabe from ever coming to power.

"We are not suggesting that the world should intervene to impose political change in Zimbabwe. [Ed. I have!] We are suggesting that global and regional organizations and individual governments should make known their support for human rights and democratic practices in that country, as elsewhere. We should condemn in the strongest terms the use of violence to prevent the free and peaceful expression of political thought. We should make clear our support for the standards enshrined in the African Charter on Human and Peoples' Rights and in the Universal Declaration of Human Rights. Given Mugabe's consistent unwillingness to respect the legitimate complaints of his people, this is not the time for silent diplomacy. This is the time to speak out. It is especially important that members of the African Union and Southern African Development Community raise their voices, for they have the most influence and can hardly be accused of interventionism?.

"Presidential and parliamentary elections that are transparent and considered to be legitimate by the people of Zimbabwe and by local and international observers should be held?.

"With crisis comes opportunity. This is the moment for political and civic leaders in Zimbabwe to unify around a common goal: a peaceful and democratic transition. Members of the opposition would be well advised to overcome their differences and to speak with a single, strong voice. In this way, reformers can demonstrate to the people of Zimbabwe and to the world that there is a viable and patriotic alternative to the repressive and misguided leadership under which the country has suffered for so long."

Ah, Mr. Tutu and Ms. Albright? The opposition you speak of is getting the crap kicked out of them. Don't lecture them on how to act!

Far be it for me to call a Nobel Peace Prize winner and a former secretary of state, idiots, but this is just the kind of garbage that has led to the predicament the people of Zimbabwe find themselves in.

For some real truth telling, I refer you to something yours truly wrote in this space five years ago, 3/16/02. Granted it's harsh.

"Let's be frank; if ever an assassination was warranted, (Mugabe) is a worthy candidate. Having 'won' his 5th-term in a fraudulent vote, Mugabe is now set to obliterate his opposition and soon the civilized world will be crying for the victims.

"In case you missed it, vast numbers of good people in Zimbabwe stood in line for up to 20 hours(!), if they ever even got a chance to cast a ballot, as Mugabe shut down polling booths in regions where he would lose a legitimate vote.

"The U.S. and the West have failed to recognize the election, but what is most upsetting is the Organization of African Unity, comprised of the likes of Kenya, Tanzania and South Africa, labeled the vote 'transparent, credible, free and fair.'

"Unbelievable. The leaders of southern Africa are nothing but a bunch of corrupt cowards and it's no wonder why many Americans often just throw up their arms and say of the whole continent, 'the hell with them.'"

That was five years ago. Five years for the leaders of Africa, including Bishop Tutu, let alone those in the West, particularly former ruler Britain and the United States, to act. Of course it is just like Sudan and Darfur.

What a worthless generation of so-called leaders we have in the world these days. Just imagine the same cast of characters during the time of Hitler. Actually, don't. You'll have too many nightmares.

Russia: President Bush told President Vladimir Putin he wanted to discuss the anti-missile shield in Europe, while a top U.S. general, trying to alleviate Russia's fears, said the shield could cover western Russia as well as our European allies.

On the broader topic of today's Kremlin, opposition leader Garry Kasparov weighed in for the Journal in an op-ed.

"(For those continuing to invest their capital in the country), the surprise will come when the investors find out their Russian partners are cashing out as quickly as possible, ready to head for the hills - or their mansions abroad - in the face of rising political and economic uncertainty.

"Anyone trying to make a fast buck investing in Russian President Valdimir Putin's police state should first practice our traditional triple kiss. That's one for kissing off moral principles, another for Mr. Putin's backside, and the last to kiss their money goodbye when a fresh government comes in and starts looking into all (the) dirty deals. [Ed. Kasparov is referring to the auctioning off of assets such as those belonging to former energy giant Yukos.]

"While the Kremlin's favorite oligarchs pack their suitcases (doubtless full of cash), the former head of Yukos, Mikhail Khodorkovsky, sits in prison for not bowing long enough in front of the Kremlin throne. Yukos was only the biggest and best- known example of what has become standard practice under the Putin regime. There is no dividing line between bureaucrats, gangsters and the police. Allegiance to the Kremlin is the only thing that matters?.

"The Kremlin's policy has its supporters outside of Russia as well. A recent editorial by Henry Kissinger called for 'maximizing incentives' and 'removing frictions to active cooperation' between the U.S. and Russia. If Ronald Reagan had had that mindset I would still be playing chess for the Soviet Union! Was President Reagan 'removing frictions' when he told Gorbachev to 'tear down this wall'? The lack of Western political will to stand up and acknowledge the true state of affairs in Russia only encourages Mr. Putin and his gang to push further."

Lebanon: Unsurprisingly, this week's Arab League summit failed to come up with any kind of initiative to solve Lebanon's political deadlock. Even on the issue of the international tribunal looking into the assassination of former prime minister Rafik Hariri, the summit statement insisted "on having all Lebanese agree on the tribunal's final make-up?while stressing that the tribunal not be used for any political or vengeance purposes." Which means that with the Syrian lackey, President Emile Lahoud, still in power, the tribunal will go nowhere; and there can be no lasting political solution without a resolution of this issue.

Pakistan: The chief justice of the Supreme Court who was suspended by President Musharraf gave his first address since he was removed and he was showered with rose petals from an audience of 2,000 lawyers who called for Musharraf's ouster. [No lawyer jokes allowed.]

China: Related to my above discussion on China and stealing technology, Wendell Minnick of Defense News had a piece in the March 26 issue asking the question just who (Hu?) is in charge of the military.

" 'In recent incidents, like the ASAT [anti-satellite] test and P-3 incident [the midair collision of a Chinese fighter and the U.S. surveillance plane], we have seen what appear to be disconnects between the Chinese civilian and military leadership, and a tendency among the military to portray the United States as some sort of boogeyman and China as a nation besieged,' said Andrew Krepinevich, director of the Center for Strategic and Budgetary Assessments in Washington.

" 'It appears that in doing so, the Chinese military leadership is attempting to justify its importance to the country's political leadership,' he said. 'In any event, the military certainly has for roughly a decade now received double-digit annual increases to its budget. How independent is the Chinese military from the party leadership? No one knows for sure. However, we do know that the last Communist great power, the Soviet Union, and other dictatorships historically purged their military to ensure its subservience.'"

What we also know is that China continues to threaten Taiwan and President Chen Shui-bian for his talk of independence. China's ambassador to the United States, Zhou Wenzhong, called on the Bush administration to stop selling advanced weapons to Taiwan that send "the wrong signals." Addressing a forum at Johns Hopkins University, Zhou reiterated China "will never tolerate Taiwan's independence or allow anyone to separate Taiwan from the motherland?through any means."

"The Taiwan question bears on the sovereignty and territorial integrity of China, involves China's core national interest and touches upon the national sentiments of the Chinese people," he said, adding, "So what I am trying to say is that the question needs to be handled with great care, great caution and the United States has a commitment to China?and the essence of that is one China." [South China Morning Post]

To which I'd reply: Mr. Ambassador, you know Taiwan is no threat to the mainland yet you continue to place medium-range missiles across the sea, now over 700 strong, directly targeting the island. Why not remove them? [Of course we know the answer to this one, but if I were President Bush, this is what I would first ask President Hu.]

Japan: Prime Minister Shinzo Abe offered up a new apology on the issue of the sex slaves, the "comfort women," during World War II.

"I apologize here and now as prime minister," Abe told a parliamentary committee. That was it. Earlier Abe denied there was any evidence the women had been coerced into sexual service, the view of conservative academics and politicians. I haven't seen whether this will be enough for Beijing and Seoul; both of which had decried the previous stance.

Colombia: According to the Los Angeles Times, the CIA has obtained information alleging that the head of Colombia's army "collaborated extensively with right-wing militias that Washington considers terrorist organizations, including a militia headed by one of the country's leading drug traffickers." As Colombia is currently the third-largest beneficiary of U.S. foreign aid, this is going to be a big issue for Congress. Thus far, the sweeping investigation that has also taken down numerous politicians has not as yet implicated President Alvaro Uribe.

Northern Ireland: At long last, arch-rivals Ian Paisley and Gerry Adams have agreed on a power-sharing deal after holding their first ever direct talks. Paisley, leader of the Protestant DUP and the face of the devil himself, and Adams, head of Catholic Sinn Fein, will form a joint executive on May 8 to run the province. The DUP has called for a continuation of British rule, while Sinn Fein has long advocated a united Ireland. No doubt a very important day here, but there will be many a tough road ahead.

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