Educate Yourself

Week in Review
For the week 11/19/2007 - 11/23/2007
Brian Trumbore
President/Editor, StocksandNews.com

I'll try and keep this week's comments on the brief side. After all, it was more of the same as concerns continue to mount as to just how severe the mortgage securities/credit crunch crisis is going to get. There are some who say we are right back to August. Others say it's even worse today.

What we do know is housing continues to worsen, whether you are measuring indicators of future activity, such as collapsing building permits, or actual home prices, dribbling down.

The Federal Reserve, after all, lowered its growth forecast for 2008 to an anemic 1.8, but with just 2 percent inflation. Right. 2 percent inflation. As for overseas, the evidence is piling up that just about everyone is slowing. True, in many cases it's still respectable growth, but the trend is in.

The great trader/commodities expert Jim Rogers was on CNBC and called Fed Chairman Bernanke and Treasury Secretary Paulson fools, nay, idiots, for allowing the currency to slide. Actually, Rogers, like the rest of us, finds it amazing that Paulson allows himself to be used so, as in continuing to say "A strong dollar is in our nation's interest," as he did once again while overseas this week. What a stooge. And as Rogers said, why would Paulson want to tarnish his legacy by playing the role of village idiot? Then again, just what is the legacy of any Wall Street chieftain, as Paulson was at Goldman Sachs prior to becoming treasury secretary?

As Jim Rogers added, these days it's all about reduced access to credit, worldwide (including even in China, in case you haven't noticed), the negative wealth effect from the popping of the real estate bubble, and soaring personal debt levels. Rogers even mentioned my favorite topic for the first time. Real estate is slowing, globally, he said. You got that right, Jimmy. It's been the real key all along. Keep your eye on the Big Picture, I say. The daily noise on individual banks and their massive writedowns isn't what brings the world economy down, in and of itself, nor even a financial accident due to derivatives (unless a massive one), but rather the gnawing impact of everyone's chief asset having peaked and rolled over. It was a laugh riot to hear Paulson this week admit housing defaults "will be significantly larger" in 2008 than '07. Brilliant. Here's some ice cream as a reward for seeing this only about a year late.

But the next few weeks we learn the true state of the American consumer. Actually, since my recession forecast has always been about 2008, I don't believe we'll totally roll over until the first quarter, seeing as the job market is still solid, though at the same time I can guarantee holiday sales will be closer to a 2 percent increase over last year than the average forecast of a 4 percent rise. Prices at the gas pump, now solidly over $3.00, nationwide, and already $3.40 on average in California, don't help. Remember, for me gasoline 'futures' above $2.30 has been the key. The level is now $2.45, after which you add your taxes and a few pennies for Mr. Exxon and the man owning the station where you gas up. And as crude oil almost touched $100 a barrel before closing the week near $98, this also means the price of heating oil is soaring.

Lastly, I was watching former SEC director and now chairman of H&R Block, Richard Breeden, talk about the issues facing the markets these days, in a discussion with Maria Bartiromo, when he said this:

"Transparency is what makes the markets," echoing a point of mine lo these past few months. Breeden wouldn't go further, though, as in these days the U.S. capital market system is an utter embarrassment. We're a laughingstock around the globe. We can bounce back, no doubt, and we will, but we need leadership of a kind we haven't seen in years.

--If it hadn't been for a strong rally on Friday, owing to nothing more than the idiotic belief that crowds at the mall on the first day of shopping season are indicative of the overall tone, as well as thin, easily manipulated markets, the carnage on Wall Street would have been far worse because Monday through Wednesday was ugly. As it turned out, though, the Dow Jones lost a mere 1.5% to finish at 12986, its first weekly close below 13000 since April. The S&P 500 fell 1.2% and Nasdaq declined 1.5%.

Early on, a Goldman Sachs forecast of an additional $48 billion in writedowns the next two quarters in the financial sector, much of these to originate with Citigroup, plus a world class quarterly loss of $2 billion for Freddie Mac, caused stocks to swoon.

Rates plunged anew as continued concern over hidden bodies amidst the mortgage rubble outweighed fears of the still tumbling dollar and inflation (and the threat the combination could one day lead to higher, not lower, rates). The Fed next meets Dec. 11.

--More real estate pain: The nation's largest homebuilder by volume, D.R. Horton, said 2008 will be worse than '07. DRH has lowered its average sales price 15% from a year ago. And the commercial real estate market is showing signs of cracking.

--Christine Harper had a well-publicized story for Bloomberg News this past Monday.

"Shareholders in the securities industry are having their worst year since 2002, losing $74 billion of their equity. That won't prevent Wall Street from paying record bonuses, totaling almost $38 billion."

The difference this go around will be that cash bonuses could be far less, with firms paying an increasing amount out in stock, and the money will be distributed less evenly. Those in the mortgage-backed securities sector, the ones still with jobs, will of course see far less than the past.

But as the years go by, and the gap between rich and poor grows, there are increasing signs of blowback?as in it's difficult for the average American to identify with any of this. What do many of these people actually create, for example, except engineered financial products?

And as for the shareholders of the securities themselves, who have taken huge hits to their own holdings, talk of bonuses greater than the GDP of Sri Lanka is tough to swallow.

--The Bank for International Settlements reports that the derivatives market has grown to $516 trillion, led by credit- default swaps to protect investors against default. Of course not all derivatives are bad, but I wonder what portion of this involves parties actually knowing who's on the other side of the trade? Lots of room for accidents, in other words, speaking of the above-mentioned financial engineering.

--For all the hype, online retail sales are still just about 3% of the pie, though are expected to increase another 20% this November and December. However, that would be less than last year's 26% growth rate for the 2006 holiday season. Dec. 10 is online retailing's Black Friday, incidentally.

--The global real estate boom is still in place in a few nations, such as Bulgaria. Last year when was I there, I hired out a driver, Tony, to take me to a mountain monastery. What a great kid, and very sharp. But I was thinking of him in reading a piece on the surging Bulgarian market because Tony said he was investing in local real estate. "Be careful," I told him. Every now and then I receive a note from him and I know from time to time he reads this, so, Tony, take your profits!!

[The point of the article I perused is that rampant development is destroying many of Bulgaria's once-charming mountain villages that are also wintertime ski resorts. It's a classic boom/bust scenario in a developing country.]

--Real estate in Moscow is totally out of control, speaking of bubbles. People don't buy and sell homes or apartments here; they tend to rent instead and a decent place goes for $5,000 to $10,000 a month! Of course few can afford this?legally, at least, i.e., there is a ton of excess credit here just like everywhere else in the world. [Pensioners have a far different deal; as in state subsidized housing.]

--The strike by Broadway stagehands is a mini-disaster; not as much in terms of the hit to New York's economy, an estimated $130 million in ticket sales if it goes through Christmas, but as Mayor Bloomberg says, "I think what hurts more is our reputation. It's the psychic things rather than the dollars."

I have to be honest; I have zero sympathy for the stagehands, like I might in the case of striking musicians, teachers or postal workers, for example. Talk about replaceable.

"Stagehands make $100,000 to $150,000 a year. That's a pretty sweet deal, even by New York standards - and it's made even sweeter by the fact that stagehanding isn't among Gotham's more demanding trades.

"Indeed, very few waiters, waitresses, busboys, bartenders and retail workers make that sort of money. Yet these are the working people who are taking a huge hit.

"They're losing money during what should be a peak time of the year - and they don't have a strike fund to help offset the losses."

Now I really don't give a damn about these folks. You might also call them idiots.

--On a related topic, I saw an NBC News report on Wednesday talking about the surge in foreign visitors to the U.S. due to the tumbling dollar, but this is highly deceiving. As Newsweek's Fareed Zakaria pointed out in his column this week, according to the most recent statistics the United States has seen a 17% overall decline in tourism since 9/11; the only major country to see a drop during a period when global tourism is booming.

One of the chief culprits, and the point of Zakaria's piece, is the U.S. is making it inordinately difficult to come here, as in huge delays for those countries where a visa is still required.

This is absurd. Our fears over terrorism have gone to extremes, and as a result business travel from overseas is way down; not a good thing. We've all learned there are other places to set up shop these days, sports fans.

--Hewlett-Packard beat Wall Street's estimates for its fiscal fourth quarter, but 42% of its $2.63 billion in total operating profits came from its Imaging and Printing Group, i.e., ink. I am personally responsible for 10% of that figure and I'm increasingly ticked off at sites such as Bloomberg.com that put dumb images, all in black, on many of the pages that I print out. Many sites are now doing this, whether it is advertising or not.

I'm printing the page not because I want to have a stupid stock picture of Pakistan! What is the freakin' purpose of this except to waste my money?!

--France's legislature, with President Sarkozy's approval, is proposing a government body that would monitor Internet piracy, with a three-strikes-and-you-are-out policy against those who download music and films without paying for them. Working closely with Internet service providers, persistent offenders could see their Net accounts suspended or terminated if they ignored warnings. Good. [Remember, I'm the last one in the world who actually goes to a music store and buys CDs. I expect some kind of lifetime achievement award from the music industry one of these days.]

--Thanks to congressional wrangling, mostly on the Democratic side, the Alternative Minimum Tax "patch" won't be signed into law until December, which means it's too late for the IRS to program their computers in time to allow next year's refunds to go out on schedule. As columnist Robert Novak notes, the chief culprit is Democratic Senate Majority Leader Harry Reid, perhaps the worst to ever hold this position, by the way. That's my conclusion, not Novak's stated one, though it clearly would be. However, some Republicans are concerned they will be blamed for the delay. Bottom line?Congress is well-deserving of its abysmal approval ratings.

--It's pretty clear the economy is going to be a big issue in the presidential race. And it won't be good for the elephants.

--I brought back lots of rubles from Russia, my hedge against the coffee cans full of coins in my laundry room. [Don't try and break into my house because of this disclosure. I have crocodiles and wolverines down there.]

--My portfolio: I'm going to comment further on my China biodiesel play down below, but for those of you in it with me, understand I was in contact with the company, expressing my dismay over the lack of a financing deal for the plant expansion, and I was urged to remain patient, that something should be happening shortly. The stock isn't likely to go anywhere until then.

It's also obviously been a tough time in the markets, overall, so many of us haven't been able to afford premium beer. Yes, it's been a period for domestic consumption only.

But I see that SABMiller, owner of Pilsner Urquell and Peroni, purchased another of the great premium brands, Dutch brewer Grolsch, to add to its stable of fine brews. We need the equity markets to turn in earnest before we can celebrate this acquisition.

--Lastly, back to the haves vs. have nots; rich vs. poor debate. My last day in Moscow I was sitting at the hotel bar and trying to figure out what this American guy, about 40, was doing with two very cute Russian girls around 20. No, it wasn't anything bad. They were having a very animated conversation about politics, the girls were clearly on their way to the U.S., and they were pumping this fellow for information. You couldn't help but hear it, being as we were the only ones in the place at the time, when this guy suddenly told this rather funny story. The guy prefaced it by saying it was an illustration of the growing divide in America.

It seems director Steven Spielberg's private plane had some mechanical issues and Spielberg, with a six-year-old daughter in tow, was forced to hop on a commercial plane to get home. So they're sitting in first class, but the plane is full, and the six-year- old turns to her very wealthy father and says, "Daddy, who are all these people on our plane?"

Iraq: I was thinking the other day of how ridiculous it looks that President Bush once handed out Medals of Freedom to the likes of General Tommy Franks, L. Paul Bremer and George Tenet. There is only one after over 4 ? years I deem worthy, Gen. David Petraeus.

"Petraeus brought three vital qualities to our effort: He wants to win, not just keep the lid on the pot; he never stops learning and adapting, and he provides top-cover for innovative subordinates.

"By late 2006, mid-level commanders were already seizing opportunities to draw former enemies into an alliance against al- Qaeda. Petraeus saw the potential for a strategic shift. He ignored the naysayers and supported what worked.

"Oh, and under Petraeus our troops have been relentless in their pursuit of our enemies. Contrary to the myths of the left, peace can only be built over the corpses of evil men."

"The evidence is now overwhelming that the 'surge' of U.S. military forces in Iraq this year has been, in purely military terms, a remarkable success. By every metric used to measure the war - total attacks, U.S. casualties, Iraqi casualties, suicide bombings, roadside bombs - there has been an enormous improvement since January?.Credit (belongs) in large part to U.S. soldiers in Iraq, who took on a tremendously challenging new counterterrorism strategy and made it work; to Gen. David Petraeus, the architect of that strategy; and to President Bush, for making the decision to launch the surge against the advice of most of Congress and the country's foreign policy elite.

"It is, however, too early to celebrate - as Gen. Petraeus and his commanders in Iraq are the first to point out. The principal objective of the surge was not military, but political."

But, as the Post continues, if the surge was about buying time for political reconciliation, "the Bush administration's passivity is even more disturbing."

As in why the hell is Secretary of State Condoleezza Rice wasting a minute of her time, now, on the Israeli-Palestinian issue when she should be locking Iraq's leaders in a room until they reach some real consensus?! It's great that some Iraqis are beginning to return to their homeland, after basically being forced out by Syria, but what are they returning to?

"If you were President Bush and your whole legacy was riding on the outcome of this war, wouldn't you be sending your top diplomat to Baghdad to work with Iraqis and their neighbors to broker a political settlement and not let them grow complacent that they have an open-ended commitment from the American people?"

Ah, but we'll stop there because Friedman just mentioned the "legacy" word. Friends, I respectfully submit that Iraq is far from the only item that will appear on Bush's legacy when it comes to foreign policy, yet so few get it.

"Though I don't especially want to perpetuate any stereotypes about the mainstream media, I have to say that this optimism [over Iraq] is totally unwarranted. Not because things aren't improving in Iraq - it seems they are, at least for the moment - but because the collateral damage inflicted by the war on America's relationship with the rest of the world is a lot deeper and broader than more Americans have realized. It isn't just that the Iraq war invigorated the anti-Americanism that has always been latent pretty much everywhere. What's worse is the fact that - however it all comes out in the end, however successful Iraqi democracy is a decade from now - our conduct of the war has disillusioned our natural friends and supporters and thrown a lasting shadow over our military and political competence. However it all comes out, the price we've paid is too high."

Applebaum goes on to refer to the fact that because America has been distracted by Iraq, we have steadily lost influence in far more important Asia (as Fareed Zakaria has also written), plus who is the key to nuclear negotiations with Iran? Not the United States, but Britain, France and Germany.

But she is only partially correct, because Applebaum makes zero mention of Russia or China, or right at this very moment, an even more critical issue, Lebanon.

So let's look at the Bush administration's legacy, as measured today, in the foreign policy sphere.

North Korea?could be a positive, but it will be a long time before we really know.

Iran?a disaster to date, with less than a year to turn it around on the nuclear weapons front before the United States and/or Israel is forced to strike; which will not be good.

Pakistan?potentially on the verge of collapse, with terrorists having free rein in the tribal areas. And Pakistan has nukes.

Afghanistan?zero improvement. The Taliban and its acolytes (warlords on the take) are back to controlling half the country, thanks to Pakistan's inability to police its side of the border.

Lebanon?an unmitigated disaster almost totally due to the inexcusable and virtually criminal neglect of the U.S. in the critical six months following the 2005 assassination of Rafik Hariri, which presented a tremendous window of opportunity that the White House then failed to exploit. Part II of the disaster was not telling Israel to cease with its 2006 war with Hizbullah. Hizbullah, by Israel's own admission, is even stronger today as a result. And now the Lebanese people themselves are on the verge of a civil war that would only benefit America's enemies.

China: I would submit that within a few months, most Americans will understand our relationship with China has never been worse in terms of the varied threats it poses. Far more below.

So let the Bush administration try to hoodwink you into talk of a positive legacy. Readers of this column know otherwise.

Iran: Our friends the Chinese scuttled talks over a new round of sanctions because Beijing opposes them. And the International Atomic Energy Agency's Mohamed ElBaradei admitted his people know less today about Iran's activities than they did a year ago. But you know what? Iran's President Ahmadinejad did say something accurate this week; the U.S. greenback is indeed an increasingly "worthless piece of paper."

Pakistan: President/General Musharraf's new puppet Supreme Court threw out the final challenges to Musharraf's recent election victory, so, in keeping with his past promises, he is expected to step down as military leader this weekend, with a long-time ally having already been tapped for the slot. [A man who Washington seems to like.]

Earlier, Musharraf had released a few thousand prisoners, but not the former chief of the Supreme Court who had defied him.

"The forces arrayed against Musharraf are a varied lot. There are lawyers (not always sure friends of the rule of law) and liberal professionals disappointed by the pace of reform and by the power of the Army, but there are also in the streets agitators and religious obscurantists (sic) who oppose Musharraf for his alliance with the United States, for the greater realism and moderation he brought to his country's foreign policy.

"Musharraf may not be a devoted democrat, but in all fairness, he has hitherto ruled with a light touch. There is in him a soldier's earnestness, a preference for order. His hero is not Lincoln but rather Turkey's soldier-founder, Kemal Ataturk. Musharraf had picked that romance for Ataturk early in life, when his father was assigned to Pakistan's embassy in Ankara. The Musharrafs spent seven years in Turkey, and the creed of Kemalism - for the people, despite the people, the Army as a guardian of a nation's order, and 'progress' in the face of religious reactionaries - is basic to Musharraf's worldview."

"Today, Pakistan's Gen. Pervez Musharraf is playing the old game [ed. the dictator's self-serving sales pitch], as is Egypt's Hosni Mubarak, and it appears to be working. Substitute radical Islamists for communists, and (it's) the same: Apres moi, le deluge. If you force me out, the radical Islamists will win. And Musharraf is busily trying to ensure that this is the only option. He cracks down on moderates with good democratic credentials, and with far greater zeal than he has cracked down on al-Qaeda. If he can hold on long enough, he may so radicalize the opposition that no reasonably moderate alternative will be available."

On comparisons between today's Pakistan to the fall of the shah of Iran, Kagan writes:

"Musharraf is not even like (him). He is not the living embodiment of a regime, as the shah was. He is not irreplaceable. He is not the lone savior of a whole way of governance. He is but a general, and not an especially effective one at that.

"There are other generals. With all the billions of dollars in aid the United States provides to Pakistan, it ought to be possible to discuss with the Pakistani military alternatives to the man who so poorly serves their interests. Musharraf may be willing to lose American aid in order to remain in power, but that is unlikely to seem attractive to the men who work for him. It ought to be possible to find a general who is willing to let Pakistan return to a democratic path and meanwhile to do a better job of fighting Pakistan's real enemies?.

"If the (White House) cannot muster the courage or skill to replace this eminently replaceable man in the name of Pakistani democracy, all because it fears the alternative, then it had better cease the absurd rhetoric about democracy promotion. It had also better get used to a greater Middle East and Muslim world where there are only two types of regimes: radical Islamists and stubborn dictatorships. That, presumably, is not the legacy Bush wants to bequeath to his successor."

For the record, President Bush, who initially scolded Musharraf when the general issued his emergency decree, suddenly switched gears and said last week that Musharraf was "truly somebody who believes in democracy." This actually may have had something to do with a New York Times story a few days earlier that the U.S. was seeking to bribe tribal leaders to fight al- Qaeda and the Taliban.

Lebanon: Friday's deadline to come up with a successor for pro- Syrian President Emile Lahoud came and went. Lahoud then departed and a new vote among parliament members to replace him has been scheduled for next Friday. But the two sides can't even agree on whether a state of emergency exists, let alone who is truly in charge. One of the big problems is a two-thirds majority is required for the election of a new president, but the pro-West ruling bloc barely has a majority, thanks in no small part to Syria assassinating a number of pro-West parliament members.

China: U.S. Admiral Timothy Keating said he was perplexed and concerned over China's last-minute decision to deny the USS Kitty Hawk a long-scheduled four-day visit to Hong Kong. Hundreds of family members had flown there to spend Thanksgiving with the sailors, but then China denied it access. [China later reversed course but not until the ship was well out to sea and back on its way home. Keating was right in not turning the vessel around.]

Earlier, two U.S. minesweepers, seeking to refuel and avoid rough weather in the South China Sea, had asked for permission to enter Hong Kong and China denied their request as well. Just a few weeks ago I told you Secretary of Defense Robert Gates' trip to Beijing to meet with his Chinese counterparts was "largely a waste of time." [WIR 11/10/07] Point proved.

Understand something about China, at least its leadership. It doesn't give a damn about you?whether you are in Japan, Namibia, or the U.S. It also doesn't give a damn about its own people, in the traditional sense that you or I care about our fellow man. Get used to me being more of a Cold Warrior when it comes to this topic. It's the result of an accumulation of evidence, both gathered from personal experience as well as through my wealth of sources. And if you aren't troubled by an example like the Kitty Hawk, you should be.

As you know, I have this shareholding in China?.my biodiesel company?and the plant during the summer was hit by one storm after another. I'd check up on whether there were any production delays through my personal contact, and always say something about the workers, as in "congratulations to your workers for weathering the storm," or, "I hope you are rewarding your workers, etc."

You know, sometimes it might seem corny when an American leader, such as President Bush, says something to the effect that "America's greatness is in its people," or the strength of America is in its workers. Our leaders have been saying things like that since the beginning of this nation. It's also true.

Any good business leader always praises the efforts of those below them. I know in my own experience when I rose to my last senior post and was responsible for our sales force, I was nothing without the help of those working for me, and I'd like to think I let them know that. I was also no different than any good boss in going to bat for my people.

I know I'm going off on a tangent here, but it really pissed me off the other day when I told my China contact to thank the workers for me, as a fairly large shareholder, and his reply was cold as a fish. Remember, just last spring I visited the place. I saw the workers. I know their living conditions. I have an idea what they are paid. [Actually, I know exactly what they are paid.] I give a damn about these people, as a caring human being. But China's leaders don't care. Nor did they have the decency, after hundreds of United States families had flown all the way to Hong Kong, for crying out loud, to spend a few days with loved ones, to allow the Kitty Hawk to dock. What a bunch of bastards.

This is the same regime, broadly speaking, that continues to poison its own people. No doubt, every nation on earth, including our own, has had its Industrial Revolution type moment where there was a period of time when progress came at a price to the health of its people.

But this is 2007. And I'm not even talking about the excessive use of dirty coal in China. Some of that has not been preventable as yet. No, it's about flooding their water system with sewerage and chemicals. Or the Three Gorges Dam project, perhaps the biggest mistake of the past few hundred years on the environmental front, just wantonly destroying centuries of history along with the forced removal of millions for a structure that increasingly looks like it has the stability of something built out of straw by the Three Little Pigs.

I warned a few weeks ago that the real clash with China is coming over pollution. Then, I was referring to air pollution that is carried by the jet stream to our air and soil. But there is another movement coming, and that is about the evil China will increasingly be perceived to represent. And I haven't even touched on the military aspect (or toys for that matter).

But to end this rant on a hopeful note, a provincial government adviser and true Profile in Courage, Wang Zhaojun, called for political reform the other day; specifically lifting the ban on religious groups and parties such as Falun Gong, as well as a reappraisal of the Tiananmen Square massacre. Wang also recommended depoliticizing the People's Liberation Army and allowing multi-party politics; all of which are taboo topics.

"Asked why [an official of his stature] risked political repercussions, he told reporters that he was frustrated with the bureaucracy when he paid a courtesy call on the cabinet's State Environmental Protection Agency."

Wang also praised democracy on Taiwan. It may be chaotic, he noted, "but it is out in the open and better than the scheming and intrigues of palace politics and the sound of sharpening knives."

North Korea: Sometimes you just can't make this stuff up. Apparently, Kim Jong-il has tabbed as his successor his second eldest son, Kim Jong-chol. This guy supposedly has a disease that causes him to produce excessive female hormones.

Israel: Talk about a waste of time; that is exactly what this coming week's parley in Annapolis, featuring Israeli and Palestinian leaders, is. There will be no actual negotiations, rather the talks are designed to establish a process for future ones. But I'll try and keep an open mind.

Russia: I couldn't have had a better week than I did in Moscow, including after I posted my column last time, but what to say about a government that forces former Yukos chairman Mikhail Khodorkovsky and his business partner, Platon Lebedev, to literally read tens of thousands of pages of "evidence" against them as part of their prison terms? If they don't, prosecutors could extend the sentences in their money-laundering cases.

Each has to read 130 volumes that number more than 30,000 pages. They began in February, but had to pause two months because prosecutors trumped up some other cases related to theirs. Both, though, have to finish the readings by Dec. 22. If you're thinking this is something out of Solzhenitsyn, you're right. It also has to do with putting them on new trials before March's presidential election.

Meanwhile, I missed by just a few days possibly seeing President Putin at his first big campaign appearance prior to the Dec. 2 parliamentary vote. Then again, I can't possibly imagine I would have been allowed into the stadium where Putin addressed thousands of youth. [Unless I died my hair and took a crash Berlitz course the evening before. "Me? Ah, I joined the Nashi, err, just a few hours ago."]

"Unfortunately there are still those people in our country who act like jackals at foreign embassies?who count on the support of foreign funds and governments but not the support of their own people."

"They want to go out into the streets, they've learnt from Western specialists. They've trained in neighboring republics."

Putin reassured his followers "In the months to come we will have a total renewal of the top leadership of the state."

United Russia, the party that Putin is fronting, has seen its support rise back up to 64 percent. The Communists, at 7 percent, are the only other ones who meet the threshold, on the number, for representation in parliament.

Russia affairs expert Marshall Goldman, a senior scholar at Wellesley College and Harvard University, had the following as part of an op-ed in the Moscow Times.

"In the long run?it would be better if Putin decides that for the good of his country, he should establish the precedent that even the most popular president must not only adhere to the Constitution, but step down after two terms and make way for a new leader. Putin would do well to follow George Washington's example. Popular as he was, Washington realized that it was important that the country's leaders not stay in office too long. He therefore refused to stay on for a third term, leaving government service completely.

"If he really cares for the well being of his country, Putin should do the same."

In a separate item, Russia is building a space complex near the border with China capable of launching both civilian and military rockets. This isn't totally without reason, though. Currently, Russia uses a Soviet-era base, Baikonur, in Kazakhstan. It needs its own. But it nonetheless may be a bit unsettling to China, which isn't necessarily a bad thing.

France: President Nicolas Sarkozy had his hands full with the nation's transit strike, but the people are solidly behind him and the strike has largely fizzled out. Score a huge victory for our new hero. Sarkozy also vowed that those who sabotaged the country's high-speed rail line would be punished with "extreme severity." The guillotine might be appropriate, mused your editor.

One Paris resident told the BBC that when it came to the strikers, "This is ludicrous! They are all a bunch of lazy people, and I am personally both enraged and ashamed at their behavior!" Touche! Some of these workers can currently retire on full pensions as early as age 50, and all Sarkozy is attempting to do is bring their benefits in line with others.

Kosovo: Remember?watch this little place. A former guerrilla leader emerged as prime-minister-designate after recent elections and he's calling for independence, as did all his opponents. By Dec. 10, when UN status talks are slated to end, there could be trouble. As reported by David Charter of the London Times, both ethnic Albanians and the minority Serbs are armed and ready for a brawl. Recall that Russia is backing Serbia's claim to keep Kosovo in the fold.

Venezuela: President Hugo Chavez's "revolution" could receive another boost on Dec. 2 with a referendum that is designed in essence to formally make him president for life and allow him to massively revise the constitution to turn his country into a purely "socialist" one. Chavez would then control all aspects of commerce. Aside from the oil angle, Americans need to care because Venezuela is no doubt becoming a base for Iranian agents, with Venezuela but a two hour flight from Miami.

Zimbabwe: Geezuz, there are a lot of bad people in the world these days. Like President Robert Mugabe, who is seeking to mortally wound his country's economy by taking over the last viable businesses; those involved in the mining of fuels and minerals. Mugabe is proposing to take 25 percent of the operations without paying for them, while paying minimally for 26 percent, with the method of payment, of course, not specified. He did the exact same thing to white-owned farms in 2000, with disastrous consequences.

Britain: Not a great week, that's for sure. First, the soccer team, only needing a tie against Croatia to advance to next year's European Cup Championship, lost 3-2. [The coach was immediately fired.]

But, perhaps more importantly (at least in some circles), two computer disks containing detailed personal information on 40 percent of Britons went missing after they were being delivered by a simple transport service, unregistered.

Australia: Aussie voters go to the polls on Saturday. Four-time incumbent John Howard is expected to go down to defeat with Kevin Ruud becoming the new prime minister. But while Ruud wants to withdraw Australian troops from Iraq, he's otherwise pro-American.

Dow Jones -1.5% [12986]
S&P 500 -1.2% [1440]
S&P MidCap -2.0%
Russell 2000 -1.9%
Nasdaq -1.5% [2596]

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