the week 2/25/2008 - 2/29/2008
O'Connor / London Times
borrowers unable to muster a big deposit have become the latest
victims of the credit crunch after Britain's biggest building
society effectively shut its doors to all but the most cash-rich
has told customers wanting a loan for more than 75 percent
of a property's value that they will pay higher rates of interest
to reflect the increased risks involved..
gave warning that the move would hit cash-strapped first-time
buyers the hardest and could be a sign of further tightening
of mortgage lending by other banks."
Britain. Here in the United States..
Rushe / London Times.from Cleveland, Ohio
through squinted eyes and you can still see what once attracted
people to Cleveland's Slavic Village.
took its name from the Czech and Polish immigrants who settled
there in the mid-19th century to work the city's wool and
steel mills. Its tree-lined streets and attractive, wood-framed
homes were once home to a community filled with factory workers,
young families and first-time homebuyers.
pockets still have that family feel, but decline set in during
the 1980s as those jobs moved overseas and drug dealers and
violence moved in. The city authorities cracked down, local
people rallied round, and until a few years ago residents
said life in the village seemed to be improving again. Then
came the subprime debacle.
Village looks as if it has been hit by a hurricane. And this
man-made disaster rivals hurricane Katrina when it comes to
displacing families. The 2005 storm displaced some 35,000
people in the worst-hit districts of New Orleans. Since 2003,
34,156 people have lost their homes to repossession in the
Cleveland area, according to Case Western Reserve University,
and the pace of those losses is accelerating. The new year
is barely two months old and so far there have been 1,857
foreclosures in the Cleveland area..
and rubbish (now) litter the streets (of Slavic Village).
Signs warn trespassers the structures are unsafe. People have
spray-painted 'No copper' or 'No metal' on their doors to
deter crooks who have stripped anything of value from these
decaying shells. Even brick steps have been ripped off, leaving
houses that look as if they are floating on a dark sea of
Village is Ground Zero for a tragedy being repeated across
and scary, what is happening in our country, but I threw in
the U.K. example because it further points out how truly global
the crisis is when it comes to housing and the unfolding credit
a week here where there was a slew of news on this front and
it was all disastrous. The leading S&P Case-Shiller index
of 20 metropolitan housing markets revealed that prices were
down 8.9% in the fourth quarter vs. a year earlier, and are
now off 10.2% from the 2006 peak. January existing and new
home sales continued to plummet, with the median price on
the former off 4.6% year-over-year, and down a whopping 15%
for the latter. Meanwhile, inventories are still rising at
a time when you all know you can't have a bottom until you
begin to work them off, and the ultimate indicator, foreclosures,
also reflects a further weakening; as in they were up 57%
in January, with Nevada the worst state and the Cape Coral-Ft.
Myers, Fla., metro area suffering the most.
two largest mortgage finance companies, Fannie Mae and Freddie
Mac, reported losses of $3.2 billion and $2.45 billion for
the quarter thanks to plummeting values on their derivatives
holdings tied to mortgages, while Newsweek had a telling story
on how lenders are turning off the spigot on home equity loans,
as in say your line of credit is $25,000 and you've spent
$10,000. Now some lenders are stepping in and saying they
will extend you no more. Only the $10,000. With moves like
this, it's no surprise defaults on consumer, auto, and student
loans continue to rise at an accelerating pace.
Toll, of the homebuilder bearing his name, in reporting the
worst quarterly loss in its history, blamed the media to a
large extent for hawking fear. "Revived buyer confidence is
paramount to getting the market moving again," Toll said.
no doubt the media is guilty of fanning the flames, the truth
hurts. Inflation (around the world), is a big issue, with
a dire reading on producer prices, the PPI, up 1.0% in January,
while readings on manufacturing, such as this week's releases
on durable goods and the Chicago Purchasing Managers Index,
were dreadful. So is it any wonder then that two readings
on consumer confidence also came in at new, multi-year lows?
note on global food prices, the UN's World Food Program, which
is responsible for relieving hunger among the poor, can no
longer afford the volume of aid once given because of the
rising cost for agricultural commodities. You keep hearing
how more and more are entering the middle class, worldwide,
but many of these same folks (let alone the poor) are now
being hit with soaring prices for basic staples such as wheat
and rice. The director of the WFP, Josette Sheeran, said "We
are seeing a new face of hunger in which people are being
priced out of the food market."
1/5/08, I wrote of the potential for food inflation and "political
combustibility" in countries such as Russia and China, but
you can talk of this just about anywhere these days. It's
the developing world that is most at immediate risk as governments
are no longer able to deal with rising subsidies on everything
from food to fuel. Something has to give, so they raise prices
on one, or both. The people then, already barely scraping
by, voice their frustration and increasingly take it to the
streets. This is going to be a major theme the rest of the
year, I suspect.
of our Federal Reserve? Chairman Ben Bernanke appeared before
the House and Senate for his semi-annual testimony on the
state of the economy and he left little doubt the Fed's main
concern these days is to keep the economy from sliding into
recession, first, while fighting inflation is going to have
to take a backseat for now. Ergo, on March 18 the Fed will
slash rates yet again, at least 50 basis points (1/2 percent),
even though until just the past two days, reducing the short-term
funds rate (its primary vehicle) has had little, if any, impact
on reducing the yield on the key 10-year Treasury off which
most conventional mortgages are based. Coupled with the disconnect
between Treasuries and mortgage-backed securities due to the
credit crisis and illiquid markets, the rate on a 30-year
mortgage has risen, not what the Fed had sought by its actions.
week's end, rates on Treasuries had come down across the board
in a flight to safety and mortgages, all else being equal,
should eventually follow. The problem when it comes to reinvigorating
the housing market, though, is that so few seem to qualify
for a conventional mortgage these days and those with existing
ones, seeking to refinance if rates fall, can't because more
often than not they now have negative equity if they've acquired
their home in the past 3-4 years.
Bernanke, he warned some small U.S. banks could collapse in
the current environment, but, fear not, no big ones! I needn't
remind you this is the same man who last June was saying,
in his best Bart Simpson imitation, "No problemo!" when asked
about the extent of the subprime crisis. It is a national
embarrassment how clueless this man is, or perhaps to put
it a little more delicately, Stephen Stanley, economist at
RBS Greenwich Capital Markets and a former member of the Richmond
Fed staff, told Bloomberg "It really kind of scares me that
the Fed had no idea things were going to get worse," particularly
in terms of liquidity in the credit markets.
of clueless, there is no bigger example of this than President
Bush, who was taken aback at his press conference when a reporter
suggested we might see $4-a-gallon gasoline.
what did you just say? You're predicting $4-a-gallon gasoline?
That's interesting. I hadn't heard that..I know it's high
out San Diego way, told me he paid $3.70 a gallon last Sunday.
Just a reminder, Mr. President. As you're working out, flip
on CNBC and look at the gasoline futures contract. Say you
see $2.50. Now, Mr. President, tack on about 65-70 cents for
a national average at the pump. That takes you to $3.15- $3.20.
Some states are higher, some are lower, depending mostly on
taxes. 'Huh,' you might then muse. 'We're really just one
more spike away from $4.'
I brought up Josh, a managing director at a large financial
outfit, we've been exchanging notes on our various markets
and he wrote this week, "My office is in downtown San Diego
and I am staring out at two 200+ unit condo towers, largely
empty, as a massive 600-unit project is also going up. The
inventory is staggering." I myself keep staring at the 75-unit
townhouse development down the block from me, just about finished
(at least the exterior), and not one 'sold' sign as yet. I
have nightmares of gangs of ghouls breaking in to steal copper
in my otherwise upper-middle class neighborhood. It could
be time to tie up some wolverines in the yard.
opened the week strong, though no one knew why, yet finished
in the red thanks to Friday's drubbing.315 points in the Dow
Jones. AIG's announcement it was taking an $11 billion hit
on derivatives contracts tied to mortgages didn't help matters,
while uncertainty over potential workouts with some of the
monoline insurers that have been in the news a lot recently
provided their own source of woe. Overall, the Dow fell 0.9%
to 12266, while the S&P 500 lost 1.7% and Nasdaq gave up another
1.4%. The month of February represented the 4th straight month
1.81% 2-yr. 1.63% 10-yr. 3.52% 30-yr. 4.41%
plummeted in the aforementioned flight to safety, as well
as on Bernanke's comment the Fed will act in a "timely manner"
to combat a "sluggish" economy, i.e., more rate cuts.
has been a lot of talk about the Fed's moves and the impact
on the long end of the yield curve, so I'll give you some
data you won't find anywhere else..at least in such a simplistic
hikes the funds rate 25 bp to 5.25%...10-yr. 5.22%
9/18/07.Fed lowers funds rate 50 bp to 4.75%...10-yr. 4.50%
10/31/07.Fed lowers funds rate 25 bp to 4.50%...10-yr. 4.48%
12/11/07.Fed lowers funds rate 25 bp to 4.25%...10-yr. 3.98%
1/22/08.Fed lowers funds rate 75 bp to 3.50%...10-yr. 3.52%
1/30/08.Fed lowers funds rate 50 bp to 3.00%...10-yr. 3.78%
the 10-yr. is back down to 3.52%, having touched 4.00% intraday
just a few weeks ago. It's not the be all to end all, but
the 10-year must trade lower if a segment of the housing market
is to begin the bottoming process (while assuming the mortgage
securities market stabilizes in kind). But remember, once
we bottom, we sit there. No 'U'- or 'V'-shaped recovery, sports
fans. It will be like the end of a luge or bobsled run. You
flatten out, and stop, and look around.and think now what?
the record, the first revision on 4th quarter GDP came in
at 0.6%, same as the initial estimate.
analyst said the total volume of writedowns as a result of
the mortgage/derivatives crisis would be $600 billion. As
of today, about $160 billion has been taken.
Bush said with a straight face that a strong dollar was in
our nation's best interest; this as the dollar plummeted to
another all-time low against the euro.$1.52. And the Fed is
only exacerbating the problem by continuing to cut rates,
which in turn is giving inflation a chance to get well-entrenched.
Journal had a big story on the commercial real estate glut
.in the U.K.
on Monday had its highest one-day price rise ever, up 20%,
on reduced supply due to extreme weather among the leading
producing nations, the lowest inventories in 60 years, and
tariffs on exports among some countries seeking to maintain
enough wheat for domestic consumption.
of nowhere, Liechtenstein wormed its way into the conversation
as the result of a wide-ranging, and scandalous, German investigation
into tax evasion. Citizens of Sweden, the U.S., the U.K.,
France, Italy, Spain, Canada, Australia and New Zealand also
have suspects that are getting swept up in the probe.
more than 100 have already been questioned with most then
confessing they were hiding income in the little principality.
The data became available through an informant inside Liechtenstein's
largest financial group, LGT, who then turned it over to German
intelligence. With the information now being shared with the
above noted countries, you have people like U.S. Sen. Carl
Levin offering that the bank "apparently harbored numerous
secret accounts which hid the taxable assets of thousands"
around the globe. In the case of Germany, officials there
are looking to recoup hundreds of millions of euros, while
Chancellor Angela Merkel is also pressuring another principality
under suspicion, that being Monaco.
for MF Global, the world's largest broker of exchange-traded
futures and options, lost $141 million after he somehow overrode
the order-entry system and "substantially exceeded" his limit
in the wheat futures markets. He was immediately terminated
and sent flying out a fortieth-story window.
but $141 million is small potatoes to Sprint Nextel Corp.,
the third-largest wireless carrier, which posted a loss of
$29.5 billion, along with scrapping its dividend, as it wrote
down the value of Nextel Communications, while in the process
of losing over 680,000 subscribers. It is the 5th-largest
loss among S&P 500 companies since 1990 and the outlook is
for more of the same, as in subscribers continue to leave
European Union fined Microsoft $1.3 billion for charging "unreasonable
prices" to software developers who wanted to make products
compatible with the Windows operating system. It's the largest
fine ever and brings the total amount the EU has demanded
of Microsoft in its antitrust dispute to $2.5 billion. Last
week, you'll recall, in an attempt to beat back such an action,
Microsoft said it was opening up its source code.
Microsoft also announced it was cutting the price of some
versions of Windows Vista (only those sold in boxes), by 20
to 48 percent. This comes as the company prepares Vista Service
Pack 1, a collection of security fixes.
as the Wall Street Journal pointed out on Friday, it's now
been one month since Microsoft made its $31 bid for Yahoo.
just that Microsoft's own market value has declined since
it went public with the takeover offer. Analysts also have
been lowering their forecasts for Internet-advertising growth
and Yahoo's earnings, according to FactSet Estimates, amid
concerns about the slowing U.S. economy."
out Google, down about 15% over this time. As the Journal
correctly opines, Yahoo CEO Jerry Yang is an idiot (my term,
not theirs) for not grabbing Microsoft's bid because sooner
rather than later, one must assume, Microsoft's Steve Ballmer
will just walk away, at which point would he then pursue German
software king SAP, an idea floated by Randall Stross in the
New York Times?
former executives of General Re Corp. and a former executive
of American International Group were found guilty of a scheme
to manipulate the financial statements of the world's largest
insurance company. Four of them face up to 230 years in prison
and a fine of up to $46 million. The fifth faces 160 years.
The defendants were accused of inflating AIG's reserves through
reinsurance deals by $500 million in 2000 and 2001 in order
to artificially boost the stock price.
isn't good either. Workers are raiding their 401(k)s with
increasing frequency. 18% have loans outstanding vs. 11% in
2006. As Terry Keenan noted in the New York Post, Fidelity
Investments said withdrawals surged 17% in December alone,
the biggest jump on record.
has increased its layoffs from 2,500 to 8,100, or 7.5% of
its global workforce.
Jersey Dem. Gov. Jon Corzine called for a reduction in state
spending of $500 million in order to begin to tackle a crippling
budget crisis. I and all Republicans in my home state give
him credit for finally admitting this is a course we must
take, but it's also symptomatic of the issues facing other
governors across the country, which means more layoffs and,
invariably, higher taxes of one sort or another.
study has concluded that anti-depressants, such as Seroxat
and Prozac, have little clinical benefit, citing the placebo
effect; people simply feeling better because they are taking
a medication that they believe will help them. In England,
the number of prescriptions for the drugs hit a record in
2006, even though guidelines stress they should not be used
as a first line of treatment for mild depression. [BBC News]
U.S. Air Force had 21 B-2 stealth bombers until last Saturday,
when one crashed after takeoff on the island of Guam, a growing
base of operations for the military. It was the first crash
for the plane since its introduction in 1989. The pilots ejected
safely. I only bring this up because the B-2 (and its B-52
stealth brother) cost about $1.2 billion each. That's just
staggering, and one reason why some of us will consider Sen.
John McCain because I'm convinced he will take a look at all
of our weapons programs. We need the B-2, but the military
complex has a long, undistinguished history of cost overruns
that someone with credibility, such as McCain, has to attack.
the Pentagon awarded Northrop Grumman and European Aeronautic
Defense & Space Co. a $40-billion aerial tanker contract for
up to 179 planes, a deal that Boeing thought it would get.]
on Medicare is expected to double by 2017 to $844 billion,
up from $427 billion in 2007, according to the journal Health
Pfizer canceled its long-running ad campaign for cholesterol
drug Lipitor using artificial heart pioneer Robert Jarvik.
Pfizer spent more than $258 million since January 2006 promoting
the world's best-selling drug. The issue was Jarvik's credentials,
for while he has a medical degree he is not a cardiologist
nor licensed to practice medicine. Plus he used a stunt double
in the commercial where he was rowing.
the Oscars were once again dreadful, but those little gold-
plated guys cost $500 to make, vs. $400 last year, due to
the soaring price of the precious metal.
you looking for an exciting job, but one that doesn't pay
well until you hit the 'senior' level? Start taking flying
lessons. Hilary Potkewitz of Crain's New York Business reports
that there is a severe pilot shortage, especially for regional
carriers, mostly due to factors such as extended tours of
duty in Iraq and Afghanistan, as well as a ton of pilots taking
doesn't permit me to cover Warren Buffett's annual letter
to Berkshire Hathaway shareholders. I have the same problem
each year because he releases the darn thing Friday evening
and I'm always too tired to do it justice. So next week, recognizing
you will have seen and heard it all by then.
Turkey announced it was ending its offensive against Kurdish
rebels, the PKK, after the U.S. had urged Ankara to limit
the invasion, while at the same time giving Turkey's leadership
a wink of approval. Cooperation between the two has increased
substantially, a good thing.
there is increased concern over the fate of the northern Iraq
city of Kirkuk, laden with oil, that is being fought over
by the Kurds, Arabs, and Turkmen. A referendum on the status
was to have been held years ago and is now scheduled again
for this coming June. The Turks (as well as Iraq and the U.S.)
are concerned that the majority Kurds would use the oil wealth
to then seek independence.
The number of U.S. forces here will be at a record level by
mid-summer, some 32,000, as U.S. intelligence says President
Karzai controls only 30% of the country, with the Taliban
at about 10% and the remainder ruled by the tribal warlords.
These days, 40% of the proceeds from the drug trade go to
fund the insurgency.
Remember Annapolis? That seems so long ago as on the ground
the situation grows tenser by the day amid signs Israel is
preparing another massive invasion of Gaza, with a goal this
time of actual regime change. Hamas continued its rocket attacks
this week, killing an Israeli citizen, and Israel responded
with one strike after another that resulted in over 30 deaths,
including six children.
Danielle Pletka and Michael Rubin, in an op-ed in the Wall
Street Journal on International Atomic Energy Agency (IAEA)
Director General Mohamed ElBaradei and his latest report on
Iran's nuclear activities that in essence whitewashes Tehran's
report culminates a career of freelancing and fecklessness
which has crippled the reputation of the organization he directs.
He has used his Nobel Prize to cultivate an image of a technocratic
lawyer interested in peace and justice and above politics.
In reality, he is a deeply political figure, animated by antipathy
for the West and for Israel on what has increasingly become
a single-minded crusade to rescue favored regimes from charges
assumed the directorship on Dec. 1, 1997. On his watch, but
undetected by his agency, Iran constructed its covert enrichment
facilities and, according to the 2007 U.S. National Intelligence
Estimate, engaged in covert nuclear- weapons design. India
and Pakistan detonated nuclear devices. A.Q. Khan, the Pakistani
nuclear godfather, exported nuclear technology around the
Libyan strongman Moammar Gadhafi confessed to an undetected
weapons effort. Mr. ElBaradei's response? He rebuked the U.S.
and U.K. for bypassing him. When Israel recently destroyed
what many believe was a secret (also undetected) nuclear facility
in Syria, Mr. ElBaradei told the New Yorker's Seymour Hersh
that it is 'unlikely that this building was a nuclear facility,'
although his agency has not physically investigated the site."
Dmitry Medvedev will roll to the presidency in Sunday's vote
and the only question here is whether it's 70 or 80 percent.
I still go with 70 and not the 71 that Vladimir Putin received
who has done virtually zero actual campaigning once he was
handpicked by Putin to succeed him, has promised to intensify
the fight against corruption, cut red tape and encourage small
business; while towing the Putin line.
feel obliged to continue the course which has proven its efficiency
over the past eight years: the course of President Putin..We
need political stability, we need to keep improving people's
lives, develop the economy, ensure reliable protection of
Russia's sovereignty and protect citizens' freedoms," Dmitry
told voters in one of the few places he gave a speech in.
been funny for the press is watching Medvedev literally morph
into Putin, including his cadence and enunciation, which is
no real surprise since they have the same image makers. And
as one analyst told the Moscow Times, "By parroting Putin's
speech, Medvedev is also reassuring voters that the relative
stability under Putin will continue after he leaves office."
traveled to Belgrade this week to show his support for ally
Serbia in its showdown over Kosovo's declaration of independence.
Medvedev demanded the United States rescind its recognition
in warning "there will be no stability" until the "fake state"
as will be the case over the next four to eight years, Vladimir
Putin is the one pulling the strings as he moves into the
office of prime minister. There are some, though, who say
Medvedev will develop his own independent voice as he tires
of being manipulated. I say this won't be the case, but the
bigger issue will be whether Putin can control the various
KGB (FSB)- oriented factions that walk the halls of the Kremlin.
Estonia's president warned Russia is sliding into dictatorship,
citing the atmosphere at the time of the Weimar republic,
while on Friday, four Russian "Bear" bombers flew a training
mission over the Atlantic Ocean, a classic Cold War tactic.
But speaking of the Russian air force, for the first time
that anyone can recall, one of Russia's arms customers is
seeking to return some product; specifically, Algeria, which
wants to send back 15 MiG-29 fighter jets, part of an $8 billion
arms deal sealed in 2006, because the shipment was deemed
defective. After Algerian officials discovered technical problems
with the first jets they took delivery of, they concluded
the aircraft were assembled with fuselages from used aircraft.
[Nabi Abdullaev / Defense News]
It was a quiet week here, though on Friday, Germany announced
it is sending more troops as part of a training exercise that
is also a demonstration of force in the face of Serbian opposition.
But this is a perfect example of what I've been writing of
for well over a year on this front. Kosovo will take away
from any hoped for increase in NATO's presence in Afghanistan.
Germany, which has been loath to contribute more troops to
the Afghan effort, let alone put its men in harm's way, can
now say 'we are already stretched too thin.'
Foreign Minister Yang Jiechi expressed the sentiments of all
in government in speaking out against criticism over China's
human rights record and the upcoming Olympic Games.
in China enjoy extensive freedom of speech. No one will get
arrested because he said that human rights are more important
than the Olympics. This is impossible. Ask 10 people from
the street to face public security officers and ask them to
say 'human rights are more important than the Olympics' 10
times or even 100 times, and I will see which security officer
would put him in jail."
the rest of the world, though, would choose to disagree; that
China's pledge to improve its human rights record ahead of
the Games is bunk.
the drought-stricken northern part of the mainland, the agency
overseeing flood control and disaster relief has asked local
governments to draw up emergency plans to ensure water supplies,
the recent severe winter weather having largely missed this
region. Rivers continue to dry up and an estimated 2.43 million
( as well as 1.89 million cattle) are short on drinking water.
If the drought continues this could lead to increased sandstorms,
right around Olympics time.
evidence of China's wide-ranging issues on the water front,
you have the story that 120 tons of phosphate-laced mud was
dumped on farmland in Yunnan province, contaminating the water
table. From the South China Morning Post:
from (the Environmental Protection Bureau) said his agency
was alerted to the contamination on Sunday after aquaculture
farmers spotted dead fish in the water."
I have to issue another warning.do not buy fish labeled "farm-raised
China is studying scrapping its one-child policy due to a
rapidly aging population and the fact that the birth rate
today doesn't match the replacement level of 2.1 needed to
sustain the population at existing levels. The flipside is,
how much would an increase in family size sap already sparse
Korea: I am ambivalent about the New York Philharmonic's historic
performance in Pyongyang. On one hand, it didn't do any harm
as I don't believe Kim Jong-il can hoodwink the rest of the
world into thinking he can successfully use this for propaganda
purposes. But at the same time Kim himself did not show up
and the plain fact remains North Korea has not lived up to
its promise to fully declare all of its nuclear activities,
including details on the number of nuclear bombs currently
in its possession.
the Wall Street Journal had an interview with the U.S. commander
in South Korea, Gen. B.B. Bell, who points out that at least
77% of South Koreans today support having U.S. troops in their
country and the new president is pro-American, a positive
change in sentiment that makes one somewhat hopeful the North
will still buckle under pressure down the road.
Just two days after talks were suspended, Kenya's rival leaders
agreed to share power. Former UN secretary general Kofi Annan
brokered a deal in which opposition leader Raila Odinga will
occupy a newly-created, and powerful, prime minister position,
with the cabinet being split between his party and the government
of President Mwai Kibaki. Perhaps, a real reason for hope
Last Sunday, the rubberstamp parliament confirmed Fidel's
brother Raul Castro to be the island's president, but passed
over reformer Carlos Laga for the No. 2 slot and gave it to
ideologue Jose Ramon Machado instead. Raul said he would consult
Fidel on all important issues until the end.
At a press
conference on Thursday, President Bush was queried on engaging
with Raul. "Now is not the time to talk," said Bush, adding
"having your picture taken with a tyrant such as Raul" is
not the right thing.
So I thought
back to an interview on CNN that Nebraska Rep. Sen. Chuck
Hagel gave this past Sunday and here were his thoughts on
Cuba and engagement in general.
I've said that we have an outdated, outmoded, unrealistic,
irrelevant policy. John Ashcroft and I in 1999 were two of
the first to offer amendments to begin engaging with trade.
It's always been nonsensical to me about this argument, well,
it's a communist country, it's a communist regime. What do
people think Vietnam is? Or the People's Republic of China?
Both of those countries are WTO members. We trade with them.
We have relations.
powers engage. Great powers are not afraid. Great powers trade.
going to see any improvement in the Middle East, in Central
Asia, the two wars that we're bogged down in right now, we're
going to have to engage Iran.
doesn't mean we give up our position, that we in any way dilute
our sovereignty, but in fact, Iran is going to have to be
part of any mix of any solution, certainly any peace settlement
in the Middle East.
getting better? I don't think things are getting better. I
think things are getting worse. We're not going to be able
to sustain the policies that we have in Afghanistan and Iraq.
Right now we own both of those countries."
there's some steps before you get to President Bush sitting
down with Raul Castrol. And that's where I think you should
start, for example, engaging with some trade. [Hagel then
pointed out that Nebraska has signed $70 million in contracts
with Cuba over the last three years.]
part of diplomacy. That's part of reaching out. That's part
of engaging. That's part of improving our situation. And I
think that those are the things you need to do to start building
bridges to engage.
the appropriate time would be for the president, whether it's
McCain or Obama..policies will dictate that.
fact is a great nation like America should never be afraid
to engage. And the reality is until you engage, things will
only get worse. We're in a battle of ideas.
not going to win in Afghanistan or Iraq to start with. That's
never a win or lose thing. What will happen in Iraq, in Afghanistan,
will be determined by the people, the Iraqi people, the Afghan
can play a role. They are. It is part of our arc of our instruments
of power. But so is diplomacy, so are alliances, so are all
the factors involved."
Hagel's comments are critically important as they frame the
debate over American foreign policy in the years ahead. I
do not agree with his stance on Iraq, necessarily, seeing
as you'll recall he was against the surge, I sided with McCain
and the president, and we need more time to make it work.
But on engaging in general, I couldn't agree more.
Bush added in his press conference that engaging Cuba would
"discourage reformers inside their own country," while earlier
he said the "stories from Cuba are unbelievably sad." So I
say again, as I did last week, just what good has our existing
policy done in benefiting the Cuban people the past 50 years?
And carrying the argument to the Middle East, when Iran gets
the bomb, we'll ask ourselves, why didn't we try some real
diplomacy years earlier? Nixon went to China, Nixon and succeeding
U.S. presidents negotiated arms control agreements with the
Soviet Union during the height of the Cold War, all to the
good. Granted, each situation is different and I have never
said we should negotiate directly with Mahmoud Ahmadinejad,
for example, but the lack of creativity in the Bush White
House will haunt us for decades.
the men and women of our armed forces.
for the week 2/25-2/29
S&P 500 -1.7% 
S&P MidCap -1.6%
Russell 2000 -1.3%
Nasdaq -1.4% 
for the period 1/1/08-2/29/08
S&P 500 -9.4%
S&P MidCap -8.1%
Russell 2000 -10.4%
Bears 36.4 [Source: Chartcraft / Investors Intelligence]
a baseball and high school sports fan, and live in the Summit,
N.J. area, come to an event I'm sponsoring on Thursday, March
6, at The Grand Summit Hotel, 570 Springfield Ave., Summit;
an evening with Willie Wilson. 7:00-9:00 pm. Admission is
free. I'd love to see you.
great week. I appreciate your support.
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