Posts Tagged ‘Obama’


It’s Obama’s White House, but it’s still Bush’s world

By Julian E. Zelizer – Washington Post 
Sunday, August 15, 2010; B01
When conservatives brand President Obama a socialist or a foreigner, his aides laugh it off. When critics disparage him as arrogant or aloof, they roll their eyes. But if liberals dare compare Obama to his predecessor in the Oval Office, the gloves come off.

“I hear these people saying he’s like George Bush,” White House press secretary Robert Gibbs told the Hill newspaper last week. “Those people ought to be drug-tested. I mean, it’s crazy.” Gibbs went on to deride such critics as the “professional left,” who will be content only “when we have Canadian health care and we’ve eliminated the Pentagon.”

Even though Gibbs later semi-apologized, saying he had spoken “inartfully,” it’s not hard to see why the comparison stings. As the midterm elections approach, Democrats have made George W. Bush a focus of their fall campaign. Speaking at a Texas fundraiser Monday, Obama asked: “The policies that crashed the economy, that undercut the middle class, that mortgaged our future — do we really want to go back to that, or do we keep moving our country forward?” Their message is clear: Republicans still embody the Bush agenda, and only with a Democratic White House and Congress will the nation be able to truly break from the past.

The president is correct in part. Just look at the health-care overhaul, Wall Street reform and the new emphasis on diplomacy in American foreign policy to see the difference that one election can make. Yet the break between Bush and Obama should not be exaggerated. Dismantling the past is extraordinarily difficult. In a host of arenas, Obama is holding on to the Bush administration’s policies and practices, even some that he decried during his presidential campaign and vowed to undo. From the wars we fight to the oil we drill for, we’re still living in the Bush era — like it or not.

First, consider the strengthening of presidential power. Every president since Richard Nixon has fought to restore the authority of the executive branch that was diminished as a result of Watergate. No chief executive was as successful as Bush, especially since he had the help of Vice President Dick Cheney, who had dedicated much of his career to criticizing the 1970s reforms that he thought had emasculated the White House. Bush relied on signing statements and executive orders to implement initiatives such as warrantless wiretapping without having to get approval from Congress.

Obama has not done much to reverse the trend. While he has worked harder to court Congress, allowing legislators to craft the details of the health-care legislation, for example, he has not stepped back from Bush’s robust use of executive power. He has relied on it to strengthen environmental programs and agencies that had been weakened since the 1980s. On national security, the pattern is more striking. Obama’s Justice Department has turned to Bush’s sweeping interpretation of the “state secrets” privilege to battle lawsuits involving the rendition and torture of terrorism suspects, and the president has defended the right of the government to conduct intrusive domestic wiretapping programs.

The second enduring legacy of the Bush presidency is the sprawling counterterrorism infrastructure created after Sept. 11, 2001. The Bush administration vastly strengthened the government’s ability to fight terrorist networks by collecting information, tracking and closing down financial and nonprofit organizations, and interrogating detainees. Although Obama was a critic of this program on the campaign trail, much of it remains in place — most notably, the detention facility at Guantanamo Bay, Cuba.

Early in the Obama presidency, Jack Goldsmith, a former lawyer for the Bush administration who had become a vocal critic of its counterterrorism policies, criticized Cheney for exaggerating the differences between the two White Houses. “The new administration,” Goldsmith wrote in the New Republic, “has copied most of the Bush program, has expanded some of it, and has narrowed only a bit.”

And in a blistering report on the administration’s national security record released last month, the American Civil Liberties Union warned of the “very real danger that the Obama administration will enshrine permanently within the law policies and practices that were widely considered extreme and unlawful during the Bush administration. There is a real danger, in other words, that the Obama administration will preside over the creation of a ‘new normal.’ “

The report praised Obama’s decisions to release the Bush administration’s “torture memos” and to outlaw secret CIA prisons overseas, as well as his prohibition of torture, but criticized the administration for, among other things, failing to eliminate military commission trials and targeted killings of terrorism suspects. ACLU Director Anthony Romero declared himself “disgusted” with the president’s policies.
Nor, in a practical sense, has the Obama administration distanced itself from the Bush administration’s third legacy, its wars for regime change. After the 2001 attacks, Bush defended a vision of foreign policy that sought to remove terrorist-friendly governments from power and rebuild their countries’ civilian and security institutions. These principles underpinned the wars in Afghanistan and Iraq.

To the frustration of many liberals, Obama has not changed course. While following through with Bush’s withdrawal schedule for Iraq, Obama has expanded Bush’s mission in Afghanistan by sending 30,000 more troops into the conflict. He is now relying on Gen. David H. Petraeus, who Bush used to clean up the problems in Iraq, to strengthen the counterinsurgency effort in Afghanistan. And Obama’s withdrawal dates remain fuzzy. At the end of this month, 50,000 U.S troops will still be in Iraq, while the July 2011 deadline for leaving Afghanistan remains far from solid (in fact, many administration officials backed off that date almost as soon as it was announced).

The Bush administration also rejected strong regulatory oversight of offshore oil drilling — a fourth critical legacy. In keeping with their long-held position that oil companies should be free from government restrictions in order to help end American dependence on foreign oil, Bush officials allowed agencies responsible for oversight to be weakened, staffing them with administrators who were skeptical of climate change and other scientific arguments about the environment.

Although many Democrats initially decried Bush’s deregulatory policies on offshore drilling after the BP oil spill in the gulf, it soon became clear that blame also rested with the Obama administration. In a series of penetrating articles for Rolling Stone, Tim Dickinson revealed how the Obama White House had not done much to repair the broken Minerals Management Service and had been willing to trade support for offshore drilling in exchange for votes on climate-change legislation. Ignoring the advice of scientific experts, the administration authorized an aggressive round of drilling in the gulf without adequate environmental review.

After the spill, the Obama administration did impose a moratorium on drilling and stuck with it despite enormous political fallout; when a federal judge struck down the first ban, Obama imposed another. Yet the moratorium has been far from airtight, with loopholes allowing several kinds of drilling to continue.
Fiscal policy is the final area where Bush’s legacy still looms. The tax cuts of 2001 and 2003 provided substantial tax relief for middle- and upper-income Americans, with the benefits weighted toward the wealthiest citizens. Building on Ronald Reagan’s supply-side economics, the Bush administration pushed for big cuts based on the notion that they would propel economic growth. Moreover, during the financial meltdown in the fall of 2008, the administration proposed the Troubled Assets Relief Program — with Democratic support — which offered a massive bailout to the nation’s financial sector.

These policies remain intact. Obama, as a senator and presidential candidate, helped push the TARP through Congress, and as president he extended and defended the bailout. On the Bush tax cuts, which are set to expire this year, the verdict is still out. Here, Obama and the Democrats have made an aggressive push to overturn part of the Bush legacy: They have rallied support to allow the tax cuts for the wealthiest Americans to expire — in order to reduce the deficits they helped create — while extending the cuts for Americans earning less than $250,000 a year. It’s not clear whether they will succeed; after all, many Democrats are nervous about being tagged as members of the party that raises taxes.

Almost since before he took office, Bush was written off by many as an intellectual and policy lightweight, an accidental commander in chief. Nonetheless, it soon became clear that his would be a very serious presidency — one with long-term consequences for the nation and the world, far beyond his two terms in office.

Obama, who won the presidency on a platform of change, is now seeking to recycle that anti-Bush magic for the midterm vote. Yet, he is learning the hard way that it is easier to campaign against the Texan’s legacy than to actually govern against it. It is Bush who, despite avoiding the post-presidential limelight (at least until his memoir is published in November), has continued setting the terms of the debate, so much so that his successor and opponents must adopt many of his ideas, however reluctantly.
We may live in the age of Obama, as many call it, but it’s still Bush’s world.

Julian E. Zelizer is a professor of history and public affairs at Princeton University. He is the editor of the essay collection “The Presidency of George W. Bush: A First Historical Assessment,” forthcoming this fall, and the author of the forthcoming “Jimmy Carter.”

It’s Obama’s White House, but it’s still Bush’s world

________________________
The MasterBlog


Top five bottlenecks in the Gulf oil spill response

Local officials complain about lack of urgency in the federal Gulf oil spill response. Here are five reasons that the government seems to be dragging its heels.

Temp Headline Image
Workers skim a large patch of weathered oil by hand near the boat ramp at Ken Combs Pier in Gulfport, Miss. The Gulf oil spill became the largest ever in the Gulf of Mexico on Thursday, based on the highest of the federal government’s estimates.
(Amanda McCoy/The Sun Herald/AP)

By Patrik Jonsson, Staff writer
posted July 1, 2010 at 7:46 pm EDT
Atlanta —
With each oily wave hitting marshes and beaches from the Gulf oil spill, desperation grows along the already stained Gulf Coast.
In part, the magnitude of the spill has simply overwhelmed the ability of the White House and BP to completely contain it. But it is clear that bureaucratic red tape – echoing the post-Katrina federal response five years ago – has bogged down clean-up efforts as a host of agencies – OSHA, EPA, Coast Guard, Army Corps of Engineers and others – weigh in on most decisions.
Meanwhile, as November elections approach, the oil spill has a political dimension as both parties begin to use the massive oil slick from the Deepwater Horizon accident to bolster their prospects. Democrats will point out Republican ties to Big Oil, and Republicans will chide what they’ll call a lackadaiscal response by the White House.
IN PICTURES: The Gulf oil spill’s impact on nature
If the Macondo well is capped, oil cleanup is ramped up, and no hurricanes hit the slick, the oil spill crisis is likely to eventually abate. But the impression many Gulf Coast residents have so far is of a Keystone Kops response, where mundane regulations and misplaced priorities stand in the way of protecting local livelihoods and the Gulf’s natural environment.
“The cleanup effort is drowning in the proverbial sea of red tape,” writes Gulf Coast native Winston Groom, the author of “Forrest Gump,” in the Weekly Standard.
Here are the top five bottlenecks impeding the Gulf oil spill cleanup so far:
Enough life vests? The Coast Guard has not eased any of its safety regulations and will likely continue to refuse to do so. A Louisiana effort involving 16 oil-sucking barges was shut down for nearly a day on June 18 by the Coast Guard, which wanted to make sure there were enough life vests and fire extinguishers on board.
“The Coast Guard is not going to compromise safety … that’s our No. 1 priority,” Coast Guard spokesman Robert Brassel told The Daily Caller. Louisiana Gov. Bobby Jindal called it “frustrating.”
The Jones Act. It’s unclear to what extent the Jones Act, a 1920 protectionist law that mandates only US vessels and crews operate within the US three-mile maritime border, has really affected the ability to move foreign oil skimmers into the spill theater.
At issue in the law is both availability and proximity of US based skimming vessels. Several nations have said their offers of help have been rebuffed at least in part by US officials citing the Jones Act. This week, Obama sent out a call for more nations to join the clean-up response, but the President has not publicly addressed the legal and practical issues around US law and the foreign fleets ready to help.
“We want all the skimming vessels in the world deployed,” Plaquemines Parish President Billy Nungesser tells the Times-Picayune newspaper in New Orleans.
(Factcheck.org says, “In reality, the Jones Act has yet to be an issue in the response efforts…. So far, offers from six foreign countries or entities have been accepted and only one offer has been rejected. Fifteen foreign-flag vessels are working on the cleanup, and none required a waiver.”)
EPA says no, then yes. Three days after the accident, the Dutch government offered advanced skimming equipment capable of sucking up oiled water, separating out most of the oil, and returning the cleaner water to the Gulf. But citing discharge regulations that demand that 99.9985 percent of the returned water is oil-free, the EPA initially turned down the offer. A month into the crisis, the EPA backed off those regulations, and the Dutch equipment was airlifted to the Gulf.
‘Ever hear of Radio Shack?’ In a recent fly-over of a spill area near Perdido Bay, BP official Doug Suttles expressed amazement that spotter plane pilots couldn’t communicate directly with skimming boats on the surface to direct them to oil patches. “We need to get the skimmers to the oil,” Suttles said. Local officials in Escambia County, Fla., have been asking for weeks for plane-to-ship communications, to little avail.
“Haven’t they ever heard of Radio Shack?” writes Mr. Groom.
Who’s in charge here? President Obama has said “the buck stops” with him. But the actual incident response command structure is a Gordian Knot for local officials requesting help and resources. Frustrated by red tape, some officials have been warned they’ll be arrested if they take matters into their own hands. The lack of a clear command structure has hampered the ability to move resources like booms and skimmers quickly, especially in a still-growing spill that’s at the whim of the Gulf’s ever-changing tides, currents and winds.
While most of the criticism has been heaped on federal agencies and the Obama administration, questions are being raised about the extent to which the four Gulf state governors (all Republicans) are responding too – specifically, on deployment of National Guard troops under their command.
In a recent investigative report, CBS News found that Louisiana’s Gov. Jindal had deployed just 1,053 of the 6,000 troops available to him. “Alabama has deployed 432 troops of 3,000 available,” according to CBS. “Even fewer have been deployed in Florida – 97 troops out of 2,500 – and Mississippi – 58 troops out of 6,000.”
Jindal told CBS that the White House had instructed state officials that “Coast Guard and BP had to authorize individual tasks” for National Guard units.
But Coast Guard Adm. Thad Allen, the national incident commander in charge of the government’s response to the spill, disputed that. “There is nothing standing in the governor’s way from utilizing more National Guard troops,” Allen told CBS.
“Whether it’s simple confusion or the infusion of politics into the spill, the fact remains thousands of helping hands remain waiting to be used,” concluded CBS.
IN PICTURES: The Gulf oil spill’s impact on nature
Related:
Gulf oil spill: The story so far
Jones Act: Maritime politics strain Gulf oil spill cleanup
After Gulf swimmers report illness, questions about opening a beach

Top five bottlenecks in the Gulf oil spill response – CSMonitor.com



The talk gets louder….

Based on months of interviews, I have come to believe that the administration knows it is a near-certainty that Israel will act against Iran soon if nothing or no one else stops the nuclear program; and Obama knows—as his aides, and others in the State and Defense departments made clear to me—that a nuclear-armed Iran is a serious threat to the interests of the United States, which include his dream of a world without nuclear weapons. Earlier this year, I agreed with those, including many Israelis, Arabs—and Iranians—who believe there is no chance that Obama would ever resort to force to stop Iran; I still don’t believe there is a great chance he will take military action in the near future—for one thing, the Pentagon is notably unenthusiastic about the idea. But Obama is clearly seized by the issue. And understanding that perhaps the best way to obviate a military strike on Iran is to make the threat of a strike by the Americans seem real, the Obama administration seems to be purposefully raising the stakes. A few weeks ago, Denis McDonough, the chief of staff of the National Security Council, told me, “What you see in Iran is the intersection of a number of leading priorities of the president, who sees a serious threat to the global nonproliferation regime, a threat of cascading nuclear activities in a volatile region, and a threat to a close friend of the United States, Israel. I think you see the several streams coming together, which accounts for why it is so important to us.”

The Point of No Return – Magazine – The Atlantic


How Chávez tries to hide the truth about his government
Washington Post Editorial
Friday, August 13, 2010; A18

ONE OF the principal goals of Venezuelan President Hugo Chávez’s foreign policy is preventing governments or international organizations from telling the truth about him. Over the past couple of years, captured documents and other evidence have established beyond any reasonable doubt that Mr. Chávez’s regime has provided haven and material support to the FARC movement in neighboring Colombia — a group that is known for massacres of civilians, hostage taking and drug trafficking, and that has been designated as a terrorist organization by the U.S. State Department and the European Union. That places Mr. Chávez in violation of U.N. Security Council resolutions and, at least in theory, exposes him to U.S. and international sanctions.
Luckily for Mr. Chávez, the Obama administration and other Security Council members have shown little interest in recognizing what, in terms of state sponsorship of terrorism, amounts to a smoking gun. But discussion and debate about the evidence — such as Colombia’s recent presentation to a meeting of the Organization of American States — makes this ostrich act difficult to continue. So Mr. Chávez has dedicated himself to bullying and intimidating those who dare to speak publicly about what everyone in the Western Hemisphere knows to be true.
His most conspicuous recent target was former Colombian president Álvaro Uribe, who ordered the report to the OAS shortly before leaving office. Mr. Chávez’s response to the maps, photographs, videos and other documentary evidence laid out by Colombia’s ambassador was to immediately break diplomatic relations and to threaten war. When Mr. Uribe’s successor, Juan Manuel Santos, signaled that he was ready to address the FARC problem through private discussions, the Venezuelan caudillo instantly reversed himself. On Tuesday he traveled to Colombia to meet Mr. Santos and agreed to restore relations.
Mr. Chávez also focused his attention on Larry Leon Palmer, the veteran diplomat nominated by the Obama administration as its next ambassador to Venezuela. Some Republicans question whether the United States should retain ambassadorial relations with Mr. Chávez’s government, and the nominee received a searching set of “questions for the record” from the Senate Foreign Relations Committee’s senior GOP member, Richard G. Lugar (Ind.).
To his credit and that of the State Department, Mr. Palmer answered truthfully. He said that he was “keenly aware of the clear ties between members of the Venezuelan government and Colombian guerrillas.” He said that he was “concerned” that two individuals designated as international drug traffickers by the Treasury Department “are high-ranking officials of the Venezuelan government.” He reported “growing Cuban-Venezuelan cooperation in the fields of intelligence services and the military” and “morale and equipment problems” in the Venezuelan army.
Mr. Chávez once again was quick to respond. On his weekly television show on Sunday, he announced that Mr. Palmer would not be allowed to take up his post in Caracas because “he has disqualified himself by breaking all the rules of diplomacy, by prejudging us.” He said that the Obama administration would have to “look for another candidate.” The State Department responded that it was sticking with Mr. Palmer. It should. If ignoring the facts about Mr. Chávez is a requirement for sending an ambassador to Caracas, then it would be better not to have one.

How Chávez tries to hide the truth about his government


Richard Russell’s Daily Letter

August 9, 2010 — Headline from page one, New York Times, Aug. 7: “Nation Lost 131,000 Jobs As Governments Cut Back. Hiring By Private Sector Anemic in July.”

Headline from the Weekend Investor section of the August 7 Wall Street Journal“How To Beat Deflation. Strategies to Protect Your Portfolio From and Take Advantage of the — Dreaded ‘D’ word.”

The specter of deflation is cropping up in many media outlets today. In fact, I’d say that deflation talk has almost become popular. The key question is this — Fed Chief Bernanke is obviously reading and hearing all about the “coming deflation.” What will Bernanke do about it? I think he will fight deflation with all the weapons at his command. And Bennie has a lot of weapons, least of which is printing “money.”
………………………………………………………..

The air is filled with rumors and contrary opinions, so many that it is literally impossible to follow them all. Some of the opinions and views have such earth-shaking implications that it’s difficult to ignore them. But as my subscribers know, we’re not a news site, and we don’t invest or divest based on the news of the day.

A few examples — I just finished my friend, John Mauldin’s always excellent column (how does he travel continuously and write the column?). Rather than paraphrase what John is writing, I’m including an actual segment from John’s latest column —“Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages are implicated.”
Russell Comment. Would Obama actually do this? My answer is that Obama and his buddies are so frantic to get the economy moving again that they would be willing to try anything.
Beyond mortgages, Americans are so loaded with debt that maybe the next Obama step would be to forgive ALL personal debts in the US. Better still, why not return to the year of Jubilee and cancel out ALL world debts (I don’t think holders of US Treasuries would go for that one).
The current issue of Barron’s is fascinating. The inimitable Alan Abelson notes that stocks are not cheap. Alan asks, “Where is it written that a market that in a not too distant-past values stocks at 60 time earnings, can’t value them, if the outlook sours, at six to eight times earnings?”
Russell Comment — Yes, I have noted that the big booster in bull markets and the big killer in bear market is the change in price/earning ratios, rather than the actual change in earnings.
But here’s what I really want to talk about. From the cover page of Barron’s — “Why the Fed Will Soon Print $2 Trillion.” The related major article is entitled, “Time to Print, Print, Print,” and is written by Jonathan R. Laing. The author believes that the Fed has only one way to go, “Quantitative easing,” and maybe printing another $2 trillion of fed notes (dollars). Laing concludes, “so it’s more than likely that the big artillery of quantitative easing will be unleashed to push the economy out of its despond. It’s high time to get out the money-printing machines. Damn the risks of triggering a bit of inflation and some modest investment bubbles. The alternatives are far worse.”
Then (believe it or not) in the same issue of Barron’s we see an article by my old friend, Robert Prechter, the guru of the Elliott Wave thesis. Robert explains how a great contraction in credit and debt will bring about deflation. Robert notes that the amount of dollar-denominated debt worldwide is some $57 trillion. . . The already-issued debt and potential debt is poised to overwhelm the possibility of management monetization. The Fed’s assets amount to $2.3 trillion, a drop in the global debt bucket.”
Robert concludes his frightening article as follows — “If you are positioned for more inflation — as the vast majority of investors are — you are likely to find yourself on the wrong side of the monetary bet. Positioning for deflation simply means avoiding traditional investments, especially risky debt, and maintaining maximum safety in cash equivalents, held in the safest institutions. If you shed market and institutional risk, you can sail through deflationary times unscathed.” 

Russell Comment — Whew, how’s that for a scary contrary opinion? Robert believes that way to safety in a deflation is to have cash, and lots of it. My concern with this approach is that I question the safety of the US dollar (and all fiat money, for that matter). So in an all-out deflation, Robert Prechter will be sitting in all cash or US Federal Reserve notes. But the dollar is collapsing, and with a US that is deflating, none of our foreign creditors will want dollars (in fact, they will be trying to get rid of dollars). With fiat money in retreat all over the world — and currencies devaluing against each other, the world’s peoples will turn to the only money they can trust — gold. I’m aware that Prechter believes gold will be heading down in a deflation, I disagree.

I was there during the Great Depression, and I can tell you nobody at that time had dollars. But if you did have dollars they were trusted and they were considered as good as gold. Today, it’s different. The very validity of the dollar is in question.

By the way, Prechter believes the Dow will end its bear market at a value of 400. If so, Prechter is looking for a calamity comparable to the Great Depression of the 1930s. 

Russell response — I distrust all scenarios and predictions, although I read ’em all and find many of them fascinating. In the end, I only trust the wisdom of the stock market. I haven’t liked the recent action of the stock market, and I’ve advised my subscribers to get out of stocks. From our standpoint, when it comes to news events, our main interest is not in the news, but in the stock market’s reaction to the news.

The stock market will tell its story as we go along and in its own good time. Our job is to ignore all opinions and forecasts and to follow the stock market and believe what it’s telling us.

Gold has advanced seven days in a row, and should be ready to back off a bit. The many arguments and rumors regarding gold are almost deafening. I don’t give a damn what the gold bulls or the gold bears say, I follow the price action as best I can. Often, the best test — is what an item can or can’t do. On the latest correction, gold held 1100 — bullish. Can Dec. gold climb into the 1300s, which would be a record high? That’s what I’m waiting to see. By the way, gold may be forming a head-and-shoulders bottom. More technicals — the 200-day moving average for Dec.gold is at 1155.10. The 50-day MA for Dec. gold is at 1215.90, which is bullishly above the 200-day MA. If Dec. gold can close above 1215.90, that would be a bullish development.

The Federal Open Market Committee meets tomorrow. Will they hold interest rates at zero and will they accelerate their printing? If they do, it will put pressure on the dollar and it will be bullish for gold. If they boost interest rates, expect gold to correct.

TODAY’S MARKET ACTION:

My PTI was up 7 at 6117. The moving average at 6095, so my PTI is bullish by 22.
The Dow was up 45.19 to 10698.75.
Transports were up 59.09 at 4516.35.

Utilities were up 1.30 to 395.02.

NASDAQ was up 17.22 to 2305.69.

S&P was up 6.15 to 1127.79.

September crude was up 0.78 at 81.48.
Total Volume on the NYSE and associated exchanges was 3.43 bn.

There were 2199 advances and 830 declines on the NYSE.

There were 305 new highs and 15 new lows
The Big Money Breadth Index was up 4 at 807.

Dollar Index was up 0.26 at 80.67. Euro was down 0.49 at 132.25. Yen was down 0.60 to 116.48. Currency prices as of 1 PM Pacific Time.

Bonds: Yield on the 10 year T-note was 2.82. Yield on the long T-bond was 4.01. Yield of the 91 day T-bill was 0.14%.

December gold was down 2.70 to 1202.60. September silver was down 0.23 to 18.24.

My Most Active Stocks Index was up 2 to 200.

GDX was up 0.02 to 50.19.

HUI was down 0.22 to 459.72.

CRB Commodity Index was down 0.12 at 274.59.

The VIX was up 0.40 to 22.14.

Late Notes — Dow up 45, Trannies up 59, Utes up almost 2. It’s increasingly more difficult to be bearish on this market when my PTI remains bullish. It was up 7 today to 6117, making my PTI bullish by 22 points. As for the “internals,” well you heard the PTI report. NYSE breadth was good, 2199 issues higher, only 830 down, 305 new highs and 15 new lows. Up volume on the NYSE was an impressive 71% of up + down volume. 

Dollar Index was up 0.26 to 80.67. Are there too many bears on the dollar. When the shorts overdo it, you know what happens — the item goes UP. Bonds were slightly lower. Dec. gold was down 2.70 to 1202.60, but still holding above 1200. Tomorrow Bernanke and the gang meet for the Fed Open Market Committee, and everybody is waiting breathlessly to hear what the gang comes up with. 

My pen-pal, the one and only Dennis Gartman notes that the M-2 is diving and that the adjusted monetary base has gone nowhere for the last nine months. John Williams reconstructs the broad M-3 money supply and shows that it is diving. So what’s going on — is the Fed playing games with us? Can the market and the economy go up without a rising money supply?

Never mind, we go by the action of the market, and so far, the action has been OK, although a bit ragged. 

See you tomorrow, with diamonds hidden in my hair — wait, Faye just cut most of my hair off. I’m walking around with a buzz cut, can this be me?

Adios,

Russell

Expensive stones, most of them over one billion years old.

With the advent of GIA (Gemological Institute of America) certificates, diamonds are becoming a leading safe-haven item. You can send a diamond to the GIA and get a recognized certificate showing the cut, carat, color and clarity of your diamond. Seasoned buyers will not buy a diamond without a GIA “cert.” These certs have finally put diamonds in a different category. You can now buy a diamond a receive (with a cert) a close approximation of what the stone is worth.

India is fast becoming the center of diamond cutting and trading. The best diamonds have come from the Golconda area of India. The Golconda diamonds were “whiter than white.” By the way, the Golconda mines are exhausted. The lower the nitrogen content of a diamond, the whiter the stone is. Golconda diamonds have a nitrogen content of 2% to down to 1%, making them the whitest of all diamonds. Actually, a few other diamonds sport this low nitrogen content, and despite the fact that they don’t come from India, they are still called Golconda diamonds. Only about 1% of all diamonds are classified as Type IIA or Golconda diamonds. These special diamond bring huge prices. For instance, a well-cut internally flawless Type IIA diamond of 5 carats may sell for over one million dollars. 

As a rule, white diamonds are judged on their whiteness — the whiter, the better. Colored stones are judged by the depth of their color and the evenness of their color throughout the stone. 

Diamonds as a safe haven have one big advantage over gold. Millions of dollars worth of stones can cross a border hidden in a tiny packet or sewed into the lining of your pants. And with the advent of GIA certs, you can be reasonably assured of what they are worth. High-grade stones are so hot today that dealers have been calling retailers and asking them if they have any overage in their diamond inventory. There is almost no bargain diamonds for sale today. The best deals are seen when a professional outfit buys a diamond from a private party, a party that knows nothing about the value of their diamond. 

Thus you see ads in the newspapers as follows: “We want your gold and jewelry and particularly your diamonds. Nobody pays higher prices than we do.”

________________________
The MasterBlog


venezuela in the news this week… we’ll see what comes of it…

this is the latest one from the Financial Times.
(Note: Highlights in bold and italics, MasterBlog)

Venezuela: Bolivarian bravado

By John Paul Rathbone and Benedict Mander

Published: August 5 2010 23:20 | Last updated: August 5 2010 23:20

Hugo Chávez

The giant Pepsi globe that once loomed above Plaza Venezuela in the traffic-clogged heart of Caracas had long been a landmark of the South American capital’s skyline. Now it is gone, dismantled piece by piece in June.

Much like the demolition of a statue of Christopher Columbus in the same square six years earlier, its removal was a crude symbol of President Hugo Chávez’s self-appointed role as the region’s anti-US, anti-capitalist and anti-imperialist standard-bearer.

It was also a reminder of faded hopes that relations would improve either with the US under President Barack Obama, following the mutual antagonism of the George W. Bush era; or with America’s closest ally in the region, neighbouring Colombia. If anything, Mr Chávez has raised the volume of his nationalist-Marxist rhetoric as his problems have grown both at home and abroad.

In July, when Colombian leaders again accused Venezuela of sheltering Marxist guerrillas intent on destabilising their country, and were confident enough of their case to present it to the Organization of American States, Mr Chávez promptly called it an act of US-inspired “aggression” and broke off relations with Bogotá. Havana, which receives subsidised Venezuelan oil in return for medical services, lent Caracas rhetorical support: “We strive for peace and harmony,” said President Raúl Castro. “But … let no one have the least doubt on which side Cuba will stand.’’

Meanwhile, with the country in recession, red-hued government propaganda in multiple media hails Mr Chávez’s “Bolivarian revolution”. The president has taken to expounding how it is “bad to be rich” – though one graffito snipes back from a grimy Caracas wall: “If it’s bad to be rich, it’s worse to be poor.”

All this might otherwise be ignored as the bitter internal politics of a volatile tropical republic were it not for Venezuela’s strategic importance and fears that Mr Chávez might consolidate his grip on power at legislative elections next month.

“Elections are of great importance for Chávez. They give him legitimacy both at home and abroad – they give him an air of respectability,” says Teodoro Petkoff, a garrulous former leftist guerrilla who now edits the Caracas-based newspaper Tal Cual.

A clear victory for Mr Chávez’s United Socialist party of Venezuela at the September 26 polls would be likely to herald further radicalisation of his socialist project, ease the way for his election to a third six-year term in 2012 and thus boost worries elsewhere about regional tensions.

Watching the results most closely will be neighbours in the Andes – a regional tinderbox, given the prevalence of clashing ideologies, well-equipped troops and armed guerrilla and paramilitary groups – and Cuba, as Venezuela’s closest ideological ally.

A further geopolitical consideration stems from Venezuela’s role as transshipment point for what is said to be more than half the cocaine shipped across the Atlantic to Europe every year. The country’s trafficking situation is deteriorating, the UN warns in its latest World Drugs Report.

Also watching the election closely will be those energy importers who ogle the country’s vast crude oil reserves, the largest outside the Middle East. As those reserves are easily accessible and use proved technologies, BP’s deep-water oil spill in the Gulf of Mexico has heightened their strategic value still further. That is as true for the US, which remains Venezuela’s biggest single oil market, as for rising energy users such as China, which recently curried favour as well as securing future oil supplies with a $20bn soft loan to Caracas.

With term limits abolished following a referendum last year, Mr Chávez has frequently expressed a wish to remain in office until 2021 – the 200th anniversary of independence from Spain – to see through his revolution. Yet, after 11 years in power, the extent to which he has succeeded in instilling in voters a mindset compatible with what he calls “21st century socialism” is debatable. (For example, he has condemned a widespread fondness for whiskey and Hummers.)

The government has therefore been working to boost its chances of maintaining in September the two-thirds majority necessary to push legislation through the National Assembly.

Changes to the electoral system this year mean rural areas will return more deputies than before, hindering the metropolitan-based opposition. State-owned media can meanwhile drench the country in pro-government propaganda. (While newspapers such as Mr Petkoff’s are highly critical, private sector broadcasters have been largely cowed into submission.)

Most unsettling of all is the possibility that Mr Chávez’s party might lose the vote yet still maintain effective control. In 2008, for example, the president res­ponded to the election of an opposition candidate as Caracas mayor by inventing a more senior post and ap­pointing a candidate of his choosing.

Another possibility, much discussed in the capital, is that he could rule by decree during the 100 days between the elections and the new deputies taking up their seats, changing irrevocably the legal landscape to his liking. A recent 40 per cent pay rise ensures the army’s loyalty.

“Chávez will not leave power voluntarily,” says Diego Arria, a leading opposition figure and former governor of Caracas. “This is a president whose motto is: ‘fatherland, socialism or death’. When they say death they mean us, not themselves.”

Such drastic outcomes may never come to pass. Despite the recession, crumbling public services, a series of damaging scandals and rampant violent crime, Mr Chávez still commands the support of about two in every five Venezuelans – roughly the same ap­proval rating as Mr Obama in the US.

In large part, this is due to his emotional bond with the poor, who in 2008 made up 28 per cent of the population, according to the UN. “Even with hunger and unemployment, I’m sticking with Chávez,” runs one refrain popular in the capital’s slums.

Gregory Wilpert, editor of pro-Chávez website Venezuelanalysis.com, emphasises that many have benefited from the government-run social programmes. “The process of devolving local governance to communities via the communal councils and other forms of participation also gives many people a real feeling of being a part of the political process,” he adds. Critics say such councils usurp the power of elected municipal governments.

. . .

Either way, to gain a decisive victory, Mr Chávez will need to win over undecided voters – the ni-nis, or neither-nors – who account for about one in three of the electorate, according to polls.

In 2006, when he was re-elected at the peak of both his popularity and the oil price boom, that problem was partly solved by throwing money around. The trouble for “chavistas” today is that there is less to spend. This year, for example, while the rest of the region is expected to grow by 5.2 per cent, Venezuela’s economy is forecast to shrink by 3 per cent, the UN Economic Commission for Latin America estimates. Inflation, meanwhile, is running at about 30 per cent.

Paradoxically, because oil prices are hovering around $80 a barrel, a healthy level historically, government finances are not in perilous shape. Rather, the main cause of the continuing recession is mismanagement – the biggest rock on which Mr Chávez’s revolution has floundered.

PDVSA, the state-owned oil company that is the dynamo of the economy, has been leached to fund social projects with cash that otherwise would have been used for much-needed investment. The non-oil economy has been hobbled too.

Capital flight has been propelled by the nationalisation drive Mr Chávez has launched in a range of sectors, including energy, finance and telecommunications. Attempts to prevent such flight have made matters worse. The rationing of foreign exchange has made importing harder, fuelling scarcity, inflation and a flourishing black market – dollars sell for about four times the cheapest official rate.

The multinationals that once made the country their regional base, attracted by its relative stability and large internal market, have upped sticks. A web of regulations has tightened around those private companies that have remained – most publicly at Polar, the food and beverage company that is an emblem of Venezuelan popular culture, which Mr Chávez has threatened to nationalise against union wishes. Private investment has slumped amid the deteriorating business climate. As for nationalised companies, the state has been unable to pick up the slack.

Since nationalisation in 2008, production in the cement sector has fallen 20 per cent, and in the steel sector by as much as 80 per cent, according to Caracas-based consultancy Ecoanalítica. Most embarrassing of all were the 100,000 tonnes of food found recently rotting in the warehouses of state-run food distribution network PDVAL. Mr Chávez blamed “US-backed fascist oligarchs”.

The opposition has failed to capitalise on such problems. One reason is that much of the electorate remains distrustful following early at­tempts to unseat the president including a botched coup in 2002 and a national strike that paralysed the economy.

. A final factor is that many of its candidates are drawn from two discredited parties, Democratic Action and the Social Christians, which once dominated the country’s politics.

Dissidents from Mr Chávez’s party and former personal allies pose a potential threat. But some of the most prominent opponents have been hounded out of the country or imprisoned. General Raúl Baduel, a former close friend who called the president a “traitor” has been controversially jailed for corruption.

. . .

All this has devalued Mr Chávez’s reputation abroad. He still enjoys occasional celebrity support, from Argentine footballer Diego Maradona and Hollywood film producer Oliver Stone, for example. Oil also ensures Caracas secures the odd multibillion-dollar deal – most notably an arms agreement with Moscow, after the US stopped selling weapons to Venezuela in 2006. Caracas and Havana remain locked in a symbiotic embrace. But the president’s vision retains little credence with the region’s leftwing, and many of the area’s leaders and diplomats are embarrassed by his virulent rhetoric and off-colour jokes.

Mr Chávez has thus failed to bring closer to reality the Latin American union he espouses in evocations of his 19th century independence hero, Simón Bolívar. Sometimes, as when he closed the frontier with Colombia, he has worked against it.

Yet his command of Venezuela – its economy, army and institutions, including the judiciary – has never been stronger. There is therefore every chance that Mr Chávez, whose political style tends towards confrontation rather than negotiation, will endure. ¡Venceremos! – “we will conquer” – as the former tank commander is fond of saying.

venezuela

see related post from the same FT piece:

FT.com / Comment / Analysis – Venezuela: Bolivarian bravado

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from the archive of the Jerusalem Post

Assad’s Lebanon By JERUSALEM POST EDITORIAL 20/03/2010

Photo by: AP
Hariri and Jumblatt’s capitulation marks the demise of the tattered remains of Lebanese independence.

While Syria steadily makes strides toward breaking free from international isolation, and while its leaders purport to espouse the spirit of peaceful reconciliation, Damascus is teaching the world an object lesson in how it reaches understandings and what it considers accommodation. But is the world listening? There was a marked absence of shock, to say nothing of censure, when Lebanese Druse leader Walid Jumblatt apologized last week to Syrian President Bashar Assad for having dared accuse him of assassinating former Lebanese premier Rafik Hariri in 2005. Jumblatt had previously “forgiven” Assad’s father, Hafez Assad, for assassinating his own father, Kamal Jumblatt, in 1977. In the wake of Hariri’s murder, the Bush administration withdrew its ambassador from Damascus. Recently, the Obama administration pointedly opted to reinstate an American ambassador in the Syrian capital, with no quid-for-quo. Indeed, rather than cleaning up its act, Damascus thumbed its nose at the new US efforts at engagement when Assad two weeks ago held a much-hyped powwow with Iran’s Mahmoud Ahmedinejad and Hizbullah chieftain Hassan Nasrallah. This, too, failed to elicit even a murmur of protest, much less a symbolic slap on the wrist. Seasoned political player Jumblatt has evidently internalized that Assad’s star is in the ascendent, his misbehavior notwithstanding. The Druse leader, after all, is an experienced hand at surviving amid the convoluted contortions of Lebanese affairs. With Washington pulling the rug from under him, Jumblatt plainly realized that the key to staying alive was to bow down wretchedly to Syrian dominance. To earn his ticket of admission to the reinvigorated and self-assured Damascus, Jumblatt, until recently a mainstay of Lebanon’s anti-Syrian coalition, was ordered – significantly via Nasrallah’s “mediation” – to apologize to Assad. No less. Jumblatt did so obsequiously after Hizbullah announced his “courageous review of his past stance.” Jumblatt had for years urged revenge against Syria and branded Assad a “snake” and a “tyrant.” Under Nasrallah’s supervision, Jumblatt has now atoned for “saying, at a moment of anger, what is improper and illogical against President Bashar Assad. It was a moment of ultimate internal tension and division in Lebanon.” Like a supplicant before an all-powerful despot, Jumblatt promised to both “forgive and forget” and implored that “a new page be turned.” THE DRUSE leader is not the only one to have come cap in hand to Assad recently, pleading for “a new page.” Sa’ad Hariri – Lebanon’s prime minister and Jumblatt’s principal partner in the anti-Syrian front that was established with much fanfare on March 14, 2005 – did exactly the same. He, too, extolled the virtues of the “new page,” went to Damascus, embraced the very honchos he had accused of murdering his father, Rafik, and is reportedly soon bound for Teheran as well. That’s how Syria defines compromise – unquestionable subjugation of any hint of dissent. After Syria’s opponents have been manifestly tamed and humiliated, they may be tolerated and enjoy the Godfather’s protection. Before Jumblatt saw the light, he repeatedly expressed fear of assassination. His political volte-face may have prolonged his life. But the capitulation of Hariri and Jumblatt – both sons of leaders eliminated gangland-style to the Assads’ satisfaction – underscores more than personal vicissitudes. It marks the effective end of the March 14 camp and with it the demise of the tattered remains of Lebanese independence. Although, pro forma, Syria withdrew its troops from Lebanon in 2005, its stranglehold on its small neighbor has only tightened of late, with Hizbullah actively abetting Syrian hegemony. Lebanon is today sovereign in name only. In effect, it is again nothing less than Damascus’s hand puppet. And as the international community clamors hoarsely for the establishment of a brand new state, Palestine, it acquiesces with extraordinary equanimity to the destruction of another, established Arab state’s self-determination. This is something to be pondered carefully by all those at home and abroad who urge Israel to make concessions to Damascus. Many in the security establishment argue fiercely that it is in Israel’s vital interest to seek an accord with Syria, in large part to try to peel Damascus away from Teheran, and there is indeed such an interest, if it is feasible. But the grim evidence is that not only has the Assad regime not reformed, but its attachment to the Axis of Evil is being patently reinforced. Meanwhile, the chastened Jumblatt has now remembered who to blame for Lebanon’s ills – Israel. Not coincidentally, Hariri is chanting the identical mantra. “All of Lebanon’s woes,” he intoned last week, “are Israel’s fault.” Assad must be delighted.

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Assad’s Lebanon

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