People From Europe are Babies

Ok. Hopefully, I got your attention. So now let’s set the record straight. Most people from Europe are good people, and don’t act like little babies. But let me say this. The people in the news protesting the retirement age being moved from 60 to 62 are laughable. Get off your lazy ass. You probably think 40 hours a week is too much too.

And the kids who think the rest of England owes them subsidized college education need a reality check. Nobody owes you anything, and 14k per year is ridiculously inexpensive. Go study and get a good job and let the people who protect your whiney asses, protect your whiney asses. And leave the worlds oldest prince alone, too.

Sorry for the negativity – I’m not feeling very PC.  Bring it on.


Revenge Punishments – Good Idea?

Today I read the story of a young woman in Pakistan, who refused the marriage proposal of her cousin. A month and a half later, he and four of his brothers cut off her nose and ear so that no one else would want to marry her. 3 of the five have been caught and so far, two have been convicted. Their punishment is life imprisonment – and the same mutilation as they inflicted on this young woman. CNN reported the story, and also invited readers to discuss whether or not revenge punishments “worked”.

What does that even mean?  I’m guessing that if your violent crime is premeditated murder that the revenge punishment might be execution.  Based on historical accounts, I’d say that it works.  There are plenty of executed people in world history.

Not surprisingly, responses were varied and inevitably got way off target with people eventually debating whether people in Pakistan are barbaric – and then, of course, how barbaric we are right here in the USA.  “How can we try to attain world peace with such eye-for-an-eye tactics?” asked one respondent.  Ok – focus people. This is not about Pakistan vs. the USA. This is about revenge punishments – which they allow in some places, but not in Westernized nations. I don’t really care about the debate on whether revenge punishment works as a deterrent or not. To me, it’s not just about deterring future crimes (although I don’t believe dead people have as good odds of killing again as living people do). We spend far too much time as a society, worrying about how we treat the most vile people on the planet. I would argue that we have a much better chance of the society and world condition that we all dream of, with the elimination of of those who commit the worst violent crimes. Take Mike Huckabee’s pardon of the young man who had ALREADY BEEN CONVICTED AND SENTENCED for rape in murder. Because he was let out, he had the opportunity to murder four police officers on their coffee break. Don’t you wish he hadn’t done that? Here is a great example of a situation where an “eye-for-an-eye” punishment would have worked much, much better.

Stop being soft on the worlds sickest people. Sometimes baseball bat justice would not only feel better, but it  would also work better.

Peter Schiff

I spent a long time researching Schiff last night. The compilation on the videos around the internet are pretty amazing. He certainly seems to have been right, calling for this economy and the bubble bursting.

Having said that, I think we need to be careful here – much of that video was taken out of context. As you know, I am not a believer in anyone’s ability to do this type of forcasting well. My first experience with this was an advisor I knew who was suggesting that I move my clients out of the market back in 1995, based on the recommendations of Elaine Garzelli, a “Seer” who had correctly forcasted Black Monday in 1987, and had cashed in on that fame with a number of books. By the date you can see that she missed the best 5 years in the markets history, and subsequently called “the bottom of the tech market” in August, 2000 – ouch. I’ve said to you before that if someone claims they can successfully predict the market or the economy on the short term, then they have a book to sell – in Schiff’s case there are two books. I researched the new one. “Crash Proof” and think much of it is off-base.

To summarize, here are some places that Schiff appears to be way off:

Schiff’s Investment Thesis:

US Dollar Will Go To Zero (Hyperinflation).
Decoupling (The rest of the world would be immune to a US slowdown.
Buy foreign equities and commodities and hold them with no exit strategy.

12 Ways Schiff Was Wrong in 2008

Wrong about hyperinflation
Wrong about the dollar
Wrong about commodities except for gold
Wrong about foreign currencies except for the Yen
Wrong about foreign equities
Wrong in timing
Wrong in risk management
Wrong in buy and hold thesis
Wrong on decoupling
Wrong on China
Wrong on US treasuries
Wrong on interest rates, both foreign and domestic
Source: Kirk Shinkle, Senior Editor, US News & World Report

I have heard (meaning hearsay only – his firm does not release performance numbers so far as I can see. Also, it is an Austrian firm, though he is clearly an American, yes?) that his firm has not put up good numbers. Given that the first of his investment produts on his website is Canadian Energy Trusts, I can guess that is at least believable. The Canadian Energy Trusts I know are down between 50% and 90% in the trailing 12. Not surprising with commodity prices.

Snake Oil, anyone?

Welcome Back! The World Needs Me…..

So I have been away for a shameful period of time.  I have been busy and content – a bad combination for a blogger.  Busy, because that’s how life goes with three kids.  Content, because I liked both of our presidential candidates and have been excited by the possibilities.  I thought, for the first time – we are actually going to have to presidential candidates that say what they mean – no twisted, half-truths designed to rally the base.  The American people asked for this.

Now – it is clear we are dealing with half-truths again.  Obama pointing out that McCain’s cheif economic architect pushed for the legislation that left the derivitve markets unregulated.  Only after the speech did we learn that two of Obama’s economy guru’s were also behind that same legislation.  Last night at the debate, McCain pointing out that Obama voted against legislation supporting deployed troops, only to find out that actually he would not support the legislation because it did not include language for troop withdrawal.  We also found out that McCain voted against legislation that supported our troops, but did include a timetable for troop withdrawal.  So apparently neither suports deployed troops?

It’s dissappointing to say the least.

Michael Savage Needs a Lesson in Diplomacy

Learning what doesn’t work.  Politics are despicably misleading.  Media is despicably biased. But polical media is about as bad as it gets.  People out to “rally the base” and in it for the ad revenues.  Does it get any less reliable?  Someone, feel free to stop me – but is there really any rational way to compare Imus’ firing to Nazi Germany?   I’m just not sure throwing the history of Nazi Germany into the same league makes any sense.   And Savage compares a lot of people to Hitler – and a lot of situations to Nazi Germany.  Don’t get on my case for picking on the “Right”.  I have a lot to say abot the likes of Robert Reiche as well.  Please climb aboard the reality that in politics and media, the truth usually lies somewhere outside of the far right and the far left…..somewhere in the middle.

Real Ramifications of Pakistans ‘State of Emergency’

On Nov. 3, President Musharraf of Pakistan declared a state of emergency, which closed nearly all the non-government-controlled media, suspended the judiciary and curtailed public assemblies. It also began arresting activists and judges. In his report “Emergency in Pakistan“, Bill O’grady of Wachovia Securities, examine’s the president’s motives for this apparent coup, the impact of this action on the Global War on Terrorism, and the most likely outcome of this event. As always, we will also discuss the market ramifications.

What does Musharraf want?
It appears President Musharraf had two motives. First, he wanted recent elections to give him legitimacy, and second, he wanted to maintain his status in the military.
Comments from Western diplomats who had a conference with the Pakistani president shortly after the emergency order clearly indicate that his goal was tied to concerns surrounding the judiciary. Last month, General Musharraf was “re-elected” to the presidency. It wasn’t much of a contest, as the major opposition leaders were in exile. However, there was a legal problem with the vote: The president was still the head of the military, and it is constitutionally unclear whether one person can hold both roles of military leader and civilian president. The Supreme Court was expected to make a decision on the president’s military status by Nov. 15. Although most expected the court to “bless” the outcome, Musharraf apparently feared it would not. After all, he had a political crisis earlier this year with Chief Justice Mohammad Chaudhry. In order to ensure a favorable decision, Musharraf declared a state of emergency; one of his first acts was to fire the chief justice.The official reason given for the emergency order was to improve the government’s ability to fight Islamic insurgents. However, there is little evidence to support this claim. Media reports show the curious spectacle of mass arrests of blue-suited protesting lawyers. It appears that the bulk of the arrests are against secular democracy advocates and political opponents who are clearly not Islamic insurgents. Thus, it is likely that Musharraf’s goal was solidifying his political position. Having the Supreme Court confirm the constitutional legitimacy of the October election was apparently critical, even if that court was packed with newly minted judges.The key institution in Pakistan is the military. Pakistan was created soon after India was granted independence from Britain. Although Indian leaders wanted to craft a multi-religious nation, Muslims objected, and thus a homeland in Pakistan was created. Pakistan is a country, but a sense of nation hasn’t really developed. Instead, there are strong tribal elements to the country that tend to be more important to personal identity. In addition, the mountainous regions that border Afghanistan have always been autonomous. The British were never able to subdue this region, and the border with Afghanistan was deliberately established to divide the tribes and make them easier to govern. The only institution that has national appeal is the military; that’s why there has been little opposition to numerous military governments since independence.It is for this reason that President Musharraf wants to maintain his role as military commander. He fears, with good reason, that giving up his military status could undermine his power and make him vulnerable to being ousted by another military figure. In addition, civilian governments in Pakistan have tended to be corrupt, so Musharraf would gain little by becoming solely a civilian leader.

The Global War on Terrorism
Pakistan’s support of military operations in Afghanistan is critical. Afghanistan is a landlocked nation. Without overflight permission, supplies would need to be delivered through (or over) areas of either the former Soviet Union or Iran. The latter is very unlikely; the former has become increasingly problematic given deteriorating relations between the United States and Russia. Because Russia’s influence in these former Soviet states has been increasing, we have seen less support for U.S. policy from these nations. The United States managed to secure President Musharraf’s support, although reports suggest there was some “arm twisting” involved. Musharraf’s memoirs claim Deputy Secretary of State Richard Armitage indicated that if his government failed to support U.S. efforts in Afghanistan, his nation would be “bombed into the stone age.”
Although President Musharraf has supported U.S. and NATO efforts in Afghanistan, his assistance against jihadist insurgents has been less than stellar. There have been high-profile arrests of senior al-Qaida operatives since 2001. But the Taliban and other fellow travelers have been allowed to operate in the western tribal regions. There are two reasons for this situation. First, as mentioned above, these regions have been autonomous for centuries. In general, these tribes are sympathetic to the religious aims of the Taliban and thus tend to support them. In addition, there is a code of protecting travelers and visitors; when jihadists from Afghanistan move across the border into Pakistan, these tribes usually protect them. Second, in the early 1980s, under the military government of General Zia, the military shed its secular policy and began to promote religious fervor within its ranks. This trend dovetailed with the mujahideen’s war against the Soviet Union in Afghanistan. It should be noted that the Pakistani intelligence services showed a similar trend toward Islam.Unfortunately, the Islamic leanings within the Pakistani military undermine U.S. and NATO efforts against jihadists operating in Afghanistan. Three recent events highlight this issue. The government was forced to trade 25 convicted terrorists for 213 soldiers who were captured by jihadists. Forty government paramilitary soldiers surrendered two towns in the Swat Valley without resistance to insurgents. And the military has refused to pursue Baitullah Mehsud, an Islamist insurgency leader, who provides material support for foreign insurgents operating in Afghanistan. In addition, it is believed that he may have been the mastermind of the recent car bombing that marred the return of Ms. Bhutto from exile. Comments from anonymous military officials suggest that they see attacking jihadists as turning their weapons on their own kind. Thus, the military rank and file tends to oppose military action in the tribal regions, and their performance bears that out.Thus, the military and intelligence communities in Pakistan are generally unsympathetic to the U.S. Global War on Terrorism. A couple of items highlight this situation. This summer, the Musharraf government declared a cease fire with insurgents in the tribal regions. NATO commanders noted that soon after, insurgent attacks in Afghanistan increased. We also note that the military has been willing to arrest secular activists, lawyers and judges in the recent state of emergency; there is no evidence to suggest these resources have been used to arrest jihadist insurgents.

What will Musharraf do?
Prior to the emergency order, it appeared the president and former Prime Minister Benazir Bhutto had cut a deal where she would return from exile to become Prime Minister and Musharraf would take the position of president in the new government. It remained unclear whether Musharraf would remain head of the military as well. In response, Ms. Bhutto returned to Pakistan; at the parade marking her return, she narrowly avoided injury from a car bombing for which she was the target.
Initially after the emergency order, Bhutto said little against Musharraf; however, she is now under apparent house arrest to prevent her from organizing protest marches. It is unclear whether Bhutto can be co-opted by the president. Even without her, though, if Musharraf can ensure a favorable outcome for the Supreme Court on his ability to hold the highest civilian and military offices in Pakistan and the decision can be seen as legitimate, the current state of emergency could end early next year. Musharraf has indicated that he plans to hold elections in February and step down from his military post at that time, but there are significant doubts that either will occur.What is evident is that Musharraf will continue to court the military for his support. If the military turns against the president, his position will become untenable. And given the military’s bias toward supporting the Islamists, we would not expect aggressive actions to be taken against the tribal regions.

For U.S. foreign policy, developments in Pakistan are a double reversal. Not only does this apparent coup undermine President Bush’s support for democracy, it appears that the Pakistani military is retreating from the Global War on Terrorism. Although this is clearly an unwelcome situation, it could become worse. If Musharraf is replaced, it is possible his successor could be unfriendly to the United States and perhaps undermine Western efforts in Afghanistan. Thus, we would expect the Bush administration, despite misgivings about recent developments, to continue supporting Pakistan’s president.
Because Pakistan possesses a nuclear weapon, an unstable or unfriendly government would be a major problem for the West. At this point, we do not expect an unfriendly change in control in Pakistan, but if one developed, the West would find itself in a very difficult position. Invading a nation with a nuclear weapon could be problematic; a Pakistan unfriendly to the West would likely work to remove the Karzai government in Afghanistan and become a significant threat to India.Thus, we expect Musharraf to remain in power but probably ruling an authoritarian government. If this assumption is correct, the situation should not be a major short-term issue for the financial markets. However, current conditions are fluid and if civil unrest rises to the point where the current government is threatened, instability could have an adverse impact on the financial markets. Assets that would likely benefit would be Treasuries and precious metals; equities would likely suffer.

Additional information available upon request from Wachovia Securities. Wachovia Securities is in no way affiliated with the Geopolitical Rooster, but the Rooster loves the non-sensationalistic and informative weekly geopolitical report from Bill O’Grady of Wachovia Securities.  Wachovia Securities does not endorse the Geopolitical Rooster and does not share in the opinions posted here, except where indicated in the referenced reports.  The material contained herein has been prepared from sources and data we believe to be reliable but we make no guarantee as to its accuracy or completeness. The material is published solely for informational purposes and is not an offer to buy or sell or solicitation of an offer to buy or sell any security or investment product. This material is not to be construed as providing investment services in any jurisdiction where such offers or solicitation would be illegal. Opinions and estimates are as of a certain date and subject to change without notice. You should be aware that investments can fluctuate in price, value and/or income, and you may get back less than you invested. Past performance is not a guide to future performance. Investments or investment services mentioned may not be suitable for you, and if you have any doubts, you should seek advice from your financial consultant. Where the purchase or sale of an investment requires a change from one currency to another, fluctuations in the exchange rate may have an adverse effect on the value, price or income of the investment. Certain investments may be mentioned that are not readily realizable. This means that it may be difficult to sell or realize the investment or obtain reliable information regarding its value. The levels and basis of taxation can change. Special risks are inherent to international investing including currency, political, social and economic risks. This document has been approved by A.G. Edwards Sons (U.K.) Limited, authorized and regulated by FSA.

The Geopolitical Rooster is Inconsistent

Sometimes life get’s in the way of good blogging.  In the last year, my partner has retired, my firm was purchased, and my assistant retired.  Just when I have things under control, I decide to move…….in December……..11 days before Christmas……….My children are changing schools…………I’m so tired.  See you as soon as I can.

Published in: on November 17, 2007 at 7:11 am  Leave a Comment  

Political Rhetoric is Bothersome

 Make big oil fund alternative energy research

“The other day the oil companies reported the highest profits in the history of the world. I want to take those profits and I want to put them into a strategic energy fund that will begin to find alternative smart energy, alternatives and technologies that will begin to actually move us toward the direction of independence!”

Hilary Clinton – Source: Speech at Democratic National Committee winter meeting Feb 2, 2007  

What?  I want to take those profits???? Oh, do you? 

I have blogged before about how media puts a sensationalistic spin on our news.  Not picking sides – it’s most every news network.  The fundamental flaw of course is that news is a business and selling it is more important than keeping it to the facts.  I once heard a reporter sum it up best on NPR.  He said, and I’m paraphrasing, “Facts are expensive – opinions are cheap.”  And of course the other half of that – the reliance of our news on advertisers, who pay for viewers.  So it really comes down to how to keep us watching.

 But what about politicians?  In order to pursuade voters, they spin things to support an agenda.  Spinning is bad.  I’m all for being passionate, or full of conviction, but I long for the day when we elect people who don’t do it.  Sorry to pick on  Hilary.  I promise I’ll pick on someone else later, but the above quote and her other comments on “big oil”, drive me nuts. 

First, why are we trying to convince people that corporations should not make big profits?  These are businesses, owned by millions of shareholdes (including you, in your 401k).  What business does not try to maximize profits? 

Second, has anyone heard of OPEC?  Don’t they control prices?

Third, sell your Expedition.

Fourth, New York State makes almost 3 times as much as the oil companies, per gallon of gasoline.  Yes, Hilary’s state – and Schumers.  His position is the same as hers.  What are they doing with their big profits?  The federal government makes 1.5 x as much as the oil companies per gallon of gasoline.

 Game, Set, Match.

Be careful of rhetoric.  It’s easy to believe it, but we really need to think about what people are really saying.