December 1, 2008
The recent attacks in Mumbai, India focused international attention back to the continuing problem of organized terrorist activity. As Hillary Clinton is presented to the world as our next Secretary of State, the more sensationalist elements of the media have their focus on terrorism. Terrorism is highlighted to the exclusion of the other pressing matters to be faced during Secretary Clinton’s upcoming tenure, presiding over that all-important bureaucracy in the neighborhood known as “Foggy Bottom”. Nevertheless, Secretary Clinton will have several other pressing issues on her agenda — “leftovers” that have stumped the previous administration for the past eight years. Among these abandoned, stinking socks on the floor of the Oval Office, the least fragrant involves the situation with Iran. The Bush years took that bad situation and made it far worse. A December 1 article in the Tehran Times focused on the remarks of Majlis Speaker, Ali Larijani, about what might lie ahead between the United States and Iran. While suggesting that the Bush Administration “sabotaged” efforts to resolve the dispute over Iran’s nuclear program, the article mentioned Larijani’s criticisms of what was described as the Democrats’ Iran containment policy.
A report in the December 1 Los Angeles Times examined the expectations of Arabs and Israelis, with Hillary Clinton as Secretary of State. Discussing various forecasts concerning American strategy towards Iran, the article noted:
Some analysts predict the Obama administration will try instead to broker an Israeli-Syrian accord, aimed at drawing Syria away from Iran’s influence and diminishing Iran as a threat to the Jewish state.
Elizabeth Bumiller’s article in the November 22 New York Times described the “working chemistry” that has developed between Barack Obama and Ms. Clinton. This chemistry resulted in a softening of Clinton’s position, expressed during the primary season debates, about negotiating with Iran:
But although Mrs. Clinton criticized Mr. Obama for being willing to sit down and talk to dictators, he has said he would have a lower-level envoy do preparatory work for a meeting with Iran’s leaders first. Mrs. Clinton has said she favors robust diplomacy with Iran and lower-level contacts as well.
In the November 24 Jerusalem Post, Douglas Bloomfield gave us a refreshing look at how the Obama – Clinton foreign policy team might function:
Hillary’s great challenge will be to remember who IS President, who ISN’T and who WAS. She will have to focus on rebuilding relationships damaged during the Bush years of “my way or the highway” foreign policy, taking the lead from the man she once described as not ready to be president.
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In the Middle East peace process, as in other policy areas, Obama seems intent on charting a pragmatic, centrist course. While that will disappoint both the Jewish Right and Left, it could prove a welcome change after eight years of the Bush administration’s faith-based foreign policy and not-so-benign neglect of the peace process.
As Inauguration Day approaches, the Bush Administration’s legacy of complete incompetence in nearly all areas is being documented by countless writers around the world. By invading Iraq, Bush-Cheney helped Iran realize its dreams of hegemony. Bush’s mishandling of Iran’s rise as a nuclear power became the subject of a thought-provoking opinion piece by David Ignatius in the November 30 Washington Post. Mr. Ignatius noted that Iran had neither enriched uranium nor the technology to enrich uranium (centrifuges) when Bush took power. As Bush’s days in the White House wind down, we now see Iran with nearly 4,000 centrifuges and approximately 1,400 pounds of enriched uranium. The 2006 precondition that Iran halt uranium enrichment before the United States would participate in diplomatic efforts to address this issue, exemplifies the handicapped mindset of the Bush-Cheney regime. As Mr. Ignatius pointed out:
It’s impossible to say whether Iran’s march toward nuclear-weapons capability could have been stopped by diplomacy. But there hasn’t yet been a good test. Because of bitter infighting in the Bush administration, its diplomatic efforts were late in coming and, once launched, have been ineffective.
By the time we finally have a President and a Secretary of State who are capable of taking on the dicey task of negotiating with Iran on the nuclear issue, it may be too late. Hillary Clinton’s biggest challenge in her new job has already been cut out for her by the Bush Administration’s nonfeasance.
Rampant Stock Market Pumping
It has always been one of my pet peeves. The usual stock market cheerleaders start chanting into the echo chamber. Do they always believe that their efforts will create a genuine, consensus reality? A posting at the Daily Beast website by Zachary Karabell caught my attention. The headline said, “Bells Are Ringing! Confidence Rises as the Dow – Finally – Hits 13,000 Again”. After highlighting all of the exciting news, Mr. Karabell was thoughtful enough to mention the trepidation experienced by a good number of money managers, given all the potential risks out there. Nevertheless, the piece concluded with this thought:
As luck would have it, my next stop was at the Pragmatic Capitalism blog, where I came across a clever essay by Lance Roberts, which had been cross-posted from his Streettalklive website. The title of the piece, “Media Headlines Will Lead You To Ruin”, jumped right out at me. Here’s how it began:
Lance Roberts provided some great advice which you aren’t likely to hear from the cheerleading perma-bulls – such as, “getting back to even is not an investment strategy.”
As a longtime fan of the Zero Hedge blog, I immediately become cynical at the first sign of irrational exuberance demonstrated by any commentator who downplays economic headwinds while encouraging the public to buy, buy, buy. Those who feel tempted to respond to that siren song would do well to follow the Weekly Market Comments by economist John Hussman of the Hussman Funds. In this week’s edition, Dr. Hussman admitted that there may still be an opportunity to make some gains, although the risks weigh heavily toward a more cautious strategy:
Economist Nouriel Roubini (a/k/a Dr. Doom) provided a sobering counterpoint to the recent stock market enthusiasm in a piece he wrote for the Project Syndicate website entitled, “The Uptick’s Downside”. Dr. Roubini focused on the fact that “at least four downside risks are likely to materialize this year”. These include: “fiscal austerity pushing the eurozone periphery into economic free-fall” as well as “evidence of weakening performance in China and the rest of Asia”. The third and fourth risks were explained in the following terms:
Any latecomers to the recent festival of bullishness should be mindful of the fact that their fellow investors could suddenly feel inspired to head for the exits in response to one of these risks. Lance Roberts said it best in the concluding paragraph of his February 21 commentary: