A few good jokes I’ve heard lately: Business ethics means that when your business client gives you $40 for something that costs $20, do you tell it to your business partner?
An interfaith council came up with concessions for world peace. The Catholic offered to give up the trinity, the Protestant offered up the Immaculate Conception, and the Orthodox Jewish rabbi offered to drop the second Yekum Purkan (a paragraph from an Aramaic prayer stuck in the middle of the service which hardly anyone can pronounce).
Having recently returned from another hop across the pond, I can report that Europe is eating well, expensive to those paying with dollars, and that orange and purple will be “in” colors this fall.
Turning to Global Thoughts, we are at a point in which it is harder than usual to state with certainty what is likely to happen. I attended a two-day foreign policy conference this month, visited Europe for 2 weeks, and did lots of reading over the high holidays, and must say that I learned very little out of all this.
US Elections / Health Insurance Issue
The conventional wisdom is that Bush was ahead till the first debate and now it’s a horse race again. Before the debate, I knew Bush was in trouble because even Democrats in Washington that I visited were supporting Bush. One local weirdo who walks around wearing lots of campaign buttons supporting someone (usually a Democrat) is also supporting Bush. Maybe Kerry will tighten up the race, but I think that Kerry has to answer for the fact that he’s been a senator for over 15 years and isn’t able to point to even one accomplishment with his name on it. I don’t care what happened in Vietnam; I care about his public service record so far and he is a blank to me. That doesn’t mean I am for Bush, but Kerry has the burden of proof if he is to unseat the incumbent. If the Gulf Arabs are supporting Bush, they’re having a hard time showing it with the high price of oil. I hear different interpretations of the state by state electoral vote count; some say that Bush is ahead, some say it’s close, and some say that Kerry is ahead. I really don’t know about this. I think it will be close and that the election will be determined by something that happens just beforehand. Consider this: 4 million evangelicals stayed home last election. Karl Rove, Bush’s strategist, stays up at nights trying to figure out how to get them to vote this time around, figuring they will make the difference. They just might, and Bush has been doing everything he can not to piss them off. (And remember that they are much more militantly Zionist than are American Jews these days.) Here’s how I think things will play out: Saturday Night Live just parodied the two candidates in the debate. I read the transcripts but did not see the debate since it fell on a Jewish holiday. In the transcript, the issue of Iraq was debated a lot but I saw few real ideas about the future. In the parody, Bush is an idiot but he is working hard and believes in what he says. Kerry is careful to draw the distinction between flip-flopping and pandering — I am not flip-flopping, he says. I am for the war when I talk to pro-war audiences, and against the war when I talk to anti-war audiences, he says. I think this is where it comes down — voters will feel that Bush is not sure where to go but that he is working hard and at least believes in what he believes. With Kerry they are not sure what he believes, and if he even believes anything. What I heard about Kerry in Washington from fellow Democrats was really bad — he just doesn’t stand for anything. People feel the US is in a tough situation, and they are not sure anyone has any good answers. They will stick with Bush because at least he seems to stand for something and seems to relate to them, even if he does not have good answers. Kerry has a real problem relating to people, and his public speaking style gets him low marks for getting his points across.
Finally, the most accurate predictor possible: I read somewhere that this poll never fails to predict the outcome. More kids are buying Bush Halloween costumes than Kerry costumes. Remember that 8 years ago we were comparing Clinton and Dole as potential babysitters and pizza topping orderers and Clinton won both of those votes by far (pizzza with all the toppings vs. plain cheese pizza, if you care to recall).
If I wanted one good reason to vote for Bush I got it today in a New York Times editorial — I am really upset over the high cost of health care insurance premiums and I run a growing company. At the foreign policy conference, the panelists said the leading cause of global economic uncertainty is the crisis being faced by companies and governments over rising health care costs. I have complained on these pages over the fact that little companies like mine pay twice as much for premiums than do larger companies and that little companies cannot pool for access to lower premiums. The Bush plan promises to allow pooling; Kerry’s plan does very little except to tax the rich. If government does nothing else that will affect my life, I want this health care insurance thing dealt with seriously. Premiums have doubled over the past 5 years and this matters, particularly since employees don’t care what the premiums are — they just want health insurance and employers today are the ones primarily responsible for paying those premiums.
Terrorism / A Kinder Gentler Allah
If I were a terrorist, I’d avoid the October surprise and go for economic disruption to kill market optimism after November when the markets tend to go up. This to me seems plausible since Osama seems to be most interested in downing economic markets. I think there will be a intense offensive in Pakistan to go after Bin Laden after the elections, if Bush is elected. Something bothersome I read during August several times in the high press that kept picking up this quote: Not every Moslem is a terrorist, but every terrorist these days is a Moslem. I just came off the high holidays and I must say that for years I wondered about the relevance in modern times of prayers that recounted who will die this year by the sword, by strangulation and stoning. The Moslem terrorists have helped return such prayers to relevancy with daily beheadings and other such outrages. We keep hearing that their God is an angry one, and that their prayer services are accented by sermons by imams who are angry. I can tell you that the Jewish God in the liturgy is our partner and king, we pray for peace and the welfare of the whole world and ask Him to be kind to us, and nobody is angry at anyone during the whole 1,000 pages of the service. I wouldn’t mind if the imams of the world made a pact with each other to become a bit less angry at their religious services and start trying to find a Kindler Gentler Allah in the Koran and in their sermons. A change in attitude on the religious plane across the world of Islam would probably make a difference and help counter the growing feeling that the world is indeed in the midst of a clash of civilizations. Now I do realize always that it is a small band of fundamentalists ruining the reputations of the vast majority, but consider that so much of the bad news these days around the world stems from Moslem Fundamentalists — the rest of the Moslem World cannot just walk away from this and say they are not their brothers’ keepers, especially when the fundamentalists live among the rest of them and look around and get no shortage of sympathy and support. They have to deal with this issue.
Iraq
Recent reports that oil-rich regions want to secede from the rest of the country because they feel they are not being adequately represented in the new government is very worrisome because such a result is plausible. On the other hand, Mr. Sadr is lately indicating that he’d like to participate in the political system. Everyone seems to want the US to get out of the country and that anyone who isn’t a Moslem in that country is considered to be the enemy, and I don’t believe that the US can do much good there at this point. We can’t provide security or even ramp up essential services, and so far in Afghanistan we are again doing neither. I think we should just arrange to get out and expect that the Iraqis will either band together to make Iraq work (as I originally thought they would several years ago) or they will just sit around and fight each other in which case Iraq will be essentially divided into spheres of influence by its neighbors (in which case it will be divided and weak and no real problem to us). The only reason to stay in is to influence oil, and so far the only net effect is to bump prices higher because of all the instability. If you think that Saudi Arabia will fall or that Syria and Iran are threats, then the bridgehead in Iraq is useful, but I think as I have expressed before that we need a much more dynamic policy that will seek popular support in these countries and to just sit around as colonial manipulators in Iraq is not going to lead to such a result. As for Iran, it is indeed a problem but I fail to see how it can be stopped. Given the awful record of intelligence collection, I really don’t believe in our estimates, for better or for worse. The better long-range effort is to create the conditions for the country to change governments, and then like South Africa or the Ukraine, for it to become a more nuclear-safe country.
Egypt
A few months ago, I cautioned that Egypt should not be too interested in the Palestinians in Gaza lest they get sucked into becoming referees and pawns of the various factions at play. Lately, the Egyptians have had second thoughts and are minimizing their role.
Israel-Palestine
This issue rates very low on the American electorate’s mind, and no substantial attention will be given to this matter for quite some time. Between Bush and Kerry, this is not a really divisive issue. Biblically speaking, the Bible tells Israel to separate themselves from the heathens of the land who sacrifice their children and to uproot them from the land of Canaan. In a sense, the Israelis are doing just that; they are revolted by the fact that majorities of Palestinians still say they support suicide bombings. A nod to the Japanese kamikazes who are sometimes compared to these people: they only attacked military targets. The Israelis want nothing to do with these people; almost 50% polled say they don’t think the conflict will be solved even in 50 years. Over a decade ago, I staked out my position that the two parties were entrenched in an interconnected land destined to live on top of each other; I didn’t see how separation was possible. Clearly, the momentum has shifted and the separation wall is becoming a reality. Even those that opposed it on both sides of the political divide within Israel have come to support the idea. Even the Israeli Arabs seem to support this now; they don’t want to be part of the Palestinian problem and hope that they will move ahead in Israel once that problem goes away and it becomes set in stone that the Palestinians are on the other side of the wall (and therefore the Israeli Arabs will not be on the other side of the border). Hirsh Goodman wrote recently that Netanyahu deserves a second look; as finance minister he has successfully driven through unpopular reforms and accomplished his agenda. He still is playing the fence on the territorial issues and people don’t know where he really stands. Silvan Shalom is viewed as a minor party hack who would be eaten alive in serious politics; Ehud Olmert as opportunistic and slimy; and Shaul Mofaz as a general still acting like a general and not yet fashioned for politics. The Labor party is in bad shape; Barak and Peretz are fighting each other and Peres won’t let go. The current Palestinian prime minister seems to be a joke in search of a punchline. He gets stomped on by Arafat, makes a show of resigning or sulking in Amman, and then a week later is kissing Arafat as part of a reconciliation only to be dumped on a week later yet again.
Asia-Pacific
I attended a recent World Leadership conference by the Foreign Policy Association in New York. Its best session was on the future of China. The panel noted that 150 years ago China had the world’s leading GDP and that what it is really doing now is returning to its previous glory. The panel is concerned that if China wants to pick a fight over Taiwan, it would best do it during the next 2 years, and get it over with before the buildup to the 2008 Olympics begins. But in the final analysis, the situation warrants negotiations and the Chinese are not prepared to invade and suffer those consequences. As to Japan, the signals are mixed; sometimes I hear they are reforming, and other times I hear they are not. I think the overall picture is moderately positive for Japan. At the conference, there was nothing about India or Japan, and I think that India at least is moving forward and that people should be paying more attention to it. My own company is looking very closely at it.
EEC Expansion
Another sexy issue at the conference. I think that Turkey ought to be taken in, but realistically this is going to stretch the EEC into something more like an mini-UN and less than a common market. You just can’t have 25 countries in a stew and expect it to not be watered down by committee and the inherent conflicts that already exist within Europe without all these new countries they’ve just admitted. The Americans are quite happy to let Europe get bogged down with Turkey. I think that Turkey will try especially hard to be a good camper because it wants in badly; the challenge for the EEC is to think less about uniformity and regulations emanating from Brussels about every imaginable thing, and more about coming up with frameworks that allow for diversity within commonalities. Trains ought to be able to run without changing locomotives at the borders because the tracks are all different and the Euro should be constant, but not everything needs to be set forth by committee.
Economics and Markets
Real estate must be in a bubble; it just has to be. Interest rates are going up, rentals are down significantly, and the prices are so high that everyone I know that is knowledgeable in this area is refusing to buy anything in Manhattan. At the foreign policy conference, the experts said that the markets would go up toward the end of the year because they usually do, the elections will have taken out a measure of uncertainty, and companies will resume merger activity once they have finished coming into compliance with the new law on corporate accounting. Oil should probably come down a bit in price unless the winter is unusually cold (probably not since we seem to be heading toward an El Nino warmer-than-usual season), the American dollar should begin to appreciate again (in part because of rising interest rates and the fact that the strong Euro has made oil cheaper for Europeans than Americans and this creates an arbitrage which needs to be corrected). An Israeli banker at the conference noted that terrorism has hardly ever affected the Israeli stock market, and to some extent tension over terrorism has become lessened in the marketplace. However, terrorism in Israel is meant to kill people; in America, it is meant to disrupt an economy. I am still fearful of an attack in the 4th quarter. It is also problematic that there are a good number of bad loans out there in the major banks, credit is over-extended to consumers, many people are out of work and the airlines and automobile companies are in trouble. (I personally would love to see the airlines go bankrupt and reorganize because it is 20 years too late.) They employ a significant number of people and America cannot ignore the consequences of all these jobs — the high price of oil is an indirect tax on the economy and it must have an effect before long. Maybe one day everyone will just get hysterical and the markets will react, perhaps when the first bad piece of news hits after the elections. Outsourcing is a red herring and one source of such hysteria; almost 50% of Americans polled say they fear losing their job to this, but in reality less than 1% of jobs have been affected by it. Outsourcing benefits American shareholders far in excess of this number, and I do believe that H1 visa quotas will be lifted or tinkered with after the elections. Perhaps the government will also lighten up a bit on business and tourist visas; we are losing tons of business, students and exchanges because it has become miserable to get into the US, even if you are a perfectly legitimate person.
