Karen recently returned from nearly a week in the Czech Republic on an international conference and I am pleased to announce that both our kids remain alive and healthy, and Elizabeth even told her mum that I did a good job. I actually got through the week better than expected. Jeremy is almost two and is a little devil; inside the house he hides in closets and closes the doors and climbs into sinks; at the park he climbs on top of the choo-choo train and up the slides and gives me the funniest look and laugh when I discover and laugh with him. When he is sad, there is no sadder face in the universe. Elizabeth talks about good temperature in the shower, tells us not to take any more of her fruits and lets us know when Jeremy’s “behavior is unacceptable,” helps me pick out my ties, watches cooking shows on TV with Karen, and seems very good at lifting herself into a swing. They are both getting quite big, aware, healthy and strong. We are moving into a larger apartment a few blocks away August 1st; Elizabeth starts school in September and it is not working well with both of them sharing a bedroom and keeping each other up consistently. Jeremy jumps in his crib for over an hour each night and we are tired of housing refugees in our bed.
US Economy — I remain concerned that nothing has really been done to reform the problems that caused the near collapse of the economic system last year. As little as possible is being done to fix anything that was broken and this is a good thing if you want the government to stay out of things. It is bad if you think this was an important opportunity to fix 30 years of neglect. If the latter is true, it is only a matter of time before a relapse occurs. It is telling to me that executives are selling shares; they obviously think the market recovery is over-hyped and that it is not sustainable. An important article in the New York Times Sunday op-ed page appeared earlier this month by the same two authors I quoted 6 months ago who wrote that still, no real reforms are taking place. The fact that the Times gave the article a full page shows the importance given to it. Obama is talking a good game but not really doing that much. The so-called reforms that the government announces are basically watered down consensus memos that are more aspirational than fundamental. I’m told that GE is set to do very well from the government’s programs.
I had an interesting conversation with an architect who studies the oil markets and global warming closely. He thinks, and I am tending to agree, that the global warming argument is being proven wrong, that proponents have had to keep backing off their claims, and that in reality the earth is simply fluctuating its polarity as it generally does every couple hundred years. The north pole is shrinking while the south pole is growing. I have previously on these pages told you what I think of the clean coal argument which is total BS. You might consider as well the argument that regular coal is actually good for the environment and that we should be giving less worry to carbon dioxide and more worry to carbon monoxide. On the oil front, the recent increase in the price has more to do with speculators back in the market and this commodities exchange in Atlanta that has been allowed to set the price of oil based on futures, because the fundamentals are against the oil market — demand is still down due to a recession. The price rise is not going to help the economy, but a more stable price that is higher than lower will force people to regain their quick forgetfulness of the value of energy conservation. Still, speculators are driving the market and this might be why governments are now urging more regulation of this market.
The funny thing here in New York is that the banks are all paying bonuses pretty much as before, or that salaries are being raised significantly to make up for lost bonuses. Banks need talent and they are giving out guaranteed bonuses to get the bankers they want. In my neck of the world, this means that real estate prices are holding steady because the universe of people that are buying the apartments I want have not really been affected. Hedge funds are making money these days and I don’t really think that the world has changed at least among the money-making classes in Manhattan. I think that last year’s developments were an interruption but not really a game-changing event. Remember that even in good times, when banks merge, people lose jobs. So far there has not really been a huge rise in unemployment here in the City. Restaurant tables can be reserved without as much trouble as before and there are more prix fixe dinners available at a decent price, but the stores are still busy and people are going out. If you believe that economies go according to cycles and that for the most part government doesn’t matter, than you could assume that the government should not try and fundamentally reform anything and that the markets should be left alone to correct themselves or to forget history and do the same thing all over again in the next cycle.
I think that the recovery is hyped and that somewhere along the line the mood will darken and people will deal with the reality that nothing really was fixed and that the problems that exist still exist. But that this all comes amid economic cycles and that the best you can hope for is that industry will take note of errors it made and that government will make some reforms to help guide industry for the next go-round. I think that even though decoupling theory was debunked during the crash part of the cycle, which was unavoidable when credit tightened up and huge amounts of capital were withdrawn from developing countries, the recovery in developing markets such as Brazil and parts of Asia will be faster than the US market, especially now that credit is easing and people are investing into these areas again. Consider this statistic — the Economist quotes research that 1/4 of all foreclosures last month in the US were strategic, meaning the debtor had the money to pay the mortgage but chose not to. This is because the government has set about reducing interest payments but not touching the principle; people don’t want to stay in homes when there is no equity. I have several times touched upon this fact.
An interesting survey in this week’s Economist deals with the issue of retirement. Basically, when pensions by government entities such as social security (in the US and other western countries) were set up earlier last century, life expectancy was such that you weren’t really supposed to live more than a few years past retirement. The pensions didn’t consider that people would be living a quarter century in retirement. The basic thrust is that the only real way to solve the pension problem, especially in an aging society, is to raise the retirement age to reflect longer life spans.
Iran — My sense is that although the election results were tampered with, Ahmadenijad would still have won, that the security forces have no problem maintaining control, that the demonstrators represent a small cosmopolitan faction that is not supported in the hinterlands, and that the real fight is not in the streets but among the elite political and military factions that will play out over the next year. Knowing all of the above, Obama is basically wise to keep his mouth shut; he cannot affect what is going on except to give ammunition to the clergy in control if he appears to be interfering.
Israel — Foreign Minister Lieberman is under inquest because his daughter left his accounting records in a file at a pool at a Cypriot hotel and it was sent with an israeli journalist to be returned to him. Obviously the journalist leaked it and the police went running with it. Netanyahu’s much ballyhooed speech with the magic words “Palestinian state” is basically his gambit to give Obama what he wants — the impression of Obama-influenced progress with no actual movement and some ease up on the daily life of Palestinians so that Obama can claim to have leverage in the region. Obama doesn’t really expect anything to happen and the stage is not set for any meaningful progress on the Palestinian issue as long as there is nobody to speak for the Palestinians with one voice that actually desires a settlement of the conflict. The Arab countries are much less interested in this arena than they are on Iranian nuclear development and they expect the Americans and/or Israelis to deal with it. If they don’t, there will be no interest in dealing with the Palestinians because the Iranians will hold an even greater veto over the region and so far it is obvious that the last thing they want is for the Palestinian issue to be solved so that they can maintain the instability in the region that is their veto and power. Reportedly, the Saudis met with the Israelis and gave them the green light for overflights against Iran. That would not at all surprise me; I have previously stated that I expected this.
Al-Jazeera — In Italy last month, my satellite system had access to the English channel. It has definitely improved over the past few years. Less strident and more a rational alternative voice to be heard in the global village. Was actually a useful source of information and analysis during the weekend after the Iranian elections.
Russia — You have to notice how all the countries around Russia have been screwing around with it. Russia bullies them, gives them money with sticks attached, then they announce agreements. A few months later, these countries turn around and make other agreements with America involving even more money that the original Russian overtures were meant to prevent. Take Kyrgyztan for example with its air base. The summit that just ended between Obama and Putin/Medvedev basically involved token agreements and putting off the hard issues. Nothing really accomplished but nothing screwed up either.
North Korea — I’ve been thinking about this over the past month. The rest of the world ought to nod and wink and the Chinese ought to instigate a coup and install a friendly regime in its place and keep North Korea as a sphere of influence. The South Koreans are not interested in the North falling apart and absorbing it; the Chinese will not tolerate the Americans or Japanese meddling in North Korea or having the country fall apart and having all sorts of people fleeing the country into China. So what is really left? The regime in place is a joke and needs to be replaced because they are intent on making trouble for everyone else and starving their own people just so that they can survive.
Some Scattered Thoughts on History — Occasionally on a trip one gets some moments where he has absolutely nothing to do except pick up a 50 year old magazine he sees in a sitting room. In a villa in northern Italy, I came across National Geographic magazines and sifted through copies dated 1941, 1944 and 1950. Besides the fact that the pictures were so different, in 1941 the ads were full of things about a nation going to war (ie: AT&T telling you that operators would always be available during wartime; life insurance ads); in 1945 ads were full of things you’d want to welcome home your family member who was a soldier; and in 1950 war had faded and the magazine was full of consumer goods you’d want to buy such as cars, radios and refrigerators. You really could tell a lot about America just by looking at the ads in the magazine….In Copenhagen, I visited the Jewish museum. The museum is small but interesting; the most moving thing to me was a Nazi propaganda video shot of Theresinstadt, a showcase concentration camp, which shows all the people fairly happy and in normal conditions — playing or watching basketball with children smiling happily, knitting sweaters by their bedsides. Many of these people were later sent to other camps to be killed after the film was shot. When you watch the film, you wouldn’t want to be there; if this was considered lovely, you wonder what the reality must have been like. You also know that you are standing there 60 years later watching something you know is false and which you know at the time people believed was a fair depiction of reality. In a way, it is more painful to watch than the films shot of the concentration camps when the allied troops came in to the place and saw what they saw.
Michael Jackson — Here’s my Michael Jackson story. In 1983, I was in a Year-in-Israel program and was sent to a development town in the Galilee for 2 weeks to tutor in English. I was trying to figure out a relevant way to get through to the kids in school. I noticed that the kids idolized Michael Jackson; some guys in our group told the kids that they knew him and were made into gods. So I transcribed his song “Say, Say, Say” — had to listen to it about 50 times to figure out what the words were, and i’m not sure i ever figured all of them out — and used it as a learning tool, translating the song into Hebrew and having the kids see how the English was used…..I remember when Andy Rooney, the CBS News 60 Minutes commentator — once wrote all the words to the song “Bad” on a chalkboard and just read them aloud as one of his weekly commentaries….”It’s bad…so bad… so bad…. bad… bad… bad..” something like this and on and on and on he went for a full minute just reading the word bad alot, and then basically saying that he couldn’t believe a song like this could be so bad, and yet be considered so good. I remember this as one of the funniest commentaries I’d heard. I couldn’t find it on YouTube but maybe somebody will resurrect it.
Travel Issues — I have a real beef with hotels around the world. More and more, they are junking sheets and blankets in favor of duvets and I hate duvets. Get hot and cold in them. My wife just traveled and the first thing she did was get the hotel to replace the duvets with sheets and blankets. I’d be interested in knowing what you think about all this…Another thing that is riling me is the high charges the banks are taking for using ATM cards and credit cards abroad. They are basically taking 3% of the money as a fee. Capital One doesn’t charge much for using their ATM cards and there is no surcharge on the credit card use abroad. They are otherwise driving people to move to cash. Another thing I find useful is to use my leftover cash in a country to pay down the hotel bill and then just take whatever I need for the taxi and/or airport to exit. I read a copy of Monocle Magazine, a new monthly on various travel and political issues managed by Tyler Brulee, the FT back of the Saturday supplement columnist. I liked it and took out a sample subscription.
We’ve had a few family holidays and I recently traveled to Europe. Notes are below.
Pennsylvania Family Travel — We made two trips to different parts of this state a month apart. Skytop Lodge in the Poconos Mountains is 1:45 door to door by car without traffic. Nice century-old stone building kinda place but food is not as good as other comparable family resort places such as the Mohonk Lodge in upstate New York and the area has no big scenic place as its focal point but it does have a nice waterfall trail you can easily walk and its grounds are more compact; the kids loved it. On Saturday nights, the Grand Elimination March was a hoot. First run to corners, they spin a wheel and everyone from a certain corner is eliminated, those remaining then start marching around the lobby and all the byways singing hokey songs — I felt like we were at a Veterans hotel; we heard every military march from every war I’ve ever heard of during that weekend….Doylestown is a small city two hours away which was fine; they have Peddler’s Village which is a 40 acre shopping area outdoors with beautiful landscaping and the feel of an old village; there is also a children’s amusement area with a carousel and various games. The Golden Plough Inn is a small hotel on property. Doylestown Kids Castle is a huge wooden castle obstacle course inside a municipal park which could keep kids busy for hours; Party Magic is an indoor play area with all sorts of things that kids can jump on and slide down; we visited a farm near Newtown where ice cream was great and the strawberry picking and playground fun; there is the Crayola Factory in Easton which we didn’t go to; a scenic railroad in New Hope; and half an hour away is Sesame Place at Langhorne, which is a large amusement park built around the Sesame Street theme. Residence Inn is just outside the park and it was fine but no cribs there but manager was nice; they also brought us a shuttle to the park. Sesame Place is great at shoulder season meaning late May; 4 hours was enough for all the kiddie dry rides and 2 shows and temperatures in the 60’s and 70’s — it gets really hot there in the summer. Parade is at the end of the day. Book ahead for character meals. We were happy campers; wanted to escape by 2pm to beat rush hour in NY and got home by 4. Bucks County has no real resorts for families but as long as you don’t mind no babysitters and lots of chain restaurants, you can have fun with the kids here. Their favorite meal of the week was at the Olive Garden — they just sat there and ate up a bowl of pasta and cheese which is all they really want.
Another area of Pennsylvania is Dutch Country near the city of Lancaster. This is about 3.5 hours drive from New York. Near here is Hershey Park, which is an amusement park built around the Hershey chocolate theme. The Willow Valley Resort is pretty cheap and offers family fun in Lancaster. There is an indoor pool with water slides and fun things for kids and a shallow area for little kids; hotel rate of $250 a night includes buffet breakfast and dinner for 2 adults and the little kids — food is pretty lousy but good enough. There is a playground and petting farm on the property and on the weekends they give wagon rides and you can see the animals and do things like chase the chickens around. There are tons of corn fields around and it is pretty country. We went there to go on the Day Out With Thomas (The Train) at the Strasburg Railroad. It is a pretty disappointing come-on but we saw a lot of happy campers. They have tons of people show up and they have shuttle buses taking people from car parks miles away to handle the crowds and of course there is tons of merchandising and photographing going on. They bring in a steam engine that looks like Thomas the Train, hook it up to their regular railroad train, and it goes 7 minutes in one direction and then returns. You don’t see the other trains from the series or anything special from the tracks. For this they charge you $25 a ticket and expect you to drive for hours to get there. But the regular train offers a 45 minute scenic ride through beautiful countryside and for an extra $7 you can upgrade to the first class cabin; that’s a nice little trip because you can sit in nice parlour chairs, walk around, see equipment and how they hook up the engines to the back of the train. Together the whole package makes a nice day out. Another good attraction was the Touch and Feel Children’s Museum in Lancaster; excellent children’s museum geared toward younger children in the age 1-3 category— most of these museums are geared toward older children. Nearby was the Country Log House Farm, a bed and breakfast on a 48 acre farm that offers a nice house with several bedrooms, a swing set and trampoline in the back yard facing rows of corn fields, and a barn and meadow with all kinds of animals. If you stay there, after breakfast Farmer Jim takes you on a hay ride and you go to the nearby farms and see the cows, and come back and milk and feed the goats and pick eggs from the chickens. A 2 bedroom suite is $140 a night. The kids loved it. These two trips were not luxury living but it is good fun with little kids at a good price and not far from New York with a car.
In March I appeared as a guest on the radio talk show called the Loftus Report. We discussed various international strategic issues. Here is a link to the program file which is 25 minutes long.