Photos from New York, Florida and finally of Karen & I on our 5th anniversary.
Today was Elizabeth’s first real birthday party celebrating her third party. Karen made macaroni and cheese and baked a chocolate cake. The kids played pin the tail on the donkey, pass the parcel and marched around with little musical instruments. Having a birthday party in Manhattan means the kids don’t drink soda and instead have only one little box of apple juice with a straw and then switch to water. Clearly not like the rest of the country.
Isn’t it amazing that everyone knew for the better part of a year that the world was in a recession but nobody would confirm it (and the media wouldn’t say so either) until a month after the election and then all of a sudden they announce that the world officially entered recession in December 2007? Do you suppose it will take that long for everyone to make such a pronouncement when the economy recovers?
Global recession also matters on Manhattan’s upper west side. The local child barber says that people are doubling the time between haircuts from 4 to 8 weeks. The local Jewish Community Center is noticing a sizable decline in registrations for after school programs and adult classes. Real estate prices have started to move, but not in a major way yet. Many companies that announced layoffs earlier this year are just now actually firing the affected personnel. We have decided to stick around in our apartment this year; we are hoping for that once in a generation opportunity to purchase an apartment sometime in the next year or two. I expect that things will get worse during 2009; how can they not when Obama clearly states that they will? I do think though that America has a great bench of economic talent that will fix this problem if they do not wind up all fighting among themselves among all the structures Obama has appointed them to and if he truly leads this group rather than leaves them to figure it out themselves. We all know that it will take 6-12 months for anything the government is doing now to work. The banks should begin to recover in 2009 and I suppose we will notice recovery in about a year. It will be interesting to see how credit evolves; will people move to debit cards with overdraft terms in the banks such as they do in Israel, or will credit cards make a comeback in a few years? I did purchase some equities on November 1st and have seen them go down another 10%; soon enough I will purchase some more. Over the long haul, sitting on cash is not going to make one an appreciable profit and there will be better upside on equities than there would be in normal times, and I expect that money will gravitate toward quality although those who take risks in stranger offerings may find their risk rewarded as well. A very respected and reliable team of economists predict a fall in the dollar later in 2009 as debt levels cannot be sustained at the present dollar level, and I suspect they are right.
The day after the election, my daughter was crying big time. Get over it…Sarah Palin will not be our next vice president, no matter how much you cry. That afternoon, I looked in my mail and was shocked to note that I had not yet received a tax bill. Obama probably deserves a sympathy card, considering the mess he is taking over. Because Bush and the Republicans have utterly abdicated, he is not even getting the grace of transition but is expected to (and doing a pretty good job at) act as if he is governing enough to keep the markets from going into freefall and not making the world that much worse a place for him to deal with come January 20.
Just for the record, you might want to re-read my February 7, 2008 posting in which I wrote:
I will go out on a limb here and predict that if Obama winds up being the nominee and goes against McCain, Obama could actually beat McCain.
If Obama will be half as good at governing as he ran his campaign, he should be a better than average president. The world is looking for reasons to give America the benefit of the doubt and Obama will gain America that grace. I expected that Rahm Emmanuel would be chief of staff and he ought to be a good one, based on his track record within the Clinton White House and within the Democratic National Party in Congress. I expected a good number of Clintonistas to join this administration and it is one source of my expectation that Obama will govern as a centrist more than a leftwing liberal. Joe Biden will be of great help in dealing with Congress and I suppose that even McCain will be a potential ally. I got the impression from McCain’s concession speech that the campaign for the presidency did not degenerate into something personal.
Two things during this campaign will be remembered. McCain’s aides had a strategy session in June and couldn’t gain a consensus after several hours on a message as to why people should vote for McCain. So the campaign became about why to vote against Obama. That doesn’t win the game when people are unhappy with the governing party. Also, in late September, when the financial crisis hit its peak, McCain came off as erratic in suspending his campaign, going to Washington to deal with the bailout bill and bringing nothing to the table, and waffling as to whether he would show up to a debate. Obama looked more presidential by comparison even if in fact he had done practically nothing.
I personally feel that Obama has the potential to be a great president and I am looking forward to the future. He is disciplined and can stick to a program, well paced, organized, has good decision-making mechanisms, has a good sense of priorities, the political landscape and the public pulse, and functions well under pressure. If he does well, I look forward to voting for his re-election. With the Democrats in control of Congress, I am looking forward to giving them a term to charge ahead and see if they can do a better job of governing now that they have no excuse to blame a deadlocked Congress and opposition president, and hope they can because the markets need certainty and all we’ve had is deadlock and haggling. Since my vote didn’t count, I voted to express my appreciation for McCain’s service to his country during virtually his entire life. My gut tells me that Obama would be a better president but I have a hard time voting for question marks and potential without real experience, which is what I expressed to you last month. Considering that I always vote for the loser (ie: Gore, Kerry, Dole), I wouldn’t want to ruin my perfect record and jinx the country by voting for Obama, right?
I think his choice of Hillary Clinton for State is a risky gambit, hiring somebody you really can’t fire. I hope it works. She has the potential to be great in the job, but I wouldn’t want to be in charge of Israel-Arab peace negotiations if Bibi Netanyahu takes over as prime minister in February.
Israel — I’d bet that Ehud Barak and Bibi Netanyahu made a deal but Barak becomes Bibi’s defense minister, and that Shaul Mofaz brings over his wing of the Kadima party in Bibi’s government. Ehud Olmert seems to be rooting for Bibi too; he is doing nothing to help Tzippy Livni become prime minister, even at the expense of hurting his own party. He’s done this once before; years ago he went and helped Labor’s Ehud Barak against Netanyahu hoping that if Bibi lost, he’d be in line to take over the Likud party. Livni simply has no friends and Barak has alienated so much of his party that the Labor party for all intents and purposes is no more. Historically, the Americans cannot pressure the Israelis to make substantial peace concessions to Arabs, so unless Bibi is going to be something he hasn’t been, I don’t see where things will go with the Palestinians. In a certain sense, he might be more in line with Hamas; if he is interested in negotiating a truce rather than a peace agreement, he will have something to talk about with them even if he has nothing to talk about with Abbas. But you do have to consider that even if Abbas is a nothing, there have been substantial gains against terrorism on the West Bank with real cooperation having developed between the PA’s police forces and the Israelis. Real change has occurred, albeit perfectly reversible. Pressure is very high for action in Gaza; Livni and Barak look weak for not acting and it is only a matter of time till someone acts; the range of the rockets is growing and the only thing between a ground war and the so-called truce is that there hasn’t been major loss of life yet in Israel from the rockets.
India/Pakistan/Afghanistan/Iran — The new president of Pakistan has been rather conciliatory toward India, thus making the country somewhat cautious in responding to Pakistan as the source of the militancy. Problem is that the country’s government can’t survive by looking weak before its voters. The aim of the attack was to suck India into a border war with Pakistan and divert Pakistani forces from Afghanistan to India. It just might succeed. Whatever happens, the Islamic militants are driving the show in a nuclear country. Iran has a stake in all this; it does not like the Sunni-Taliban in Afghanistan with whom it shares a border. The challenge is for the US to channel Iran’s shared interest in not being the victim of dangerous instability by its neighbors into a more cooperative stance instead of having the Iranians use this unstable situation to bolster its nuclear ambitions against the US. It is really a matter of jujitsu — channeling the chi forces in a positive rather than a negative flow. I don’t think this is a matter of chess — it is a constantly changing schema not conducive to long-term thinking, when the order of things is upset by a couple of militants breaking into hotels and grabbing a nation hostage. The same game plan was hatched in NY a decade ago but was discovered before it was executed. It could be done here in NY considering that security is not all that it should be. Anyway, back to Iran. What it comes down to is whether or not there are sane heads in Iran and a full wide-ranging discussion with the US. I have always felt that it is unrealistic to expect the Iranians not to pursue a nuclear program; there are too many reasons around it for them to require such deterrence. The Pakistanis are much more dangerous to the world. The key with Iran is to get the government to act more reasonably in the world and figure out that it can stay in power and deliver its people the goods without carrying on like lunatics. The president of Iran has few supporters at this point and the economics of the country are in very bad shape. At this point, a person should probably be looking at these 4 countries in the same vein. Saudi Arabia is close behind; they have a supreme interest in stability in Pakistan, have leverage with the Taliban, and they are the most likely to act if Iran continues to upset them.
Turkey — The prime minister is losing friends on the world stage as he gets more parochial and his party gets more corrupt. In a lousy economy, Turkey presumably has less leverage. Not a good trajectory for this country in the mid-term future.
Russia — I’m quite happy to see the troublemakers of the world such as Russia, Venezuela and Iran chafe at $45 a barrel oil. Russia is on a trajectory of failure. The government is using the crisis to take over sectors of the economy from its oligarchs and either nationalize or favor friends with the largesse. It will not be a command economy Soviet-style, but it is not a free one either that fosters competition and investment has already suffered, and production has been affected. Foreign investors have been burned too much with onerous taxation, takeovers and downright bullying tactics sanctioned by the government. It has a population that drinks too much, dies too early, and its foreign exchange reserves are dwindling quickly. It is driving its separatist regions to hate it even more and its neighbors to be suspicious of it. I expect that the Europeans are angling to rid itself of dependence on Russian gas over the next 5-10 years. The country has made virtually no investment in infrastructure and the gains of the past 10 years will be fleeting under attack of a world economy that doesn’t consume its oil. Russia laughed for awhile and the fact that its citizens saw their standard of living go up a bit gave its government a bye, but it really lost a golden opportunity to take its sudden fortune and spread the wealth around in a way that would put the country on a long-term buildout for the future. Obama in America might well be doing the right thing that Putin should have done if the infrastructure buildout he proposes is done well and doesn’t just become a barrel of pork sent to obscure congressional districts that doesn’t even get spent. America really does need to redo its infrastructure after milking it for half a century. Most of Russia is still living in conditions that were surpassed by the West more than 50 years ago.
Germany — Merkel is popular in her own party but on the world stage she is being seen as being a disappointment. For an important country, she is seen as not doing very much to lead in a poor economy that Germany, as an economic power trying to head up Europe, could be leading.
Oil — Will eventually go back up to $70-80 but not soon. I’d like to see the US tax SUV’s or keep oil at a floor, so that people don’t go back to gas guzzlers as they have done countless times before when oil drops. I postponed my trip to the Gulf till April which was to commence next week because people there are so shell-shocked by the sudden halt in the world economy that going there to look at opportunities would be a waste of time. I recall a dinner this past spring with a friend of mine who lives in Dubai and I said that there are no yellow lights when the end of an economic cycle comes — you just wake up one morning and found you have hit the wall. You probably know that stocks in the Gulf are down 70-90%, that people are getting fired and that housing prices are falling hard and fast.
Other Economic Sectors — Airlines are set to profit as they cut flights and keep fares high. Food prices are high because companies are absorbing the price increases and they expect that with credit squeezes, the coming harvest will be lower since farmers couldn’t borrow all that they needed to finance this year’s crop, even with good weather. This is true all around the world, from Brazil and Australia to the USA.
Cuba — Time for America to drop its embargo. Get on with the future. Let Starwood and Harrah’s get on with it already.
Travel — We stayed at the just reopened Fontainebleau Hotel in Miami Beach a week after its Grand Opening. It’s still a construction site and totally not ready for prime time for at least a few more months. Phones still ring to the wrong extensions; restaurants serve stuff that is different from what is on the menu and food ranged from good to fair to poor. Rather expensive and a place for Beautiful People — not for families with children — difficult to get around with little kids and expect to find sex books and toys prominently displayed in the lobby sundry shop with the chocolates and newspapers. Karen and I stayed at a very nice place for our 5th anniversary; a true hideaway known as the Woolverton Inn on the New Jersey / Pennsylvania border not too far from Princeton. A bed and breakfast with just about 12 rooms and cabins, it is true seclusion and the breakfast and snacks are innovative and tasty. Sheep are outside your windows as you gaze at hundreds of acres of pasture, and the nearby towns about 10 minutes drive have good eats and cute shops. There are also lots of outlet malls around. This is about a 90 minute drive from New York City. We’ll be back.
Upcoming Travel — Next week in lieu of my trip to the Middle East, it will be a consolation trip to St. Bart’s in the Caribbean which, I am told, is the only place in the Caribbean worth visiting. It’s all in French, so at least I’ll feel I went somewhere and it’s a lot warmer than Paris. For Christmas, we will be going to a family resort in St. Petersburg, Florida. This year our family will be specializing in trips where Jet Blue flies. Those $150 per ticket change fees with a family of 4 have pretty much soured us on going anywhere else. Tourist marketers take note. The Middle East will be visited in late April and the sites are Dubai, Abu Dhabi, Doha, Bahrain, Kuwait, Cairo, Amman and Jerusalem. I mentioned that Latin America is on my 2009 list — the sites on this visit are going to be Mexico City, Panama City, Bogota, Sao Paulo and Buenos Aires with the exact dates to be determined in the next month or two.