Year-End Thoughts & Predictions — 22 December 2011

Assorted photos at home, Central Park, Las Vegas and vicinity.

Lyrics from an interesting song I heard this week: “There is no Yes in Yesterday….You only get what you give, so you gotta give it all you’ve got.”

The reason the Research in Motion company is $15 a share and Apple is $380 a share is that I have 25 employees all turning in their blackberries in favor of iPhones as part of a year-end technology upgrade. When I asked my Chief Technology Office what advantage iPhone would have over the Blackberry, he said “It doesn’t matter. Everybody just wants one.” And of course we want our employees to feel extra cool.

I know very little about many of the people reading Global Thoughts but every so often I hear from them. This column started as a way to keep in touch with my friends but it’s become clear that many more people beyond those on my several-hundred long mailing list are reading this stuff. This past month I was in DC and visited the National War College and the offices of a top insurance company at the invitation of readers who have been reading this column for years who said they wanted to know more about the author of Global Thoughts. Kinda nice when you all let me know you’re out there and of course I want to know what you like and don’t like on these pages.

Here’s a great tip. My dad’s Wall Street Journal and Barron’s subscriptions came up for renewal and the company wanted $600 for the renewal for the two items added together. I called up on the phone and protested to their subscription department but they had nothing for me. So I googled “discounted wall street journal subscription” and immediately got a link from Dow Jones for one year subscription for $119 (on the page with other companies offering discounted subscriptions). As soon as I placed the order, I got a prompt asking me if I wanted a 13 months of Barrons for $99 and of course I said Yes.

I’m kinda heavy on the family stuff this month because there are some fun stories here.

I told Elizabeth that Karen would be flying to DC and having lunch at the White House and I asked Elizabeth if she remembered what it was. She wasn’t impressed and she answered in a very bored tone, ‘Yeah, that’s where Obama lives; I’ve seen it twice.” Our nanny was a bit nonplussed, so I told her “well, Elizabeth didn’t exactly vote for him, you know.”

One evening she was trying to deflect blame for losing a toy somewhere in the house. She said that since God is the boss over everything, the fact that she lost the ball was His fault.

So in NY you go trick or treating at the American Museum of Natural History and they give you treats including toothbrush and toothpaste…..Elizabeth went to the Metropolitan Museum of Art  for the first time with Karen (she has gone with her school before). She went with the book “You can’t take a balloon into the Metropolitan Museum of Art” and insisted on going through the entire museum to match the art exhibits with the pictures in the book. Karen was given a run for her money. Elizabeth had comments about all the art – she thought of the idea that the museum might lend out its excess collections to other museums when she heard about all the art being stored in the basement. She looked at a Greek mythological male sculpture and her basic impression was about how huge its you-know-what was. She didn’t want to waste her limited time on period rooms because she felt she had seen real castles this past summer in Austria and didn’t feel these could possibly be as worthy. So our little girl is learning the art of good taste and accepts no substitutes.

Jeremy is also doing very well and we are very pleased at his progress this year in school. He has become very good at coordinating his clothes every evening whilst he is supposed to be going to sleep and both of them are very good at constructing and describing all sorts of structures. Jeremy wrote his name on a piece of paper this week for the first time. Elizabeth praised him to the stars – “that is the best writing of a name on a paper by a 4 year old I’ve ever seen.” So as you can see she is learning the art of being patronizing to the n’th degree….Jeremy is very germanic; he advises our nanny that “I will be naughty on Tuesdays and Fridays.”…

Jeremy runs to the front door in the morning this month of December looking for the newspaper. He looks to see if Toys R Us has an insert in the morning paper and then he dutifully starts cutting out all the pictures of the toys he likes and lines them up to show me what he wants me to buy for him. Needless to say, he wants TRAINS TRAINS and more TRAINS.

We were in Miami Beach for a Jewish holiday in October and attended our family synagogue where our kids were playing with their cousins. There are as many as 50 Ciments in that place. It was a pain just keeping track of Jeremy; we found Jeremy Ciment in a room somewhere with a little boy and scolded him telling him that he was only supposed to be with a Ciment cousin, whereupon the boy in the room said “I’m a Ciment cousin.”….

This month we went to Las Vegas in honor of my mother’s 70th birthday. I had offered her a party in New York City but she said “BOOOORING!” and insisted that we all go to Vegas to celebrate with her. Elizabeth lost her Elmo in Las Vegas; I’m glad that’s all she lost. The kids ran the hallways endlessly at the 3,000 room Mirage hotel and casino and drove us insane having us chase them around casinos and hotel lobbies all over Vegas – not a place to take kids. We experienced all kinds of reactions while we dealt with one meltdown after another – one guy in the lobby of the Mirage wanted to punch me out because he thought I was being too rough with Jeremy who was having a tantrum in the lobby, and one security guard wanted to throw us out as we checked in and was standing there over an hour waiting for our room after a 6 hour flight. Another drunk told me I should be hitting Jeremy real hard when he was melting down on the sidewalk next to Harrahs because I wouldn’t buy him the toy he wanted because it was during the sabbath. So as you can see everyone had an opinion. More on Las Vegas below in the Travel Notes section.

Moving onto the Morons of the World Section…What kind of a moron was US presidential candidate Cain to think that 4 women wouldn’t come out on his sexual harassment history – including one who got a payout equal to a year’s salary and one that had a 13 year affair with him? I don’t think he expected to be a front-runner; just to promote his book and his speech-making career. Increasingly, I feel that losers are using the presidency to springboard their career instead of capstone it.

Count on short memories – Americans are buying SUV’s again.

You gotta give Saudi prince Talal credit – he bought Apple stock for $25 million when Steve Jobs came back to the company about 14 years ago, and it is now worth $17 billion.

Gingrich is flavor of the month; nobody who is in DC who is in the know wants to deal with him. He is basically on the campaign for selling books; for several days his only public appearance even now has been book-signing events.

Russia doesn’t so far censor the Internet and it’s clear that people are ignoring the national television and getting their news through the internet. Putin will still get a majority of the vote but he can’t control public opinion like he used to, and he is clearly not terribly popular. It’s just that there are no real alternatives because he stamps them out or tries to stage-manage them. Last month or so I said that Russia is a loser country and that its next generation is abandoning it – here’s a statistic that confirms it. By end of this month, the outflow of capital from Russia will be 70 billion dollars more than the amount invested in the country. The main source of capital flight is Russian native entrepreneurs. Even if the price of oil stays high and the amount of export remains the same which are not givens, the country will have a capital accounts deficit by 2014.

Let’s talk about China as well. Finally I understand why casinos in Macau are doing so much business – Macau has the highest rate of economic growth in the world today. Tons of rich Chinese as well as people who have jobs in the present government are laundering their money out of China through casinos in Macau; they give in Chinese money to get chips; and then cash them in for foreign exchange. China will have a lot of new people in government this year and the ones who are inside now might lose their patronage. Lots of rich folks are taking out their money and leaving the country. China in the long haul is a loser country – nobody has any rights there and it is not a safe place.

Europe is still on thin ice even after the action taken this past week by the various central banks and the various agreements reached by Germany and France to the exclusion of Britain. The bond markets still don’t believe that any real reform has been made; the continent basically has decided to adopt the original principles when they first adopted the Euro, but never followed them. It’s a lot of talk but no walk and the markets are not buying it. It is just prolonging the agony. Prediction for 2012: The Euro may well not survive the next year and Britain might turn out to be right in not going along with the crowd.

Syria’s FSA opposition is training in Turkey with support from France, US, Jordan and Turkey. It is hard to sort truth from propoganda but the attacks inside Syria are getting a little bit more sophisticated and one should keep an eye on this over the next few months to see if the training is having any effect. Look to see what kinds of attacks are happening and with what weaponry. Libya was brought down because the Brits and others with their special forces trained a bunch of Libyans who otherwise couldn’t shoot their way out of a tea party rally. Prediction for 2012: At a certain point Assad will be gone as his party dumps him, and I predict that will occur sometime in 2012. The country is being squeezed financially and the merchant class is about to scream “uncle.”  A more Sunni-oriented country will follow with more Turkish influence and that country will join the mainstream.

Prediction for 2012: Israel will probably strike this year against Iran, and I would bet sooner than later. To a great extent they are already doing so with pretty good success, just doing things under the radar without openly declaring war and the Iranians have been OK to lick their wounds without publicly admitting that anything happened just like the Syrians did a few years ago when the Israelis struck them without saying so publicly. If the Israelis reach their objectives in this manner, there may be any need to escalate. I would also bet that the UK is very much in on this deal, considering how there seems to be bad blood going between them and Iran. Obama is weak and he himself likes to do such things – he doesn’t have a problem going after terrorists. It is an election year and the consequences to Israel viz the USA are minimal. The Republicans aren’t going to oppose it and Obama isn’t going to start a fight with Israel now. The UN won’t do a thing; Europe and the Arabs are completely diverted, and China and Russia can’t do anything. Better to clear the decks now than with a new president who has to set his own policy and doesn’t want someone else messing it up. I really could see the US being closer to Iran instead of Saudi Arabia 5 years from now so it is a delicate matter. But remember that after we nuked Japan, they became our allies. And that’s how it might come to pass with Iran. They need to see that they are going to lose with the rest of the world if they are going think that their clergy-led revolutionary leaders are going to bring about Armageddon and take down the rest of the world but leave them in charge of it. Iran could make trouble in the strait of Hormuz but it would be short-term and more psychological than real. The US, if it has enough warning in the area, will be able to cover the threat. If you really want to put Iran out of business, if you can’t get at their nuclear installations, just take down 5 or 6 of their refineries and they go kaput. The country is a net importer of oil because they don’t have enough refinery capacity.

I expect Israel to give a big round of “Told Ya So” with regard to Egypt’s first round parliamentary election where the Moslem Brotherhood got 40% and the Salafists got 25%. The liberals got the rest all split among themselves; you can just imagine what the next parliament is going to look like with the MB and the Salafists holding at least 65% between them. The Salafists are pretty extreme and the MB will not partner with them for now (but see below in the next paragraph). A friend of mine in the region who reads their internal documents says that they really have changed over the past 10 years and that at present they look toward the present-day Turkish model for inspiration and have moved away from the idea that they want to create some kind of religious caliphate with one person running a government by coercion.  This is a good thing because Egypt needs good relations with the world to have food on the table; Iran had for years tons of oil to sell and could afford to tell everyone to screw off and to fund their external adventures to export their ideas. He also feels that the fact that the Moslem Brotherhood is pretty well organized in the region via Jordan, Egypt and Gaza means that Israel oughta deal with Hamas and forget about the PA – both of the authorities are corrupt but the PA is viewed as so corrupt by Palestinians that they are viewed as collaborators with Israel and just don’t have the street credibility to make a deal with Israel that would be viewed as anything less than a sellout. Hamas could make the same deal and it would stick and right now they are viewed as the only Arab party that could really deliver the Palestinians. We know the Israelis are dealing with Hamas as it is and senior Israeli officials are no longer denying it, and they actually seem to have some sort of modus operandi going. I seriously wonder if the Israelis find it easier to deal with the Hamas than the PA. I assume that as time goes on the Israelis will buy off many Hamas officials but meanwhile the Palestinians in the street don’t know about it. My friend feels that the Saudi peace initiative put out about a decade ago is going to be the one that has the best chance of universal acceptance.

Very interesting story I noticed today – Egypt’s Salafist party announced that they would respect the treaty with Israel and called for leaders of their party to have contact with Israel. It seems like various parts of the Moslem Brotherhood and these more fringy elements are coming more into the mainstream, and I’ve noticed that Hamas and Hizbullah are getting less money from Iran and feeling the pinch. The reason Hamas is getting Gulf instead of Iran money is that they have become non grata in Syria; they came out against Assad now that it has become impossible to support him and their leaders Meshaal has been kicked out to Jordan (funny thing was that he was deported from Jordan to Syria a decade ago). Hizbullah continues to stick with Syria because after all they are in Lebanon and have no choice but to stick with him to the very end. And of course Syria is surviving now because Iran is helping to prop it up. Prediction for 2012: Hamas will, under the umbrella of the Moslem Brotherhood, announce publicly that it is in favor of making peace with Israel and Israel will proceed to deal with them.

Obama is not exactly bad for me – stock market is up since he took office; taxes are the same and business is up. Health insurance I don’t pay for anyway. But I think that Romney would probably be better for the country; we need real reform and I think he will cut the budget and attack entitlements. Prediction for 2012:  I expect Romney to win in 2012 but it will be a real race; Obama has money too and his Jewish fundraisers at least are all sticking with him. He has money, organization, discipline and experience; he is likely to squeeze by virtue of lukewarm Republican support as a mainstream consensus candidate because Obama is really not popular in the country and unemployment will still be high in this election year. The economy itself will plod along with election year stimulus and the world hopes that in 2013 real reform will happen. I predict that under a Romney presidency, there will be real reform in the US. His track record in this regard is pretty good. If Obama is the president, very little will happen. He just doesn’t know how to work with Congress and I don’t see any reason why it will change in a second term.

North Korea – will be run by a group at the top with a figurehead president boy wonder. China virtually controls the country; they provide it with almost all of its daily needs. They don’t want any instability and millions of refugees streaming across their border, and truth be told neither does Japan or South Korea want to have to absorb them economically. So for as long as the farce can continue, it will with the US and its allies and China just trying to keep that country in check.

Af/Pak Region: The US will of course be pulling out a lot from Afghanistan and trying its best to ignore Pakistan. The US has little ability to influence that region and its military venture has been without any real sustainable gain. Pakistan as a society has become even more anti-American as a result of all the activities that the Americans have been carrying on inside that country. It is true that Pakistan has acted with duplicity but it is also a fact that their interests do not coincide with America’s, and America is not there for the long haul and they are and they have to deal with Afghanistan both as tribal family and neighbor. I think that the US would have more influence in the region by continuing to fund education and social development programs in that region and keep its military home. Till now, the Saudis have been funding education in Pakistan and we see the results. Education funding is much more cost-efficient than use of the military. Education leads to jobs and enlightened understanding of the world. Military involvement leads to resentment, death, destruction and hatred. Whether or not we knock off another few hundred Al-Qaidanicks in this region has to be weighed against the hundreds of thousands of people that increasingly hate America because of that campaign and line up to replace the radicals that go down. We just have to admit that the use of the military to win the “hearts and minds” of the people is a crock – I think of an article about some lady in Iraq who got a blanket from a US army person who was going around the village handing out blankets. She said “you guys killed my son and destroyed my home, and now you’re giving me a blanket?”

The Wall Street Journal notes that the US is set to become a net exporter of petroleum products this year for the first time in 62 years. Last month I noted how the world of energy that is most meaningful to America is shifting away from Arabia and toward the Western Hemisphere. I have a feeling that this shift is going to take place faster than anyone thought it would.

Some Travel Notes now. Las Vegas: Mirage was OK but there are better hotels with better food and beverage and not as much of a circus. The location is excellent right in the middle of the strip of hotels. Tons of Asians there and they completely ignore the No Smoking rules. Might have drunk people yelling in the hallways at 3am. But not bad for $55 a night… Saw the Siegfried & Roy lions which were really lovely; Wynn buffets are still my favorite and the Pizza Place at the Wynn is great (try the pesto pizza which is in the pantheon of such items); and Jean Phillipe in the Bellagio lobby is excellent but never saw any real gelato in all of Vegas. Pirate show at Treasure Island, volcano at Mirage were all loud and scary for the kids; Bellagio fountains are nice and the Venetian had a small christmas show which was OK. Gondola rides are not happening unless you go in the morning and reserve timed tickets in advance at the ticket window. Get a babysitter even at $45 an hour which is what they charge there (high insurance costs in Vegas). Human Nature is a 60’s motown revue by an Australian male quartet which was excellent. Karen also liked the Beatles Love show with music backed by Cirque D’Soleil. Kosher restaurant Jerusalem Grill wasn’t bad for chicken items.  Bonnie Springs an OK attraction 30 minutes from town with a Wild West theme; go on the little train ride for beautiful desert and mountain views – you will really feel that you went somewhere distant. A bit further is a picnic spot with grass and then Red Rock Canyon with a 12 mile scenic ride around the park.  Circus Circus Adventuredome was good for the kids. Vegas airport was not so bad arriving or departing even Sunday after Thanksgiving. Las Vegas is not a great place to take kids and it is a pain with strollers but there is no way you can live without them. We were there when it was nice to walk around outside; in the summer heat you’d be stuck inside all the time and it would be impossible with kids who need to run somewhere and the hotels do not have amusements for them.

Travel notes to Turks and Caicos, a 3 hour flight from New York on JetBlue (by the way, you should see the panic going on throughout the Caribbean with American Airlines in bankruptcy). Stayed two nights at the Amanyara, an Aman resorts property. It is on its own part of the island in a nature reserve, a 10 minute ride down a dirt road away from any other road with no sign at the turnoff. It is 25 minutes from the airport. What I saw on the roads was not impressive; I didn’t see any of the Grace Bay part of the island which is where most of the condos and other hotels reside. At the Amanyara, it is a beautiful resort with a beautiful beach, lovely pool, and flawless service with excellent food and beverage (except that some of the portions were small; I complained and within 2 minutes there were 2 waiters there with a ton of extra food being put on the table). You get a villa (there are 40 of them for the hotel plus 20 other resident villas on the property) and they are truly excellent. There is an excellent spa, small movie theater and a nature center for children. If you are here more than 2 nights, you better like water sports or really be into doing nothing. I didn’t go off property at all, and there is no place within 30 minutes drive to go to. This is good for adults who want to get away from it all; not good for children except at the major holiday periods when there might be others around with kids. For all this you pay quite a bit, but at least you get unlimited international touch tone phone calls from your room and a free minibar stocked with various treats (you do pay for alcoholic beverages though).

We’re off to Florida — Miami, Palm Beach and Disney World for the New Year break. This has been a good year for Morningside and we reached significant milestones of growth. Hope all is well with you and wishing you and yours a happy holiday season and a Happy New Year!

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