Daily Investment Interpretations

September 15, 2010

2010-9-15 (Wednesday) The markets worked their way a bit higher today: U.S. industrial output up for 14th straight month. The NASDAQ Composite uplifted 11.55 points (0.5%) to 2,301.32, remaining within its May-to-September trading range. The Dow posted a 46.24 point gain (-0.44) to close  at 10,572.73, and the S&P 500 eked out a 3.97 point increment (0.35%) to end at 1,125.07. Oil slid slightly to $75.73 a barrel, while Gold retreated $1 to $1,269. The VIX rose 0.54 to 22.10.  
    Is tea party end of our two-party system? This is another excellent article by Marketwatch's Darrell Delamaide. He writes, "The so-called establishment in the GOP is now at the mercy of former Alaska Gov. Sarah Palin, Sen. Jim DeMint of South Carolina and other self-appointed prophets of the conservative movement that have succeeded in channeling the recession-fueled anger of a good chunk of the voting public... In short, the ultrapolarization that characterizes the political debate in this election year is opening a yawning gap in the center. In democracies less sclerotic than ours, this would be an opening for a new political party to capture that disaffection in the middle... It is Obama himself, of course, who has helped create this opening with his erratic, inscrutable and aloof approach to politics and policies. Obama is not a Muslim, he is not antibusiness and he is not a socialist — but he has left his profile blurry enough that his opponents can successfully pin these labels on him." His key point is, and has been in other articles, the unprecedented ultra-polarization of the U. S. public.

    O’Donnell’s win spoils Republican party  
"The division caused by her victory could be summed up by a tweet sent out by Tony Fratto, a former spokesman for President George W. Bush: 'Seriously — I never realized there were that many kooky people in Delaware.'” 
    “'We were looking at eight to nine seats in the Senate. We are now looking at seven to eight in my opinion,' Republican strategist Karl Rove said in a Fox News interview. 'This is not a race we’re going to be able to win.'” 

    The part that worries me most about
right-wing extremists taking over the U. S. government is the potential for an all-out nuclear exchange--for World War III. In 2007-2008, the Bush Administration was working on a "ring of fire" confronting Russia in Eastern Europe... a set of anti-missile launch sites in Eastern European nations such as Poland and Czechoslovakia. Supposedly, these were to protect Europe from potential missile attacks from Iran. 
    The Russians considered this story ridiculous. They argued that they' live next door to Iran. If the Russians aren't worried about Iranian missiles, why should we be? Further, if the U. S. were serious about intercepting Iranian missiles, why not locate them in Turkey? They interpreted the U. S. move to be aimed at defending the former Eastern European Soviet bloc countries from Russia... or worse. They began to warn that if the U. S. installed missiles in Poland and Czechoslovakia on schedule in 2012, the Russians would take them out. Given the Bush Administration's warning that it wouldn't cavil at using nuclear weapons to impose its will, the Russians pointedly mentioned that they wouldn't rule out nuclear warheads to take out the U. S.-installed "anti-missile" emplacements in Eastern Europe. (It seemed to me that the Russians would reason that once we had installed nuclear missile launch sites flanking Russia, it would be possible for us to sneak additional missiles into our launch bunkers. Furthermore, given the "cowboy mentality" of the Bush Administration and the possibility of even more radical successors to President Bush, there would be no telling what might happen.)
    If the situation were reversed... if the Russians or the Chinese announced that they were going to install anti-missile missile batteries in, say, Cuba, to protect Mexico from terrorist rockets from South America... I would hope that our leadership wouldn't be so trusting that it would let them install their missiles. 
    None of this seemed to garner any attention in the U. S. media, but I was reading what was being published in Russia, and I was more than a little alarmed. By the time I read this, I had recently become aware of some of the wild risks that some of our earlier Cold War presidents took that we knew nothing about. For example, in 1961, President Kennedy authorized the secret installation of 1,500-mile (2,400-kilometer) range Jupiter and Thor thermonuclear-armed ballistic missiles: Cuban Missile Crisis - Wikipedia, the free encyclopedia. These missiles were capable of hitting most western Soviet cities, including Moscow. Khrushchev's riposte in Cuba was an attempt to counter JFK's feint in Turkey, but we, the people, knew nothing of this at the time. At the time, according to the news media, JFK had stared Khrushchev down: In reality, Khrushchev had secretly agreed to remove the Soviet missiles from Cuba if the U. S would remove its (secret) missiles from Turkey.
    What bothers me about this is the deception involved, and the risks that were taken without our knowledge. In October, 1962, we, the public, were led to believe that the Cuban Missile Crisis was instigated out-of-the-blue by the sneaky, evil Soviets, and that we, the United States, were innocent targets of this aggression. 
    It's important to know that the majority of the members of the ExComm Committee were in favor of attacking Cuba in spite of JFK's reminder that the Soviets could immediately launch their missiles and could kill 80,000,000-100,000,000 Americans (effectively eliminating the U. S. and the U. S. S. R. as world powers, not to mention injuring practically every citizen of the U. S. and the U. S. S. R.).Fidel Castro was also in favor of immediately launching the Cuban missiles, knowing that the counterstrike would practically wipe the island of Cuba off the map.
    In the book,
Averting the Final Failure: John F. Kennedy and the Secret Cuban Missile Crisis Meetings: the author, Sheldon M. Stern, notes that in the "Missiles of October" ExComm meetings, President Kennedy knew that the highly secret Discovery surveillance satellite system could provide information complementary to the U-2 overflight photographs, but even the ExComm members who were advising him regarding responses to Khrushchev's ploy weren't aware of the existence of this satellite system.
    Torn Curtain - The Secret History of the Cold War  
    Stock market futures are down about 0.2% tonight.

To Be Continued