Gleanings II ~ 494 ~ Compliments of Nick Rost van Tonningen Posted by John on January 20, 2013

A leopard cannot change its spots nor a tiger its stripes. And neither can US lawmakers break old habits. So the legislation that rolled the fiscal cliff another couple of months down the road was laden with “pork barrel spending” that one analyst thinks could cost the US Treasury US$613BN in 2013 alone. Many people are aware there were some goodies in it for Nascar but few that it contained new, or extended old, tax breaks for a small number of companies, incl Morgan Stanley, that have big portfolios of foreign loans, for companies that transfer patents they own to offshore companies that then can earn licensing fees in a tax-free environment, for those who interpreted helping post-9/11 reconstruction in New York as a license to build high-priced condos there (as well as Goldman’s new headquarters), and for the railways, for the film industry & for hedge funds (& this is only a very partial list).

Another analyst with an interesting insight notes that everybody has been focusing on what it will take for the Republican-dominated House to agree on fiscal cliff-avoiding/higher debt ceiling legislation for the Democrat-controlled Senate to vote on. But he believes the former could prove the lesser hurdle. For the Democrats have a 55-45 majority in the Senate & among those 55 are six who are up for re-election in 2014 from states that Romney won (Alaska, Arkansas, Louisiana, Montana, North Carolina & South Dakota), in the case of all except North Carolina by majorities of 10% or better. Their political careers go easily up in smoke in November 2013 if they were to vote for anything for which the Republicans could hold their feet to the fire eighteen months hence.

US inflation is deemed to remain “benign”. For in December the CPI was flat MoM & up 1.7% YoY, while core inflation was up 0.1% MoM, half the 0.2% expected (& 1.9% YoY); while gasoline prices fell 2.3% (& energy prices generally 1.2%), this was more than offset by food prices rising 2.3% – anyone remember the old saying about the ‘calm before the storm’ – or perhaps better in this day & age that before a tsunami hits the coast the ocean level recedes’? Other economic indicators are mixed. Manufacturing/factory activity indices continue to weaken while the market was startled when December’s 12% (MoM) annualized housing starts came in at 954,000, a 4 ½ year high & the largest MoM increase since May 2006, way above its expected 890,000, and new jobless claims plunged to 335,000, well down from the previous week’s 372,000 & the expected 369,000.
Since the Fed quit leveraging up its balance sheet over a year ago, the ECB, & now the BoJ, have picked up the slack in theirs ( and while the Fed’s has grown from 6% in 2007 to 20% today, a level at which it now seems to have stabilized, that of the BoJ went from 19% to 32%, and will go much, much higher when, not if, Prime Minister Abe’s plans to drive down the Yen materialize.

US Treasury Secretary Timothy Geithner has told the White House that, come what may, January 31st will be his last day on the job – This could hamper the Treasury’s operational effectiveness during a critical period. And when Jack Lew moves into his new office after what could be tense nomination hearings, there will be no honeymoon (Obama’s nomination of him to succeed Geithner is taken as a signal that his fiscal bias during his second term will be towards more spending, whereas, had he chosen someone like Erskine Bowles, it would have been seen as indicative of him starting to appreciate that the odds are not negligible that during his second term his Administration will find itself up the fiscal creek without the proverbial paddle & that he was going to do whatever it took to keep his legacy from becoming like that of Bush 43, shameful.

Optimism abounds a recovering housing market will boost US GDP growth. But David Rosenberg has a valid point when he says that move-up buyers need first-time buyers & that the potential universe of the latter is limited by uncertain career prospects & heavy student loan burdens. Since then another source noted “the 20-34 year crowd, having seen their parents wrestle with the downturn in housing, do not wish to strap themselves down with a mortgage, so they rent” – in fact, the multi-unit segment has been outperforming the single family home segment of the new home-building sector. As to Canada’s supposedly still booming, but in reality slowing, housing market, the rapid aging of its population means that in the years to come it will have to absorb a steady, & mounting, supply of existing single family homes whose owners have died or have moved, by choice or necessity, into apartments, condos or assisted living facilities.

The US its still the world’s largest producer & exporter of corn. But with 85% of its corn now consumed domestically, whereas 30 years ago it had an 80+% share of the global corn export trade, today it’s that’s down to 30% (albeit of a one-third larger volume), while that of “all others” – i.e. countries other than the US, Argentina & China – has gone from 10% to 50% (with Brazil on track to become the world’s No. 2 corn exporter). According to USDA US corn exports this year may be less than half the 60MM tonnes in 2007/08 while those of ‘other countries’, at 70MM tonnes, will be almost twice the 37MM tonnes they exported then. And in the past five years China has turned from a major corn exporter into a major importer : its corn imports have gone from 3,975 tonnes in 2005 to 1,752,737 tonnes in 2011 as its exports declined from 3,073,999 tonnes in 2006 to 135,997 tonnes in 2011, a 4.5MM tonne turnaround in five years in a 90MM tonne global corn export market. And its imports will continue growing as dietary tastes keep shifting towards more meat & dairy pr4oducts, top quality arable land keeps falling victim to industrialization & urbanization (& its average quality keeps declining as the new additions are of a lesser quality than that blacktopped over), its farm population keeps aging even faster than the population as a whole, & water for irrigation keeps getting scarcer.

Today the near-term prospects for the global economic/financial/ political system &, longer-term, for the role the US can play in it, depend on what on a good day looks like merely a dysfunctional US Congress & on a bad one like a bad air day in Beijing. So a review of the occupational & educational backgrounds of the House’s 435-, & the Senate’s 100-, members of the last Congress may in order, since the make-up of the next one is unlikely to be materially different) :

• in mid-2011, the Employment Policies Institute, a Washington-based, non-profit, fiscally conservative think tank, found the 90% with college degrees had majored in government & law (34.8%), humanities (20.9%), business & accounting (13.7%) and science & technology (11.5%), prompting Michael Saltsman, one of its Research Fellows, to note “Members of Congress are expected to provide answers for our current spending and economic crises, but … many … might have difficulties answering Econ 101 questions”;
• according to the Congressional Research Office 95% of them had university degrees. 225 had law degrees, 99 Master’s degrees (most commonly MBAs), 23 Ph.Ds, & 20 ones of a medical variety (inc. one vet & one dentist); and
• Wikepedia provided the following breakdown (with a 40% double counting ratio) of their undergraduate fields of study : government – 241, law-225, business – 201 & education 94.

And the Wall Street Journal Infographic service provided details as to their ages. In the House 25.9% of Democrats were aged 65 or over, vs 13.2 % of Republicans (and 12.9% & 5.9% respectively 70 years or over), with the corresponding numbers for the Senate being 43.1% & 36.1%, and 27.4% & 17.0% respectively – this may help explain the attitudinal differences between them; for generally speaking older people are more likely to favour the status quo & to have an attitude of ‘it will last out my lifetime’ (or as King Louis XV, or some say his mistress, Mme de Pompadour, put it, “Après nous le déluge”).

All of the above makes on wonder why we talk about ‘representative government’.
In North America the Indian gang rape case has gotten a lot of attention. But Nicholas Kristoff points out in the New York Times that US lawmakers showed their (lack of) concern for sexual violence against women by failing to renew the landmark 1994 Violence against Women Act. Drafted in then Sen. Joe Biden’s office, passed by the House 235-195 & the Senate 61-38, it was signed into law by Pres. Bill Clinton on September 13th, 1994. After being partially defanged in 2000 by a 5-4 Supreme Court decision that struck down the provision enabling women to sue their assaulters (on the grounds it intruded on states’ civil rights), it was re-authorized in 2005 & 2010 in the face of growing Republican opposition. Last year a bill was tabled in the Senate to further extend the Act, prompting the House to counter with one of its own. And, when on January 2, 2013 the Senate re-authorization bill wasn’t brought to a vote, the law died after a 17½ year run.

Omnibus bills seek in one fell swoop to introduce new-, or amend existing-, legislation in a number, often dozens, of diverse & unrelated areas. For the executive branch of government they are an efficient way of doing business. But in a democratic, representative government context they are an aberration that shifts power from the legislative-, to the executive-, branch of government. Long a common feature on Washington’s Capitol Hill, they have been much less so in Canada. But once at the head of a majority government after the May 2011 election, Prime Minister Harper wasted no time introducing them to frustrate the opposition & circumscribe its effectiveness. His first omnibus bill last year was not without controversy. But his second one, tabled last October, may have been “on bridge too far”; for it has energized & coalesced Canada’s Indians like nothing before because, among many other things, it seeks to redefine the concept of “Aboriginal Fishery” & to weaken the protection of Canada’s navigable waters, & of the environment generally, in order to put fewer obstacles in the way of the rapid exploitation of Canada’s natural resources. So the Indians have joined, if not seized control of, the “Silent No More’ movement

As part thereof for about a month Canada has witnessed the spectacle of Theresa Spence, the chief of the 1,500 inhabitant Attawapiskat First Nation on the Western shores of James Bay in Northern Ontario engaging in a protest “hunger strike” in a tent on an island in the Ottawa River within sight Parliament Hill, demanding a meeting with the Prime Minister & the Governor-General. With full media coverage a number of bigwigs in the Indian ‘industry’ & opposition politicians have called on her to offer her obeisance. But, just as a picture is worth a thousand words, this very act illustrates better anything else could have the core of the Indian problem in Canada.

For she is not a role model, she is a fraud. While on her “hunger strike” she says she only takes water ”and fish stock”; so after a month of doing so she looks remarkable unlike someone halfway to the terminal point in a real hunger strike (the world record was set in 1981 by IRA activist Bobby Sands who died after having refused sustenance other than water for 66 days – one can survive without fluid intake for only about five).

While a number of the 600 plus “First Nations” in Canada can be justifiably proud of the way they’re being run, the majority operates on the business model of a corrupt sub-Saharan Africa country, i.e. the chief, his/her family & hangers-on do quite well, while their people are largely left to fend for themselves, to be conveniently trotted out on suitable occasions to ‘prove’ to the world how bad conditions are in their community & how badly they are being treated. Her Attawapiskat First Nation falls in the letter category. As Chief her annual stipend is $70,000, which, since it is ‘earned’ on a reserve, is tax-free. Her husband, who has served as the band’s financial and/or general manager; although he isn’t right now, was paid as much $865/day (also tax-free) when he did. And rather embarrassing for her, in the midst of her “hunger strike” Deloitte produced a scathing audit of her band’s financial affairs. It found that the vast majority of the $100+MM Ottawa had shoveled into her community over five years had been spent without leaving much, if any, of an adequate paper trail, quoting examples such as a $300,000 legal bill that failed to provide the name of the lawyer who had provided the service & millions of what were described as “real estate transactions” on a reserve where the band owns all the land.

On the other, & more commendable, end of the Indian spectrum from Chief Spence is Clarence Louie, who is a role model. Two decades ago, at age 24, he became Chief of the Osoyoos First Nation when it was bankrupt & run by the Indian Affairs Department. Today his 432 member band is a $40MM year business that has so much more on the go than it has people that it has members of 13 other bands working for it. While part of the difference is a matter of location, for the Osoyoos’ ancestral lands are on the shores of Lake Penticton in Southern Interior BC while those of Chief Spence’s band are thousands of miles from nowhere, much of it is a function of attitude; among his favorite admonishments when addressing fellow Indians as a motivational speaker are “Our ancestors worked for a living … so should you”, “I don’t waste time fighting 100 year-old battles”, & “no more foolishly looking to the Queen to protect our rights” (all of which run against the grain of the Indian lobby which makes it not surprising that, just as Obama was faulted by some in the 2008 election for not being “black enough”, he is often being criticized for not being “Indian enough”

Rabbi Eli Ben-Dahan(58) is Moroccan-born & came to Israel with his parents in the mid-50’s . He has a Bachelor’s degree in Business Administration & a Master’s in Public Affairs. From 1989 until last year he was Director-General of Israel’s Rabbinical Court system during which time, as he is happy to point out, its role & influence in the Israeli government increased greatly. His is now the No. 4 name on the Jewish Home Party’s list of candidates; so he is a shoo-in to be in the next Knesset, and his party has been pushing his candidacy as the next government’s Minister of Religious Affairs (which is infuriating the ultra-orthodox Shas Party since it has occupied that post since 2003 & claims squatter’s rights & doesn’t like his idea as to what being Jewish is all about). Last November he opined it was time to put an end to the Oslo process (& the idea of a two-state solution) & urged the Knesset to just go ahead & annex Judea & Samaria (i.e the West Bank). And he recently said in an interview “This land (i.e. the West Bank) was given to us by God … (and) we have no right to forego one grain of this land.” – in recent days he has been fighting off Likud charges that he is “against women’s rights” (that may backfiring on it).

The latest polls suggest that, among the major parties (of the 34 on the ballot for the January 22nd election) Likud had slipped another notch to 34 seats (down from a total of 42 in the last Knesset) while the others held their own, Labor with 17 (up from 7), Jewish Home with 16 (3), and the new Yesh Atid & Tsipi Livni’s The Movement parties with 10 each, while support for Kadima, which had gone from 27 to 21 in the old Knesset after a number of defections, seems to have gone pffft.

According to Bloomberg’s Jeffrey Goldberg Obama thinks that Netanyahu is a political coward for refusing to use his position to arrive at a compromise with the Palestinians,that he “doesn’t know what his own best interests are” & that he is leading his country down the path of international isolation by cowtowing to the settlers. This leaves the Canada of Stephen Harper & his pitbull John Baird as Netanyahu’s sole unquestioning ally & Obama, likely perturbed by Netanyahu’s support during the US election campaign for his old friend & fellow beneficiary of the beneficence of gambling czar, Sheldon Edelman, as possibly shortchanging Netanyahu (who comes, after all, from a family with a strong Zionist bent).

In Greece the ratio of those with a job (3.68MM) over those who are unemployed (1.34MM) is now 2.75, a record low. And the number of “inactive workers”, those classified as neither employed nor unemployed (i.e. those who in US labour statistics would be classified as having “dropped out of the work force”) is now rapidly closing in on the number of Greeks who actually have a job.

GLEANINGS II – 494
Thursday January 17th, 2013

GERMANY REPATRIATING GOLD FROM NEW YORK, PARIS (Forbes)

• During the Cold War era Germany for safety reasons held most of its official gold reserves (currently almost 3,400 tonnes) in the vaults of the New York Fed, the Bank of England & the Bank of France. A decade ago it repatriated about half of its gold in the Bank of England when the latter upped its storage charges (the other two store it for free – because they are making money by lending it to speculators?). On January 16th the Bundesbank announced it will repatriate all its 374 tones of gold from the Bank of France & 300 tonnes of the 1500 it has at the New York Fed (thus leaving 37% of its total gold reserves there) but will leave alone its 445 tonnes stored in the Bank of England (the only one that charges it for doing so). This process is going to takes time but it expects to have half the gold it owns in its own vaults by no later than 2020 (while the gold in Paris can be trucked to Frankfurt, the gold from New York must come by air and, since the insurance companies won’t provide coverage for more than 5 tonne loads (i.e. US$250-300MM-worth), it will take a minimum of 60 flights to effect the transfer from New York.
• Two reasons were given. One was to “build confidence & trust domestically” (there was a hell of a row not long ago when the government auditor noted that Germany’s gold reserves in foreign central bank vaults hadn’t been verified for a long time & the Bundesbank had no system for tracking individual gold bars). And the other was to have “the ability to quickly exchange gold for foreign currency … in case of a currency crisis.”

The Dutch government is coming under pressure to follow suit. Since WW II the lion’s share (currently 89%, vs. Germany 68%) of its gold is held in foreign central bank vaults (51% in New York, 20% in Ottawa & 18% in London), and Netherlands Info Services, the English language service of the (private sector) Dutch national news agency ANP went as far as noting “More and more citizens, politicians and economists in Europe are questioning whether the foreign gold reserves, which their country possesses, are still in fact physically there.” While gold bugs predict this will lead to an implosion of the “paper gold” market, that’s actually the best case scenario. The worst case is that is reflects a) a loss of trust , & confidence in each other, in a central bank universe that has long been very “tightly knit” community – which would impinge on their ability to cooperate in, & deal effectively with, a crisis, and/or b) that they have concluded that the probability of the occurrence of the ‘mother of all financial crises’ is no longer zero. Neither is good news.

COLLABORATE VS COLLABORATE (Thomas L. Friedman)

• The word has two meanings, one constructive, the other pejorative (the Oxford Concise dictionary defines the former as “work jointly … esp. at literary or artistic production” & the latter as “co-operate traitorously with the enemy.”) In both Silicon Valley & Washington rivalries & competition are intense. And yet in Silicon Valley there is much collaboration of the first kind, even between arch-rivals; for they know that doing so in areas of common interest typically creates better & better thought-out, and more effective & practical outcomes, quicker than if each had done his own thing in isolation. The Washington ‘business model’, however, is based on collaboration of the second kind, into finding fault with others & their ideas, so that good ideas don’t get airborne & the solutions forced upon it at the last minute are haphazard, papering-over Rube Goldberg-like contraptions.

In Silicon Valley it’s all about speed & cost-effectiveness; for consumers are impatient & price-sensitive, while in Washington cost is never an issue & tax payers are relevant only at election time. In Silicon Valley, inactivity quickly has career-, & income-, implications while in Washington it doesn’t; in fact, the very opposite can be true. In Silicon Valley success comes to those who are creative & can implement ideas quickly & cheaply, while in Washington success depends on ‘playing the game’. Silicon Valley is into ‘finding solutions’ & Washington into creating the illusion of them. And Silicon Valley‘s spirit is in the tradition of America’s pioneers (even though much of its success has been due to people born elsewhere) while that Washington’s is in that of of King George III (who lost his head to insanity) & King Louis XVI (who lost his to the guillotine).

DID OBAMA JUST TAKE DEFAULT OF THE TABLE? CNBC, John Carney)

• In his January 14th White House press conference President Obama said the government won’t be able to pay all its bills if the debt ceiling isn’t increased (the Treasury is already into “extraordinary measures” to keep it afloat, the scope for which Treasury Secretary Geithner told House Speaker John Boehner in a January 14th letter will be exhausted by about mid-February, “earlier than I had expected”). Obama’s exact words were “If Congressional Republicans refuse to pay America’s bills on time, Social Security checks and veterans’ benefits will be delayed. We might not be able to pay our troops, or honour our contracts with small business owners. Food inspectors, air traffic controllers, specialists who track down loose nuclear materials won’t get their checks.”

This is the oldest trick in the book to be trotted out at times it is proposed cutbacks be stuffed down a public sector entity’s throat : threaten to put the highest profile, and most popular & heart-rendering programs on the chopping block, rather than the least deserving (in this case the salaries of the 535 members of Congress who are refusing to cooperate to the common good in the way the vast majority of Americans expect, & pay, them to do). There has to be a legal way to include the lawmakers among those who would be be financially inconvenienced in case the debt ceiling were not extended. Doing so would be a win-win-win-win situation for Obama : every red-blooded American taxpayer would cheer him on & his ratings would soar, both problems would likely be addressed in short order, it would send a message to those head-in-the-sand Republicans who subscribe to the view that “Nobody is talking about default except the President”, and he would once & for all lay to rest the perception he is a ‘wimp’. And As to the answer to the question posed in the headline, please read on.

WEAK DEBT DEAL COULD RISK US RATING (CNNMoney, Mark Thompson)

• Fitch says a repeat of the 2011 debt ceiling crisis will result in its reviewing the US AAA rating. While it expects the ceiling to be raised, it says it’s critical how & when this is done. And it warned that “In the absence of an agreed and credible medium-term deficit reduction plan … consistent with sustaining the economic recovery and restoring confidence in the sustainability of long-tem US public finances, the current negative outlook is likely to be resolved with a downgrade later this year, even if another debt ceiling crisis is averted”. It also warned that, while prioritizing debt service payments over other commitments “would not constitute a default event from a sovereign rating perspective … (it would) very likely prompt a downgrade even as debt obligations continued to be met.”

A two part message : the bar is set high & you lawmakers had better grow up & do so quickly ( the chances of which are ……………..?). As to the chances it will be heeded, they are not great.

JP MORGAN SAID TO BE WEIGHING RELEASING “WHALE “REPORT FAULTING DIMON (Bloomberg, Dawn Kopecki)

• An internal report will be presented to its Board at their January 15th meeting that faults CEO Jamie Dimon for inadequately overseeing the activities of a London operation headed by Bruno Iksil (nicknamed “The Whale” because of the size of the positions he took) that last year cost the bank US$6.2BN (& at its nadir had destroyed US$51BN of shareholder equity). The Board will then have to decide whether or not to release it when it publishes its Fourth Quarter results on January 16th.

Its hard to see how the Board could avoid an avoid releasing it. And that will not be good news for Dimon who threw most of the people in the chain of command between himself & the Whale under the bus while pretending it had been none of his business – in the event, the Board did seek to send a message of sorts by cutting Dimon’s compensation package in half to …..US$11.5MM).

BAKKEN OUTPUT FELL IN NOVEMBER FOR THE FIRST TIME IN 18 MONTHS (Bloomberg)

• North Dakota’s average daily oil production was down 2.2% during the month, as the state’s rig count declined from 210 on October 19th to 181 by November 30th.

This illustrates the Achilles Heel of the whole shale oil & gas mirage : wells have an unusually high production drop-off rates & maintaining output requires a “Drill, baby, drill” modus operandi. It is also interesting to note in this context that Denbury Resources, that last September sold its Bakken exposure to ExxobMobil, has now used the proceeds thereof to buy ConocoPhillips’ properties in Montana’s Cedar Creek Anticline where, after producing oil for over half a century, output using traditional technology has been dropping off but where Denbury thinks it can recover as much as 185MM bbls., in part by applying its Bakken experience (in which case its US$5.67/bbl purchase price will prove to have been a real bargain). This in line with the history of the oil patch. Big Oil’s ponderous decision making processes have typically caused it to have to buy its way into new plays in johny-come-lately fashion & to sell off its mature properties just as more fleet afoot small operators are figuring out how to use new technologies to blow new life into them.

THE INVASION OF THE DATA SNATCHERS (NYT, Bill Keller)

• Under the heading The Gun Owner Next Door the Gannett-owned White Plains, N.Y. Journal News published the names, & mapped the addresses, of 33,614 handgun permit owners in two surrounding counties. ‘Public’ reaction was swift & venomous (& supposedly not just from gun owners), ranging from suggestions the identities of the journalists involved deserved be stolen, their houses burgled & their children taunted to that they be shot, with one retired Florida police detective-turned-author calling it “one of the most despicable acts of dirty journalism ever”. But while some Americans can get seriously exercised about this kind of invasion of privacy, all of us are sleepwalking through the ever more pervasive invasion of our privacy by the authorities in the name of homeland security, even as the threat posed by al-Qaeda wanes. Thus last month Attorney-General Eric Holder authorized the National Counterterrorism Center to examine & copy everything the government may have collected, & stored, about any American. None of us paid any attention when in its dying days the members of the 112th Congress found the time to re-authorize the law that allows any, & all, US intelligence agencies (of which there are 16, if not more) to eavesdrop on our emails & phone calls. And few, if any, people raise their voices when Facebook & the like monetize our personal information for their gain.

It is beginning to look uncomfortably much as if the pieces are increasingly being put in place for the science fiction-like scenario envisaged by Aldous Huxley in his Brave New World to become reality, one century after his death in 1932. If so, once again one man’s, at the time seemingly outlandish, vision will have ceased to be so.

OHIO SCHOOL DISTRICT TO ARM JANITORS (Toledo Blade)

• Montpelier, Williams County, Ohio has 4,000 inhabitants, and a school with 1,000 students & 75 teachers in one building. Its School Board recently voted to arm its custodians & four of them have volunteered to take two days’ of weapons training.

Parents’ reaction has been mixed, with one of those having reservations observing “There is a need to beef up security … But it all starts at home. Lock your guns up.”

NRA SHOOTING VIDEO NO LONGER ‘SUITABLE’FOR FOUR YEAR OLDS (KLTA 5)

• “NRA Shooting Range” was released on January 13th & is available for free at the iTunes store. Described as “striking the right balance of gaming and safety education”, it was initially rated as suitable for anyone aged four years or older. But after an outcry from anti-gun groups this was changed, on January 15th, to twelve years or older.

The right hand obviously doesn’t know what the left hand is doing; for at a press conference a few days after the Newtown shooting, NRA Executive Vice President Wayne LaPierre told those assembled “Guns don’t kill people … video games, the media and Obama’s budget kill people.”

JEWISH AMERICANS MAY BE INCREASINGLY DISENCHANTED WITH NETANYAHU BUT THEIR PRIORITIES ARE ELSEWHERE (The Observer, Peter Beinart)

• In Israel the political discourse is moving right, as witnessed by the rise to the top of local newspaper heap of the free pro-Likud newspaper Israel Hayom (owned, & purportedly subsidized to the tune of US$20MM/year by the same septuagenarian gambling magnate, Sheldon Edelson who was so magnanimous to the Newt Gingrich & Romney campaigns), & by the rise of Naftali Bennett. But American Jewry is moving left as witnessed by the increasingly harsh criticism of Netanyahu by mainstream Jewish commentators like the NYT’s Thomas L. Friedman & David Remnick, the Editor of the New Yorker, the Jewish lobby’s failure to derail Hagel’s nomination & the rise of J Street, the liberal Jewish lobby.
• Many American Jews, especially the younger ones, are becoming more disconnected from the Jewish state : in a recent survey by J Street over 40% of them couldn’t even identify Netanyahu. And many also have little contact with the organized Jewish community in America (which is run by the more conservative, older & richer, and more religious & tribal among them) & tend to be more interested in domestic social issues. But while America’s Jewish community will give Netanyahu a pass on how he deals with the Palestinians, Iran is another matter. For it sees that as directly affecting American interests & American security. The 70% of American Jews who just voted for Obama are more focused on America than on Israel, & more on being liberal than Jewish. Whether Netanyahu understands or not will determine the relationship between the world largest two Jewish communities in 2013.

Interesting how America’s younger Jewish generation seems to be gravitating towards the ideals of early Israel & the older towards that of the regimes that led to its creation.

WEAKEN THE RIGHT (Haaretz, Editorial)

• Netanyahu’s outgoing government did serious damage to Israel in its four year term. It has caused growing international isolation & a rift in its critical relationship with the US by focusing on expanding the settlements, avoiding negotiations with the Palestinians & reviving talk of annexation. And domestically its policies have been hallmarked by nationalistic zealotry, harassment of its Arab minority, politicization & militarization of the education system and efforts to destroy the Supreme Court and weaken freedom of the press. The undecided voter has quite a lot of alternatives to choose from (albeit none of them terribly appealing) but the principle that must guide his vote is clear : weaken the right & the Haredim to halt the country’s slide into political isolation, fascism & apartheid.

The chickens are now coming home to roost for Obama’s failure to seriously, & very publicly, rattle Netanyahu’s cage at some point in the past four years; for the average Israeli voter seems blissfully unaware how isolated their country has become from the global community in general, and from its longest & strongest backer.

CHINA PLANS DIAOYU ISLANDS MAPPING (English.news.cn)

• In 2009 China launched the first stage of a territorial islands & reefs surveying & mapping project that, by the end of last year had resulted in the identication & precise positioning of about 6,400 islands & more than 4,900 island maps at three different scales. And on January 15th it was announced that the second stage will include the Diaoyu islands as part of China’s efforts to safeguard its maritime rights & interests.

One step closer to a confrontation that both sides say they don’t want but that China seems bound & determined to precipitate, the more so because it was announced since that this second phase will be implemented in collaboration with the mapping & surveying departments of the PLA.

FORMER JAPANESE PM VISITS BEIJING (CCTV.com.cn)

• Yukio Hatoyama arrived on January 17th for a 4-day visit, invited by a Chinese NGO

He was for nine months in 2009/10 one of a succession of Democratic Party Prime Ministers, and now is part of the (weak) opposition. While his visit was supposedly “private” in nature, he nevertheless met forthwith with an important political figure, Jia Qinglin, the Chairman of the National Committee of the Chinese People’s Political Consultative Conference, who later reiterated that the Diaoyu Island matter should be handled through dialogue and consultation & that “ the two sides should handle the … dispute properly in order to ensure bilateral relations of healthy and stable development’. But in any such consultations Beijing would hold all the aces.