Since its independence in 1776,  the singular focus of America has been Europe. America understands Europe. The greatest foreign policy successes of America have been in Europe.

President George W. Bush turned the focus of America from Europe towards the new emerging centers of power. This shift began during his transition period in 2000 under the leadership of Wolfowitz. The events of 9/11 accelerated this shift. The Bush Administration paid far greater attention to BIC countries, Brazil, India and China, than it did to Western Europe. Within, Europe, they paid greater attention to Emerging or Eastern Europe than they did to Old Europe of France, Germany and Benelux. 

This was a major transformation of the US frame of global reference. President Bush did this instinctively. He did not announce it as a formal shift. He did not consult and he did not inform. So very few people in America noticed this major transformation.

But the Europeans noticed. Europeans have a tremendous mental and physical involvement with America. They did not like this change one bit. They felt ignored and slighted. Europeans started describing Bush as a non-consultative President, a cowboy who increased America's isolation from the world. For President Bush, this proved to be a heavy price to pay for what he believed.

In contrast, President Barack Obama came to power determined to get America's focus back to Europe. He promised to be more consultative with the "World" (read Europe) and less unilateral in his policies. He envisaged a partnership with Europe to reset the course of the world.

And he tried. President Obama tried very hard to bring the European Governments in to a joint consultative and supportive partnership with America. But he did not succeed. He found out that his charm and consultative style did not translate into greater support from Europeans. He met with Europeans in December 2008, a month after his election victory and then again in April 2009. But the Europeans gave Obama virtually nothing. When President Obama announced his "surge" in Afghanistan, Europeans merely paid lip service to the plan.

So this week, President Obama signaled that his Administration was turning its focus away from Europe. He did so by expressing his inability to attend the USA-EU Summit in May, 2010.

This is a big deal. No U.S. president has skipped a USA-EU summit since 1993. European Union officials found out about this decision from the News Media. It was first reported on the web site of the Wall Street Journal. To add insult to injury, this decision was announced just before next week's US visit of the Prime Minister of Spain, the host country for the USA-EU summit.  According to the New York Times, Europeans feel snubbed by Obama and see this decision as evidence that "Europe is being taken for granted and losing importance in American eyes..."

The shift away from Europe was first evident in the Copenhagen Climate Control conference. President Obama rescued the conference by barging into a meeting of the BASIC countries, Brazil, South Africa, India & China, and making a deal with them. He did it without consulting the Europeans or even inviting them to the discussions. This was a crushing blow to Europe's standing in the World. This shift away from Europe has now become explicit with Obama's expressed inability to attend the USA-EU summit in May 2010. 

This is not just a change of focus but a significant turn in his global frame of reference. It is overdue. As we wrote on November 15,2008,  "The events of the world will be increasingly influenced by events in China, India, Russia, Brazil, South Africa and their neighbors. America's principal focus must be on these regions and countries.  That is in America's long term interests."

In that article, we had expressed ".our fervent hope that Barack Obama quickly adopts the Bush frame of reference and reassures the new centers of power that his policy will continue the transformation pioneered by George Bush."

It was not quick but better late than never. President Obama prefers to come to his conclusions thoughtfully and methodically.  This is an example of  Obama's Analytical Intelligence coming to the same smart conclusion in a different way than Bush's Instinctive Intelligence.

As the global frames of reference of Obama and Bush converge, the world sees a rational America focused on its long term interests. That is good for America and the World.


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In September 2008, we wrote a detailed article about the USA-India Strategic Partnership  that was launched by President George W. Bush and Prime Minister ManMohan Singh.  In the first section of this article, we discussed a security partnership in the Indian Ocean between India & America:

Then we asked readers to "Look at the map below and ask yourself which large country would be the ideal partner?"



This week, the 2010 Quadrennial Review of the U.S. Department of Defense  provided a clue to Pentagon's thinking. This report describes the growth in India's military capabilities and states that "India will contribute to Asia as a net provider of security in the Indian Ocean and beyond."

In our opinion, this is a major statement. The United States does not anoint another country as a "net provider of security" lightly. There are strong reasons for this designation.

One reason is India's unique geostrategic position. Look at the map above. India's reach extends from the Straights of Hormuz in the Persian Gulf to the Straights of Malacca in the east, two waterways through which the majority of oil traffic and commercial traffic flows. Protection of this broad span is the aim of India's growing Air Force and Navy. The deeper reach of India extends up to South Africa in south west and up to Australia in the south east. 

The second reason stems from the Quadrennial Report's admission that "The United States cannot sustain a stable international system alone." It states that "In an increasingly interdependent world, challenges to common interests are best addressed in concert with like minded allies and partners who share responsibility for fostering peace and security."  

How does India fit in this framework? The Report states:

Any American journalist who wishes to cover India should become familiar with Bharat. If they do, they will succeed in a way that the "elite" Indians cannot. This is because  the vast majority of Indians in India want to speak with "real" Americans than "elite" Indians like S. Mitra Kalita. 

It is quite possible that we are being unfair to S. Mitra Kalita of the Wall Street Journal. After all, her use of the code word of Indian elitism might be accidental rather than intentional. So in the tradition of this blog, we invite her to tell us her point of view. If we are wrong, we will apologize to her and to our readers. But will she care to speak to a simple Bharatiya-American like us?

* Remember the Seinfeld episode about the man-purse. When Jerry was put down for carrying a purse, his response "it is european".


Send your feedback to editor@macroviewpoints.com 

Editor's Note: In this series of articles, we include important or interesting videoclips with our comments. Our Web Software does not permit embedding of the clips into our articles. So we shall have to be content to include the links to the actual videoclips. We are very happy with the tremendous response from readers to this series of articles. We thank them sincerely and profusely. 

This is an article that expresses our personal opinions about comments made on Television and in Print. It is NOT intended to provide any investment advice of any type whatsoever.  No one should base any investing decisions or conclusions based on anything written in or inferred from this article.Investing is a serious matter and all investment decisions should only be taken after a detailed discussion with your investment advisor and should be subject to your objectives, suitability requirements and risk tolerances.


Sovereign Debt

Is Greece the Sub-Prime crisis of 2010 or is Greece the Thailand of 2010? This was the week when Sovereign debt crisis exploded into a panic. There is not much to say except that every one knew this was coming. 

Wasn't Dubai the first salvo? But that was a time when investors had a huge cushion of profits from the monster rally in risk assets that began in March 2009. Performance Managers were determined to see or hear no evil. Their goal was a run into year-end and they did it. 

But now is the beginning of the New Year. Performance Managers have no wish to hold on to positions and no profit cushion in 2010, a new year for performance measurement. So they began selling in the second week of January and have sold one very piece of news, good or bad. 

But Greece is real bad news and so is Portugal & Spain. If you solve PIIGS, then you might face the British Lion (or will it be the California Bear?). We do think that contagion is the word but there have to be some relief rallies in between. 

May be, one such rally began on Friday afternoon. We will know better next week.

Commodities & Emerging Markets

Gold fell $45 on Thursday prompting even CNBC's Larry Kudlow to cry Debt Deflation. At least for that moment, Larry agreed with David Rosenberg of Gluskin Sheff. Could George Soros be right about Gold being the ultimate asset bubble at this stage? 

All commodities fell and fell furiously, a sort of a liquidation type fall. Then we learned that a Hedge Fund was in trouble, having been caught on the wrong side of the commodities trade.

We also heard that, by mid morning, bids had evaporated in emerging markets like Brazil. Then, as if by a magic wand, fear subsided and we saw a furious rally in all risk assets on Friday afternoon. Dow actually closed up after being down as much as 160 points in the afternoon. Gold closed up as well. Did some one know something or did no one want to go home short over the weekend?

The question is not whether risk assets will mount a rally but what to do after the rally. Ideas anyone?

Here is one. Michael Hartnett of BAC-Merrill Lynch said on Thursday that it was too early to buy equities. Mr. Hartnett had called for a Valentine day correction back in December 2009. He thinks this is like 1998 Asia crisis in reverse. Back in 1998, the lead indicator was EM Debt spreads and today it is European CDS, Hartnett says.


Equities

We have to give a shout out to Rick Bensignor, the veteran technician, who said Sell on CNBC when Dow reached 10744. During the rally early last week, he said to short the rally at 1100-1106 on the S&P. His levels have been perfect. Was does he say now? Will any CNBC show invite him for the benefit of viewers like us?

Mary Ann Bartels, Chief Technician at BAC-Merrill Lynch continues to argue the Decennial "0" pattern for 2010 - a decline in January, a rally in February-March, another decline into June followed by a rally into year-end.

CNBC Fast Money reported on Friday that Doug Kass of Seebreeze Partners says that the panic of this week signals the end of this correction. Hope he is right. 


Treasuries 

The most despised asset class in the universe is the only one that continues to win. But people hate Treasuries and Treasuries-lovers. Look what they did to David Rosenberg in a panel segment on CNBC on Friday, February 5. As soon as Rosenberg began stating his thesis, others piled on him. It was as if Rosenberg was being pro Al Qaeda. 

They did allow Richard Bernstein, Rosenberg's ex-colleague at Merrill, to say that the only way to protect yourself is with long maturity Treasuries. Bernstein has argued for at least a couple of years that the only uncorrelated asset class in the world is long maturity US Treasuries. CNBC Anchors pretend to listen and then go back to talking about Gold as a safe haven. They pretend to not remember the Soros comment about Gold being the ultimate bubble now. Listen to David Faber making noises  in the background as Bernstein recommends Treasuries ( at least we think it was Mr. Faber). 

Is the rally in Treasuries a short term flight to safety or is it a intermediate term investment in deflation protection? Can the ultimate sovereign debt rally in the face of mounting sovereign debt concerns? We will find out soon.

The guy who is not waiting is CNBC's stock reporter Bob Pisani. He continues to interview ETF marketing people who agree with Pisani's fervent plea to investors to buy stocks and sell bonds. Mr. Pisani did so again on Friday afternoon at 3:54 pm with complete nonchalance about the ongoing market turbulence. But why worry when it is only your viewer's money, right Mr. Pisani?


Municipals -  Our Sovereign Debt Problem?

We began asking this question in October 2009 when we noticed a sell-off in closed-end muni bond funds. Things are certainly not improving on this front. Last week, we heard the news that Harrisburg, the capital of Pennsylvania, will consider Chapter 9 bankruptcy protection along with tax increases and asset sales as options to address $68 million in debt service payments due this year. Also, we heard this week that California's debt problems now rival those of Greece.


Who dat?

Kudos to CNBC PowerLunch. They brought Steven Sapra, a Quant Jock from Analytic Investors to make a pick for the Super Bowl. Like Dennis Kneale of PowerLunch, we like cutting to the chase when football is concerned.

So we report that based on his quant model, Steven Sapra predicts that Saints will win on Sunday by a touchdown.



Featured Videoclips

2. Jon Stewart on Bill O'Reilly's show - Wednesday & Thursday, February 3-4

September 11, 2001 was a defining day of my life. My office was on Broad Street in Lower Manhattan, a couple of blocks from the World Trade Center. To get home that day, I had to walk through the dust & rubble of downtown. I remember it vividly. That day New Yorkers in every neighborhood came down in to the streets and gave hugs, water and food to people like us as we walked uptown. That was a day when all of New York City became one.

During my business travel in the next few months, as a New Yorker I received warmth from people wherever I went. People told me that they felt for us New Yorkers and that they were with us. This was a rare and unique feeling. Usually New Yorkers, especially Yankee fans like us, are not used to being treated well in the rest of America. 9/11 brought America together and it felt great.

We heard a lot of discussions on Television in the weeks after 9/11. The overriding theme was that Freedom of Expression was a right but not a license. People could speak against America's reaction to 9/11 but they had to remember that free speech could have consequences. In other words, the concept of academic freedom protected the speech but not the consequences of such speech. 

After some time, the intensity of the 9/11 outrage dimmed. Some "scholar" Professors began articulating theories about 9/11 that seemed preposterous and deeply vile to us. We even heard "analysis" that concluded that 9/11 was a work of the CIA and of the Israeli Mossad. This was being done by American "scholar" professors in American Universities under the guise of Academic Freedom.     

We were disgusted by the behavior of such professors. But fortunately we did not have to write our opinions at that time. People with bigger megaphones and greater resources began campaigns to censure these "scholar" professors, people like Bill O'Reilly, Sean Hannity, Joe Scarborough among others. The campaigns succeeded in most cases and the American people did get justice from the Universities that employed these professors. 

As we see the work of today's "scholar" professors against Indian Culture & Religion, we wonder, as we did in May 2009, Where are the Indian Bill O'Reilly,Sean Hannity, Joe Scarborough?


Send your feedback to editor@macroviewpoints.com

Editor's Note: In this series of articles, we include important or interesting videoclips with our comments. Our Web Software does not permit embedding of the clips into our articles. So we shall have to be content to include the links to the actual videoclips. We are very happy with the tremendous response from readers to this series of articles. We thank them sincerely and profusely. 

This is an article that expresses our personal opinions about comments made on Television and in Print. It is NOT intended to provide any investment advice of any type whatsoever.  No one should base any investing decisions or conclusions based on anything written in or inferred from this article.Investing is a serious matter and all investment decisions should only be taken after a detailed discussion with your investment advisor and should be subject to your objectives, suitability requirements and risk tolerances.

Bernanke Gets Back In. Now What?

So last week was not a bad dream. Just a bad week that might prove to be a precursor of a volatile year. This week, financial TV featured a number of experts who expressed dismay about Bernanke getting reconfirmed. The Senate seemed just as unhappy. But Senators run away from accountability and they ran away from the risk of being blamed for market chaos if Bernanke nomination failed. The speech of Senator Kyle demonstrates this. He gave a blistering speech attacking Bernanke from every angle he could think of. But, in the end he voted for Bernanke because he thought the next Obama nominee would be worse. We get this. For years we complained that Coach Lloyd Carr of Michigan was not a Championship Coach and wondered when Michigan would get a Jim Tressel type coach. Then Lloyd Carr retired and his replacement gave us the worst record in Michigan's 100 year history. So we wish we had the wisdom of Senator Kyle.  

But we must disagree with the experts who complain loudly about Bernanke being weakened and the Fed being weakened by Congressional actions. We are reminded of the old adage "that which doesn't kill us, makes us stronger". We think, of course hopefully, that the Bernanke Fed will emerge determined to show the world that they are nobody's patsy. May be, Bernanke will summon the inner George W. Bush in him. Remember in 2000, all the political pandits told us that the narrow squeaky win in Florida will make Bush draw in his horns and govern from the center. Bush-Cheney realized a win by one vote was as decisive as a win by 1 million votes. So they said damn the torpedoes and went ahead in their own merry way.

Of course, this is all theoretical. The US Economy, despite the inventory cycle rebound, seems mired or at least the American people do. The US banking system seems at risk of backsliding. We recall reading somewhere a question posed by Mr. Case of Case-Shiller "if house prices go down another 10% and loans made in 2008, 2009 start going bad, then what happens to the Banks?" We shudder and prefer to not think. But we already hear that JP Morgan is beginning to extend prime mortgages to 40-50 year terms rather than changing principal amounts or foreclosing. These innovative gimmicks keep the loans as current, at least on paper.

So what happens to Bank portfolios or the Fed portfolio if CNBC Anchors get their fervent wish and interest rates go up at the long end? A double barrel blast of massive duration extensions with higher rates and a gift of massive losses by the Fed to the Treasury. If this week was bad for Bernanke, what would that scenario mean for him? So you see why we ask Bernanke to begin waking up the George W. Bush inside him.

Sovereign Debt

Is this the Eureka moment for Greece? Hopefully, this weekend will bring some relief. But $440 billion of debt is a bit too much. What happens to the Euro is an open question? It is massively oversold but will it eventually get to par with the USD, as Walter Zimmerman of United-ICAP so boldly forecast on September 1, 2009?

S&P fired its cannons against UK Banks but as CNBC's Santelli said they don't have the guts to downgrade UK. After all, as Bill Gross said in May 2009, the "market considers USA & UK to be relative twins".  By the way, did Mr. Gross buy long maturity Treasuries in January 2009? They rallied a lot in January and Bill Gross does not miss such rallies. We know Erin Burnett will never ask him a tough question but what about you, Steve Liesman?  Look at the Pulitzer prize in your home and get some courage, will you? But Liesman did ask the Bond King a skeptical question about mortgages on January 27. His Majesty William Gross did not like it and gave Liesman a royal "We are Not Amused" look before dismissing it.

Equities

This was another bad week for equities. It looks as if all news is being sold.  We will find out whether the January indicator holds this year. Giving credit where credit is due, we must acknowledge that CNBC did bring its viewers warnings about the stock market.

The first week was a great up week but in that week (on Wednesday, January 6), Peter Costa of Empire Executions predicted that January would be a down month this year. He also said that this year will be a down year. Strangely CNBC Fast Money has also been very useful. Gary Kaminsky had the guts to tell viewers to get out of Big-Cap technology stocks because they had become a crowded trade. Kaminsky is a real manager of people's money and he has been a tremendous breath of fresh air on Fast Money. The Terranova gang beat up on Kaminsky in early January but Kaminsky took a victory lap this Friday.

But the star of CNBC Fast Money has been Steve Cortez. Cortez told viewers in the last week of December 2009 to sell commodities and to buy the US Dollar. He was even positive on US Treasuries. Commodity stocks were destroyed in January and the Dollar rallied. 

What did Steve Cortez get for being so correct and prescient on Fast Money? Banishment, of course. We predicted this in our January 2 article when we asked Will Steve Cortez be banned again until Melissa Lee goes on her next vacation? We do wish Cortez and Kaminsky become first team traders on Fast Money. They are the ones with the hot hand. What does Anchor Melissa Lee have against Cortez? Is it an ethnic thing? We know it is a mischievous question. But why not ask it? Especially when we have been so inspired by the example of Margaret Brennan of Bloomberg (see clip 3 below).

On January 9, we asked if Steel stocks are today's Telecom stocks? This week answered the question. US Steel went from $35 in October 2009 to $66 on January 8, 2010. It closed at $44 on January 29. Wall Street Analysts treated steel stocks just like they treated telecom stocks in 1999-2000. In January one large firm upgraded X to a Buy at around $62. Then another firm followed up by upgrading X to a Strong Buy at around $65. The first firm had rated X a Sell at $22 and upgraded X to a Hold at $ around 45. Of course the upgrade was to a Buy was at $62. A defining example of Analytical Intelligence? (See our article Instinctive Intelligence vs. Analytical Intelligence).

Where were the Squawk Box Penguins when these upgrades were announced? CNBC Squawk Box Anchors were too busy hosting politicians and pretending to be Joe Scarborough that week. We are not pleased. We gave Squawk Box an award and we don't like to see them slipping into complacent mediocrity.


China 

If Bernanke has not sent a thank you note to China, he should. China seems serious about cooling down its economy. It is this fear that has demolished commodities and removed the specter of inflation from financial markets. The drop in Oil, Gold, Copper has to be sweet music to Bernanke ears. Now all he has to worry about is the Fed's massive portfolio. 

Jim Chanos was on Financial TV this week talking about a bubble in Chinese real estate and fixed asset investments. We think China will end up as the most important story in financial markets. In fact, our belief that the 30-year Treasury will again trade with a 3-handle (& perhaps a 2-handle) rests to an extent on the bust of the Chinese credit bubble.

The most interesting commentary on China was not by either Chanos or Jim O'Neill. It was by Jim Grant. Those of you fortunate* enough to get Grant's, run to the article Sell Product 97 in the latest issue. You will see how China is following in the notorious steps of Wall Street Wealth Management products. The US investors who have participated in Structured Notes, CDOs, CLOs and Trust Products realize now that Wealth Management from Wall Street means Management of the process by which Wealth is Transferred from Investors to their wall street Brokers. 

Grant's points out that Chinese Banks are doing exactly that by putting their loans (mostly bad) into trust portfolios and selling these portfolios to investors with an above-market yield, a process by which the full credit risk of the loans is transferred to investor-buyers. Remember the SIVs (Structured Investment Vehicles) that were created by Wall Street to push bad stuff out of their balance sheets. How did that story turn out? 

Those who watched the opening ceremony of the Beijing Olympics know that China does things on a big scale. So does Chinese Wealth Management Sector, it seems. 

For the benefit of our readers, their viewers and all investing humanity, we call on Bloomberg, CNBC & Fox Business (lnac**) to invite Jim Grant to talk about Product 97 and their product cousins in detail. And if you invite him folks, please let him talk. 

* Those who are not subscribers should rush to Grant's website  and request a free sample issue, preferably the latest one. 
** lnac - last name alphabetically correct - our nod to the correctness fashion 


CNBC & Bloomberg TV

Those who remember the 1980s Lakers would remember the presence of stars like Jack Nicholson and Dyan Cannon at the Forum. When asked about this, Magic Johnson replied "they want to be us and we want to be them".

We see a tinge of this in the behavior of CNBC Anchors & Guests. Clearly, CNBC Anchors love talking to investing superstars. They want to be them. That is why instead of asking real investing questions, CNBC Anchors tend to exchange banter with superstar investors. But, we have begun to notice that superstar guests want to be like CNBC Anchors as well; may be they feel jealous of the platform the anchors have. We saw a bit of this in the Chanos interview on Squawk Box (see clip 4 below) and we have seen this in interviews with other guests.

In contrast, Bloomberg Anchors seem to be all business. That is why they seem to ask direct questions, sometimes interesting questions like Margaret Brennan's question to Jim Chanos about comments by Jim O'Neill. Chanos responded in kind by saying Jim O'Neill had not visited 3 of 4 BRIC countries when he created the acronym BRIC (see clip 3 below). Now, why can't CNBC Squawk Box Anchors ask such a question on their show? Are they afraid their guests may not like them so much?

May be Networks have their own culture. Just look at the Burnett-Brennan trade. Erin Burnett used to be a tough anchor at Bloomberg, so nasty at times that we nicknamed her "Irish Mace" for her tendency to beat guests over the head with questions. She moved to CNBC and now watch her with Bill Gross. She is almost coquettish in her manner with Gross, always playing up to him. She has not exhibited even a trace of her Bloomberg toughness on CNBC. 

Margaret Brennan used to be nice and sweet on CNBC. Then she moved to Bloomberg and now she is asking her guests tough, direct questions.  

We are on record saying that we like the "fun & friends" approach of CNBC. But folks, above all, we are hopeful investors and our eternal hope is to learn valuable investing insights from your guests. May be, you folks should view some Louis Rukeyser clips. He was the greatest financial anchor for individual investors because he never forget them. In every show and with every guest, Rukeyser would demand to know what investors should buy or sell. Are you listening, Sue Herrera? You know why we ask this question. 


Featured Videoclips

This week we feature the following clips:

Read this summary and watch this clip. China could be the most important factor for global financial markets this year and next.



Send your feedback to editor@macroviewpoints.com

• the sexual circumstances of the birth of Jesus, 
• the impact on the sex life of Jesus and his relationship with Mary Magdalene,
• then draw from this an inference to abuse of boys by Catholic Priests in America and
• further draw from these sexual analysis a causal relationship to the inhuman cruelty of European Christian conquest of Latin America, Asia & Africa.

• “ "There is no dignity, no taste, no form",” he (Forster) complained in a letter home. Recoiling from Hindu India, Forster was relieved to enter the relatively rational world of Islam." (emphasis ours)
• "Forster, who later used his appalled fascination with India’s polytheistic muddle ....was only one in a long line of Britons who felt their notions of order and morality challenged by Indian religious and cultural practices." (emphasis ours)

Then Mishra describes the Indian beliefs as "pagan blasphemies" and goes on to praise British historians who studied Hinduism.

This is a review? Under what editorial standards does this biased outburst qualify as a review? To use views of Forster, Karl Marx and words like "pagan blasphemies" as evidence to justify attacks on Indian Culture?
This fits with the Editorial Standards of the New York Times? We suspect that even religious extremist newspapers would exercise better editorial control!

This review then praises the Doniger book as a staggeringly complex work and writes "Doniger sets herself the ambitious task of writing "“a narrative alternative to the one constituted by the most famous texts in Sanskrit.”"

Here is an author, a non-practitioner of Hinduism, employed by an American University,  who sets out to write her own narrative that seeks to contradict the most famous texts in Sanskrit.  

And the New York Times Editors did not see anything wrong in this? Did they ask any Indian scholars in India for their opinions about the Doniger book or the Mishra review? Clearly they did not. They probably felt that an American "scholar" from the University of Chicago was an entirely trusted source to defame Indian Religion. 

In a paraphrase of Justice Stewart, we recognize cultural & religious supremacism when we see it and defamation is a thin line away from inbred, deeply felt supremacism. 


Why is this Important? 

Griff Witte of the Washington Post wrote an article about Pakistan's public education system. It described how the nature of the education system is reflected in popular attitudes toward the Taleban, Al-Qaeda and other extremist groups.

Perhaps Griff Witte and his colleagues should look closely at American Universities. We notice that religious defamation is spreading across American Universities, especially defamation of Indian Culture & Religion. A clique of "scholars" have begun deriding pre-Buddhist achievement of Indian culture in a variety of ways, the most central of which is a Freudian or Sexual analysis of Religion & Culture. 

Until recently, the focus was on writing about how the British brought civilization and culture to India. Today, the political focus is on writing that Alexander and the Greeks brought European influence into India and shaped Indian culture. Last week we showed an example of this false yet effective message in our article  Cultural Supremacism in a Time Article & of Time's Editors? 

A "clique" of self-described non-practitioner "scholars" in America are now engaged in attributing the good aspects of Indian Religion to the influence of Buddhism, even though Buddha was born over 1,000 years after the formulation of Indian Religion & Culture. This is as biased and perverted as saying that the teachings of Christianity were due to the good influence of Islam. Remember Islam was formed as a religion several hundred years after Christianity.

This spread of defamation of Indian culture is of grave danger to America & India. First, books by professors at American Universities are likely to be used as reference in teaching about Indian Culture & Religion in American schools. Persistent and pernicious use of defamatory texts can have the same effect on American children as persistent & pernicious use of defamatory texts on Pakistani children. An inbred and cultivated belief in European Cultural & Religious Supremacy can only backfire against America, as it has backfired against Pakistan and some Arab countries. 

Fortunately, unlike Pakistan, there are numerous American writers and scholars that repudiate such defamatory writings. For example, a good article about Indian Religion was by Lisa Miller in Newsweek titled We Are All Hindus Now.  The Clay Sanskrit Library is in the midst of a gigantic project to translate the great Sanskrut texts into English. It is the love of Sanskrut of John & Jennifer Clay that led them to finance this greatest publishing project of our time. We wrote about the Clay translation of the Book of Karna (from the Maha-Bharat) by Adam Bowles in our article The Karna-Arjun Battle in The Maha-Bharat - Beyond Adjectives.

But the good people of America & India cannot rest on the laurels or work of a few like the Clays or Lisa Miller. They have to be vigilant about the spread of religious bias in American Universities and American Media. To paraphrase John Kennedy, when good people do nothing, evil gets a free reign.

The New York Times is but one participant to the Anti-Indian defamation we write about. The University of Chicago is another. Ms. Doniger is employed by that University and that employment is what gives her book a standing that other books may not have.

Our Approach in this Article - Thank you John Grisham

John Grisham wrote A Time to Kill in 1989. In this novel, Tonya Hailey, a 10-year old African-American girl, is viciously raped and beaten. Her father, Carl Lee Hailey, shoots the two accused men because he fears they would go free. His friend Jake Brigance defends Mr. Hailey at his trial. 

In his closing remarks, Jake Brigance asks the jury to imagine that a white girl had been raped by two black men and these men had been shot by the girl's father. Then he asks the Jury to think of whether they would convict the white girl's father. He does so to bring home to the white jury the depth of Hailey's anger.

We have tried to use a Jake Brigance approach in this article. We have asked readers to imagine what their reactions would be to statements, similar to those made by Ms. Doniger, against deeply held Christian or Jewish beliefs. It was the only way we could convey some of the horror and outrage caused by the Doniger book to Indians worldwide. As far as the Mishra review is concerned, it is beneath our contempt. 


Indian Culture & Indian Religion - Our Use of the Word "Indian"

The word "Hindu" was created by Persians to describe the culture and civilization of the people that lived on the banks of the River Sindhu (apparently, the Persians could not pronounce S). It was the region between the Sindhu, Saraswati (now lost) & Ganga rivers that created the culture that is now referred to as the Indian Culture. The English could not say either Sindhu or Hindu. So they made up the name "Indus" for the River Sindhu and India became the name for the country and culture created on the banks of the river Indus. 

So the words Indian and Hindu are synonyms. Therefore we use them as such. The non-religious  name for the country is Bharat. But Bharat includes all of Afghanistan and today's Pakistan. It is an ethnic or historical name.  

Indian Culture was created long before there was a Buddha, a Christ or a Mohammed. The notion of religion in India was woven around the concept of Dharma, a framework that encompasses the concepts of devotion, faith, theology, social practice among others. This is what Lisa Miller explains in simple terms in her Newsweek article We are All Hindus Now. 

The teachings of Mahavir and then of Buddha introduced the concept of a single path to Nirvan or God in Indian society. The embrace of Buddhism by Emperor Ashok transformed Buddhism from a niche faith to a religion practiced from Persia-Greece in the west to Far East Asia. The notion of a single path to God was then embraced by newer religions like Christianity and Islam.

The central concept in Indian Dharma is that there are multiple paths to one God and, if practiced with devotion, all paths lead to God. As Indian economy emerges from its stupor, as India becomes a greater player on the world scene, the potential spread of the eternal democratic" concept of Indian Dharma is being perceived as the greatest threat to "follow this path - or-else" religious teachings.  

Is this a reason behind the increasingly vituperative attacks on Indian Religion? Is this a reason behind the almost zealot pursuit of proving that Indian culture is somehow derived from Buddhist teachings?

For example, Wendy Doniger writes about Bhagwat-Geeta "Arjun starts out with what might appear to be a quasi-Buddhist attitude that Krishna demolishes." This is the same Doniger who writes elsewhere that the Maha-Bharat war was around 900 BCE, about 600 years before the birth of Buddha.

Today, there are millions of Buddhists, Christians, Jains, Muslims and Sikhs (in alphabetically correct order) in India. Every single one of these Indians can and does claim Indian Culture as theirs, regardless of their own religious beliefs. The history of Ramayan, Maha-Bharat, Vedic civilization belongs to them all and all of them have the right to be anguished by defamatory attacks on Indian Culture or Dharma. Just as the American practitioners of various religions claim the legacy of George Washington, Thomas Jefferson, Ben Franklin as their own and become outraged by obscene, contrived attacks on American Society.

Indian society was enriched by the introduction and influences of cultures from around the world. So will American society as America grows more diverse. But American Universities and American Journalists will have to discard their deep seated supremacist tendencies.

Perhaps New York Times & University of Chicago can take the first steps by discrediting the Mishra review and the Doniger book. 



Send your feedback to editor@macroviewpoints.com

Editor's Note: In this series of articles, we include important or interesting videoclips with our comments. Our Web Software does not permit embedding of the clips into our articles. So we shall have to be content to include the links to the actual videoclips. We are very happy with the tremendous response from readers to this series of articles. We thank them sincerely and profusely. 

This is an article that expresses our personal opinions about comments made on Television and in Print. It is NOT intended to provide any investment advice of any type whatsoever.  No one should base any investing decisions or conclusions based on anything written in or inferred from this article.Investing is a serious matter and all investment decisions should only be taken after a detailed discussion with your investment advisor and should be subject to your objectives, suitability requirements and risk tolerances.

A Week & An Election To Remember 

The sovereign debt problem in Greece worsened this week but investors hardly noticed, especially American Investors. They were suddenly confronted with the specter of the Obama Presidency coming unglued and they sold, sold & sold.

It is hard to remember that Tuesday marked a new high in the post-March stock rally. Then, on Tuesday night, the election results shocked the world. The victory of Scott Brown, the independent Republican, was not a surprise. But the margin and breadth of his victory was. 

Every Democrat saw in this election a crystal ball of their own future in the November 2010 elections. They unraveled. Unfortunately for America, so did President Obama. He is in the early second quarter of his Presidency. Every successful football coach would have told to not panic or suddenly jettison his game plan. But President Obama does not have old, shrewd advisors.

So the Obama advisors got themselves a brand new populist plan - attack the Banks as a symbol of excess in America.


President Obama & His conversion 

Wyatt Earp stood up to the angry mob that wanted to lynch his prisoner. Wyatt stood alone in front of the crowd with a shotgun and said the mob could only have his prisoner over his dead body and the bodies of several men in front of the crowd. The crowd dispersed.

In 2006, President George W. Bush stood firm in front of his detractors and the newly elected Democratic Congress. He remained steadfast and challenged the Democratic Congress to cut off the funding for the Iraq War. The Democratic Congress folded.

The American People admire courage, the courage of a man's convictions and his courage to stay a sensible course. That is what they admired in President Bush. The American People also admire the courage of a leader to change his course and lead them on to a sensible new path. This is what they admired in President Clinton in 1995 when he stood up to a triumphant Newt Gingrich and began governing as a centrist.

Unfortunately, President Obama did not display either form of courage. It was evident to all that President Obama panicked after the Scott Brown victory. He changed his course suddenly and embarked on a populist course simply because it seemed politically convenient. We think the Obama Administration and the Democratic Party will pay for this mistake. 

Unfortunately, President Obama put in jeopardy the one great ally he had, the one symbol of his economic success - The Stock Market. Right or Wrong, every body looks at the Stock Market when they want a quick verdict on the economy. Even when the real economy is limp, even when the average Joe & Jane find jobs hard to get or find incomes hard to live on, the success of the stock market creates a hope that someday the real economy will follow. 

We believe that the American People will not be fooled by President Obama's sudden conversion to anti-Bank populism. American investors have already given their verdict. A poll on Friday showed that 70% of Investors now consider President Obama "Anti-Business". 


The President vs. the Mayor

A number of experts protested Mr, Obama's seemingly draconian reform plan. Representative Barney Frank disagreed with some elements and the pace of the plan in his appearance on CNBC (see clip 4 below). Even Tim Geithner, the Treasury Secretary, seemed to express reservations thereby creating rumors about his own status.  

No one did it with the authority and  directness of Michael Bloomberg, the Mayor of New York City. Mayor Mike Bloomberg lashed out at Obama’s reform proposals, calling them economic doom for his city and an end to the US as the center of Western finance. In addition, Mr. Bloomberg told reporters in New York City to expect layoffs by the boatload if the Obama plan passes. 

Unfortunately for New York City and America, our bet is that some version of the Obama Bank Reform plan will pass and whatever passes will be a large negative for the largest Banks & Investment Banks in America. 

Just think as if you were a Democrat running for re-election. What are you going to run on? Cap & Trade, Health-Care? Frankly, you got nothing. The only platform left for you is to run as a Main Street representative who will penalize the Banks for making excessive profits and giving obscene bonuses. Your hope is that the economy continues to improve at least during the first half and so you can attack Banks without risk.


The President & The Chairman

Unfortunately, President Obama and his new populism may have put into jeopardy the one man he needs the most - Ben Bernanke, the Chairman of the Federal Reserve. It is Bernanke who kept the financial markets humming and protected the American financial system. 

When President Obama attacked large Banks with ferocity, he unknowingly attacked Ben Bernanke, the chief regulator of the large Banks. How could Democrats run on a strident anti-Bank platform without jettisoning the man who made the Bank profits possible with his injection of liquidity?

President Obama announced his Damn the Banks plan around 11:30 am on Thursday morning. By 3:00 pm on Friday afternoon, the Bernanke reconfirmation was in severe jeopardy. People wondered whether Chairman Bernanke would survive the weekend (see clip 1 below). No wonder the stock market fell off the cliff in the last hour of trading on Friday. 

Perhaps, the stock market selloff panicked the Obama Administration and Tim Geithner began calling each of the Senators to jawbone them to vote for Bernanke.

We cannot think of a more serious danger for global financial markets than a non-confirmation of Ben Bernanke. In case people have forgotten, the US Treasury plans to borrow hundreds of billions of dollars from the markets every month. The success of these auctions depend entirely on the confidence in the US Federal Reserve. 

This week, especially Friday, should have seen a huge rally in long maturity Treasuries. But the 30-Year Treasury actually sold off a bit on Friday. The US Dollar also fell back from a key moving average. Does this portend an erosion of faith in the American system?

Right or wrong, global investors have a great deal of confidence in Ben Bernanke. They regard him as the man who saved the global financial system, the one sane man with power and political independence. If Bernanke is made to leave after his stellar job and if the political independence of the Fed comes into question, investor confidence in our Treasury markets could be shaken and then all hell might break loose in the Treasury markets. This is our greatest fear. 

We are convinced that President Obama understands this. But we are equally convinced that President Obama did not pause to reflect whether his new populist anti-Bank mission would backfire on the man who had the President's back,  Ben Bernanke. 

This is why Presidents are expected to be resolute and thoughtful in their plans or response. 


A Dark Prophecy

This week made us recall the dark prophecy of Robert Prechter, founder of Elliott Wave International, from his Bloomberg interview on December 10, 2009 (see our December 12 article - clip 4).

1. Big Ben on the way Out? James Pethokoukis of Reuters & Steve Liesman on CNBC Kudlow Report - Friday, December 22

Larry Kudlow opened the segment with the provocative question - "Is Ben Bernanke going to last the weekend before he is forced to withdraw because he can't get 60 votes to pass cloture, much less the 51 votes to get through the nomination to be reconfirmed as the Fed chairman?"

Larry then asked Mr. Pethokoukis for his basic take.

This is a must watch clip.


2. Bernanke's Future - Alfred Broaddus & Robert McTeer on CNBC Closing Bell - Friday, December 22

Mr. Broaddus is a former Richmond Fed President & Mr. McTeer is a former Dallas Fed President.  Their conversations begin at minute 05:26 of the clip.

Send your feedback to editor@macroviewpoints.com  

This segment was an insult to hard working individual investor viewers of CNBC, people who have seen their retirements funds cut in half and their children's education funds go down hard. They watch CNBC to get some value in their investing and Power Lunch gives them the same dangerous drivel that has been discredited for the past 10 years. 

We like Sue Herrera and Tyler Mathisen as people. They are gentle folk, we think. We have not watched Mr. Kneale long enough to build an opinion. But these three anchors have a job to do at Power Lunch. They did not do their job in this segment. Actually, in our opinion, Herrera, Kneale & Mathisen committed gross journalistic negligence, negligence that comes perilously close to journalistic malpractice. 

We have criticized CNBC Fast Money and other anchors. But every other CNBC show is superior to Power Lunch in its questioning of guests and no other anchor ever stoops to the level of the Power Lunch anchor crew in this segment. The others may make mistakes but they try to learn and adapt to the changing markets. Power Lunch Anchors simply do not care,  in our opinion. As we have noticed, they remain smug and unchanging in their belief that all they need to do is to smile and tell investors to be optimistic. 

We wish we had the eloquence and the resources of Bill O"Reilly to really articulate the outrage we feel.


Send your feedback to editor@macroviewpoints.com

It is a maxim of ours that lack of education leads to ignorance and ignorance leads to cultural supremacism, a dangerous form of religious prejudice and racism.  We find this in many comments from America's writers on Afghanistan and its largest ethnic group, the Pashtuns. These writers can only acknowledge the history of the region from the invasion of Alexander.

But cultural supremacism can itself be a central tendency in some people and their practiced ignorance can be the result of their deeply held supremacist attitudes. To paraphrase the famous judicial statement about pornography, we know cultural supremacism when we see it or feel it.

We felt and saw an example of such cultural supremacism in an article in Time Magazine. Let us describe below why we feel so.

On December 25, 2009, Time Online published an article by a Christopher Allbritton from Islamabad titled Pakistan's Turmoil Endangers Its Archaeological Treasures. In this article, Mr. Allbritton describes his views of the historical kingdom of Gandhar and how the ruins of Gandhar are being destroyed in the Taleban violence. This is an important topic and it was good of Mr. Allbritton to write about it.

Gandhar is a favorite topic of ours and we looked forward to reading this article.

• Gandhar is an extremely important part of Indian history. Indian Culture was developed on the banks of the Saraswati & Sindhu (or Indus) rivers. So the Gandhar-Kashmir region is a deeply central part of Indian culture.

• The history of Gandhar is deeply woven into the Great Indian epics of Ramayan & Maha-Bharat. Gandhari, the princess of Gandhar, was the queen of the Kuru Dynasty in Hastinapur (near today's Delhi). Her brother Shakuni was the mastermind of the plot that eventually led to the great Maha-Bharat War. Shallya, the King of Gandhar, became the charioteer of Karna in the great final battle between Karna & Arjun. Kaikeyi. the step-mother of Shri Ram, the most venerated figure in Indian Civilization and considered to be a flawless Avatar of God on earth, was a princess of Kaikeya, a sovereign of Gandhar.

• The city of Taskha-Shila is considered to have been named after Taksha, the son of Bharat - the brother of Shri Ram and an eternal symbol of a brother's dharma.

But what did we find as we read the Allbritton article? The 3rd paragraph begins with the sentence:

• "The Gandhara kingdom and its art are important because it shows the impact of Hellenistic influence brought by Alexander the Great and his Macedonians (emphasis ours)."

Here it is in plain English. The importance of Gandhar derives from and only from the influence of Alexander and the Greek influence he brought with him. This is the definition of cultural supremacism, in our opinion. The deep roots of Gandhar in Indian history and its rich contribution to culture and education in pre-Alexander period seem to be completely irrelevant to Mr. Allbritton. 

Mr. Allbritton then proceeds to  ignore history after Alexander by jumping to the Bamiyan statues of 1500 years ago (so around 500 CE), about 700 years after Alexander. He describes the Buddhist history of Gandhar without any picture of how Buddhism came to Gandhar. So let us fill in the blanks left by Mr. Allbritton:

• It was young Chandra-Gupt (or Sandro-Cotus in Greek literature) who established the Maurya Empire and defeated Selecus I, the great general and ruler after Alexander. Selecus ceded all Indian (including today's Afghanistan) lands invaded by Alexander to Chandra-Gupt. The Mauryan empire reached its zenith under the great Ashok, one of the greatest emperors in the history of the world (see map below left).
• Ashok embraced the nascent Buddhist tenets and spread them far and wide from Persia to the west, to China & beyond in the north and to Far East Asia in the east (see map below right). This is why, in the eyes of many,  Emperor Ashok is ranked next only to Buddha in the history of Buddhism. The Ashok-Chakra, the symbol of Ashok, adorns the center of India's flag.
• The most celebrated king of Gandhar was Kanishka I, a couple of hundred years after Emperor Ashok. Kanishka was a Kushan king and his reign extended all the way to Tibet. This was the golden era of Gandhar Buddhism. In this entire period, Gandhar and the Indo-Gangetic plain were under one sovereign and the culture of Gandhar was intricately woven into Indian culture. 

    
(Mauryan Empire) (Greek-Aramiac inscription of Ashok in Kandahar) (Spread of Buddhism by Ashok)
                                                                  (source wikipedia)

But Mr. Allbritton's article is about Archaeological Treasures and not about history. This was our own initial opinion until we read the article again.

It seems to us that Mr. Allbritton goes out of his way to describe the relationship of Gandhar with the rest of Asia and Persia while completely ignoring its deep relationship with Indian Religion or Indian History:

• "Likewise Gandharan Buddhist art reached as far as China, Korea, and Japan. After it became part of the pre-Islamic Persian Empire, Gandhara's culture went on to influence artistic developments in the Middle East."
• "Taxila should be a showcase of that civilization. Today a town about 20 miles northwest of Islamabad, it was a center of Buddhist learning, a must-visit for travelers like Xuanzang seeking Buddhist scripture and wisdom."
• "Formerly part of the Persian Empire, Taxila was one of Alexander's conquests and is today a World Heritage Site."

Taxila is the Anglicized version of Taksha-Shila, considered to be the oldest university in the world. It was a great seat of Vedic learning, long before Emperor Ashok introduced Buddhism to the area. Chanakya, the great economist, strategist and teacher of Chandra-Gupt, taught at Taksha-Shila before Alexander's invasion. Chanakya went to Patli-Putra, the then capital of India (in today's Bihar) to persuade the Nand dynasty emperor to march west to fight Alexander. He failed. Then Chanakya teamed up with a young man in his teens called Chandra-Gupt who was in Taksha-Shila at that time. This duo raised an army, overthrew the Nand dynasty and formed the Maurya empire. The rest is history even if Allbritton chooses to ignore it.

To describe Taxila as a former part of the Persian Empire is to reduce Europe's history to a one-liner as a former part of the Hun Empire. It would be a mere fraction of the whole truth and an attempt to defame history. This is just one example of Allbritton's perversion of history.

In our opinion, the article by Mr. Allbritton exhibits a deep-seated cultural supremacism and includes a deliberate attempt to rewrite history according to his own biases. Based on our analysis above, we also opine that his ignorance of the Gandhar history is not accidental but deliberate. It reminds us of the perversion of Indian history practiced by many British Historians of the 19th & 20th century.


The Behavior of Time's Editorial Board

At this Blog, we take great pains to be fair to people we criticize. So we took the time and effort to reach out to Time's editors. Our request was to speak to one of the editors or to the managing editor of Time about our concerns. We also requested the opportunity to speak with Christopher Allbritton, the writer of the article. Our requests went unheeded.

After our persistent attempts, we received an email from an assistant of the managing editor of Time informing us that he "is not available to discuss this at this time. If you’d like to write a letter or e-mail with your point of view, we would be happy to consider it for publication."

So, we wrote this article to describe our point of view.

We also approached the Corporate Communication Officers of both Time Magazine and of Time Warner, the corporate parent. We were told by an assistant of the Senior Vice President for Corporate Communications that "if she is interested, then she will respond". Since she has not responded to us, we can only conclude that the Senior Vice President is not interested in our concerns about a supremacist bias at Time Magazine.


The Need for an Anti-Defamation League for Indian Culture & Indian History?

The article by Mr. Allbritton and the contemptuous dismissal of our concerns by Time Warner raises issues about  cultural supremacism, perversion of history and potentially about defamation of an entire culture and civilization. Unfortunately, this behavior is all too common in European-American media.

We are doing what we can to bring what we see to the attention of our readers. But, the frequency of such behavior and the acceptance by the corporate offices of the offending media leads us to wonder whether the time has come for an Anti-Defamation League type organization in America for Indian Culture, Indian History & Indian Religion.

As far as this article is concerned, let us know if you disagree with us. If you concur with any part of our article, send your comments to Time Magazine (at letters@time.com), to Time Warner Corporate Communications and to the Board of Directors of Time Warner. 


Send your feedback to editor@macroviewpoints.com 

Editor's Note: In this series of articles, we include important or interesting videoclips with our comments. Our Web Software does not permit embedding of the clips into our articles. So we shall have to be content to include the links to the actual videoclips. We are very happy with the tremendous response from readers to this series of articles. We thank them sincerely and profusely. 

This is an article that expresses our personal opinions about comments made on Television and in Print. It is NOT intended to provide any investment advice of any type whatsoever.  No one should base any investing decisions or conclusions based on anything written in or inferred from this article.Investing is a serious matter and all investment decisions should only be taken after a detailed discussion with your investment advisor and should be subject to your objectives, suitability requirements and risk tolerances.


The First Realized Surprise of 2010
 
What is the one concept that could win the award for the "most crowded" concept in America? It is not the belief in China or Commodities. It is not the certainty of future hyperinflation or the conviction that Treasury yields were going to spike to high levels. 

In our opinion, it the utter conviction that Big Ten is the worst major football conference; that Big Ten teams are overrated; they cannot match up with other powerhouse conferences; that Big Ten football teams are much slower and less talented.. and the list goes on.

That is why they play the game as Chris Berman says. During the first week of 2010, the three top Big Ten Teams, all underdogs, convincingly defeated their opponents. Ohio State beat the favored PAC-10 Champion Oregon, Iowa beat the heralded ACC champion Georgia Tech and Penn State defeated the much admired LSU of the vaunted SEC.

In the investment space, the most crowded concepts have been the continued underperformance of the US Equity Market, the continuing weakness of the US Dollar and the near certainty of a Treasury Market rout in 2010.

Will these US Assets surprise the way the Big Ten teams did last week? The evidence so far is to the contrary.

In clips 4-6 below, we feature the predictions, surprises and risks presented by Robert Doll of BlackRock, Byron Wien of Blackstone and Ian Bremmer of Eurasia. 


The Non-Farm Payroll Report

The December Payroll report was bad. The reaction of the market was similar to the action following the terrible reports of September & October of last year - Dollar went down, Gold went up, Euro, Australian Dollar went up, Commodity stocks and Emerging market stocks outperformed the US Stock market and the Yield Curve steepened. 

The reason again was the same. Fears of the Fed raising rates or engaging in other tightening measures evaporated after the NonFarm Payrolls report and markets celebrated the continued injection of the sugar-high of free liquidity from the US Federal Reserve.

The December report was really bad. The expectations had been as high as an increase of over 100,000 jobs. The components of the report were even worse. Accounting for a large decrease in the labor force, the real unemployment number might be as high as 10.4%.

But this was deemed irrelevant except for its impact on the US Fed. The conviction of the markets is increased growth in US & the Emerging Markets and a consequent rise in inflation or at least inflation expectations. In other words, the dominant trend of the past 9 months continues.


Bernanke already turning into Greenspan?

On Thursday, the Federal Reserve took the unusual step of issuing an advisory to Banks stating that by buying long-term assets funded with short-term liabilities Banks are endangering those earnings and their capital if interest rates rise.

The financial markets yawned. After the release of the awful jobs report on Friday, this "advisory" by the Fed was compared to the ineffectual and erroneous "irrational exuberance" statement of Greenspan in 1996. It is a sign that the financial markets, or more specifically the large macro traders, are openly dissing Ben Bernanke. But that is what these traders have done since 2006.


Helicopter Ben vs. Large Macro Traders

This fight has been the story of the Bernanke's tenure as Fed Chairman. The large macro traders are convinced that Bernanke, at heart and in brain, is "Helicopter Ben", a man who would reign liquidity as a solution to every problem. 

This is why in 2006 & 2007, the commodity & emerging markets rally gathered full steam. In 2006, 2007 and 2008,  Bernanke took decisions based on his judgment and training. These decisions were dovish and favored injection of liquidity. These decisions eventually proved to be correct. But the markets did not believe in what he saw of the underlying economy.

So at every step, Bernanke's decisions were treated as that of a liquidity addict by the macro traders and they rallied commodities and sold off the US Dollar. They did so until Bernanke was forced to get tough. Unfortunately be waiting so long, Bernanke had to get far more tough than he ever wanted to be to kill the overarching inflation expectations. As a result, Bernanke's actions ended up damaging the economy.

This history seems to be repeating in 2009-2010. The reaction of the markets to the Fed "advisory" and laughable reverse repo experiments shows that words of Bernanke are considered irrelevant. In other words, large macro traders know that Bernanke is not going to raise rates given the state of US unemployment.

The real damage of this Bernanke paralysis might be an inexorable rise of inflation expectations to a level where these expectations become engrained. Bernanke understands it. But, in our opinion, Bernanke is betting on the data getting weaker and core inflation falling to get his Fed out of this mess. We fervently hope he wins this bet.

Because, if the data refuse to cooperate and the leading indicators keep rising, by mid-year the Bernanke Fed could face a crisis of confidence. At that time, Bernanke might be forced to tighten excessively just as Greenspan was forced to do so in 2000 with terrible consequences for the US economy.

The risks in 2010 may be far greater than in 2000. The Federal Reserve has "never managed such a huge amount of liquidity and stimulus before" and "there is significant risk about how they go ahead and unwind".  These are the words of Susan Bies , a former Fed Governor during her appearance on CNBC StreetSigns on Wednesday, January 6 (at minute 3:30).

Ms. Bies is talking about risks in unwinding in an orderly way at a time of Fed's own choosing. But what about the risks of a chaotic unwinding that is forced on the Bernanke Fed due to a spiking of inflation expectations? We tremble at the very thought. 

In our opinion, Ben Bernanke needs to pay attention to the challenge of the large macro traders. He should do that know with a firm announcement in the January 2010 Fed meeting. If he leaves the timing to large macro speculators, then he could be risking the US economy as well as his personal reputation. That scenario, of course, be par for the course for winners of the Time Award.


A Transfer of Wealth from Middle America to Large Banks, Large Speculators & Wealthy Investors?

Is this real story of the Obama-Bernanke medicine in 2009? Look at who benefited from their medicine.

The Bernanke Fed provided enormous amounts of liquidity to the Large Banks. The Banks kept this money to improve their capital positions and invested it in yield-curve carry trades. The Large Speculators took this virtually free liquidity and made wonderful returns by moving this free liquidity to their favorite commodities & emerging market trades. This is why 2009 has been the highest return year in history for hedge funds. As a result, wealthy investors saw a substantial increase in their financial net worth.

In stark contrast, the American middle class invests in shorter term securities. Income is the greatest need of the American middle class today. This group is getting hurt very badly by the Bernanke medicine. By starving them of critical income, the Bernanke Fed is enriching the Large Banks, Speculators and the Wealthy. 

Small business owners are getting caught in the Obama-Bernanke squeeze play. The expected hike in personal taxes, added expenses from health care "reform", the drop in incomes from savings and the almost total freeze in credit from Banks - how does Small Business survive let alone create jobs?

If this were not enough, the fiscal deficit is now above 10% of GDP. How much of this will Middle America tolerate?

This week, we read and heard Bill Gross, the Bond King, sound like Glenn Back (see clip 1 below) in his CNBC interviews. The Glenn Beckization of Bill Gross? Today's truth and far, far stranger than the wildest fiction. 


Is Reagan-Volcker a Model for Obama-Bernanke?

The Reagan-Volcker solution was radically different than the Obama-Bernanke medicine. President Reagan delivered tax cuts and fiscal stimulus while Paul Volcker raised rates. We realize that 2010 is very very different than 1982. But we can't help wondering whether following Reagan-Volcker might still work for Obama-Bernanke.

If Bernanke were to raise short term rates, it would stabilize the dollar and actually lower long term Treasury yields. The commodity markets would fall sharply and oil-gas prices could come down by $15-20 (as Rex Tillerson of Exxon said a few weeks ago). This, in itself, would be a tax cut for the American economy. Capital would flow back to the USA from Emerging Markets. The combination of payroll tax cuts and rise in savings income would increase incomes for American workers. 

Is this feasible given the sorry state of America's deficit? We don't know. But we do know that the current plan is on a slippery slope (see comments of Martin Feldstein and Simon Johnson in clips 3 & 7 below).


Are Steel stocks today's Telecom stocks?

We don't know but this week's action in stocks like Schnitzer Steel and US Steel was amazing. US Steel went up from 57 to 66 this week, the last 4 points coming on Friday because of yet another analyst raising estimates. Is this action real or is it simply a case of too much un-invested money chasing beta to avoid falling behind the averages?

All week, we felt that high beta money was being put to work, perhaps the same money that left in late October to harvest 2009 returns. Already we see a performance anxiety in this money. We see that in the headlong buying of technology stocks in the first couple of days that reversed after the Google announcement of their Nexus phone. Then we saw a rotation of money from commodity stocks into financials on Thursday after China's decision to hike their bill rates. Then again on Friday, we saw a rotation from financials back to commodities and technology after the terrible payroll report. 

US Steel has gone from $35 in October 2009 to $66 this week. To us, this action is reminiscent of the 4th quarter of 1999 in technology stocks. After all, today's belief in secular growth of China-led commodity stocks is reminiscent of the 1999 belief in secular growth of telecom stocks. Another sign that Bernanke is turning into Greenspan?


Has Meredith Whitney made another winning call?

Analysts generally upgrade stocks and raise numbers in the first week of a new year. Not Meredith Whitney. In an unexpected move, she reduced earnings for Goldman Sachs on Tuesday, January 5. This mid-day call stopped the rally in GS in its tracks. But the stock rallied at the end of the day. On Thursday, GS rallied almost 4 points leading our friends at CNBC Fast Money to do a segment on whether Meredith Whitney has lost her mojo? 

We recall that in October 2009, Meredith Whitney downgraded Goldman around $186-187 and the stock rallied after her downgrade to around $192. The stock began its descent after the earnings of Goldman and Ms. Whitney's call was validated.
 
Will this history repeat? We will know very soon. We now have somewhat of a stake in this call because of our award to Ms. Whitney. We do not wish to suffer the fate of other media awards like Time & BusinessWeek (are you listening, Squawk Box, Maria Bartiromo & Steve Liesman?).

On Friday, Meredith Whitney got company. The Citi analyst lowered estimates on Goldman and others. The Goldman stock closed down over 3 points to $174.31.


This week, we feature the following clips:

Read the entire report at Top Risks of 2010 on the Eurasia group website.


7. Crisis Just Beginning - Simon Johnson of MIT om CNBC Squawk On The Street - Thursday, January 7

Prof. Johnson is an economist at MIT Sloan School of Management. His views are starkly different from the consensus. This clip is a must watch in our opinion.

He says that Emerging Markets are the next frontier for the crisis. He says that the conventional wisdom is that you can't have back to back crisis but we are going to push that. The next 12 months could really be exciting. It could be positive but we are setting ourselves up for an enormous catastrophe. When you have free money, you will go to where you are sure things will go up. That is China, that is Emerging Markets. He admits that China is very hard to read, so may mirrors behind mirrors.  It might be more of a Japan type of scenario. It could have a massive banking crisis and you could have a dismal performance for the real economy and all kinds of exchange rate dynamics that could impact the world. 


8. The Real Crisis Culprit - John Taylor with Larry Kudlow - Wednesday, January 6

John Taylor is the creator of the Taylor Rule, the rule that has governed Fed analysis since its creation. We discussed the Taylor Rule in March 2009 our article What Is "Taylor Rule"? What Does It Say Now? Was It A Factor In Bernanke's Decision?

In this clip, Professor Taylor refutes the assertion by Fed Chairman Ben Bernanke that the Fed's monetary policy was not responsible for the bubble. 

If you like monetary policy, you should not miss this clip. Thanks to Larry Kudlow for bringing on Professor Taylor to discuss the calculus behind monetary policy. 



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• "First Snoop Dogg, Now Sylvestor Stallone - Everyone Is Getting Aboard The Bolly-Holly Train"  has moved up into 6th place. 
• "Will The Obama Administration Occupy Pashtunistan Or All Of Pakistan?" has moved up to the 8th place.

A breakdown of the Top 10 list by topic is as below:

• India Related - 4 Articles
• Geo-Strategy - 3 Articles
• CNBC Related - 3 Articles

As we ring out 2009 and ring in 2010, we feel a sense of goodwill, hope and optimism. In this spirit, we would like to wish our readers a very Happy, Healthy & Prosperous New Year. 

Perhaps this is best said with the timeless Sanskrut invocation:

Asato Ma Sat Gamaya - Take me from Faleshood to Truth
Tamaso Ma Jyotir Gamaya - Take me from Darkness to Light
Mrutuor Ma Amrutam Gamaya - Take me from Death to Immortality

Recently, Helene Cooper & Andrew Ross Sorkin of the New York Times appeared together on the Chris Mathews show. They presented different outlooks so often that finally Helene Cooper laughed and said that no one at the New York Times agrees with any one else (at the Times).

This simple direct comment brought home to us again the essential difference between the New York Times & the Washington Post. As we first wrote in June 2008, New York City is a stunningly diverse city with a global outlook. It competes with London, Hong Kong, Singapore every day in finance, media, arts, trade and tourism. Ethnically, you can see the amazing diversity of New York by simply taking a ride in the subway. New York is a builder of its own success.

In contrast, Washington DC is a very parochial city in its power base, ethnicity and outlook. Washington DC does not have to compete for its success because it inherits its standing from the White House and the Congress. Take away the seat of executive and legislative power and we think Washington DC will instantly become an unimportant city. 

The two newspapers seem to derive their own ethos & approach from the characteristics of their home city. As Helene Cooper said, New York Times reporters strive to present new & different outlooks, they disagree with each other as individuals based on their backgrounds or views. They are more likely to travel globally and bring stories that  differ from official consensus. In contrast, Washington Post reporters and opinionators seem to disagree, if they ever do in public, based on their party affiliations or ideology. Their sources are politicians, lobbyists and US or Foreign Government Officials.

We have noticed this difference in the way these two newspapers cover Pakistan-Afghanistan. Consistently, it has been the New York Times that has broken new stories or presented the reality underneath the public facts.

For example, consider the case of Siraj-Ud-Din Haqqani & his Taleban force, the biggest threat to the American forces in Afghanistan and an "asset" of the Pakistani Army-Intelligence. It was Jane Perlez of the New York Times and her colleagues that broke the story of how the Pakistani army has refused to go after the Haqqani network. In her superb article on December 14 titled Rebuffing U.S., Pakistan Balks at Crackdown, Ms. Perlez broke new ground in American media's coverage of the Pakistan problem. A couple of excerpts might make our point:

The article quotes Julian Callow, Europe economist at Barclays Capital, as saying "Britain is nearing the eye of the storm as the Bank of England starts to unwind quantitative easing." Further, according to Mr. Callow:

• “The Bank has bought more gilts over the last nine months than the Government has issued. It has magically eradicated the cost of financing the deficits, but this is going twist dramatically the other way in early 2010. Markets know this. They are demanding a risk premium on sterling.”

• “On top of this you have all the uncertainty over the election. We have the highest deficit in the EU as a share of GDP after Latvia and Ireland. It is not clear whether the next government will have the nerve to push through the tremendous fiscal tightening we need,”
  

The action in the UK Government Bond market is of substantial significance to the US Treasuries market. As the Bond King told CNBC on May 21, 2009 "..the market views those two countries, the U.K. and the U.S., as relative twins."

Again, the Bond King was right. The action in the Treasuries this week was a relative twin of the sell off in British gilts. 

Treasuries

The sell-off in Treasuries began on Monday morning because of comments of Zhu Min, deputy governor of the People’s Bank of China, the largest holder of US Treasuries. The comments of Zhu Min reported in the Shanghai Daily are self-explanatory:

• "The US current account deficit is falling as residents’ savings increase, so its trade turnover is falling, which means the US is supplying fewer dollars to the rest of the world,”
  
• “The world does not have so much money to buy more US Treasuries."

• "The United States cannot force foreign governments to increase their holdings of Treasuries,” (Zhu said, according to an audio recording of his remarks)“Double the holdings? It is definitely impossible."

You ask any trader, investor or the average economist and they will all tell you that Treasury Issuance would be impossible without Chinese buying. So, the sell-off in Treasuries this week was only to be expected.

However, true experts like Jim Bianco of Bianco Research point out that the bulk of Treasury purchases in 2009 have come from US domestic sources, including US Banks and that the Chinese purchases have been less significant. But then facts are completely ignored during a Treasury market sell off.

The Large Speculators & Hedge Funds love shorting long maturity Treasuries and they are no doubt at it again. To them, shorting the 10-Year & 30-Year Treasuries is like free money, or so it always seems to them until they get blown up in the next rally. On Monday, BAC-Merrill Lynch technical guru remarked that the Hedge Fund short position in 10-Year Treasuries had become "crowded". The week's action suggests that the position got even more "crowded" this week.

The yield on the 10-Year Treasury Note rose to 3.80% this week, am increase of 60 basis points from the November 30 yield of 3.20%. Now that's a sell off, as Crocodile Dundee might say.

Normally, after such a sell-off in stocks or commodities, CNBC Anchors would ask whether the sell-off could signal a buying opportunity. Witness, the number of times CNBC Anchors have asked their guests whether this month's sell off in Gold is a buying opportunity?

But, not a single CNBC Anchor asked whether the big sell off in Treasuries was a buying opportunity. Instead, virtually every CNBC show pointed to the Treasury sell off and told its viewers about the dangers of investing in Treasuries.

It seems Treasuries are never a buy according to CNBC Anchors. During a rally, CNBC Anchors ask whether Treasuries are a bubble? During a sell off, CNBC Anchors ask whether Treasury yields will spike up due to hyper inflation they know is coming. They make it seem as if they acting in a CNBC version of Waiting for Godot.

It is such behavior that led us to ask in August 2008 Are CNBC Anchors on a Mission Against US Treasuries? - A Viewer's Perspective and then again in May 2009 Are CNBC Anchors on a Mission Against US Treasuries - A Viewer's Update

Are Geithner & the Treasury Department Arrogant?

The week between Christmas & New Year is a dead week. Almost every single senior trader & investor is on vacation.

Who in their right mind would issue any security during such a week? The U.S. Treasury Department, of course. In their infinite wisdom, or arrogance, the Treasury Department has scheduled 3 auctions for next week to raise in excess of $100 billion.

Will this arrogant stupidity finally drive the 10-Year Treasury yield to 4%? We shall see.

The 20 Surprises for 2010 from Doug Kass

Doug Kass, the veteran Hedge Fund Manager, has published his 20 Surprises for 2010 on www.theStreet.com free website. We have a great deal of respect for Mr. Kass. For the record, we have no association with Mr. Kass, except as a viewer of CNBC and we have never spoken with him. His TV appearances & writings have led us to believe that Mr. Kass is not dogmatic but flexible in his outlook and approach.

It was our impression that Mr. Kass was bearish on US Treasuries all through summer and fall. So we were stunned to read his surprise number 11 titled "Treasury Yields fall". Mr. Kass predicts that the yield of the 10-Year Treasury will fall to 3% by the summer of 2010 and end that year at approximately 3%. He also predicts that "Bonds surprisingly outperform Stocks in 2010." He goes on to predict that 2010 will set the stage for a "vast speculative top in bond prices"  by late 2011. 

If this is not enough of a surprise for you, the fact that Doug Kass has been invited to guest-host CNBC's Squawk Box next week should surprise you. It sure surprised the heck out of us. Is it possible that Squawk Box honchos did not read the Kass surprises? Having invited him, will they actually allow Mr. Kass to speak bullishly on Treasuries on Squawk Box.  Now, that is not a mischievous question. Remember that Squawk Box did not allow David Rosenberg or Richard Bernstein to give their bullish views on Treasuries during their appearances on Squawk Box earlier this year.

But maybe, just may be, could CNBC Squawk Box demonstrate that it is not as "jihadi" as CNBC Fast Money?

CNBC Fast Money on Treasuries

We were also surprised to read that Barton Biggs was positive on 10-Year Treasuries calling them "decent value with 3.5% yield and inflation at 1-2%" in his Newsweek article "What New Normal?". 

Last week, Barron's pointed out that the vast majority of predictors on Wall Street were bearish on US Treasuries. According to Barron's, Goldman Sachs & David Rosenberg of Gluskin Sheff were the solitary bulls with 3% as their prediction for the 10-Year Treasury yield by summer 2010. When asked about his outlier forecast, Barron's says Rosenberg "cites Rule No. 8 of Bob Farrell, the former Merrill Lynch market analyst:"When all forecasts and experts agree, something else is going to happen."

Did CNBC Fast Money mention these bullish comments about US Treasuries from any of these gentlemen? Of course Not. Is this "censorship"? Yes, we would argue. Remember that Doug Kass & Barton Biggs are highly respected at CNBC Fast Money, judging from the accolades from Fast Money Traders about these two gentlemen. If their comments can be so "censored", is it any wonder that other guests do not dare speak bullishly about US Treasuries on CNBC Fast Money?

In contrast, CNBC Fast Money spent all week gloating about the rise in 10-Year & 30-Year Treasury Yields with Anchor Melissa Lee leading the cheer. If that were not enough, they invited Peter Schiff, the most intense of anti-Treasuries Bears, to share in their joy (see clip 2 below). Then, in response to a viewer's rational question, Fast Money Trader Karen Finerman said she agreed with Peter Schiff and not with Tim Seymour, her co-trader on Fast Money. Then she gratuitously recommended shorting TLT, the 20-year Treasury ETF, to the viewer. Guy Adami, her colleague congratulated Karen Finerman on recommending the short trade and the anchor Melissa Lee gloated "That's exactly what we do here on Fast Money" (see clip 3 below).

Later in the show in the Pops & Darts segment, Karen Finerman again said "you got to be short the TLT" and a colleague clapped. We are not kidding. A Fast Money team member actually clapped on air after when Finerman suggested shorting TLT, the 20-year Treasury ETF. We do not recall any other instance of a fellow trader clapping on air after a recommendation on the Fast Money show - not one single instance since the inception of the show.

Listen to clip 4 below and hear the clap. Then wonder as we do why CNBC Fast Money hates Treasuries with such vehemence and passion? We just don't get it. But then, we have never understood the concept of "Jihad".

Stress in Municipals

This week, Bloomberg published an excellent article on this topic titled "N.J. Leads Municipal Bond Downgrades as Aid Shrinks".This is a must-read article in our opinion.

According to this article, the problems of New Jersey are a harbinger of things to come. The article quotes Richard Ciccarone, chief research officer at McDonnell Investment Management in Oak Brook, Illinois:

• “In many of the large states, this is going to become the norm: California, New York, New Jersey and Illinois,” said Ciccarone, whose firm oversees $6.8 billion in municipal bonds,including New Jersey debt. “The stress levels have got to be very high right now for municipal fiscal officials.”
  

Yet, the Municipal Bond market does not seem to care or even notice. Is this resilience or sheer complacency?

We are encouraged to see smart CNBC anchors like Maria Bartiromo and Becky Quick discuss Muni concerns with their guests. Maria, in particular, seems to have begun a series of segments about bonds on her show Closing Bell. So far, her guests have been salespeople or marketers of Muni ETFs or Preferred Stocks rather than credit experts. But she is making an effort and for that we thank her.

Videoclips

This week was a fairly barren week for interesting videoclips. Below are the most interesting of what we saw:

1. The Fed Agenda - Charlie Evans, Chicago Fed President with CNBC's Steve Liesman - Monday, December 21 

Mr. Evans sees a better 2010 than 2009 but sees unemployment ticking up slightly. But Mr. Evans says that the Fed could keep rates low for sometime to come because he sees inflation coming down. Mr. Evans also points out that there is tremendous slack in the economy and that could lead to a lower trajectory for inflation for next couple of years. He also says that there is an active debate within the Fed about exit strategies.

2. Treasury Prices Fall Again - Peter Schiff of CNBC Fast Money - Tuesday, December 22

Peter Schiff said that the GDP growth in the USA is a mirage but inflation is real. In answer to a leading question by Joe Terranova of Fast Money, Mr. Schiff said that hyperinflation is not just possible but inevitable if current policies are pursued. Guy Adami asked Mr. Schiff whether the sell off in Gold has made it even more attractive to Mr. Schiff? Peter Schiff replied that there is a lot of support at or just below $1,000 and if Gold gets there, he would buy all the Gold he can get his hands on.

• Then Joe Terranova asked a dumb question "you truly believe that hyperinflation is coming in 2010?"

• Peter Schiff scoffed at this question and said "it is not going to hit in 2010 but it is gonna hit eventually if we don't change policies..there is still time to do the right things, there is still time to significantly raise interest rates to let a lot of these phony financial companies fail..to let housing market complete its correction.....we are marching down the road to hyperinflation because we are pursuing the very policies that every other nation pursued that eventually had hyperinflation...."

Peter Schiff vs. these Fast Money people is such a mismatch. Schiff makes mincemeat of them even though he has been provably dead wrong on most of his outlandish predictions. It is like watching a Pro Basketball star playing against an elementary school players. 

 
3. Fast Message - A Viewer's Question on Fast Money - Tuesday, December 21

This segment follows the above interview with Peter Schiff. Anchor Melissa Lee said their email box became "en fuego" thanks to Peter Schiff  and she highlighted a question from a viewer:

• Richard in Plano, TX asked "Yesterday Tim Seymour said there is no inflation, today Peter Schiff implied there is inflation. Who's right?"

• Melissa asked Karen Finerman "Karen, Are you going to defend our colleague Tim or are you going to side with Peter Schiff?"

• Karen Finerman replied "I am actually leaning towards Mr. Schiff, I am unclear at the moment if there is inflation but there is the expectation of inflation which is almost the same as having inflation, so I would be leaning towards inflation which would make me short the 30-year, which we are"

• Guy Adami then pops in "she gave a trade on the back of it, look at that" and gives a smile full of rapt adulation.
  

Not be outdone, Anchor Melissa Lee said "yeah, that's amazing, that's exactly what we do here on Fast Money".

Folks, how we wish we had the talent and the resources of Jon Stewart, the truly amazing host of The Daily Show! Only he could justice to this clip.

 
4. Stock Pops and Darts - Fast Money - Tuesday, December 21

If two segments about shorting Treasuries were not enough for one show, Anchor Melissa brings up the TLT topic at minute 01:43 of this Pops & Darts segment and throws a soft lob to Karen Finerman. Karen responds "if you believe in Peter Schiff and inflation, you gotta be short the TLT, going down".

Listen carefully, you will hear a clap immediately after Karen's comments (approx. minute 01:53). You got to hand it to the Fast Money gang - They love to flaunt their hate of US Treasuries!

 5. Jim Cramer on CNBC Mad Money - All Week Long Series

On December 15, Jim Cramer began his mission to persuade his viewers from owning Bonds or CDs and to buy stocks instead. He continued this mission this week by telling his viewers every day that investing in bonds or bond funds is reckless, not prudent. This week, he gave his viewers a daily list of stocks with high dividend yields to buy. In his own inimitable style, he said to his viewers they can never get back to even in bonds "let alone make loads & loads of dough".

We could not but help recall his series in late summer of 2007 when he came up with the rationale about stocks that break $80 in price keep going up until they reach $100. This did not prove to be a money making series for his viewers as we recall. 

Of course, investing in dividend-yielding stocks is a time honored concept. There is historical evidence to show that over time a large portion of return from stocks comes from dividend payments. 

But comparing dividend paying stocks to bonds is not appropriate. People buy bonds for income but really for income PLUS capital preservation. Any one who invested in high dividend paying bank stocks in 2007 realizes today that dividends do not protect investors from large capital losses. That has also been true for high dividend payers like Altria (MO) and Pfizer (PFE) for the past few years. 

But there is another fallacy and investor risk that Cramer does not share with his viewers. Cramer has made it clear that, in his opinion, Treasury yields are way too low and are likely to go much higher in the next year or so. 

How do dividend-yielding stocks fare in such a rising interest rate environment? If rates rise after you bought your dividend paying stocks, the dividends go down in value as rates rise. After all, a 4% dividend is more attractive when rates are 2% than when rates are 5%. 

Mr. Cramer, isn't it a reality that as rates rise sharply, dividend yielding stocks tend to underperform or even go down in price? If they do, would you still consider such stocks as better alternatives to Bonds that guarantee principal? 

Jim Cramer is a smart investor. He knows all about the history of dividend paying stocks in periods of sharply rising rates. So we wonder, why did he not alert his viewers to this risk in his series?

Finally, it is important to make the point that investing in individual bonds can protect your capital but not investing in Bond Funds.  But why should we make this point when the terrific Suzy Orman makes it so well. See the next clip.


6. Suze on Bonds- Suzy Orman with Larry Kudlow - Monday, December 21

This is a must watch clip for any bond investor. Suzy Orman clearly and concisely tells you the risks of investing in Bond funds and the difference between Bonds & Bond Funds in terms of getting your capital back.

She also describes her views of investing in quality bonds such as Pre-refunded Municipal Bonds. As we said, watch this clip.


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David Ignatius of the Washington Post is an intelligent, thoughtful writer. He is one of the best opinionators at Washington Post, in our opinion.  But, we have learned that raw intelligence without knowledge and insight can lead to dreadful mistakes. Our maxim is that lack of education breeds ignorance and ignorance breeds cultural supremacism, a form of racism.

This, we believe, is the hidden factor behind American media's portrayal of the events in Pakistan or more specifically Pashtunistan (the North West Frontier Province that was annexed from Afghanistan in 1893 by British-run India and then gifted to Pakistan in 1947).  Pashtunistan, the "Stan" or abode of the Pashtuns is where the Taleban movement was born and where it lives & hides to attack today's Afghanistan at will. 

President Obama has realized that no semblance of victory in today's half of traditional Afghanistan is feasible without taking out the Taleban bases inside Pashtunistan. But the Pakistani Army & its sovereign pride stands in the way.  

It is evident to everyone including David Ignatius that the Pashtuns of Pashtunistan, the Taleban in particular, do not recognize the 1893 Durand Line, the British imposed border that is today's line of control. The Taleban cross it at will because they believe correctly that both sides of the Durand line are their homeland. 

The reality is that Pakistan is an artificial state, an attempt to combine different ethnicities under one religious banner. The other reality is that Pakistani Panjabis, the dominant ethnic group, imposed their supremacy in all of Pakistan. This "single country" facade was first destroyed in 1971 when East Bengal broke away from Pakistan to become Bangla-Desh, "Desh" being a synonym for "Stan". Pakistani Bengalis wanted their own language, the beautiful Bengali, to dominate their land. It was language, race & culture that broke 1947 creation into today's Pakistan and Bangla-Desh.

We see a version of the Bangla-Desh struggle being repeated in Pashtunistan. Pashtuns, especially the Taleban, think of themselves as Pashtuns and they call the Panjabis as Pakistanis. In other words, they see themselves as Afghans and not Pakistanis. 

The Pakistani Panjabi generals realize this very well and they have let the Pashtuns manage their own affairs. This is why despite well-meaning American pressures, they have refused to deploy the Pakistani Panjabi Army, the heart & mass of that Army, in Pashtunistan. The Panjabi Generals understand that such a deployment will bring on a broad racial conflict between Pashtuns & Pakistani Panjabis, in other words a full scale repeat of 1971 Bangla-Desh war. 

In to this situation steps in David Ignatius with his "new" strategic concept - America should help Pakistan "gain sovereignty over its "tribal territory" for the first time in history and thereby finally complete the task of building its own nation." He describes this "new" concept in his Washington Post article How partnering with the U.S. could strengthen Pakistan's sovereignty.

Before we dissect this "new strategic concept" of Ignatius, let us quote what some knowledgeable observers say about the Pashtun problem. CNN's Fareed Zakaria said after President Obama's speech on Afghanistan that President Karzai of Afghanistan must  "get Pashtuns on his side". Michael Ware, CNN 's knowledgeable and insightful war correspondent, agreed with Zakaria and said "The Pashtuns lost the war". Ware was referring to the fact that in 2001 America helped the Northern Alliance of Afghanistan defeat the Taleban regime.

The Northern Alliance was composed mainly of Tajik Afghans and Uzbek Afghans. So the 2001 victory essentially became a victory of the minority ethnic groups of Afghanistan over the largest ethnic group, the Pashtuns.

The Pashtuns now found themselves ruled by other ethnic groups on both sides of the Durand line border, to the south by the Pakistani Panjabis and to the north by Afghani Tajiks & Uzbeks. This simmering resentment lies at the heart of today's Af-Pak problem. The simmer has not come to a full boil because the Pakistani Panjabi Army has generally left the Pashtuns alone and actually helped the Taleban to attack American troops in Afghanistan.

In the face of this reality, David Ignatius suggests that America help Panjabi-dominated Pakistan to impose its writ in Pashtunistan. In its essence, the Ignatius "new strategic concept" is to re-colonize the Pashtuns. He says "Pakistan will not be a confident and fully successful modern state until it has extended its writ to the lawless tribal regions. Lacking that control, the Pakistanis fear that their national fabric could rip along its seams."

America won in Iraq because America helped end the colonization of Iraqi Shias by the Iraqi Sunnis. This is why the Shias, the majority of Iraqis, supported America and this is why the minority Sunnis could not keep up their insurgency.

In stark contrast, David Ignatius wants to make America an active  partner in the re-colonization of the Pashtuns, the majority community in Pashtunistan & Afghanistan, by the Pakistani Panjabis. A brilliant concept indeed, America - the new colonial arbiter in Asia. The perfect Ignatius theme for the first African-American President in history.

Speaking of history, David Ignatius should read some. For nearly 1,200 years, the Pashtuns and the Panjabis have gone to war against each other. The Pashtuns usually won. Today, the Taleban Pashtuns feel that they can take on Pakistan as well as America-protected Afghanistan. Just look at the frequency and ferocity of attacks in the heart of Pakistani Panjab. 

The reason the Taleban problem is still manageable is because the moderate Pashtuns do not support the Taleban. They have rejected the Talebani version of Islam by defeating the Islamic parties and electing the moderate non-Islamic parties in every election .

If America attempts to re-colonize the Pashtuns, the moderate Pashtuns will revolt and throw in with the Taleban to fight the colonization. This will bring the simmering problem to a full boil. The end result will be another breakup of Pakistan, this times courtesy of America as a colonial power.

David Ignatius is a bright man but he is ignorant of history. He has fallen prey to the prevalent racial notion in American media about the Pashtuns being uneducated, tribal people who live in a medieval culture. He is not entirely to blame. His friends in Pakistani Panjabi Army feel the same way and Ignatius has been infected by their racial supremacism.

This is why the Ignatius "new strategic concept" is a rehash of the old British "White Man's Burden" wrapped in the American flag. A recipe for utter disaster for both America & Pakistan, in our opinion.

Michael Ware is right. The ideal way to solve the Af-Pak problem is to let the Pashtuns win. This is best done by enabling the Pashtuns to get their homeland back, a unified Afghanistan-Pashtunistan or the traditional Afghanistan. In other words, the complete opposite of the Ignatius "new" 18th century colonial strategic concept. 

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