A major snowstorm sorta crept out up of nowhere this week and we stepped into a city park today that looked like a winter wonderland with people on cross-country skis. But just a few more weeks and it will be spring. Sometimes we wonder if Elizabeth’s nursery school is just a glorified playgroup or if education is wasted on 4 year olds. But then last week at my parents’ dinner table in Miami my brother mentioned how he would be in Amsterdam and someone mentioned a museum there featuring Van Gogh and several adults there didn’t recognize the name, and then Elizabeth mentioned how she had learned about Van Gogh that week in class. So I guess we are supposed to think we are getting our money’s worth. Her school is a tad liberal; they told us that Purim costumes (the Jewish holiday was this week) were not to feature any weapons such as guns, grenades, swords or knives. When I asked Elizabeth if she had learned about Haman in school (the evil person in the holiday story), she said “Haman was bad because he hurt the Jewish people’s feelings” which, of course, is the biggest crime of all in her school.  Elizabeth otherwise talks about art folios and brings me things to put in them, mentions museum exhibitions and a brother who must “cooperate” and “give her privacy.” She’s becoming a better eater – last night she had cauliflower with crunchies, Moroccan chicken tagine “rockin’ chicken”, and her mum’s baked pistachio-cranberry biscotti which she allowed was better than Fairway’s biscotti. Jeremy doesn’t talk much but he totally understands everything; goes to the fridge and brings you what he wants, and follows complicated instructions. He has so much fun being naughty that is very hard to want to spank him.

In the news these days, the supposed Israeli hit squad in Dubai is a bit of a tongue in cheek story. Israeli kids wore tennis outfits and wigs for Purim costumes (mimicking the assassins). Americans drop bombs from drones in Afghanistan and Pakistan and kill hundreds of civilians and nobody says a thing – the Israelis send a hit team to get rid of a terrorist in a hotel room that is on his way to Iran to make an arms deal and everyone piles on? I sorta wonder why the Dubai police keep playing it up. You would think they would want to sweep it under the rug and get the story off the front pages once they’ve saved face in the Arab world. I think they are selectively leaking information to elicit people to deny or to confirm things. Some of the things being put out there don’t make a lot of sense and it might even be that they are doing this in order to make things fuzzy or to provoke a response. Did the Israelis really send 30 people inside the UAE to get this job done? Could well be. It appears to me that several other Arab countries and Hamas and Fatah insiders helped them and the cost of failure was too high. I guess the Emiris are upset that it took place on their soil and want to strongly discourage such activity in the future. The interesting point of all this is just how sophisticated all the surveillance technology is and how it is increasingly difficult to run these kinds of secret operations. Dubai might be more advanced than New York City for all we know and the degree to which their surveillance around the emirate is integrated is impressive. Based on the evidence, it is pretty clear that the Israelis ran this operation the way they are known to run such operations, and that very few services in the world could have run such an operation in this manner. One might wonder why a few of these agents might have blown their cover when they knew they were under closed circuit video surveillance but nothing is really clear and overall the professionals in the business think they ran an excellent operation.

I had said a few years ago that campaigns to delegitimize and isolate israel as a south african-like pariah state would become big and this seems to be going on quite a bit. Funny thing is that the Arabs seem less interested than the Europeans in doing this. I think the Arabs are much more concerned about Iran than Israel.

In Gaza, the Israeli government finally admits after several years of raising hopes of its citizens, that the Iron Dome anti-missile defense system that is now coming on line will be irrelevant in terms of protecting its citizens against missiles from Gaza. I knew that, but just now after spending billions of dollars over several years they are just now telling everyone the truth?

Other Israel-related stuff: During the last few months, there have been stories about this J street Lobby organization designed as a left-wing counterpart to AIPAC (the traditional Jewish lobby in DC). Obama’s people are using it as a vehicle to try and co-opt the Jewish lobby and sideline AIPAC. It’s not going to work. J-Street is a Flash in the Pan. People are against something, such as a threat, much more than they will be for something such as Peace especially when it looks impossible and remains much more ambiguous than the threats. Talk radio is Right-Wing; the liberal talk radio networks are smaller and not surviving.  Also, the present Israeli government is doing its best to marginalize J-Street and they will succeed because J-Street is seen by them as a hostile organization captive to left-wingers in America trying to lobby Israel, not as a vehicle for Israel to lobby the US.

Google in China – I like this story. China doesn’t need internet to thrive, but it wants respect. Companies showing that it will live without China mean that they will, and that China’s development will be stunted because there will be the lack of competition and players throwing resources at development. I believe though that Google also figures they are losing to China’s other search engine and that they would have more market share in China if they were forbidden fruit, rather than team players. As team players who agreed to censorship, they were not “hot stuff” and that’s probably one reason they have been thoroughly beaten so far in the marketplace.

Brazil is only country with a clean bill of health in Stratfor’s 10 year forecast. Angola looks primed for growth but it’s a crazy place. Poland also gets a good review out of the Economist. So I would continue to place my bets on Brazil.

China is quietly going green and going to become a big thorn for the US as it creates the technology the US will depend on in the next generation. Obama is not off the mark here in consistently warning about China’s strides in this area and the challenge it creates for the US.

I don’t see the Gulf, India, China, Europe, Japan as being great opportunities for the next decade. The Gulf is coming off a bubble, China is a bubble waiting to burst, India is stewing in its own juices as is Europe and Japan. Israel-Arab Peace Process is boring (just say autonomy) and Bibi is really not interested in any hint of deals which will bring down his coalition. Obama and the Democrats are a disaster and the Republicans are beginning to actually suggest some new ideas such as the bipartisan group that is suggesting reform of the tax code and health care. Team Obama basically rattle the markets, one day pro Wall Street, next day bashing them, raise taxes, don’t fix anything having to do with health insurance costs. They are just out of touch with reality – they are suggesting bigger government and more taxes and everybody with money has less money to spend and feels a total disincentive to work in this country or to spend their money because they feel they are being asked to reserve so much of it for taxes that they must spend less. This will inevitably lead to less economy, less spending and therefore less revenues which ultimately matters much more to government than taxing income. Obama is ineffective and captive to the left-wing of his party which is out of sync with America which is closer to the middle-right, and I am predicting here that he will be a one-term president. Peggy Noonan keeps saying he is a professor who appears out of touch and she is probably right. I think his act will grow stale after 4 years and people will want someone else in their living room on TV for the next 4 years especially if they don’t see any real improvements. At this rate, there may not be real recovery before 2013. I would hold onto whatever stocks I bought this year for the long term; there will be ups and downs but a general upward trend over the next few years.

The US Economy has been showing better performance of late based on the artificial stimulus of government spending. Problem is that it has fed a shadow economy of government and other union workers who make up enough of a portion of the work force that if they lost their jobs the rest of the economy would feel the pinch. So we are in a trap -- if the government doesn't spend money to feed this sector, these people lose jobs and stop spending money and paying taxes, which feeds even more deficit. Hence the argument that the government has to keep spending its way out of the deficit. But this is a trap because we are basically having the government subsidize a portion of the workforce that really shouldn't be as bloated as it is. Maybe you need to let them go, take the pain and have them find some other job that is not paid for out of the public purse. Maybe you have to let lousy public schools fail and to force states and local governments to cut their spending and to do such unpopular things as merge when you don't really need 25 municipalities in a county all doing the same thing. But this pisses off the unions who basically put Obama into office. Word is that they are dissatisfied with him; they never had it so good. They basically have a seat in the White House. Somebody else is the loser in all this, and that poor shnook is people like me. Yeah, the small business owner and the true upper middle class of the country that is supposed to be the engine of growth that the candidates all say they want to encourage.

I personally am sick and tired of the US Government’s rape of small business and the middle class. Despite what the government keeps telling everybody, if you make more than $50,000 a year in this country you fall into the highest tax brackets. All the tax deductions that the government gives out begin to get phased out at that level and the Alternative Minimum Tax kicks in. Even for things such as the Individual Retirement Accounts and the Health Savings Accounts (which are supposed to help you fund the large deductibles that insurance plans are increasingly requiring). So you can't even put away money for retirement on a tax-deferred basis or fund your health insurance with pre-tax money. Small businesses which are the lifeblood of enterprise in the US are taxed and charged significantly more than large companies for the exact same things that constitute huge cost areas. For instance, most companies pay for health insurance for their employees although let's not kid ourselves -- employees are not getting raises and their benefits are being cut because there is only so much money to go around so this is a real drain on everything and diversion of resources in an inefficient manner. ADP Total Source runs an insurance pool similar to that of a large company of 200,000 employees and offers the same exact insurance for $200 per employee per month cheaper than what my company pays which just shows you what a racket it is for small companies in this country and that nobody in DC is doing a thing to help small businesses or married people. Instead they pass laws like they just did that says that even if you fired someone for cause, you have to advance 1/3 of that person’s health insurance premiums for 3 years after they’ve left your employ if they decide to stay on the plan. Supposedly you can get the money back but just try and get it and cope with all the bureaucracy and rules... Over 10 years have passed and government has never raised the quota on H1B visas which disproportionately would help smaller companies than the larger companies that can always get what they want as they use their power to hog quota in the first place. The marriage penalty still exists. Women with small children have virtually no incentive to work unless they make at least $120,000 a year; otherwise, their income basically goes to pay for the nanny and/or child care. If they are at home, they don't produce anything and can't spend anything either. The Republicans didn’t do squat over the past 10 years either on any of these issues – so I really don’t care about the rhetoric from either party.

It may be convenient to say that people that make $250,000 a year are filthy rich and should be taxed to the hilt but it's really not true. $250,000 a year in New York City hardly pays for rent and tuition for 2 kids after taxes. Remember that private school tuition is paid for with after-tax dollars, and you still pay for the public schools you don't use. If all these people actually went to the already over-crowded public schools that cannot cope and force people to go to other districts, they could never handle the influx. Tuition vouchers would help and neither party is doing anything seriously to deal with this. You really don't want to declare war on the upper middle class because they are the ones most likely to be able to spend money on the big ticket items that would stimulate manufacturing and services sectors in America. But instead they have to divert all kinds of money to stupid things such as taxes on up to 60% of their income when you count in sales and excise taxes, tuition, health insurance instead of travel, appliances, cars and other items all being cut back to pay for the other stuff. It is a wholly inefficient diversion of resources -- all this money is being wasted on a few bottomless pits that are run horribly when it could otherwise be spread around to benefit a greater number of people. 

If you want to say that the great majority of people only make $50,000 a year and these other people should shut up, the answer is that the people making $50,000 a year are simply not the people you have to rely upon to spend the money to stimulate the economy because they are too busy making ends meet. An extra $1,000 is not going to change things much for them. It is in the upper middle class brackets that the real money resides to spend in a manner that benefits the people making $50,000 a year. Think of it this way -- people without much money go on package tours. Those tours basically have tour operators who pool all their money and spend it on just a few local businesses that are in cahoots with them. The wealthier people travel independently and spread their money around in a more random manner, among restaurants, drivers and hotels. They are the kind of tourists that create wealth in the places they visit and give the greatest number of local businesses a chance to profit from them.

You have to really think about how you define "rich."

In the US, Labor unions exempted themselves from a 40% excise tax on so-called cafeteria insurance plans for the "rich" with floors that were too low for all sorts of normal families to avoid taxes. These insurance plans were said to be tax dodges of the rich and famous but were to a great degree given to unions as part of deals that are currently bankrupting companies from General Motors to state and local governments. But what about the private sector that pays their own way for these plans that would now be taxed?  In New York, a decent family health insurance plan that let's you choose your own doctor costs upward of $36,000 a year and the government proposed to tax 40% of the cost of this plan in excess of $18,000 a year -- what could you possibly buy for that amount? Not even an HMO plan that doesn't let you choose a doctor. Just in case you think it is only Obama that likes to spend your money, George Bush Jr. increased gov spending more than any prez since Lyndon Johnson, says the Economist, and it was Senator McCain that proposed taxing these plans as did President Bush in his last year in office. How stupid would that be? Companies would just have to raise people's salaries to help pay for these plans and then half the raise would be taxable. I'm telling you -- nobody who can afford it will want to live and work in the US.

Despite a year of talk about health care reform, not a single thing is being done to alleviate this problem. My company has been begging to join an insurance pool for close to 10 years and the insurance industry specifically makes it impossible for small companies to get the same deals as larger companies. I finally found a way around this but we are one out of a million businesses that will figure this out. Meanwhile, small businesses are choking under insurance bills that are 4x what they were a decade ago. If I were starting a new business today, I wouldn’t even offer health insurance to my employees and am thinking of taking all our present employees off the plans they currently have and moving toward high deductible plans where insurance doesn’t even apply to the first few thousand dollars of health care costs each year.. 

What the US needs right now is a president that tells the truth, because Congress will never deal with reality unless it has the political cover to do so, and that has to come in part from the president. Here’s an example:

Almost 90% of the US budget cannot be tampered with unless Congress changes laws.  This 90% involves interest payments on US national debt, entitlement programs such as medicare and social security, and then a big chunk is on defense spending. All the rest of everything is less than 10% of the annual budget. So if you want to deal with the US deficit, you have to be willing to attack the entitlements and Obama has been completely unwilling to do so.

When retirement age was set at 65 and the social security program was founded in the 1930's, the age expectancy for a working man was 62 in the US. It is now in the mid 80's. Raising the retirement age to something between 72 and 75 would make a lot of sense. They must reduce entitlements or else money will be worthless anyway by the time people retire. This is where the real money is; if you want to make a dent in the national deficit, this is where you have to go.

While I’m bashing Obama, let me just mention Iran, which looks like another area where he won’t do anything. The New York Times clucks about the issue but they are also insane. They want more sanctions but are against almost all of the proposed sanctions as being too strong. They are against every proposal made but offer not even a single specific proposal of their own. I have no idea what the NY Times would actually do in order to bring about a positive outcome from Iran except I know what they wouldn’t do. This is pretty much what I know about Obama. Utterly useless they are and frankly irresponsible. Sanctions can work – an Iranian parliamentary study shows that in 8-16 years, depending on conditions and barring substantial foreign investment, Iran will have to import its own oil. I have said in the past that if there is military action against Iran, they will bark but not bite. They will take their licks and move on. I think that military action would actually increase the probability of regime change in that country. Despite whatever price it would be, the cost of doing nothing will be 100x worse both money-wise and death-wise. Pay now or pay later with very high interest.

Some other Global Thoughts about Outrages in the World Today... Abu Dhabi admitted that it lied by $5 billion the $10 billion stated bailout of DP World; in Afghanistan, over 50% of population said it had to pay a bribe to a public official that year.  Haiti – A few days after the earthquake I was watching the BBC. The BBC reporter was at a refugee camp 5 minutes walk from airport with nary any food or medical team in sight. A black hole for aid. 

Some Travel Notes – Nassau, Bahamas – JetBlue airlines makes the islands affordable for last minute travel to these islands off the coast of Florida. In February, it is a better bet for sun and warmth than Florida. Building a new airport set to open next year. Allow 45 minutes to get to airport from Paradise Island. Always something along the road. The Cove at Atlantis is upscale and perfect rooms but not a chill-out place; expect rap at the pool or Martin Luther King’s I have a Dream speech to techno beat. Lots of kids from Brooklyn when I visited; it was Yeshiva recess week full of Israeli and Syrian Jews. Buffets at Mosaic at Atlantis were of Dubai-like quality. Ocean Club Hotel also owned by Atlantis a mile away from all the pizazz at the rest of Atlantis was perfect; great chill-out; food, service, bicycles; kid camp drop-in and family pool with zero entry. Nice beach; get a room in the new wing. Reviews from the older wing were just not good. Don’t forget to visit the Cloisters and the Golf club area next to the Ocean Club. Catch a Junkanoo parade at 9pm at the Marina on Paradise Island. BBC World on the TV’s at both hotels. Both hotels are owned by Atlantis. If you stay at the Ocean Club, you can access the other properties but not vice versa. Amex Platinum gets you amenities at the Cove; Leaders Club from Leading Hotels of the World is accepted at the Ocean Club bu you should know that at the Ocean Club you will not get upgrades. Funniest thing I saw was this obviously wealthy Russian woman at the spa at the Ocean Club buying several thousand dollars worth of potions – “I need,,,I need....MINIMUM 3 of this, 4 of that....I guess under communism there was no way to say “I want.” Outside the hotel, there is virtually nothing to do in Nassau and when Cuba opens up, they will probably put the Bahamas out of business except for Atlantis with its water parks.

We visited Miami and Key West (Sunset Key Cottages) also this month. Flying between the two cities is very convenient at 35 minutes in the air. Miami airport is a real hassle right now as the American Airlines terminal from security to gate expanded to up to a mile long but the air train is a year behind. Can take a half hour to walk to the baggage claim with small children. Fort Lauderdale is a much better airport to deal with and to get a rental car. We continue to enjoy this hotel having stayed there in 2007 (an earlier review appears in Global Thoughts on the Travel Page list), even with temperatures that were 15 degrees below normal in one of the coldest winters they’ve had this past century. Funniest thing we saw was this dessert place in Key West called Better than Sex just down the street from Blue Heaven which serves up fantastic lunches and dinners and has chickens running around. Mood lighting, adult stuff on the tables and suggestive menus offering all kinds of yummy desserts. I got a receipt that says “Sex $13.69" – fortunately my wife was with me so she doesn’t have to ask why it says what it says. Great café in South Miami Beach is Paul’s on Lincoln Road and Drexel, a block west of Washington Avenue. Fantastic sandwiches and French patisserie. 

Coming this Month: Visits to Mexico City and Panama City. Haven’t been to these areas yet and want to see our southern neighbor as well as this interesting democratic country in our neighborhood. Visit to Israel is on top next month as well as a stopover in Barcelona to see what’s new over there.