All in all, I’m not expecting lots of stuff to happen in 2007 in the ordinary course of business unless something really crazy happens out of the blue.

Stock Markets – I am not going to buck conventional wisdom here. People think the markets will act in a positive manner for at least the first half of the year. With no real crises that are apparent unless some terrorist has it in for us, I expect the good times to continue for awhile. Real estate market may actually begin to recover in 2007 and in Manhattan the prices have not really fallen; this is too bad for me because I am looking to buy but there is always someone with Euros or British Pounds or just a billionaire from China or Russia who thinks it is cheap here and there are only so many good apartments to buy in Manhattan.

Terrorism – Pakistan courts just let out of prison 80 bona fide terrorists and they will come back in 2007 or 2008 to haunt us all. Unless the intelligence services make sure to kill them, there will be consequences from this group on the loose. Generally, the US from its big secret terrorist tracking center is now tracking 400,000 supposed terrorists which means they are tracking nobody. At US and Heathrow airports, they are still searching for things rather than people. The airport search experience has become totally harassing and ridiculous and yet it is completely possible to get stuff through that shouldn’t, even in Israeli airports. So as long as they are looking for things rather than people, all this war on terror ain’t worth squat in the airports. Meanwhile, nobody is dealing with the ports and the entry points where the next big threat will come from.

Iraq – Bush will defy logic and mostly ignore the recommendations of the Baker report. He will try and send more troops to Iraq and Congress will likely cave in and give him what he wants hoping that it will fail and that they will get a Democratic president in 2008. I don’t see any scenario where Americans can pacify Iraq with their troops; it makes sense to me to have them turn it over to Iraqis, let them fight their 5 year civil war. The Kurds will be in the north and the Saudis will provide leverage to the Sunnis by increasing oil production to put the Shiites and Iranians out of business if they insist on backing jihad all over the place. America has 1,000 people working in its Bagdad embassy; 33 speak some Arabic and only 6 are fluent. Need you know more? I’m in the middle of reading Woodward’s book “State of Denial”; it raises one’s anxiety level to see the depth of incompetence running the country and the war in Iraq. I will deal with this book later once I’ve finished the book.

Iran and North Korea – They are going nuclear unless negotiations provide otherwise and I just don’t see this administration as having the savvy to deal with Iran diplomatically. Assuming Bush doesn’t go for any Hail Mary passes with Iran, the best that can be hoped for is that they might negotiate with a Democratic president in 2008 who has a more dynamic policy. Same for North Korea. The present regime in Iran will not change for the next few years even though it is not popular, however the grand ayatollah Khameini will be replaced within the year as he is very ill and the president will probably be replaced as well; Rafsanjani will be the guy to watch. Problem is that it just changes the face of the same regime because Ahmadinejad has little real power anyway. The big unknown is whether Bush thinks he has a god-given mission to destroy Iran’s nuclear program. If he does, all bets are off and he’ll do whatever he can and I have no idea what comes next but probably would guess that Iran will do less in return than it claims it might.

Cuba – Fidel will fade from the scene and Cuba’s policy will gradually change, particularly if the price of oil stays moderately low and they cannot count on largesse from Venezuela.

Europe – will continue to do well in 2007 and France will have electoral changes with this woman socialist becoming the new sensation; hope she gets along with Merkel of Germany who seems to be doing a decent job. The UK really needs some work; it is still a backward country in certain ways even though it is a world power. Whoever takes over from Blair has work to do. The Euro will probably appreciate against the dollar but I will avoid the currency market and stick with stocks which will probably outperform the currency appreciation.

Africa – Do you think this year Mugabe will finally see the end of his rule? I thought so a year ago but he’s still there. Here’s hoping... In Egypt, Mubarak will continue to rule till he dies and that could be awhile. Mr. Suleiman from the intelligence service could be a good successor but he has opponents within the military.

Rest of the Middle East – Olmert will continue in office for several more years. Keep an eye on Tzippi Livni, his foreign minister who I’m told is competent and keeping a low profile on purpose. Both Bibi and Barak, both likely successors, have too many enemies. The Israelis can’t do much about Iran except prod others to act and they won’t. A leading think tank says they can strike and top strategists think so too. I really don’t know but think that Olmert will weigh the decision carefully before attempting to do so; but even leftists in that country are scared to death of living under the threat of a nuclear bomb with Ayatollahs in charge of Iran and say it must be stopped at all costs; the Arabs also don’t want Iran going nuclear but they have no power to stop it. If the Israelis want to act militarily and get the job done, they need help from the US (I don’t believe they can knock it out themselves in one fell swoop and that only the US can back up the sustained campaign that would be necessary) or else they will find themselves going one-off bombing non-nuclear sites in order to cut off economic lifelines that support the nuclear effort; problem is that doing that just raises the price of oil and allows Iran to get more for selling less oil. Olmert really doesn’t know what to do about the Palestinians except hold the fort until they get their act together. He might free Marwan Barghouti this year in the hope that this will get Fatah to create a united front that will be internally popular as well as strong enough to deal with Israel. If there is an election in the territories, Fatah will get the majority of the popular vote and the parliament as well. Hamas made a mistake in that when it got the chance to govern, it was caught captive by its rhetoric and delusions of jihad and showed no interest in actually dealing with the minutia of government. Lebanon will plod along with no real change; Hizbullah will challenge everyone around it but not go overboard for fear of overplaying its hand. Syria wants to deal with Israel; if Bush doesn’t veto it, Olmert just might be happy to talk to them. If Olmert completely blows Syria off, Assad might try this summer to start a war against Israel on the Golan and hope to get that territory at the negotiating table especially if he loses the war hoping he can achieve what Nasrallah did which is to negotiate from weakness and claim the top dog spot in the Arab heartland. The Saudis will be an important mediator in the region but do everything it can to not get any credit for it because they are scared of attention and the trouble it causes. Jordan will survive by just staying quiet and benefitting as everyone around them runs to their hotels as their own neighborhoods fall apart.

Russia – Putin puts in his successor and nothing really happens here. Foreign investors beware but there are always suckers.

China – Continues plodding along with its plans of economic growth; has a better chance of getting along with the US this year with the new treasury secretary and China-friendly team. As it prepares for the Olympics, it probably wants to avoid the spotlight and any trouble.

Japan and the Rest of Asia – New prime minister isn’t doing that much, but at least he isn’t causing problems. The past year of market performance was disappointing and perhaps it will do better this year; I think Indonesia has more market potential this year but overall Australia, Singapore and Hong Kong markets did well this year and I think they will continue to do well in 2007.

India – I’ve been told that it would be wise to avoid India market investment this year. The country seems to do lots of business but its progress is coming whenever the private sector gives up on government and goes it alone. This is cute in the short term but no way to get such a large country to move. Ultimately, the country needs strong leadership.

Pakistan – the real wild card in the world. If there is a problem in 2007, it will emanate from here. Afghanistan is failing because Pakistan is causing its instability and Pakistan itself is a basket case country with a corrupt leader (so is Karzai across the border) and nuclear technology sold to anyone who will pay. Musharraf will at some point be knocked off; this country doesn’t have a backup. It is the most dangerous spot in the world even if Iran barks loudest and people are not paying enough attention to it outside the region. Arabs seem to be worried about Pakistan and even top analysts in Israel still think Pakistan is too far off the regional map for them to be worried about it. Pay more attention here.

The ‘Stans – Stratfor intelligence service notes that there will be more changes in these countries and that so far the fact that there has been peace here is more of the continued survival of those in charge than the result of anyone managing change well. Iran has some possibilities of capitalizing on this change but they will have to take on Russia to do it; it may be more than they can chew. I’m happy for the Russkies to keep an eye on the Stans (the Americans are trying but they don’t have the leverage) and the Chinese would be best to keep an eye on the North Koreans and even take it over if necessary and keep the place quiet so that the Japanese don’t feel the need to go nuclear as well.

Latin America -- Mexico seems less stable than it appears; it has not really made the transition from a PRI-run state. I still haven't visited there and that can't be good for Mexico. Brazil and Argentina continue to do well. Leftist politics in Bolivia and Nicaragua are flavor of the month; to do well the people running the shows have to produce something and Venezuela has its own problems.

US Politics – Hillary Clinton is the front runner until she self-destructs. She is actually electable and did well enough from conservative sectors of New York state to be elected. People hope they get her husband with the package. John McCain is making a strategic error to be angling toward victory in Iraq, something that is not achievable. I also think he will crash and burn again in a campaign. Unless something really goes wrong this year and people think he has the answers. This guy Obama is flavor of the month; perhaps ought to be someone’s VP nominee but has no experience yet. The Democratic Congress with speaker Nancy Pelosi will be a huge disappointment; she has made it clear she values those who suck up to her rather than people who have seniority or know their jobs. First impressions of her are that she is utterly corrupt and petty and if she’s the leadership, well there goes the rest of it. Just look at the new head of the intelligence committee, Silvestre Reyes, a 62 year old 10 year congressman. The one with seniority doesn’t get along with Pelosi and the second guy down the line has too much corruption taint. So this guy gets the job. Here’s what he said in an interview with the national security editor for the Congressional Quarterly reprinted in Haaretz, an Israeli newspaper:

Al Qaida is what, I asked, Sunni or Shia?
Al-Qaida, they have both. You’re talking about predominately?
Sure...
Predominantly, probably Shiite.
And Hezbullah? What are they?
Hezbullah, Uh, Hezbullah? ..... Why do you ask me these questions at 5 pm? Can I answer in Spanish? Do you speak Spanish?
Poquito, a little.
Poquito?
Go ahead, talk to me about Sunnis and Shia in Spanish.
Well, I uh....

Yup, this is what is running the US committee on intelligence in the House of Representatives. Beware because kissing Pelosi’s ass means more than worrying about how safe the world is.

Musings – Travel – Cost of travel is getting really high. Air tickets and hotels are going up tremendously and it is beginning to impact people’s ability to travel. Another 9/11 is ripe to occur and might bring the markets back to reality, just like the last 9/11 did. While there are a good number of people with money and demand is outpacing increased supply, it is just nuts that a mediocre hotel room is $500 a night in New York and that room rates of $1,000 to $1,500 per night in the US exist. The business class ticket to India for $3,500 is now $6,000 and consistently sold out.

Technology – Electronics seems to be trying to integrate everything you could want into single pieces of equipment in a concept known as convergence. So far it means that I have remote controls in my hand that supposedly do everything but now I can’t figure out how to turn on the TV without using 3 of them.  I submit that people using telephones just want to make telephone calls. All this internet stuff is resulting in people with no attention spans and the blackberry makes people have no life at all; there was an interesting article in the Wall Street Journal about children who live with parents that are blackberry addicts and how they’re all in therapy now dealing with the fact that the blackberry is more important than the family. The backlash to come in the next few years will be that people will start to back off all the real-time technology and simply decide to tune out because they will be totally stressed out from having no private space at all. That’s been said for years but I think we’re at the breaking point now. Talk about convergence –  It is only a matter of time before you have an ear piece on you that is connected by wireless to the web that allows anyone to interrupt you just like they would on an instant message – why not? So now you’ll have voices in your ear from anywhere in the world at any moment. That is, until people turn it off. Till now, I don’t use IM software and don’t have a blackberry because I don’t want to be interrupted. People feel that just because a phone rings in the middle of their dinner that they have to get up and answer it. I don’t. The world will survive without me having to be on call every minute of it. The instancy of everything just makes people feel that they themselves are too important to it all. We need to restore limits and to put our place in the world back in its proper context – we are all dispensable and the reason we have all this technology is to work more efficiently to get us to where we want to be, not to squeeze ever more productivity out of us so that we just continue to work harder and more.

Health -- One reason Americans are so obese is that we drink so much soda and sweetened fruit drinks that have no nutritional content and lots of sugar. A study showed that 30% of the obesity in America over the past 40 years could be directly linked to carbonated sweetened beverage consumption alone. Personally, I know that if I lay off fruit juice my weight stays down and I am less bloated.

Quality of Life at the Right Price -- During my recent visit to the UK I heard about what it costs to live well. Private school tuition and nannies cost twice what they do in the US, and nannies there are unionized with all sorts of work rules and rights that really add to the cost. Hospitals are considered gross and private insurance is limited and still requires you to pay much of the bills for doctors and hospitals when you are not in an emergency situation. It costs at least double to have a baby in the UK if you are paying and you can’t count on insurance paying you most of your bill back; if you’re on public you have very little choice in the matter and the options are not pleasant. Also, all these types of items are paid with after-tax money in the UK as they are in the US. So as I have said before, the US private health insurance system is really the best system in the world considering what you get for what you pay, and if you are going to live a high lifestyle, you are going to do it for less money in the US than in places such as the UK. On the other hand there are certain pleasures that are cheaper abroad and the American tourist would do well to take advantage of it rather than complain how expensive Europe is: 4 Course Dinner at the Ritz Gourmet room in London with 5 piece orchestra is $125 including tax and tip; the Rainbow Room in Manhattan is $200 Plus tax and tip for 3 courses and an orchestra and the food is a 3 compared to a 10 at the Ritz. A tasting menu at Per Se in Manhattan is $195 plus tax & tip, and the vegetarian tasting menu at Charlie Trotters in Chicago is $120 plus tax & tip. Of course, this is not a big deal when you figure that having a baby in the UK privately is at least $20,000; a high-class nanny is close to $100,000 per year (that would be about 60k plus taxes and benefits in New York) and the tuition at the private school is over $50,000. Go figure.