Europe and the Mideast continue to be the forces which willcreate a real risk for the world. While the ECB continues tosupport banks and to keep Spain and others alive, the reality ismany large companies and investors are pulling out of southernEurope, further assuring that this part of Europe will have a veryprolonged struggle to revive their economies to a level which willbe sustainable long term. They are now in a sort of death spiral.The more deficit reduction and austerity, both of which arenecessary, the more the economies wither, and the more companiesclose down and shy away. That, of course, means even fewer jobprospects and capital investment, and less tax revenue to pay themassive debt. This creates more unemployment and more entitlementprogram needs and drain on government resources. And on and on downwe go. Unlike Japan where the culture is not one generally knownfor rebellion and massive social upheaval, the southern Europeansare a very different breed. The most frightening part is thesituation can devolve so much as to create uncontrolled socialunrest and that can lead to bad people coming to power and thenthere is no way to predict what could happen. Maybe Spain andGreece will pull it out, but they will be so burdened by loans fromnorthern Europe and the IMF, that it will be a generation possiblybefore there is real sustained growth of the type that reallyrevives those countries. That drag on the rest of Europe will be aanchor dragging down potential growth in the stronger countries.France is now going into a situation where there is no growth andthe Hollande government is introducing classic socialist remedieslike higher taxes, more regulation and reducing the retirement age,all of which is driving out investment and further diminishingfuture prospects for growth. With a huge Muslim population, and ahistory of street riots, there is a potential for major unrestagain happening and that could be a further damper on investmentand job growth. In short, while some think Europe is turning thecorner and is a place to invest, I retain my admonition againstinvestment in Europe. I do not believe the Europeans have solvedtheir issues, and the risks of bad things happening is still high.The risk reward still makes no sense to me.

I continue to draw your attention to the real world problem ofthe Mideast. Syria is going down this week or next, but very soon.The rebels are now in the process of attacking Damascus and willsoon force the departure or death of Assad. Then all hell breaksloose. Obama kept finding foolish arguments for doing nothing- ifwe arm the rebels we don't' know who they are (so they got armsfrom Al Queda in Libya), we will just cause more violence and death(is 40,000 dead not enough), we will instigate civil war (what namewould you put on it now), we will go through the UN and Kofi Annan( he was real effective). The latest is don't dare use chemicalweapons. Well they mixed the gas and loaded it on bombs already soour opportunity to proactively stop the potential of these weaponsfalling into the wrong hands is greatly diminished. Now we have nochoice but to send in special forces along with Israel and others.It will take a fairly large force now, and be far more dangerous toour forces now that the weapons are ready to fire. Had Obama actedearly we might have been able to save tens of thousands of livesand had our forces at much less risk. We have lost control. Therebels have now said publicly that the US abandoned them when theyreally needed help so stay out now when we are winning.

We did not want to do anything much in Libya and we led frombehind and then did not want to appear to be heavily involved. Sonow Al Queda is in control of Benghazi and is setting up camps inLibya from which will come bad things. Obama and Hillary werewarned and did nothing, and then tried to cover up and now the USand the world will pay a major price for the lack of leadership. Awell renowned expert on terror has just issued a piece whichdelineates his view that the events in Libya are part of a wellthought out strategy by Al Queda to use northern Africa as a newbase instead of Libya and to take advantage of the weakness of theObama administration policy of essentially leaving the area as fastas it can. This leaves Egypt, Jordan, Lebanon and the entire areaat severe risk. None of this even touches Iran getting nuclearcapability which is now very near.