The lead article in The New York Times this morning, “Leaders Pledge Effort to Reach a Mideast Peace,” offers some hope for a different outcome than all the failed initiatives in the past.

The reasons are many. For one, the killing of four Israeli West Bank settlers by Hamas on the eve of the joint meeting at the White House failed to scuttle the event. Israel did not allow the wanton act to interfere with actions between sane adults, and, even more importantly, the Palestinian Authority strongly denounced the action.

Second, the participants in the talks are different this time. Like him or not, President Obama certainly has the intelligence to provide the bridging proposals the talks will need to succeed. And the Prime Minister of Israel, Benjamin Netanyahu, as an avowed hawk, is most likely to be able to persuade the Israeli public and members of his coalition regarding any sacrifices necessary to make a final deal.

The geopolitics are different as well. The Saudi Arabians actually pushed the Palestinians to enter into the negotiations, rather than playing an obstructionist role. And a successful conclusion to the talks is more in the national security interests of the United States than ever before.

The tableau on the front page of The Times showing the leaders of Egypt, Jordan, Israel, the Palestinian Authority and President Obama lined up in a row was certainly impressive. Let’s hope the talks are equally so.

The lead article in today’s New York Times, “Obama Declares an End to Iraq Combat Mission,” discusses a welcome conclusion to our combat mission in Iraq, marked by a Presidential address from the Oval Office. President Obama officially marked a milestone last night, the end of the military venture called Operation Iraqi Freedom that needlessly cost thousands of young American lives.

The President also emphasized again his vow to draw down from Afghanistan as well next summer, saying an endless war there helped neither Afghanistan nor the United States, and that the Afghans must learn to fend for themselves.

The President provided a forceful argument about the need to stop spending trillions overseas when our own domestic economy remains in tatters, with so many suffering through long-term unemployment. His sanity provides a welcome refreshment to the recalcitrance of the Bush administration to ending our overseas adventurism.

Yet the President showed a touch of class about the previous administration as well. He praised the patriotism of George W. Bush and even called him from Air Force One to mark the milestone. Of course, the Iraq War, and Barack Obama’s criticism of it, provided the initial boost to his Presidential campaign.

A breath of fresh air and sanity from the White House, thank God.

The lead article in today’s New York Times, “China Fortifies State Businesses to Fuel Growth,” provides an interesting look at Chinese economic strategy and the role state-owned enterprises (SOE) play in their phenomenal expansion.

Apparently, the Chinese reserve key industries for SOEs and limit private entrepreneurs severely in these areas. The article mentions finance, communications, transportation, mining and metals as the key fields where competition is either non-existent, barely tolerated or opposed with all the power of the state.

For example, airlines initially experienced some competition between eight private competitors and the three big companies run by the Chinese government. However, after providing favorable terms to the big three for the state monopoly on jet fuel, the private competitors were reduced to just one.

In my opinion, the most important element for the United States, besides the growth of China as a formidable economic power, involves the degree their statist economic model is followed by other poorer countries. Even though Japan’s top-down economic systems eventually failed, you can’t argue with the success of China’s system, at least so far.

According to the Chinese, efficient management by the state can be more effective in helping poorer countries pull themselves up by their collective bootstraps than just capitalist market forces. The Chinese claim that the government can make decisions and organize more efficiently, as well as gathering resources for large projects. One only has to look at China’s success in the promotion of clean energy to recognize the validity of this latter statement.

The lead article in today’s New York Times, “Fed Ready to Dig Deeper to Aid Growth, Chief Says,” doesn’t exactly inspire confidence about the future of the economy. Ben Bernanke, head of the Fed, signaled that he was prepared to buy up more government debt to bolster the anemic economic recovery we have been seeing.

His gesture about the possibility of future action, in lieu of any concrete steps now, seems to be as anemic a response as the economy. We saw a disastrous housing report for July, with double the drop in the market predicted by the experts, a revising of economic growth figures from 2.4 percent to 1.6 percent, and still no indication of any alleviation of unemployment figures, the main impediment to a robust recovery. Consumers drive two-thirds of the economy and without more employment, they have a lot less money to spend.

Of course, Mr. Bernanke can’t cure the economy on his own; that would take coordinated action by the President and Congress, and Republican recalcitrance to any form of action seems to preclude that possibility.

Most experts seems to predict continued slow growth; the alarmist predictions of a double-dip recession by the right wing are just that, alarmist. And most investors know that the pace of this recovery is about average or even slightly above average compared to previouis recessions.

The lead article in today’s New York Times, “Much of Pakistan’s Progress is Lost in Its Floodwaters,” paints a grim picture of the situation in Pakistan today with surging rivers and destruction affecting large swaths of the country. The U.S. foreign aid package to the country, totalling $7.5 billion, will now need to be diverted to get the nation back to square one instead of buttressing the government with new schools, electrical grids, etc.

The statistics tell the story better than any graphic depictions:

62,000 square miles have been affected, an area larger than England;
20 million people are suffering, the population of New York State;
8 million are in urgent need, with more than half of them without any shelter;
5,000 miles of roads and railways have been destroyed;
7,000 schools and 400 health facilities, too.

In all, the total cost of the flood damage is estimated at $7.1 billion, or 20 percent of Pakistan’s budget.

The floods are also throwing a wrench into the U.S. war effort in Afghanistan. The Swat valley, which had been ravaged by the fight against militants, is now in even worse shape, and every bridge in the province has been lost. A main supply road running from Pakistan to Afghanistan has been washed away. Electricity, a main source of civil unrest due to poor supply before the flood, is now even more erratic.

U.S. officials are trying to picture the flood as an opportunity for rebuilding, but it seems to me like they’re whistling in the dark.

The lead article in today’s New York Times, “Key Karzai Aide in Graft Inquiry is Linked to C.I.A.,” shows the futility of trying to root out corruption in Afghanistan when it is endemic to both the government and the culture. A chief of administration for the Afghan National Security Council, Mohammed Zia Salehi, was arrested after soliciting a new car for his son in return for impeding an American investigation of a corrupt company. He made a phone call to the President, Hamid Karzai, and, after Mr. Karzai sent two separate delegations to the jail where Mr. Salehi was being held, he was released.

To make matters worse, Mr. Salehi is on the payroll of the C.I.A., according to this article, though it is not exactly defined what he does. (should this appearing on the front page of a newspaper??) In fact, and this I didn’t know, and it is buried deep in the continuation of the article, the C.I.A. has been paying the entire budget of the Afghan spy service, the National Directorate of Security, from 2002 until just last year.

Mr. Salehi, in turn, is just a pawn in this game. He was arrested in connection with the Afghan company, New Ansari, whose sole purpose seems to be the transfer of U.S. dollars out of the country, primarily to Dubai, where Afghan officials, drug lords and insurgents all maintain mansions and live in decadent wealth. Apparently, New Ansari doesn’t discriminate between the government, Taliban or C.I.A. puppets.

And the administration, according to the article, is rushing to show progress to Congress by December. Any realistic look at this situation will tell you that any substantial progress is very unlikely.

Lead article in today’s New York Times: Housing Market Plunged in July, Fueling Anxiety

Sometimes, the experts are just wrong, and this was obviously the case in July’s housing report. The drop of sales to 25.5 percent of a year ago, though ostensibly caused by the end of an $8,000 government incentive for new homebuyers, also showed the inherent weaknesses of the housing market have not been adequately addressed.

While the end of the incentive in June was the immediate reason for the decline, and probably pushed the levels artificially low as July was the immediately subsequent month, experts had been predicting a drop of about 13 percent, and this was nearly double. In an even more alarming statistic, the inventory levels are up to 12.5 months compared to an average of less than six, and the highest level since this statistic was first tracked in 1999.

The question on everyone’s minds is whether the housing market will drag the economy down again like it did before and whether we’re in for a double dip recession. Despite the naysayers, I still believe our anemic recovery will continue — every recession seems endless when you’re pulling yourself out of the ditch (to use an Obama phrase) — but it will be trying for investors and the average citizen alike.

I expect there will be a few days of volatility immediately following this July housing report but then things will return to normal — if you can call it that.

Lead article in today’s New York Times: Judge Calls Halt to Stem Cell Aid Backed by Obama

The decision by a judge yesterday to halt embryonic stem cell research authorized by the Obama administration came as a shock to scientists in the field but represented a return to the rule of law passed by Congress regardless of your perspective on the debate.

The ruling by Chief Judge Royce Lamberth of Federal District Court described the current practice of funding the creation of stem cells — through the destruction of embryos — with private money, then using federal funds for research, using those new stem cells, with public money. Judge Lamberth said that the distinction was meaningless since the research required the initial destruction of stem cells to proceed. It represented a direct interpretation of the law whatever your side in the stem cell debate.

The law, the Dickey-Wicker Amendment, prohibits federal financing for “research in which a human embryo or embryos are destroyed, discarded or knowingly subjected to risk of injury or death.” It is passed every year by Congress.

Those who support stem cell research, a highly controversial issue, should lobby to get the law changed. And much as I support the Obama administration, an executive order should not be used to contravene a law, only to interpret it.

The lead article in The New York Times this morning, “Mideast Talks: Scant Hopes for the Start,” describes the new beginning of direct talks between the Israelis and Palestinians, to start in Washington in just two weeks. But the article goes on to note the very low chance of any real progress, and it gives the feeling of “we’ve been here before, and we know how it’s going to turn out.”

The article notes the current positions of the Israeli and Palestinian governments and describes the talks as negotiations betweeen the unwilling and the unable — Prime Minister Netanyahu heads a right-wing coalition with little incentive or desire to make any compromises while Mahmoud Abbas is a weak leader of a divided people between the West Bank, where he rules, versus the Gaza Strip, where Hamas is ascendant.

The article provides several other reasons for despair — the settlement movement has just about reached a critical mass in terms of the number of sites and population to make dismantling it just about impossible; the Israelis twice placed generous offers on the table for the Palestinians only to have them rejected; Netanyahu won’t compromise on Israaeli sovereignty of Jerusalem and control of the Jordanian border, both anathema to the Palestinians, et cetera, et cetera.

The one thing neither the Palestinians or the Israelis have counted on, however, is Barack Obama. President Obama, who achieved a health care plan unobtainable for 30 years, may be a new force who can change the dynamics and prevent the talks from going in circles.

The lead story in The New York Times this morning, “Direct Dialogue Expected Soon on the Middle East,” describes the possible re-opening of direct talks between the Israelis and the Palestinians to attempt to forge a new peace agreement.

Expected to be announced by Secretary of State Hillary Clinton, it will be the first direct negotiations for 20 months and represents a foreign policy victory for the Obama administration and more specifically, special envoy George Mitchell who has been engaged in fierce “shuttle diplomacy.”

Hope springs eternal. Despite unfavorable political realities on both sides — the Israelis have a right-wing coalition government and the Palestinians are split between Fatah and Hamas — there seems to be a real desire to get things done this time. If a pact was achieved, it would remove a major thorn in the side of the United States in terms of its relationships with other Arab countries.

Yet, in my opinion, for that very reason, peace might not occur. These other nations use the Israeli-Palestinian conflict as a means of validating their own authoritarian governments. They can always stir up their supporters through an anti-Israeli rally instead of attending to poverty and other urgent domestic needs among their own citizens.

The Palestinians insisted on a one-year time limit on the talks, and maybe that will force some action. It remains to be seen …