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Tyrants and Globalization + Rumsfeld's departure

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Start screaming crazier and crazier edicts and pronouncements if you want to be a tyrant these days. If you have any doubts about this, read a few of the gems that have escaped from the lips of North Korean President Kim Jong Il, Iranian President Mahmoud Ahmadinejad or Venezuelan President Hugo Chavez. I emphasize their first names because they make everything so personal and we see and hear them so often that I feel like they must want to be friends in some perverse way.

Hugo has called President Bush the devil during a worthless diatribe to the United Nations, and Kim has threatened the United States, Japan, South Korea, and anyone else that questions his tyrannical, ego-maniacal nuclear ambitions. However, you will note he has not threatened China. This I point out as evidence that he may appear crazy, but he is not stupid!

Mahmoud, on the other hand, has threatened only a third of the world including, with no lack of emphasis, Israel. He has stated Iran has no compunctions about losing 250,000 of its own people in the process of a first strike. However, the fact that Israel has second strike capability and the figure could reach 25 million people has not made it into any of his speeches. The latter figure no doubt might test the limits of his list of willing martyrs.

While there is an outside chance that this is all bluster, I can assure you (having started this story while traveling in Jerusalem) that the Israelis are taking these comments very seriously and are not likely to sit around doing nothing forever. While the idea of Israel striking first would not be unprecedented, it would also raise the stakes in what would be the scariest of bad-boy games.

If Mahmoud backs the Israelis into a corner... well that might be the all time dumbest stunt ever and could be the opening scene for Jackass 3. My perception is that Mahmoud will continue to threaten with the intent of keeping his enemies and rivals off balance and unfortunately might guess wrong about the edge of sanity (never mind wisdom, we long ago passed that mark), where he appears to teeter back and forth.

Patience, patience, this story is about economics...

There are others that revel in their power including some on every continent, well maybe not Antarctica, but that is only because of a lack of people. Our own Secretary of Defense was doing more reveling three years ago but has decided to stop using childish football lingo and sports analogies. He has had many sobering experiences and (until a few days ago) hung on to his job by a fine thread tethered to a loyal and steadfast president.

All this rambling from our world leaders keeps bumping up against the "New World Order" which is not western lead or terrorist influenced, but global and chaotic. No one is more frustrated by this than the leaders of all these sovereign nations, be they presidents, tyrants, CEOs or movie moguls, often a difference without distinction.

What got me thinking about this now was an article I read in an international journal about Mahmoud where he called for a renewed and invigorated economic boycott, "blacklist," of Israeli companies and products, including investors and trading partners doing business with same. I am sure he meant what he said, but I am equally sure it would not be possible, times have changed. Even a partial boycott would hurt Iran more than Israel in our global economy.

For starters, the largest generic drug company in the world, Teva Pharmaceutical Industries Ltd (ADR) (NASDAQ:TEVA) is an Israeli company. They do exponentially more business outside of Israel than inside, and have integrated themselves into every economy with a GDP above ten cents. The list of partners, investors, collaborators, distributors, wholesalers, retailers and end users of Teva products is so large that Iran could not blacklist them all. And if they simply stopped importing their products it might create a black market for generic drugs -- raising their own costs.

Continuing along these lines Motorola, Nokia, LG, Samsung, Rim/Blackberry, and every other maker of cell phones in the world is doing business with Israel, in Israel, and most have established some level of R&D facilities in the country. So Mahmoud's next edict might as well be: throw away your cell phones and make your own. While you are at it, write your own software, design your own hardware, new processors and create a new independent computer industry because Microsoft, Intel, IBM, HP, SAP (a German company with Shai Agassi of Israel on its seven member executive board) and most others are doing business in Israel and have invested heavily, have R&D facilities and have Israeli partners and investors.

Globalization has made blacklisting (and probably our attempts at embargoes) silly and quite impossible. Iran would have to step back a few centuries to accomplish this in any meaningful way. Maybe that's the vision -- move backwards.

Aircraft, Internet, automobile, energy, agriculture, and every other industry have been globalized and Israel is part of this highly integrated world. Recently no less than Warren Buffett, Chairman of Berkshire Hathaway (NYSE:BRK.A), made his first foreign acquisition in Israel by purchasing Iscar, a metal parts manufacturer. Needless to say, Mahmoud intends on boycotting Berkshires multitude of companies and thousands of associated business partners.

I'm sure Mahmoud does not include sovereign nations or the blacklisting of trading partners when he spreads his venom, because that would include most of the known world starting with the USA, Europe, China, and India. While I have no documented proof, I have been told many times by many sources that various Arab countries are enjoying Israeli oranges and other products acquired through third parties, with a wink and a nod. Many of these countries feel more threatened by Iran than Israel. How's that for the law of unintended consequences?

Mahmoud is not alone. Consider our own president and his axis of evil comments, and desire to control world events with troops, sanctions, embargoes, and resolutions that are all to little avail. Even if I might agree with his sentiments, at times he has made little progress in convincing the rest of the world to join his cause(s). Studio chiefs cannot control their stars, Hewlett Packard can't control its own board, and so it goes. That is the world of globalization. You want to affect the world, make a good product, provide a good service, market the hell out of it, and listen to your customers. Then repeat the same as consistently as possible.

Its all about ideas and customer satisfaction, distribution and cooperation. The results of last Tuesday's election were not a reflection of conservative versus liberal values. They were a result of customer dissatisfaction. Globalization (and Internet growth) means old assumptions, alliances, and partnerships have less cohesiveness. The world is more fluid, things change fast. Mankind has survived through the ability to change and adapt. Businesses have learned this lesson and are still learning this lesson. Presidents, Tyrants, CEOs and Movie Moguls are much slower to learn. Those that cannot learn can be replaced.

Interested in reading more? Check out my other posts for BloggingStocks here.

Sheldon Liber is the CEO of a small private investment company and the vice president for Design and Research of an architecture & planning firm.

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Last updated: November 26, 2009: 08:32 PM

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