Used to send a weekly newsletter. To subscribe, email me at

Friday, August 03, 2007

International Herald Tribune Editorial - Notes about competition

International Herald Tribune Editorial - Notes about competition
Copyright by The International Herald Tribune
Published: August 2, 2007

If we were in any other business, a risky takeover of a powerful competitor might lead to celebration. Not in our business. Good journalism, which is an essential part of democracy, thrives on competition.

More than anything, competition makes our work better - more ambitious, more in-depth, more honest. When citizens are served by many responsible news outlets, they can make more informed judgments. That is why we are paying such anxious attention to Rupert Murdoch's purchase of Dow Jones & Company and its crown jewel, The Wall Street Journal.

As newspapers have contracted, or simply disappeared, news organizations like The New York Times, the International Herald Tribune and The Journal have not celebrated. We have mourned sharp reductions in national and foreign coverage by virtually every American newspaper. The exodus of American news organizations from Iraq, for example, means more exclusives from the war zone, but a healthy democracy demands as broad a view of the war as possible.

For years, The Journal has been the model of a responsible and challenging competitor, not just in business news but also in its investigative reporting and its coverage of politics, international affairs and culture. Just this year, The Journal won two Pulitzer prizes: for its reporting on business executives unfairly enriching themselves with backdated stock options; and for articles on the high social and environmental costs of China's unregulated rush into capitalism. Coverage like that drives us all to work harder and better.

The Times and The Journal have reported extensively about Murdoch's meddling in his media properties: How he reneged on his promise of editorial independence for the Times of London and how, to curry favor with China's leaders, his satellite broadcaster, Star TV, stopped carrying news from the BBC. Now, Murdoch has bought one of the greatest newspapers in the world, with one of the most sophisticated readerships in the world. Those readers will be watching for any sign that news coverage is being slanted to curry political or economic favor.

The best way for Murdoch to protect his $5 billion investment is to protect The Journal's editorial quality and integrity. That will mean continued high-quality competition for other news organizations. And that will be good news for all newspaper readers.

Chicago Sun-Times Editorial - JUST SAY NO TO BP

Chicago Sun-Times Editorial - JUST SAY NO TO BP - They think it's OK to pollute our water, so the best way to get the oil giant's attention is to hit it where it counts -- in the pocketbook
Copyright by The Chicago Sun-Times
August 3, 2007

If it takes a lawsuit to stop BP from putting more pollution into Lake Michigan, then by all means, Mr. Mayor, file one. If it takes cutting up BP credit cards and boycotting the company's gas stations -- as Ald. Edward Burke called for Thursday -- then let's cut the plastic and drive on by. Whatever we can do to save the lake from more contamination, we've got to do it.
Subjecting our source of drinking water to 54 percent more ammonia and 35 percent more sludge particles -- not to mention the two pounds of mercury BP already dumps a year -- is not something we should tolerate, even if it looks like Indiana handed BP its permits with a bow on top.

What's even more infuriating is a key reason the company gives for needing to dump more gunk into the lake. Although its Whiting refinery has 1,700 acres, BP says the company doesn't have space near the existing plant to add a treatment system to remove more ammonia -- even though it would take about a quarter of an acre. The company contends that it has vacant space but it's too far from the rest of the treatment plant and would affect reliability and efficiency.

We think BP needs to try. It's hard to believe a company that made $22.3 billion last year can't afford to come up with a more creative solution.

It's spending $3.8 billion to reconfigure the refinery and argues that the added pollution is still within legal limits and represents no threat to the aquatic environment or regional drinking supplies. Nevertheless, the plans have set off a firestorm of protest from environmental groups and officials from Illinois and other states who view any additional pollution as a reversal of years of efforts to clean up the lake. The protests haven't yet derailed the plans.
Mayor Daley is threatening to hit the company with a lawsuit, and Burke wants to hit the company in the pocketbook. Burke ordered city departments to cancel any BP credit cards, and he moved to cut off city bond business to three financial institutions whose directors have "interlocking relationships" with BP: Goldman Sachs, Bank of America and the Royal Bank of Scotland.

BP and Indiana officials have said that a bigger plant could remove more ammonia. BP now contends that it really wouldn't make much difference.

But Dick Lanyon, general superintendent of the Metropolitan Water Reclamation District of Greater Chicago, disagrees. If BP can meet pollution targets now, expanding the refinery doesn't necessarily mean it has to dump more pollution. It could spread its water treatment plant on two different parts of the Whiting refinery.

Indiana and federal officials, meanwhile, continue to insist that the permit does not violate the Clean Water Act. Daley responded by saying that might be true, but, "Come on, this is a different age. . . . This is 2007. We should do much better." We agree. We should do much better. We should not be backsliding on our defense of the lake.

All spans in Illinois to get new inspections

All spans in Illinois to get new inspections
By David Mendell and Azam Ahmed
Copyright © 2007, Chicago Tribune
11:14 PM CDT, August 2, 2007

Gov. Rod Blagojevich on Thursday ordered state inspectors to examine all bridges considered to be criticalas Illinois officials sought to assess the safety of its bridge network in the wake of the deadly collapse in Minneapolis.

But even as the governor took aggressive measures, structural engineers and bridge safety experts cautioned that there was no cause for panic—Illinois bridges are inspected regularly and tragedies such as the one in Minnesota are isolated incidents, often involving many factors.

"American bridges simply don't collapse of their own volition," said David Schulz, director of the Infrastructure Technology Institute at Northwestern University. "It's almost always a chain of low-probability events coming together. It takes a lot to bring these down.

"I don't worry about bridges," he said. "When we look at spectacular bridge failures, I think what you're going to find is that somebody did something that affected the bridge and that it wasn't the structure or the bridge itself."

Blagojevich acknowledged that Illinois regularly and vigorously inspects its bridges and that he undertook this measure as a precaution. He was among a slew of governors across the country who ordered new inspections. By Thursday evening, the federal government had alerted states to inspect spans similar to the Minneapolis bridge.

"While we have a rigorous inspection system that ensures the safety of our bridges in Illinois, a tragedy like this demands that we step up our efforts and do everything in our power to guarantee the safety of our bridge network," the governor said in a written statement.

Nearly 2,450, or 9.4 percent, of 26,000 bridges rated in Illinois were considered "structurally deficient," according to the Federal Highway Administration's National Bridge Inventory. Nationally, 12.4 percent of rated bridges fall in that category.

Illinois compiles a list of priority bridges based on a rating scale that uses various measures to assess safety and deterioration. The 1-to-100 scale is used to prioritize replacement or repair of bridges. The higher the rating, the better the condition. A rating of 80 or less means the bridge probably needs some rehabilitation. A rating of 50 or less means the bridge may need to be replaced.

At least three spans on the Skyway were rated structurally deficient, with ratings in the low 70s.

But engineers stress that when a bridge is structurally deficient, that does not mean it is unsafe for travel. It simply is no longer able to carry the load size for which it was designed. In response to a structurally deficient bridge, engineers will assess the damage and then determine new weight limits.

"A structurally deficient bridge is still perfectly safe to use for years and years and years, provided the limits are not overly stressed," Schulz said.

Inspectors from the Illinois Department of Transportation and the tollway will examine bridges that are similar to the truss-style Minnesota bridge, that are under construction or that carry high volumes over waterways, state officials said.

Those critical spans would be visually inspected for general structure alignment and anything out of the ordinary, officials said. Inspectors could pore over a truss-designed bridge for as long as a week, officials said.

Most of the dozen truss-style bridges are Downstate, including spans along Interstate Highway 74 near Peoria and several in the Metro East area, said Maria Kollias, an IDOT spokeswoman.But engineers also are looking at a highly trafficked bridge on the Bishop Ford Expressway near 130th Street because it has been deemed structurally deficient in past inspections, Kollias said.

Slowdowns through the Dan Ryan Expressway construction zone have put additional vehicles on the Bishop Ford bridge recently, she added.

But overall, "there is not a reason for people to be worried about driving in their vehicles," Kollias said. "We have done our inspections."

Bridges are designed to carry twice their stated weight capacity, said Richard Hughes, an engineering consultant based in Pennsylvania. Another way bridges deteriorate is through wear and tear from the weather, he said.

Given the vast fluctuations in weather in places such as Minnesota and Illinois, thermal expansion can prove detrimental to bridges. From below-zero to the mid-90s, a bridge can expand by as much as 3 feet as it heats up, Hughes said.

During the winter, sand and salt get into areas that allow the bridge to stretch, and the resulting rust can lock them into position. When the bridges heat up there is insufficient flexibility, which can lead to a collapse, Hughes said.

Weather-related damage can be difficult to detect, he added.

"You could be looking at the [area] on that bridge and think, 'It looks all right,' but if it's locked up somehow, how would you know?" Hughes asked.

Though visual inspections of bridges are necessary and important, they are not adequate for all structures, said Farhad Ansari, professor and head of civil engineering at the University of Illinois at Chicago.

More complicated structures, such as the truss-style bridge in Minneapolis, older bridges and very heavily traveled ones should also be equipped with electronic sensors and computers to accurately monitor movement and vibration, said Ansari, who made that point in a 2003 report for IDOT.

The cost of installing sensors can range from $50,000 to $200,000 per bridge, and states have done little to install such monitoring equipment, mainly because of limited infrastructure funding, Ansari said.

In Springfield, the Minnesota bridge collapse sparked outraged legislators from both parties to call for quick action on long-stalled construction projects in need of funding throughout the state, including potential bridge repairs.

Blagojevich has been unable to win approval of a capital project plan because legislators have not trusted the governor to be impartial in the way he distributes the money.

Further complicating the matter is regional politics that are always in flux. Illinois is a state where Downstaters compete for transportation dollars to keep community infrastructures and long miles of open highways up to date.

It was uncertain Thursday whether there would be additional costs from the immediate inspections. But officials said inspectors will take their new mission seriously.

How Pakistan is being lost

How Pakistan is being lost
By David Gardner
Copyright The Financial Times Limited 2007
Published: August 2 2007 19:34 | Last updated: August 2 2007 19:34

For a good while now it has been hard to see what the point of General Pervez Musharraf is.

When he took power in a bloodless coup eight years ago, many Pakistanis dared to hope for an end to decades of misrule, by civilians as well as generals, that had bankrupted the country and buckled its institutions.

Pakistan’s allies and adversaries, tut-tutting on cue about the vulgar anachronism of a military coup, were privately relieved that a newly nuclear-armed state, which had just fought a small war in the Himalayas with arch-rival India, was in the grip of an officer with an ostensibly modernist outlook: a whisky liberal in an Islamic republic, an admirer of Ataturk, father of secularist Turkey, as much as of Mohammed Ali Jinnah, revered founder of Pakistan.

How naive that all seems now.

True, those who hoped or believed in Gen Musharraf seemed vindicated when he threw his weight behind the US after the al-Qaeda attacks of September 11 2001. As the manager of an initially civilian team, moreover, the general secured some positive change, such as fiscal reform and privatisation, for a rickety economy.

But it was nothing like enough and only now is its price becoming clear.

The general had the chance to relay the foundations of stability and democratic rule. He constantly told visitors to his Army House residence in Rawalpindi that he would restore democracy as soon as he had put in place the accountability essential for it to work – accountability so foreign to the neo-feudal elites who had lorded it over Pakistani politics. Whereas previous military regimes had merely superimposed martial law on civilian rule, leaving its weak structures intact, he aimed to change them. This he has indeed done: but in a way that seeks to institutionalise and prolong his supremacy, which he appears to regard as consubstantial with the national interest. Gen Musharraf’s whole purpose has been to cling to power, civil and military.

A master tactician, he has managed to convince Washington that only he can deliver up the al-Qaeda cadres Pakistani security episodically kills or captures; that only he, survivor of two near-miss attempts on his life, can prevent the country falling to the jihadis; that it is he who must stay at the head of the army, Pakistan’s last working institution, to banish the spectre of mullahs with nukes.

The US has provided roughly $10bn in aid since 9/11, along with new F-16 fighter jets, while tacitly endorsing Gen Musharraf’s double-hatted but unconstitutional role as president and army chief of staff. Only now is the Bush administration beginning to figure out the cost of its Pakistani strongman’s terrible trade-offs.

Inside the army, Gen Musharraf has bought off some generals with sinecures, but secured the support of others by letting them abet jihad – in Afghanistan through the resurgent Taliban and in Kashmir, the divided, mainly Muslim territory at the heart of Pakistan’s warring with India. Some Pakistani officers, especially in ISI military intelligence, have long believed in the need for “strategic depth” in Afghanistan as part of the primordial contest with India, as well as licensing a few thousand jihadis in Kashmir to hold down up to half a million Indian troops there.

These tactics have willy-nilly given the jihadis a run of territory from Kashmir to the Hindu Kush. But Gen Musharraf’s approach to domestic politics has been equally disastrous.

His methodical marginalisation of the country’s mainstream parties – the Pakistan People’s party of Benazir Bhutto and the Pakistan Muslim League faction led by Nawaz Sharif – has forced him into alliance with the religious right. Before the rigged 2002 elections, support for Islamist parties had never made it into double figures. Now, they swagger across the national stage, Talibanising the country.

Gen Musharraf is leading Pakistan back to the coup 30 years ago by General Mohammed Zia ul-Haq that first set the country on an Islamist course under military tutelage. His success in blocking Pakistan’s political mainstream has given force to the violent Islamist tributaries.

Six months ago, the Bush administration sent Dick Cheney to Islamabad as evidence mounted that al-Qaeda had rebuilt its command and training structures in Pakistan’s tribal areas, with whose leaders Gen Musharraf had concluded a truce.

It is, as not only Musharraf loyalists point out, sickeningly rich that Mr Cheney, the vice-president who after 9/11 pushed so hard to go after Saddam Hussein rather than finish off Osama bin Laden, should be lecturing anyone about the international jihadism he and his superficially muscular policies have done so much to proliferate. It is also fair to say Pakistan is still struggling with the “blowback” from the anti-Soviet jihad the US sponsored in Afghanistan during the 1980s.

But Gen Musharraf has made this worse. It is no longer an exaggeration to say Pakistan risks state failure.

Its federation is fraying at the edges. The tribal areas are in revolt. In the North-West Frontier province Pashtun nationalism is fusing with Islamism. The crushing of opposition in resource-rich but dirt-poor Balochistan in order to favour pro-Taliban allies has rekindled a nationalist insurgency. Reliance on gangster-politicians in Sindh is reviving ethno-sectarian conflict.

But some of Gen Musharraf’s manoeuvres may offer opportunities. He has been praised for bloodily evicting jihadis from the Red Mosque in Islamabad last month – though had he acted when they started this challenge to the state in January there might have been fewer dead, and perhaps fewer reprisal bombings.

Yet the jihadi onslaught, and his February blunder in sacking the chief justice, Iftikhar Mohammed Chaudhry, now reinstated by the Supreme Court, is pushing him to seek alliances with, for example, Ms Bhutto, whom he met in Abu Dhabi last week. He faces a renascent civil society, improbably regrouped around the hitherto supine judiciary, as well as the wrath of the jihadis after the Red Mosque assault. He needs allies. The problem is he seems to want to keep his uniform and president’s sash even more, and is angling for a deal with Ms Bhutto that would allow that.

What Pakistan needs is to postpone this parliament’s selection of a president – due to start next month – until a new assembly is fairly elected in open political contest.

Yes, the Benazir Bhutto and Nawaz Sharif governments were venal and incompetent. They temporised with the army and jihadis. But Pakistan needs their supporters to build a democratic bloc against Islamist extremism, so that nation-building can begin anew. It may not work but it looks a better bet than this too-clever-by-half generalissimo.

Democrats’ frustrated Congress

Democrats’ frustrated Congress
By Norm Ornstein
Copyright The Financial Times Limited 2007
Published: August 2 2007 19:51 | Last updated: August 2 2007 19:51

When the Democrats captured Congress in November 2006, after 12 long years in the minority, they were ebullient. The victory followed an uphill battle in the 435-seat House of Representatives, where the benefits of incumbency and a historical Republican money advantage made a 15-seat gain seem unachievable. Securing a Senate majority seemed even more improbable.

For Democrats, the campaign recipe was simple: repeat a three-part mantra – Iraq, the do-nothing Congress and the culture of corruption. It worked. They gained 30 seats in the House and six in the Senate, a landslide by modern standards. But seven months on, the ebullience is gone. Public approval of Congress, which rose after nearing historic lows at the mid-term elections, is now back at sewer level. A Gallup poll gave Congress 66 per cent disapproval ratings, worse than the 65 per cent disapproval for President George W. Bush in a Washington Post/ABC poll.

Republicans are still viewed harshly, but Democrats are not seen as much better. The do-nothing Congress charge is back, this time proclaimed by Republicans who show no visible discomfort at their hypocrisy after their own reign of inaction. Ditto their complaints of Democrats’ insensitivity to ethical standards, which follow the indictment on bribery charges of a prominent House Democrat, William Jefferson, and the complaint by an even more prominent Democrat, John Murtha, that ethics reform is “pure crap”.

The do-nothing Congress rap has stuck because of a bad first impression. On Iraq, the Democrats’ promise to change the Bush policy was stymied by their inability to settle on a strategy that could work, given internal disagreements and the fact that Congress has limited ability to check a commander-in-chief during wartime except through blunt instruments, such as cutting troop funds. Democratic uncertainty on Iraq gave Republicans an opening to unite – not necessarily backing an unpopular war, but squaring up to a divided and wavering opposition.

On the domestic front, a fast start by Democrats in the House, passing six measures in the first week of their rule, including an increase in the minimum wage and expanded embryonic stem cell research, was negated by a slow and indifferent response in the Senate – an endemic congressional pattern set by the different rules in the two chambers. It was exacerbated by the minority party’s ultra-aggressive use of the filibuster to block both major and minor legislation. For voters not sensitive to institutional nuance it was simply ballyhooed promises that seemed to go nowhere fast. Democrats did get stem cells through Congress – but could not overcome a presidential veto.

Mr Bush has been a problem for the Democratic Congress – ironically, more because he is weak than strong. In divided government both parties need the other to get anything done. Opportunities for action flourish when a president wants or needs a legacy and a Congress wants accomplishments. But a deeply weakened, lame duck president, whose approval ratings rival Richard Nixon at his lowest point, has had no political capital to influence Republican lawmakers to join in any deals with Democrats. Thus, on Mr Bush’s top domestic priority, immigration reform, he could command only 12 of 49 Republican senators and saw his bill go down in flames. On other issues where the president might be tempted towards bipartisanship, his need to rally his own base has led him towards veto rather than co-operation.

A Congress lasts for two years before it is judged at the polls, making the legislative process more like a marathon than a sprint. In the past month, as the August recess has neared, Democrats have picked up their pace. In a flurry, the House passed virtually all the spending bills for a fiscal year that does not begin until October, passed a major ethics and lobbying reform package, expanded health insurance for children, passed a major water projects bill, a long-awaited farm bill, an energy bill and moved towards a rewrite of the Foreign Intelligence Surveillance Act. The Senate, as usual, lagged behind on several of the measures.

Looking at the numbers, the 110th Congress has far outdistanced its predecessors in days and hours in session, votes, hearings and investigations. It is moving toward a respectable record on domestic reforms. But its inability to do much to change course in Iraq, combined with the weakness of the president and a general public distemper, leave voters still far from a thumbs-up.

The writer is co-author, with Thomas Mann, of The Broken Branch: How Congress is Failing America and How to Get it Back on Track

Subprime blues sound familiar

Subprime blues sound familiar
By Desmond Lachman
Copyright The Financial Times Limited 2007
Published: August 2 2007 19:34 | Last updated: August 2 2007 19:34

The rapid unravelling of the US subprime mortgage market reminds us of the adage that history repeats itself: many of the sad excesses of today’s subprime market are but an echo of the costly savings and loan crisis of the early 1980s. Perhaps history will have taught the American taxpayer to resist vigorously picking up the bill, which this time around could prove even more costly than the earlier S&L meltdown.

At the heart of today’s subprime crisis is the unfortunate interaction of financial innovation gone awry, inept market regulation and a failure of the rating agencies to exercise their fiduciary responsibility to protect the average investor.

It began with the increased securitisation of mortgage market loans in the late 1990s. This increasingly separated the originator of mortgage loans from their final outcome. It also gave the originator every incentive to push out mortgage loans at an increasing pace without regard for how they would perform over the longer term.

Two further financial market innovations have played important roles. The first was the increased use of collateralised debt obligations, which allowed AAA ratings to be obtained for the larger part of subprime mortgage loan pools, thereby substantially expanding the participation in this market to pension funds and insurance companies.

The second was the introduction of financial market instruments such as adjustable rate mortgage loans or negative amortisation loans. These instruments, which were introduced with the encouragement of the Federal Reserve, allowed very much less creditworthy borrowers to qualify for mortgage financing for the first time.

Financial market innovation alone could not have spawned the phenomenal growth in the subprime market. Rather, what was needed was for both federal and state regulators, including the Federal Reserve, to be asleep at the wheel as loans totalling $1,300bn were issued – the equivalent of 10 per cent of US gross domestic product.

Like today’s subprime crisis, the S&L meltdown of the 1980s also had its origins in financial market innovation and poor regulation. Towards the end of the Carter administration, the balance sheets of savings and loans – the US equivalent of building societies – came under severe pressure from higher interest rates. Congress then substantially loosened S&L lending standards and allowed them to diversify into riskier and very much more profitable commercial real estate lending. At the same time, federally backed deposit insurance at these institutions was raised from $40,000 to $100,000. Not only did this trigger a rush of money into the S&Ls, it also further encouraged the S&Ls to increase risk taking.

Compounding the S&L crisis was the considerable loosening of regulatory standards. In particular, the S&Ls were given the option of choosing whether they were to be state or federally regulated. Predictably, this encouraged many states, which stood to earn large fees from registering S&Ls, to enter a race to the bottom by offering ever more lax supervisory regimes.

A cautionary lesson to be learnt from the S&L crisis is how official estimates of its scale were repeatedly ratcheted up and how in the end it was the taxpayer who got stuck with the bill. Initially, the cost was put at some $50bn. However, when the dust settled, it turned out that the federal bail-out of the S&Ls cost the taxpayer some $150bn.

Last week, after previously downplaying the fallout from the subprime mortgage lending crisis, Fed chairman Ben Bernanke finally admitted that losses to the financial system could total up to $100bn. If experience is any guide, this estimate will also prove to be on the low side. One only need contemplate that subprime and Alt-A loans (those made to people with only somewhat better creditworthiness than subprime borrowers) might in the end have to be written down on average by 10 per cent to arrive at a total cost of the crisis more in the order of $250bn. Were that to turn out to be the case, today’s subprime lending crisis would be of a similar magnitude to that of the S&Ls, even in real dollar terms.

As the subprime mortgage market was vigorously expanding, many of its financial market proponents argued that the securitisation of those loans healthily spread the risk of such lending among many market participants. Now that the bottom is falling out of this market, it is important that the financial institutions, which stood most to gain from that lending, rather than the taxpayer, foot the bill.

The writer is a resident fellow at the American Enterprise Institute

Clinton backs ‘ambiguity’ on Taiwan policy

Clinton backs ‘ambiguity’ on Taiwan policy
By Demetri Sevastopulo and Andrew Ward in Washington
Copyright The Financial Times Limited 2007
Published: August 3 2007 01:28 | Last updated: August 3 2007 01:28

Hillary Clinton, the frontrunner for the Democratic presidential nomination, on Thursday said she supported the US policy of maintaining “ambiguity” over whether Washington would defend Taiwan in a conflict with China.

The New York senator was responding to Michael Swaine, a China expert at the Carnegie Endowment for International Peace, who claimed she previously expressed doubt that the US would defend Taiwan.

The US is required to help Taiwan defend itself under the Taiwan Relations Act. But successive US administrations have generally sought to maintain a policy of ambiguity over whether the US would actually defend Taiwan in case of war.

In a video interview with Foreign Policy magazine posted on its website (download mp3 audio transcript of the video), Mr Swaine said: ”I talked to Hillary Clinton a couple of years ago…She said ’oh, the United States government, the people of the United States would never go to war over Taiwan’.”

Philippe Reines, spokesman for Mrs Clinton, said that was not an “accurate reflection” of her position.

“Senator Clinton has been a clear and consistent supporter of the longstanding US policy of strategic ambiguity regarding the US response to a military conflict between China and Taiwan,” Mr Reines said.

Mr Swaine on Thursday declined to comment. Foreign Policy later removed the video from its website. Mr Reines said his office had not requested the removal. A spokesman for Carnegie, which owns Foreign Policy magazine, said it was removed because the comments were part of a private conservation.

Michael Green, a former senior Asia adviser to President George W. Bush, said he doubted Mrs Clinton advocated the position outlined by Mr Swaine.

“If any candidate said they would not stand by the Taiwan Relations Act, it would be a major change of policy, and a major retreat in the face of an enormous Chinese arms build up,” Mr Green said.

Mr Swaine’s claim comes at a sensitive moment for Mrs Clinton as she tussles with Barack Obama, her main rival for the Democratic presidential nomination, over foreign policy.

Mrs Clinton has sought to portray Mr Obama, a first-term senator for Illinois, as naive and weak while trumpeting her greater foreign policy experience.

The spat continued on Wednesday after Mr Obama ruled out the use of nuclear weapons to fight terrorism in Afghanistan and Pakistan “in any circumstances” if he was elected president.

Mrs Clinton said presidents needed to be “very careful” about discussing hypothetical use of military force.

“I don’t believe that any president should make any blanket statements with respect to the use or the non-use of nuclear weapons,” she said.

Earlier in the week, Mr Obama said he would be prepared to take military action against terrorists in Pakistan with or without approval from Islamabad - a remark that appeared aimed at demonstrating his willingness to take tough foreign policy decisions.

But this too drew criticism from Mrs Clinton, who said US military strategy “should not be telegraphed or discussed for obvious reasons”.

The claims by Mr Swaine also come as Washington grows increasingly frustrated with Chen Shui-bian, the Taiwanese president, who recently vowed to hold a referendum to gain support for a push for Taiwan’s membership in the UN under its own name.

Ralph Cossa, an Asia expert at the Center for Strategic and International Studies, said US policy on Taiwan has been designed to prevent either Beijing or Taipei from upsetting the status quo because of a misreading of US intentions.

“You don’t want China convinced that we won’t respond, but you don’t want Taiwan convinced that we will,” said Mr Cossa.

Peter Rodman, a former senior Bush administration Pentagon official now at the Brookings Institution, declined to comment on the politics of the presidential campaign, but stressed that Washington needed to ensure its deterrence was as unambiguous as possible to ensure China did not get the wrong message.

Bridge collapse highlights ageing infrastructure

Bridge collapse highlights ageing infrastructure
By Andrew Ward in Washington
Copyright The Financial Times Limited 2007
Published: August 2 2007 08:30 | Last updated: August 2 2007 20:45

Wednesday’s deadly collapse of a busy road bridge over the Mississippi river in Minneapolis has focused attention on the state of ageing US transportation infrastructure.

At least four people were killed and as many as 30 people were missing after the eight-lane bridge disintegrated during the evening rush hour.

Police divers on Thursday were searching for victims in vehicles that fell up to 60ft into the Mississippi, many of them crushed beneath fallen concrete. A school bus carrying 50 children narrowly escaped the disaster, having crossed the bridge seconds before its collapse.

The White House acknowledged that an inspection of the bridge two years ago had found structural deficiencies but said there had been no indication of immediate danger.

The disaster appeared certain to intensify calls for increased investment in US transportation infrastructure as it comes under strain from rising levels of traffic.

Until this week, attention had been focused mostly on the capacity shortages that have caused freight bottlenecks on US roads, railways and docks over recent years.

But the Minneapolis bridge collapse has shifted the spotlight to the public safety implications of failures in transportation infrastructure. Speaking at a conference on infrastructure finance on Thursday, Jeffrey Shane, US undersecretary of transportation, said the country was facing “an intolerable decline in [transportation] system performance in the form of travel delays and unreliability”.

“Deteriorating performance in the nation’s surface transportation infrastructure is acute and widespread, and it affects both passenger travel and freight movement,” he said, without mentioning the bridge collapse.

Joseph Schofer, professor of civil and environmental engineering at Northwestern University in Chicago, said the disaster highlighted the need for greater inspection of public infrastructure. But the rarity of such events indicated that structural weaknesses were not widespread, he added.

“This is big news because bridges do not collapse very often in the US or other developed countries,” said Mr Schofer.“Our infrastructure is in pretty good shape.”

An inspection in 2005 gave the 40-year-old bridge a rating of 50 on a scale of 120 for structural stability – a score that indicated a possible need for replacement.

The Short View: Fed’s priority

The Short View: Fed’s priority
By John Authers, Investment Editor
Copyright The Financial Times Limited 2007
Published: August 2 2007 18:25 | Last updated: August 2 2007 18:25

Markets are generating enough uncertainty of their own, but they now face external events that could stoke up volatility. Friday brings US non-farm payrolls, which almost always provoke a market overreaction. On Tuesday, the Federal Open Market Committee meets for the first time since world credit markets started to tumble. The FOMC’s statement also regularly provokes a wild overreaction.

Nobody expects the Fed to change the Funds rate next week. It will stay at 5.25 per cent. But the market does now believe the Fed will cut rates by the end of the year. Fed Funds futures put the chance of a cut to 5 per cent by January at almost 100 per cent.

Meanwhile, the market seems unconcerned about inflation. Treasury inflation-protected securities imply an inflation rate of 2.09 per cent over the next five years. This has fallen in recent weeks.

But a more benign view of inflation is unlikely on its own to induce the Fed to cut. That would require evidence of rising unemployment, which the payroll data may not provide.

Rather, the most likely cause for a cut would be to bail out the market from its subprime problems, as Alan Greenspan did with two rate cuts in the wake of the Long-Term Capital Management crisis in 1998.

The Fed may start preparing the way for a cut next week. But that seems unlikely.

A better guess is that it will follow a template set yesterday by Jean-Claude Trichet, president of the European Central Bank. The ECB made it clear it remained hawkish on inflation. As for the turmoil in the markets, it said it “deserved attention”, but that it signified a “process of normalisation”.

The message was that the ECB was worried by the markets, but for the time being felt the process would not be harmful, and that the fight against inflation should still take priority.

It may disappoint the markets, but the Fed’s message may be much the same.

Buy-out deals may be on hold for months

Buy-out deals may be on hold for months
By Peter Thal Larsen in London
Copyright The Financial Times Limited 2007
Published: August 2 2007 22:08 | Last updated: August 2 2007 22:08

Leading bankers on Thursday moved to calm the global markets even as they admitted that the shockwaves from of the US subprime collapse could put private equity deals on hold for the next few months.

Shares in European and US banks have slumped in the past week as investors have fretted about their exposure to subprime-related losses as well as leveraged loans stuck on their balance sheets. Analysts estimate large banks have underwritten loans worth $300bn to finance deals not yet been completed.

Bob Diamond, Barclays president, on Thursday predicted the consequences of the subprime collapse could take more than a year to be resolved. However, he said the leveraged loan market should recover more quickly: “We would expect at some point over the next two to three months to see that market at more normal volume levels.”

Brady Dougan, chief executive of Credit Suisse, said: “There has been a back-up in pricing and probably in August it will be a bit quieter . . . our hope is that the market will begin to operate more normally in the short term.”

However, institutions with direct exposure to the subprime market continue to suffer. Shares in IKB plunged by 40 per cent on Thursday following a government-led bail-out of the German lender, which warned this week of heavy losses in a fund it managed. IKB faces further questions after it emerged that Germany’s financial regulator first learnt about the problems from Josef Ackermann, chief executive of Deutsche Bank, rather than from the lender itself.

AXA Investment Managers, the investment arm of the French insurer, also fell victim to the subprime fallout when it took the almost unprecedented step of bailing out investors in two of its US funds after they suffered losses on subprime mortgages.

However, credit markets in the US and Europe rebounded slightly after banks took a loss to complete the sale of $8bn in loans for the financing arm of Chrysler, the carmaker. The loans were sold at a discounted 95 cents on the dollar, meaning the banks were forced to take some losses relating to the deal. However, after the sale, the loans traded as high as 98 cents in the secondary market.

Additional reporting by Ivar Simensen in Frankfurt, Jane Croft, Kate Burgess and Lucy Warwick-Ching in London and Saskia Scholtes in New York

Thursday, August 02, 2007

SMART INVESTING - Dollar-cost averaging keeps investors in market

SMART INVESTING - Dollar-cost averaging keeps investors in market
Copyright © 2007, Chicago Tribune and The Associated Press
August 2, 2007

NEW YORK - With the stock market resembling more bronco than bull recently, investors accustomed to a steadier ride might be tempted to step aside and wait for calm to return.

But the stock market's mostly smooth run in the past year was a break from more normal levels of turbulence. So if volatility begins to visit Wall Street more regularly, some investors looking to get into the market might consider a strategy known as dollar-cost averaging. It's designed to let investors wade into an investment gradually, without the risk of making one lump-sum investment.

Investors planning to buy a stock, for example, would determine a schedule and then invest the same amount each time, regardless of the share price.

The fixed contributions are meant to help investors look past fluctuations in the market. And while the stock market's recent tremors likely caused a good amount of investor angst, those who let emotions dictate their investment decisions could ultimately be left feeling the biggest regret.

"Dollar-cost averaging sort of helps work against human nature, those emotions of greed and fear. Greed and fear are your worst enemies in the market," said Tim Krause, director of risk management at Zecco Trading, an online brokerage.

Financial advisers often counsel investors to maintain a diversified portfolio and remember that stocks generally work best as long-term investments.

Adam Bold, chief investment officer of The Mutual Fund Store, an investment management company, contends investors who sell because of a sudden market movement are often doing themselves harm.

"They say 'When the markets look good then I'm going to put the money back in.' The problem is the markets never look good," he said, noting that Wall Street either recovers and makes it more expensive for the investor to jump back in or it moves down and makes hesitant investors likely to miss a market bottom.

"What ends up happening is they never get reinvested. It's too subjective and too difficult," he said, referring to forecasting the market's day-to-day moves. "You're much better off to set your schedule and stick to it."

So for investors who determine they acted hastily in taking their money off the table, dipping their toes in the market with incremental investments might help allay concerns about short-term movements.

"If you put a chunk in and things go up then you're happy because you got a portion of your money in and if things go down then you have some of your powder dry for when prices go lower," said Bold.

While the merits of dollar-cost averaging can stir debate among investors, one of its pluses is that it relies on the widely praised idea of making regular contributions.

"The academic literature has been against it historically, but most of these studies were done in a rising market so naturally it would've been greater," said Krause, referring to the returns seen from putting a lump sum in the markets compared with gradually adding money.

Investors who make regular contributions, such as through a 401(k) plan, have both time and compounding interest on their side and are likely to see their returns outpace those of less disciplined investors or even those who make bigger contributions but over a shorter time period, research has shown.

Krause noted, however, that many investors simply don't have a big chunk of money to put into an investment.

"The main benefit to me is that most of us aren't very good at market timing. It reduces peoples' fears at times like these when the temptation is just to dump everything. At least you know if you're averaging in, over the long haul you're going to achieve a beneficial average price," Krause said.

The Pain Moves Beyond Subprime - The debt and leveraged-buyout markets have stalled, and more trouble lies ahead

The Credit Mess
The Pain Moves Beyond Subprime - The debt and leveraged-buyout markets have stalled, and more trouble lies ahead
by Matthew Goldstein and David Henry
Copyright by Business Week
August 2, 2007, 12:01AM EST text size: TT

The flu in the financial sector has sapped the U.S. stock market of more than $200 billion since the start of the year. The question on investors' minds is: How far will it spread?

On July 31 the stock market resumed a downdraft that had begun a week earlier, and once again bad news from a financial company triggered the sell-off. Shares of American Home Mortgage Investment (AHM) plunged 88% after the Melville (N.Y.) lender to homeowners with decent credit histories warned that it's facing serious liquidity issues and may be forced to close. For the year, the widely followed KBW Bank Index of the 24 largest lenders has fallen 10%, caused mostly by the meltdown in the subprime mortgage industry. And because financial shares make up 20% of the Standard & Poor's 500-stock index—its biggest component—the pain has spread. Without them, the S&P would have been up 5.6% in 2007 through July instead of the 2.6% it logged.

Yet as challenging as conditions have gotten for financial-services firms, signs point to even more trouble in the months ahead—trouble that may continue to weigh on the broader equity market.
Financing at Risk

Subprime woes have moved far beyond the mortgage industry. Already, at least five hedge funds have blown up. The latest worry is that a recent slump in the markets for corporate loans and junk bonds will deepen, jeopardizing the financing of leveraged buyouts, a big profit driver for investment banks. What's more, fears are growing that banks may be on the hook for some of the $300 billion in loan commitments they've made for buyouts already in the pipeline. The mood has gone so somber that derivatives traders are betting that bonds issued by major investment banks will tumble to near junk territory. Goldman Sachs Group (GS) and Lehman Brothers (LEH) are being seen as no more creditworthy than casino operator Caesars Entertainment, according to an analysis of derivatives trades by Moody's Credit Strategies Group.

The situation probably isn't that bleak for the nation's biggest investment banks and brokers. The major rating agencies, Moody's Investors Service (MCO) and Standard & Poor's (which, like BusinessWeek, is a unit of The McGraw-Hill Companies (MHP)), are sticking with their credit ratings for most financial institutions. Peter Nerby, a Moody's senior vice-president, says investment firms are good at managing risk and have ample resources to endure. "The key to risk management is avoiding body blows and big shocks, and that means staying very liquid," he says.

Even so, dark clouds loom over Wall Street. Nearly two dozen major financings for pending deals have stalled out, including already postponed issues for the buyouts of Chrysler Group (DCX) and General Motors' Allison Transmission (GM).
Falling Victim to the Turmoil

Wall Street is banking on the credit market improving in September after big institutional investors return from summer vacations. But that's hardly a given. Says Martin Fridson, CEO of Fridson­Vision, a high-yield-debt research firm: "Investment bankers and [private equity] sponsors say: 'Once we get past Labor Day, everything is going to be fine. We just need time for everyone to cool off a little bit, and then we'll be back in business.'" But given the new problems in the markets, he adds, "you can't have great confidence in that."

If debt investors remain wary, banks may have no choice but to reprice loans and junk bonds at higher interest rates—and eat the difference. Deutsche Bank (DB) analyst Michael Mayo estimates that lenders could lose as much as $6 billion for this reason alone.

There's a good chance that some pending buyouts simply won't get done, analysts say. That would be bad for investment banks for another reason: They collect their mergers-and-acquisitions advisory fees only after deals are completed. In the first half of 2007, private equity firms paid a record $9.6 billion in investment banking fees, a 35% jump over the first six months of 2006, according to M&A tracker Dealogic. Now, Wall Street firms are facing the prospect of some of those revenues drying up. Says analyst Brad Hintz of Sanford C. Bernstein: "The Street faces an earnings headwind as it enters the second half of 2007."

The turmoil in the credit markets, meanwhile, is likely to continue to claim new hedge fund victims both in the U.S. and overseas. Two big Bear Stearns (BSC) hedge funds imploded in June, and a third ran into trouble in late July. Meanwhile, the $11 billion Raptor Global Fund, managed by James Pallotta, posted a one-month loss of 9%, while two hedge funds run by Australia's Macquarie Bank were off 25% this year. And Sowood Capital Management is throwing in the towel. The onetime $3 billion fund lost nearly half its value in recent months after making bad bets on "credit spreads"—the difference between the yields on Treasurys and corporate debt.
'Too Much Liquidity'

The ultimate worry is that the trouble in the junk-debt markets will spread to the traditional corporate bond market and create a full-fledged credit crunch that would threaten the economy. That scenario may be unfolding. Issuance of investment-grade corporate bonds fell 72% in July from June's level and 34% from July, 2006, according to Dealogic. And some say the subprime-mortgage and leveraged-loan markets are harbingers of wider credit troubles. Greg Jensen, co-chief investment officer for money-management firm Bridgewater Associates, wrote in a July 31 client note: "Both problems are just the symptoms of…a significant financial fragility built on too much liquidity for too many years." Adds Leslie Rahl, president of Capital Market Risk Advisors in New York and former co-head of Citibank's (C) derivatives group: "Nothing stays rosy forever. We've been in a rosy world, with credit spreads at historically tight levels for some time now. But we seem to be leaving it."

The blowup at American Home is a reminder that the mortgage market remains a major threat as well. American Home's customers, after all, were borrowers with generally good credit histories—an indication that the mortgage mess is no longer confined to risky subprime borrowers. Through the rest of this year and into next, a raft of adjustable-rate mortgages will begin adjusting to higher interest rates. The higher monthly payments could squeeze even borrowers with good credit histories, leading to a new round of mortgage defaults.

All this could mean more pain for the financial sector—and for the broader stock market. Warns Bradley Golding, a managing director at Christofferson, Robb & Co., a money manager that invests in bonds: "The stock market has not caught up to the severity of the situation."

Goldstein is an associate editor at BusinessWeek, covering hedge funds and finance. Henry is a senior writer at BusinessWeek. With Aaron Pressman in Boston.

Four safe and smart strategies—and one riskier play for the truly bearish—for investors who expect the worst

The 2007 Bunker Portfolio
Four safe and smart strategies—and one riskier play for the truly bearish—for investors who expect the worst
by Ben Steverman
Copyright by Business Week
August 2, 2007, 7:45PM EST

No one really knows where the stock market is going. Is the late-July plunge in stock indexes a momentary blip, or a sign of worse things to come? Will credit troubles and the ever-lower housing market do in the rest of the economy?

One thing is clear: Markets have entered a period of wild volatility. Indexes hit record highs and a week later fell almost 4% in two days.

"That is a sign the market is changing," says Hossein Kazemi, finance professor at the University of Massachusetts at Amherst. "There is a divergence of opinion" among investors, he says.

For this Five for the Money, we look at what investors can do to prepare for the worst. We call it our Bunker Portfolio. Feel free to compare this with last summer's edition, when the big worry was tension in the Middle East (see, 7/17/06, "The Bunker Portfolio").

Before we lay out a few strategies, though, some warnings courtesy of the financial advisors we consulted for this story:

Risk is part of investing. If you're investing for the long term, don't get spooked just because of a little bad news. You can miss out on a lot of upside if, as often happens, the worst fears aren't realized. Also, don't make any sudden moves you will regret. If you switch strategies too often, trading costs may eat up your returns.

If, however, you're going to need to cash in your investments soon—for retirement, tuitions, or a home purchase—it makes sense to keep your money in a safe place. As Austin (Tex.) planner Morgan Stone points out, a market crash just before you need the money would be disastrous.

Also, if you really believe stock prices have peaked and the economy is facing a world of hurt, a safer investment strategy just might help you sleep better at night.

Whatever happens, here are five ways to help your hard-earned cash survive downturns and disruptions. We start with the most conservative—some might say boring— strategies and move on to riskier ways to prosper if things get dire.

1. Cash

If you're really worried, "there is no shame in being in cash," Kazemi says. With cash you'll lose out on big returns, but you won't lose any of your principal.

If you do cash out of other investments, there are better places to put the money than burying it in the backyard. Money-market funds provide an entirely safe spot to park cash while still getting a decent return. Marshall Groom, a financial advisor based in Richmond, Va., recommends the Vanguard Prime Money Market (VMMXX) fund. Another risk-free option is bank certificates of deposit, which are insured (up to $100,000 at any one bank) by the federal government. CDs, however, lock up your money for a period of time, often at least six months.

Advisors recommend that you have at least some of your portfolio in cash at all times. Cash worth at least three or four months of expenses can help out mightily in an emergency.

Kazemi suggests the extremely cautious investor might wait on the sidelines in cash until October, when the ride might be a little less wild.

2. Bonds

The safest investment out there may be government bonds. Yes, prices can fall, but you're guaranteed a certain return if you hold the bonds until maturity. TIPS bonds are guaranteed to beat inflation, which can sap your portfolio's buying power. If things get bad, an interest rate cut by the Federal Reserve might boost bond prices.

Until recently, markets gave investors little incentive to invest in somewhat-riskier corporate bonds. Yields were barely higher than those on government debt. "The market basically ignored risk," says Micah Porter, president of the Minerva Planning Group in Atlanta. With the recent credit crunch, that's starting to change. Porter says it may make sense to buy corporate bonds, but he recommends only those with very high grades that will hold up if the economy worsens, defaults rise, or the credit crisis deepens.

3. International funds

Most advisors say international investments are part of any diversified portfolio. Much of the world's economic growth is expected to come from outside the U.S. For risk-averse investors, international exposure lets you avoid the impact of disruptions in the U.S.

Countless mutual funds and electronically traded funds (ETFs) let Americans invest cheaply abroad. International investing also helps protect against a declining U.S. dollar. But a few warnings are necessary:

Emerging markets such as India and China are booming, but they may be less stable than the U.S. There is less market research abroad, and regulations that protect investors aren't as strict, says Avani Ramnani of Athena Wealth Advisors in Jersey City, N.J.

Barbara Camaglia, of Ohio-based Legacy Financial Advisors, says it's important to distinguish between emerging markets and developed markets. Stocks in Europe are no more risky than U.S. stocks, she says.

One of the best ways to avoid risk is to diversify your portfolio to include assets that won't rise or fall in value together. Foreign investments used to move independently of those in the U.S., providing a good counterweight.

However, the extent to which investments correlate can change over time. Signs are increasing that world economies and stocks are becoming more and more connected as it gets easier to invest across borders. In late July, credit worries in the U.S. caused markets all around the world to fall at once. "Over time, they're going to run in tandem," says Brent Little, managing partner of Texas-based Odyssey Wealth Management.

4. Commodities

The booming global economy can't seem to get enough oil, metal, and other commodities. That could keep commodity prices high even if markets fall. Commodities also should hold value even if the dollar continues to fall or inflation heats up, Kazemi says.

Until recently, commodity investing for the small investor wasn't easy. But a variety of new ETFs offer investors inexpensive ways to get commodity exposure. Advisors recommend spreading your money across various commodities.

Commodities can be very volatile and "a little goes a long way," Minerva's Porter says. He recommends PIMCO's Commodity Real Return Strategy fund (PCRAX).

5. Alternative investments

Here's where things get riskier. If you have some money to play with and don't mind paying some hefty fees, you can find a fund manager with strategies for growing your money through even the worst economic turmoil.

Hedge funds were originally created just for this purpose: to be hedges against declines in other assets, like stocks. Thus, many private equity and hedge funds consciously try to move independently of equity markets, and often they succeed.

Investors, however, will need a high net worth to invest in hedge funds. It's risky, so you don't want to put all your eggs in one basket. "Diversification in the case of hedge funds is especially important," says Kazemi, who is a consultant to the not-for-profit Chartered Alternative Investment Analyst Assn. "You don't want to invest in a single manager."

Funds of funds give well-off investors a place to invest in a broad spectrum of hedge funds. However, they often add their own fees, on top of those of the hedge funds. "You are getting a second layer of fees, but you're also getting diversification that a small investor ordinarily couldn't get," Little says.

Some mutual funds specialize in providing returns in down markets. Kipley Lytel, managing partner of Montecito Capital Management, recommends the Hussman Strategic Growth fund (HSGFX).

Again, caution is needed here. This sort of investing requires a lot of skill and research. Many hedge fund strategies exist, some much more risky than others. And bearish mutual funds will provide mediocre results in a rising market.

The bottom line? Most financial advisors recommend against market timing, i.e., trying to bet exactly when the market has hit its peak. You'll probably be wrong.

A better strategy, they say, is to keep your portfolio diversified, spread among several asset classes from the safe to the risky. Then you'll be ready for almost anything.

"If you have a properly designed portfolio," according to Cathy Pareto of Florida-based Investor Solutions, "market corrections and economic disruptions become irrelevant."

Steverman is a reporter for BusinessWeek's Investing channel.

No More War

No More War
Copyright by The Windy City Times
August 1, 2007

There is a revelatory lesson in all this urban warfare and jihadist violence: From Baghdad to Beirut and from Gaza to Kabul, these recruits to the ultimate in reactionary cults threaten the existing states in the Muslim world far more than America or its Western allies. They are one side in a conflict centered within the Muslim world. Contrary to President George W. Bush’s notion, this is not America’s long war against terrorism but the Islamic world’s conflict with itself.

The recent world events point to what most of the intelligence agencies refuse to share with the American people. Just like we were lied about the weapons of mass destruction and the connection between Saddam Hussein with Al-Qaeda, we are now being lied to, perhaps because they are unable to tell the truth, but most likely because of the stubbornness of the commander-in-chief ( who talks to God the Almighty ) that we are at war with the terrorists. After all, it’s the leaders of the country who determine the policy, and it’s always a simple matter to drag the people along. Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked, and denounce the opponents of the war for lack of patriotism—exposing the country to greater danger.

Let’s suppose that we bring all the troops home from Iraq tomorrow. Would the retaliatory strike against Sunni Arabs be any different? Just like Hamas on Gaza, the two factions—Sunni and Shiite—will fight their civil war until one side wins. It is a crime against our brave American troops to place them in the crossfire of a civil war that will not be resolved through military intervention by an outside party. The only way to avoid further bloodbath in Iraq requires a political solution. The problem is that just liked Hamas and Fatah, these conflicts have persisted for centuries. America, just like the British before, should remember the history of the region. It is not like a civil war is something we don’t comprehend. If my memory serves me right, we fought one from 1861 to 1865. What would you think would have happened if the British or the French would have tried to mediate it?

The only difference is that America’s incompetent leaders initiated Iraq’s civil war. Instead of sacrificing our young armed forces, I would put on trial the people responsible for crimes against humanity and get our soldiers out of harm’s way.

Carlos T Mock, M.D.

Developments on the Same-Sex Marriage Front

Developments on the Same-Sex Marriage Front
by Lisa Keen
Copyright by The Windy City Times

There were two significant developments in the same-sex marriage arena last week: in one, gay couples in yet another state have the option of getting married; in another, a state’s ban on gay marriage has been stopped from destroying laws meant to help stop domestic violence but it may have made the possibility of civil unions more difficult.
The first involves New Mexico, but happened in Massachusetts. In a surprise move, a state agency in Massachusetts quietly announced it will issue marriage licenses to same-sex couples from New Mexico.

According to Gay & Lesbian Advocates & Defenders, which sought the declaration, the Massachusetts Registry of Vital Records and Statistics issued a “corrective notice” to Massachusetts’ city and town clerks, instructing them that New Mexico’s laws do not prohibit marriage between parties of the same gender."

The Massachusetts Supreme Judicial Court ruled last year that gay couples from states which explicitly bar same-sex marriage cannot go to Massachusetts for a marriage license. So far, the only couples which have been able to take advantage of that ruling have been those in Rhode Island and those in New York State who obtained marriage licenses in Massachusetts before the New York supreme court ruled that state could bar recognition of same-sex marriages. But in none of these cases has any ruling guaranteed that marriage licenses obtained in Massachusetts would be recognized in other states.

That same distinction holds true for New Mexico gay couples, and Alexis Blizman, head of the statewide gay political group Equality New Mexico, says there’s not been a lot of reaction by gay couples in New Mexico. A group which has sought a constitutional ban in New Mexico has vowed to try for it again next year, said Blizman, but the state legislative session is but one month long next year and the House and Senate are controlled by Democrats.

“We would hope,” said Blizman, “that the Democrats wouldn’t want this on the ballot in 2008.”

Meanwhile, the Ohio Supreme Court ruled July 25 that the existence of a constitutional amendment barring same-sex marriage in that state does not preclude the enforcement of a state law that prohibits domestic violence between unmarried partners.

The case, State v. Carswell, involved an unmarried heterosexual couple. A state trial court dismissed charges against a man accused of attacking a woman with whom he was living, noting that the domestic violence law violated the constitutional amendment. The Ohio Marriage Amendment stated that “Only a union between one man and one woman may be a marriage valid in or recognized by this state….” But the state domestic violence law prohibits violence against a “family or household member,” and defines those terms to include a spouse or “a living as a spouse.”

The court said that recognition of a person “living as a spouse” for the purposes of the domestic violence law does not provide such persons with any of the rights or benefits of marriage.

One justice dissented, saying that providing recognition to an unmarried partner under the domestic violence law in itself provides “a legal status” to that unmarried partner.

“The crime of domestic violence,” wrote Justice Judith Ann Lanzinger, “occurs within an intimate relationship and is distinct from the crime of assault….. The General Assembly’s classification of ‘person living as a spouse’ is a recognition by law of the relationship of unmarried and cohabiting individuals based solely on the similarity of that relationship to marriage.”

Lambda Legal Defense and Education Fund submitted a brief in the case to argue that the Marriage Amendment should not be interpreted to undermine the domestic violence law, as did Equality Ohio, a statewide gay organization.

But Equality Ohio said the specifics of the decision actually harmed gays in the state.

Lynne Bowman, executive director of the group, noted that the majority defined the marriage amendment’s language referring to the ban on “legal status similar to marriage” and including civil unions.

By specifically listing “civil union” as an example,” said Bowman, “the court has made life even harder for same-sex couples trying to care for each other and their children in Ohio.”

Conjugal visits approved for Mexico City GLBT prisoners

Conjugal visits approved for Mexico City GLBT prisoners
Copyright by The Associated Press

MEXICO CITY—Mexico City’s prison system has begun allowing gay conjugal visits, bowing to a recommendation by the country’s National Human Rights Commission, the commission has announced.

Mexico City’s government has taken a series of controversial stands in recent months on social issues such as abortion, gay marriage and prostitution, despite opposition from conservatives and religious organizations.

“The Mexico City department of prisons and rehabilitation has allowed the first conjugal visit to an inmate with a sexual orientation other than heterosexual,” the government-funded rights commission said in a news release. It called the move “an important step in terms of nondiscrimination regarding sexual preference.”

In many Mexican prisons, inmates are allowed to receive conjugal visits, and most do not require the visitor to be married to the inmate. Special rooms are set aside in many prisons so that inmates and visitors can be alone during such visits.

The decision was prompted by a complaint filed by a man identified only as “Agustin N.,” who said he wanted to visit his companion, “Ricardo N.,” at the Santa Martha Acatitla prison on the city’s east side.

Agustin filed a complaint with the rights commission—which has the power to make recommendations but not to enforce them—saying prison authorities had denied his request because the two are gay.

On Feb. 8 the commission ruled that was discrimination, and prison authorities decided—the statement did not say when—to allow the visit.

The commission said it still wants the policy change to be set down in writing and applied to all city prisons. The prisons department spokesman’s office said he was not immediately available to comment July 30.

The leftist party that governs Mexico City has already legalized gay civil unions and abortion in the capital of this overwhelmingly Roman Catholic country and has proposed legalizing prostitution, which is currently punishable by 12 to 24 hours in jail and small fines.

Mexico as a whole adopted a law in 2003 banning discrimination based on sexual orientation.

Burke praises diversity, GLBT lawyers at Sidetrack/Attorneys Celebrate Diversity

Burke praises diversity, GLBT lawyers at Sidetrack
By Gary Barlow
Copyrightt by The Chicago Free Press
August 1, 2007

Some 150 attendees heard Illinois Supreme Court Justice Anne Burke discuss the evolving diversity of the legal profession at the third annual Lawyers for Diversity Mid-Summer Barbecue July 26 at Sidetrack in Lakeview.

“The legal profession is…more responsive, more talented and certainly more diverse than it ever was,” Burke said, recounting how the opportunities for advancement for women, gays and others have opened up in the practice of law in the years since she joined the bar.

“We are who we are—straight, lesbian, gay, bisexual, transgendered,” Burke said.

Speaking to an audience largely made up of GLBT lawyers and judges, Burke praised them for enriching the profession in Chicago.

“You certainly give our profession the virtue it needs from your tolerance and from sharing your gifts with us,” she said. “It is revolutionizing our profession.”

The event served as a benefit for several organizations—Center on Halsted, Equality Illinois, the Lesbian and Gay Bar Association of Chicago and Parents, Families and Friends of Lesbians and Gays.

LAGBAC’s Jeremy Gottschalk noted recent advancements in GLBT diversity detailed in a new Equality Illinois survey of Chicago-area law firms. Most of the firms that responded—92 percent—now have a GLBT-specific nondiscrimination policy and 100 percent said they provide healthcare coverage for employees’ same-sex partners. Gender identity protections surged since last year’s survey—44 percent of the firms responding said they have a nondiscrimination policy covering gender identity. Only 25 percent had such a policy a year ago.

Among the responding firms, Jenner & Block reported the most GLBT attorneys, with 13, followed by Kirkland & Ellis, with eight, and Latham & Watkins, with six. Most firms also said they’ve been supportive of the community, with 87 percent sponsoring GLBT community events and 78 percent providing financial support for GLBT organizations.

Attorneys Celebrate Diversity
by Amy Wooten
Copyright by THe Windy City Times

Lawyers for Diversity hosted its third annual Mid-Summer Barbecue July 26 at Sidetrack, 3349 N. Halsted, where Illinois Supreme Court Justice Anne Burke made a special appearance to speak about the growing diversity within the legal profession.
The event benefited the Center on Halsted, Equality Illinois’ ( EI ) Education Project; the Northern Illinois Council of Parents and Friends of Lesbians and Gays; and The Lesbian and Gay Bar Association of Chicago ( LAGBAC ) Foundation.

Burke—the third woman on the Illinois Supreme Court—spoke on how much has changed, in terms of diversity, within the legal profession over the years.

“The legal profession is better than it ever was,” Burke said. “Fresher, more challenging, more expressive, more tolerant and, certainly, more diverse. It almost seems impossible that it could ever have been any different than it is today.”

Burke said she also suspects the legal community has finally come to understand how crucial diversity is.

“When you are confident, you do not have to apologize to anyone for being a woman, for being gay, for being Irish, Asian, Black, brown, Jewish, Muslim or Christian,” she continued. “Or for being a South Sider! They know us by the quality we keep, as well as our refusal to do any less.”

Also during the reception, the LAGBAC Foundation honored two scholarship recipients currently interning at Lambda Legal this summer: Todd Kolb and Malcolm “Skip” Harsch.

Those present included Judges Joy Virginia Cunningham, Mary Colleen Roberts, Mike McHale, Tom Chiola and Sebastian Patti; Deb Mell, who is running for state representative; and Equality Illinois’ Art Johnston, among others.

Equality Illinois revealed preliminary results for its annual Law Firm Summary during the reception. The results, the organization said, indicate that the Chicago legal community is making progress in terms of LGBT awareness, presence, and its relationship with the community.

Equality Illinois found that 92 percent of the responding firms included “sexual orientation” in their non-discrimination or EEO statement. Additionally, all provided domestic partner benefits. There has also been progress in addressing “gender identity” in the workplace. Responding firms that reported including “gender identity” in their non-discrimination policy have increased from 25 percent to 44 percent in the past year.

As far as diversity within the responding firms, 74 percent reported having active diversity councils or committees with a mission that includes LGBT issues. Forty-four percent report having an LGBT-specific affinity group, a number Equality Illinois finds low.

All the firms reported that they actively recruit openly LGBT people, but the preliminary results show that most firms indicated they have fewer than three openly gay attorneys and that most do not track LGBT non-attorney staff.

In terms of marketing, half of responding firms said they actively market to the LGBT community; 87 percent sponsor LGBT events; and 78 percent said they provide financial support to LGBT groups.

The Healthcare Power of Attorney for Hospital Stays

The Healthcare Power of Attorney for Hospital Stays
By Roger McCaffrey-Boss
Copyright by Gay Chicago magazine and Roger McCaffrey-Boss
July 31, 2007

Q: My lover will be undergoing a serious operation next month. Will I be allowed to visit my lover in the hospital while she is in intensive care? Will I be allowed to make decisions regarding medical matters? Can her family stop me from visiting? What do we need to protect ourselves?

A: In Illinois, the law still considers LGBT couples as two unrelated individuals who live together. Legally they are strangers. The hospital and physicians do not have any legal obligation to consider the desires of LGBT couples to participate in and consent to medical treatment the other may receive while in the hospital.

It is entirely possible that once a member of a couple is hospitalized, the other lover could be refused the right to visit, especially if the patient was in intensive care, which has restricted visitation. The lover would have no right to consent to or authorize medical treatment if the need arose. And the lover would be powerless to question ongoing medical treatment to make sure their lover was receiving proper medical treatment and procedure.

Anytime a member of a couple is hospitalized, the other member should be with their lover as much as possible to make sure their lover is receiving medical treatment and, if necessary, to question the treatment that is or is not being performed. If it is a serious operation or medical treatment, the hospitalized lover may be too sick to look out for themselves, leaving it up to the other. It is the Healthcare Power of Attorney which gives the members of a couple the legal right to participate in this process.

The law also allows a person to grant to their lover - or agent - the following authority:

The right to give consent to and authorize or refuse or withhold any and all types of medical care, treatment or procedures including any medication program, surgical procedures and life-sustaining treatment, even if death would ensue. The law allows a person to specify to what extent and under what circumstances they want their agent to use or withdraw life-sustaining treatment.
The right to admit the person to or discharge the person from any and all types of hospitals, institutions, homes, residential or nursing facilities, treatment centers and other healthcare institutions providing personal care or treatment for any type of physical or mental condition.
The right to examine and copy and consent to the disclosure of all the person’s medical records, whether the records relate to mental health or any other medical condition.
The time that your lover is in the hospital undergoing major surgery is a time when the rights of each member should be protected. Because of the importance of the subject matter of a Healthcare Power of Attorney and the possible consequences, the decision to grant anyone such extensive power should only be made after serious deliberation and consultation with your physician, attorney and designated agent - lover.

Roger McCaffrey-Boss is a graduate of Hamline University School of Law, St. Paul, Minnesota, and is a member of the Chicago Bar Association. You can e-mail him at He suggests that you consult your own lawyer for any specific questions regarding the issues raised in this colum

International Herald Tribune Editorial - War wounds

International Herald Tribune Editorial - War wounds
Copyright by The International Herald Tribune
Published: August 1, 2007

There is no more urgent task than improving medical care for wounded veterans, whose shameful neglect is yet another failure of the Iraq war.

A presidential commission hurriedly created in the wake of scandalous accounts of mistreated and forgotten veterans has issued a series of sensible recommendations for repairing the damage, including a major overhaul of the way disability pay is awarded and providing more support for wounded veterans' family members.

Making all the required improvements, the commission's report said, would require "a sense of urgency and strong leadership." Unfortunately, there is no sign that the White House either grasps the urgency or is prepared to provide that leadership.

The commission did not blame the White House for its gross shortchanging of veterans' care. But the panel pointedly noted executive action could solve most of the problems. True leadership is required to force necessary change. A public increasingly jaded about the damages from this war should demand that the commander in chief face up to the sufferings of his returning troops.

International Herald Tribune Editorial - Coming clean in Washington

International Herald Tribune Editorial - Coming clean in Washington
Copyright by The International Herald Tribune
Published: August 1, 2007

It took a while, and the process certainly hasn't been pretty, but the Democrats are close to winning passage of their long-promised ethics reform bill. We suspect it will take a lot more than one new law to break the binding and corrupting ties of lobbyist cash and politics. But the bill, which the House approved with overwhelming, bipartisan enthusiasm on Tuesday, is a good start.

If the Senate needs further impetus to follow, federal agents supplied it Monday when they raided the Alaska home of Senator Ted Stevens. Stevens, who denies any wrongdoing, has the distinction of being the longest-serving Republican in the Senate's history.

Unfortunately, when it comes to getting caught up in an investigation of political corruption, he's just one in a long bipartisan line.

One of the important aims of the new legislation is to let the public see for itself how much money is being traded for access.

For the first time, the lavish torrent of campaign money from eager lobbyists to grateful politicians would have to be reported quarterly to the public via the Internet, with tighter scrutiny and penalties for violators. The reports would highlight lobbyists' so-called bundling, the massing of individual donations into eye-popping packages for politicians and their party committees.

And the bill would require that all earmarks - those budget-busting pet projects that fall like manna from heaven - as well as who's sponsoring them be identified on the Internet before final passage.

The bill would also curb such abuses as corporate-paid gifts and travel. It would end lobbyist-sponsored galas "honoring" ranking politicians at national conventions. It would even ban the ludicrous pensions now being paid to congressional alumni doing prison time for felonies.

The bill is not perfect. It doesn't place enough restrictions on the rush of lawmakers into lobbying careers, but it is a major step toward resisting the Capitol corruption laid bare in the downfall of Jack Abramoff. He's the über-lobbyist whose lavish wooing of dodgy lawmakers led to the Republicans' loss of congressional control. In the minority now, Senate Republicans would be foolish to block this urgently needed reform, as some are threatening.

The commitment to reform goes far beyond any party's campaign pledge. The Senate Republican leader, Mitch McConnell, has an opportunity to join the majority leader, Harry Reid, and House Speaker Nancy Pelosi in delivering bipartisan reform. Voters are watching closely to see if Congress finally has the courage to clean itself up.

Will we betray our Iraqi workers?

Will we betray our Iraqi workers?
Copyright by The Chicago Sun-Times
August 2, 2007

I see by the papers, as Mr. Dooley used to say, that the American ambassador in Iraq is trying to obtain passports for Iraqi members of the embassy staff and isn't having much success. The United States hires Iraqis to work for them but does not want its employees to have an escape hatch when the end comes. Homeland Security is combing the list for possible terrorists. It might be easier if the department gave them passports and then forced them to live in the toxic house trailers it has stockpiled for Katrina victims.

What will happen to those Iraqis who worked for the United States when we finally pull up stakes? In Vietnam, American allies were sent to "re-education" camps. A few were released eventually. In Iraq, someone will cut off their heads. Americans will feel no more responsibility for their deaths than they do for the tens of thousands of Iraqis who have already died during our feckless occupation. One of the arguments that the neocons make for staying on in Iraq, even for 10 more years, is that we have an obligation to the Iraqi people. But is there no obligation to those people who face death because they worked for the American government?

There are two reasons why the ambassador's plea for escape hatches for his employees might embarrass the administration. The first is that it violates the party line that we are not going to leave Iraq until the job is done -- until, as the president promises, we've won. The ambassador is "pessimistic." Outside of the coterie of advisers around the president, their allies in the media and diehard "patriots," there is little doubt that the war has been lost.

The "surge" strategy cannot work. Even half a million Americans couldn't put out the fires of ethnic hatred that consume the country. The suicide bomber who drove a truck bomb into a crowd celebrating a soccer victory was proof of that if any more proof is needed. The "surge," which was supposed to last three months, has been extended to September, then to 2008, now to 2009. It becomes evident that the "surge" was a response to the pessimistic report of the Iraq Study Group to protect the president from defeat until he's safely out of office.

The war will not end until the inaugural of the next president. Mr. Bush can leave with the boast that he kept the faith. Out of office, he can blame Democrats, Congress, the media and pessimists for losing the war. The atmosphere in the White House is remarkably like that of the months before the war. The slick spin, the dishonesty (conflating bin Laden/al-Qaida with the small group of "foreign" terrorists in Iraq that has dubbed itself al-Qaida), the threats of more terrorism, the attacks on the patriotism of critics -- a recycling of all the stale, tired Karl Rove tactics.

Six hundred Americans have died trying to police Iraq since the "surge" was announced. Many more will die before January 2009 in an evil effort to preserve the president's infallibility. Does one have to say that each of these unnecessary deaths breaks the hearts of many Americans -- as Chicago novelist Harry Mark Petrakis poignantly shows in his novella Legends of Glory? At this late stage, do not such deaths come dangerously close to war crimes?

The second reason for denying an escape hatch to embassy staff is that immigrant-hating nativists will think that dirty, dark-skinned Iraqi refugees in huge numbers are preparing to inundate this country. The Minutemen and their allies will go crazy. We don't want no Iraqis.

Lead paint forces recall of almost 1 million toys

Lead paint forces recall of almost 1 million toys
August 2, 2007
Copyright by The Associated Press

WASHINGTON---- Toy-maker Fisher-Price is recalling 83 types of toys -- including the popular Big Bird, Elmo, Dora and Diego characters -- because their paint contains excessive amounts of lead.

The recall being announced Thursday involves 967,000 plastic preschool toys made by a Chinese vendor and sold in the United States between May and August. It is the latest in a wave of recalls that has heightened global concern about the safety of Chinese-made products.

The recall is the first for Fisher-Price Inc. and parent company Mattel Inc. involving lead paint. It is the largest for Mattel since 1998 when Fisher-Price had to yank about 10 million Power Wheels from toy stores.

In an interview with The Associated Press on Wednesday, David Allmark, general manager of Fisher-Price, said the problem was detected by an internal probe and reported to the Consumer Product Safety Commission. The recall is particularly alarming since Mattel, known for its strict quality controls, is considered a role model in the toy industry for how it operates in China.

Fisher-Price and the commission issued statements saying parents should keep suspect toys away from children and contact the company.

The commission works with companies to issue recalls when it finds consumer goods that can be harmful. Under current regulations, children's products found to have more than .06 percent lead accessible to users are subject to a recall.

Allmark says the recall was ''fast-tracked,'' which allowed the company to quarantine two-thirds of the recalled toys before they even made it to store shelves. In negotiating details of the recall, Fisher-Price and the government sought to withhold details from the public until Thursday to give stores time to get suspect toys off shelves and Fisher-Price time to get its recall hot line up and running. However, some news organizations prematurely posted an embargoed version of the story online.

Allmark said the recall was troubling because Fisher-Price has had a long-standing relationship with the Chinese vendor, which had applied decorative paint to the toys. Allmark said the company would use this recall as an opportunity to put even better systems in place to monitor vendors whose conduct does not meet Mattel's standards.

He added: ''We are still concluding the investigation, how it happened. ... But there will be a dramatic investigation on how this happened. We will learn from this.''

The recall follows another high-profile move from toy maker RC2 Corp., which in June voluntarily recalled 1.5 million wooden railroad toys and set parts from its Thomas & Friends Wooden Railway product line. The company said that the surface paint on certain toys and parts made in China between January 2005 and April 2006 contain lead, affecting 26 components and 23 retailers.

''Anytime a company brings a banned hazardous product into the U.S. marketplace, especially one intended for children, it is unacceptable,'' said Nancy Nord, acting chair of the Consumer Product Safety Commission. ''Ensuring that Chinese-made toys are safe for U.S. consumers is one of my highest priorities and is the subject of vital talks currently in place between CPSC and the Chinese government.''

Carter Keithley, president of the Toy Industries Association, praised Mattel's quick response to the problem, and suggested Mattel will use this setback as a lesson for not only the company but for the entire industry. However, he expressed concern about how the recall and other toy recalls will play out in consumers' minds in advance of the holiday season.

''We are worried about the public feeling,'' said Keithley, adding he observed how toy companies are embracing strict controls during a recent toy safety seminar in China. ''We have thought all along that (consumers) can be confident in the products,'' he said. ''But if companies like Mattel have this, then you have to ask how did this happen?''

Sen. Dick Durbin, D-Ill., introduced a bill last month that he contended would dramatically expand the product safety commission's ability to protect consumers. In a statement Wednesday night, Durbin also called for better safety standards for products imported from China.

''Sadly, this is the most recent in a series of disturbing recalls of children's toys. While the toys may be different, they have one thing in common -- they were manufactured in China,'' he said. ''With the current tools and resources the Consumer Product Safety Commission has, it cannot adequately protect American consumers.''

Owners of a recalled toy can exchange it for a voucher for another product of the same value. To see pictures of the recalled toys, visit Mattel's Web site For more information, call Mattel's recall hot line at 800-916-4498.

Auto sales plunge in July - Makers, observers differ on reason

Auto sales plunge in July - Makers, observers differ on reason
By Rick Popely
Copyright © 2007, Chicago Tribune
August 2, 2007

Automakers blame high gas prices and sagging housing prices for a 12 percent decline in new-vehicle sales in July that encompassed most major manufacturers. Industry observers also suggested another culprit: Fewer consumers may need or want a new car.

The widespread decline included Toyota Motor Sales U.S.A., which routinely reports double-digit increases but saw a 7 percent setback in July, to 224,058. That was still enough to place second, behind General Motors Corp.

GM fell 22 percent, to 315,870, Ford Motor Co. fell 19 percent, to 194,097, and Chrysler Group 8 percent, to 137,728. The U.S. market share held by the three domestic-based manufacturers fell below 50 percent for the first time, coming in at 49.5 percent for the month.

Nissan North America was among the few to buck the trend, gaining 2 percent, to 87,877.

For the industry it was the sixth sales decline in the last eight months. The Power Information Network, the data gathering unit of J.D. Power and Associates, is one of those betting that's because consumers are hanging on to cars longer.

The average age of vehicles traded for new models in the second quarter was 5.4 years, up from 5 in the second quarter of 2004, according to transactions at 7,000 dealerships around the country.

Power statistician Tom Libby attributes that to higher quality. "Ten years ago some brands had quality scores that were much worse than average. Now, the band [from best to worst] has narrowed," he said.

Former Chicagoan Dale Shipman agrees. Shipman leased a new car every two or three years for about two decades but took a hiatus in 2005 after he and a partner launched an information technology consulting business, the budget of which did not allow for a car payment.

So he began driving a 1998 Dodge Grand Caravan that now has 150,000 miles. It runs well and gets 28 miles per gallon on the highway, he says, so there is no urgency to trade it in.

"There's no question cars are better now. It's easily got a quarter of a million miles in it," Shipman said, calling it a "purely economic decision" to hold off on a new car.

Shipman, who lives near Boston, would like a new car but that won't happen "until we can turn this business around," he said.

The decision is more philosophical for Chicagoan Lisabeth Weiner says a new car isn't even on her radar screen. Weiner worries a little about the rust spots on her white 1992 Acura Legend, but after years of reliable service and "just 75,000 miles" on the odometer she sees no reason to buy a new vehicle.

"To me, there are two types of cars in the world, cars that go and cars that don't," she said. "As long as it keeps going, I don't see why I should change. Why would I take on the expense of a new car?"

Weiner, who runs a public-relations business, said a new car's only attraction would be its safety features because she has a 7-year-old daughter and a 16-year-old son who is learning to drive.

CNW Marketing Research, which studies consumer buying decisions, says Weiner is hardly alone. New vehicles have fallen behind home improvements and high-end appliances as big-ticket status symbols.

"Today, neighbors are just as likely to be impressed by ultra-upscale kitchen appliances as a new car in the driveway," CNW President Art Spinella noted in his July summary of the auto market.

GM market analyst Paul Ballew isn't buying it. He sees economic distress, such as the housing slump, as the reason car purchases are delayed. Ballew also predicts sales will perk up by next year.

"[New cars] are a purchase that can be deferred," Ballew said. "That's usually due to macro [economic] factors that affect consumers' buying cycles."

July's dismal sales amounted to 1.3 million vehicles for the industry. For the calendar year, sales are off 3 percent from 2006 and 8 percent from two years ago, when employee-discount pricing fueled purchases.

As has been typical, domestic manufacturers fared worse than imports. Their collective market share of less than 50 percent is in stark contrast to the days when GM alone commanded more than half the U.S. market.

Ford sales analyst George Pipas said slipping below 50 percent was "no more significant than 51 or 52 percent. This was at least 30 years in the making."

Earlier, Pipas shrugged off a suggestion that Ford will soon permanently lose second place to Toyota in the U.S. With calendar year sales of 1.55 million, Toyota is less than 10,000 vehicles behind. "We're way beyond that," Pipas said, saying Ford's focus is to "return our business to profitability."

Ford's U.S. sales are down 12 percent this year, but it reported a $750 million second quarter profit. GM's sales are off 9 percent, yet it made $891 million in the quarter. Analysts expect GM to be profitable for the year but Ford to lose money.


Doctors 'jump-start' man's brain - Patient had been minimally conscious

Doctors 'jump-start' man's brain - Patient had been minimally conscious
By Robert Mitchum
Copyright © 2007, Chicago Tribune
August 2, 2007

Doctors have succeeded in "jump-starting" the brain of a man who had been barely conscious for six years with electrical stimulation of the brain, making it possible for him to speak a little and take food by mouth, doctors reported Wednesday.

The 38-year-old man, whose identity was not released, had been in what is called a minimally conscious state for six years after suffering a brain injury during an assault. He retained some language capability but was unable to communicate reliably beyond brief gestures and silent mouthing of words. Usually, his eyes were closed, and he had no coordinated motor movements.

On Wednesday morning, the patient's mother tearfully described the improvements she has observed after electrodes were implanted in his brain.

"My son can now speak, watch a movie without falling asleep, drink from a cup," she said at a news conference. "He can express pain, can cry and laugh."

The authors of a case study published Thursday in the journal Nature and outside observers were quick to point out the therapy has been shown effective only in a single person. The technique is not likely to help people in a persistent vegetative state, they warned, and it is unknown to what extent the stimulation can help even other minimally conscious patients.

"It is way too early for us to know if this is actually going to be applicable to people who are in this situation," said Dr. Felise Zollman, medical director of the brain injury medicine and rehabilitation at the Rehabilitation Institute of Chicago, who was not involved in the study.

"We may find down the road that it adds to our toolbox in meaningful way and want to use it for a select group of folks, or we may find it has a very, very narrow application, and may not be relevant to many people at all."

Still, neurosurgeon Dr. Ali R. Rezai, a member of the research team from the Cleveland Clinic, called the achievement a new chapter in treating patients with brain injury. "Hopefully, we can reconnect people with loved ones," he said.

Deep brain stimulation involves the implantation of electrodes to inject electricity into select portions of the brain. The technique is already approved for the treatment of symptoms associated with Parkinson's disease and is in trials to test its effectiveness in treating epilepsy, obsessive-compulsive disorder and depression.

As with a pacemaker, the electrodes are implanted permanently and can be controlled remotely by doctors. The electrodes, placed in this case in a brain region called the thalamus, are turned on for 12 hours and off for 12 hours each day.

"Most likely we are activating areas of brain that were essentially depressed in activity as a result of this severe trauma," said Rezai. "In some ways we are jump-starting the brain, speaking simply."

"It's analogous to giving a drug that would cause arousal, waking one up from a drowsy or sleep cycle," said Dr. Richard Penn, a neurosurgeon at the University of Chicago not involved in the study, "though it's much more specific, as only a particular part of brain is being activated by it.

"But does it hold promise for lots of people? No one has any idea whatsoever," Penn added.

For the six years following the patient's injury, doctors said, he had shown no progress in his ability to communicate or orient toward objects in his environment consistently.

When the electrodes were implanted and activated in 2004, he immediately appeared more alert and moved his head toward people who were speaking. Since then, he has shown further improvement in speech, movement and the ability to swallow food.

"The most compelling change seen in the last six weeks is that he is able to say the first 16 words of the Pledge of Allegiance without prompting," said neurologist Dr. Joseph T. Giacino, an author of the study.

Now, the patient also is capable of coordinated movements such as bringing a cup to his mouth and brushing his hair, though some motor difficulties remain because of his long inactivity. He can chew and swallow food, whereas previously he had to be fed through a tube.

Even before his treatment, doctors described the patient as being in the "upper end" of minimal consciousness, very different from the more serious condition known as a permanent vegetative state.

"Someone who's in a vegetative state will open their eyes at certain times of day and look like they have a sleep/wake cycle, but have no interaction with environment," Zollman said. "They're awake, but not at all aware of their surroundings."

The amount of brain damage suffered in these patients and in many minimally conscious patients, is so severe that deep brain stimulation may not improve behavior, doctors said.

enn speculated that in addition to the fact that relatively few people may benefit from this technique, it is still at least several years away from being put into clinical practice.

- - -

Brain stimulation

Deep brain stimulation involves surgical implantation of electrodes into a specific brain area, with the control box and battery placed in the chest. Side effects may include disrupted speech and emotional imbalance. It is approved by the FDA for treating these conditions:

*Parkinson's disease

*Essential tremor

*Dystonia (uncontrolled repetitive movements)

Ongoing clinical trials

are investigating its use

in treating:


*Obsessive-compulsive disorder


*Tourette's syndrome