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.

dmendell@tribune.com

aahmed@tribune.com

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

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 BusinessWeek.com, 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.
Chicago

Developments on the Same-Sex Marriage Front

Developments on the Same-Sex Marriage Front
by Lisa Keen
Copyright by The Windy City Times
2007-08-01


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
2007-08-01


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 RVMLAWYER@aol.com. 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?
BY ANDREW GREELEY agreel@aol.com
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
BY ANNE D'INNOCENZIO AND NATASHA T. METZLER
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.

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rpopely@tribune.com

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:

*Epilepsy

*Obsessive-compulsive disorder

*Depression

*Tourette's syndrome

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rmitchum@tribune.com

Power play over fate of Sun-Times - Hollinger takes over board, talks of sale

Power play over fate of Sun-Times - Hollinger takes over board, talks of sale
By James P. Miller and Phil Rosenthal
Copyright © 2007, Chicago Tribune
August 2, 2007


The controlling stockholder of the parent company of the Chicago Sun-Times disclosed Wednesday that it has seized control of the company's board of directors in a move that may put the flagship newspaper and dozens of suburban papers on the auction block.

Canadian holding company Hollinger Inc., the controlling shareholder of Sun-Times Media Group Inc., said it made use of its majority voting stake to unilaterally remove three sitting directors from the Chicago company's board. It also expanded the Sun-Times Media Group board from eight to 11 members, and placed six Hollinger representatives on it.

The power play positions the Toronto firm to exert a vast amount of control over the Chicago company's future, including whether the stable of papers are sold.

The maneuver faces at least one potential obstacle. Since a scandal blossomed at the Sun-Times' parent company over the activities of then-controlling stockholder Conrad Black, a federal monitor has been in place to protect the interests of minority shareholders. The monitor, Richard Breeden, former head of the Securities and Exchange Commission, has the power to undo Hollinger's board shuffle.

Sun-Times Media said Wednesday that it has notified Breeden of Hollinger Inc.'s latest actions, "in connection with his mandate to take all actions he deems appropriate to protect the interests of the company's [minority] holders."

The company said it will "also continue to evaluate its full range of options" regarding Hollinger's actions. A Sun-Times Media spokeswoman declined to elaborate.

Hidden assets?

At a Wednesday bond hearing for Black in federal court in Chicago, Hollinger Inc. refused to release any of Black's money and accused him of hiding about $60 million in assets. Black had sought transfer of funds from Canada to increase his $21 million bond to comply with a request from U.S. District Judge Amy St. Eve. Because more money wasn't forthcoming, Black was ordered to remain in the U.S. until his Nov. 30 sentencing.

Also on Wednesday, debt-heavy Hollinger Inc. filed for bankruptcy protection both in the U.S. and Canada, a move to protect its assets from creditors.

Hollinger has previously expressed unhappiness regarding Sun-Times Media's direction and, in June, indicated it was planning to establish a presence on the board by nominating two directors at some point in the future.

While Sun-Times Media Chairman and Chief Executive Cyrus Freidheim has publicly described plans to forge ahead as an independent company, Hollinger CEO G. Wesley Voorheis told Freidheim in a June 11 letter that the controlling stockholder thinks the company should instead begin reviewing "all the strategic alternatives" available to maximize shareholder value.

In the corporate world, that phrase is generally a euphemism for putting a company up for sale. On Wednesday, the Canadian company bared its teeth.

"The concerns we expressed [in the June letter] remain, and have been heightened as the value of Sun-Times shares continues to decline," Voorheis said in a statement.

"We have always believed that Sun-Times should implement a formal strategic process to enhance value for all Sun-Times shareholders," he reiterated, adding that Hollinger's surprise move to claim board control is "consistent with" that view.

Acknowledging Breeden's continued authority, Voorheis said that Hollinger Inc. does "not intend to interfere in any way" with the monitor's obligations or with a Sun-Times Media board committee overseeing a thicket of long-running, nine-figure litigation that exists between the Chicago and Toronto companies.

The issue is far from simple, however, because the relationship between the two companies is a relic of the Byzantine ownership structure established by Black, its now-disgraced former owner convicted of fraud and obstruction of justice in a Chicago U.S. federal courtroom last month.

Controlling stake

Toronto-based Hollinger owns a 20 percent equity stake in Sun-Times Media but controls a 70 percent voting position through a class of "supervoting" stock. Hollinger Inc. was once headed by Black, who also served as CEO of Hollinger International Inc., the Chicago newspaper holding company now known as Sun-Times Media Group.

Black was ousted in late 2003 from his post at Hollinger International, and he later lost control of Hollinger Inc.

Sun-Times Media Group is scheduled to announce its second-quarter results Wednesday.

Like most newspaper publishers, Sun-Times Media is saddled with eroding circulation as readers -- and advertising dollars -- migrate to the Internet.

Black-era legacies

Black's tenure as head of the company was marked by indifferent management and underinvestment, and a circulation-inflation scandal surfaced at the flagship paper soon after he and Sun-Times Publisher F. David Radler were ousted.

In another legacy of the Black era, the company has been forced to spend heavily on legal and accounting costs linked to the scandal.

In 2006, those factors helped give the company a net loss of $56.7 million in 2006, a deeper deficit than the $11.6 million loss it reported in 2005, and revenue declined 9 percent to $418.7 million.

But in the first quarter of this year, its net loss eased to $4.8 million from $7.8 million, despite an 11 percent decline in sales, to $91.3 million.

Currently, the stock market values Sun-Times Media at just $357 million.

- - -

Sun-Times Media

Assets: More than 100 newspapers, including Chicago Sun-Times, Daily Southtown, Post-Tribune, daily papers in Joliet, Elgin, Aurora, Naperville and Waukegan, and the 58 weekly papers in the Pioneer Press.

Income: Last year, the company reported a net loss of $56.7million.



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jpmiller@tribune.com

philrosenthal@tribune.com

Twin Cities bridge collapses into Mississippi River - At least 7 killed, 60 injured as dozens of vehicles tumble off span

Twin Cities bridge collapses into Mississippi River - At least 7 killed, 60 injured as dozens of vehicles tumble off span
By Jon Hilkevitch and James Janega
Copyright © 2007, Chicago Tribune
2:03 AM CDT, August 2, 2007


MINNEAPOLIS - Investigators will sift through records and wreckage to determine what caused an interstate highway bridge spanning the Mississippi River in Minnesota's Twin Cities to collapse during the Wednesday evening rush hour.

The disaster sent dozens of vehicles crashing into the river with panicked drivers and passengers trapped inside, authorities said. At least seven people were confirmed dead, Minneapolis officials said. At least 60 people were taken to area hospitals, officials said.

The 40-year-old arched bridge, Interstate Highway 35W in Minneapolis, had been undergoing routine resurfacing this summer, according to the state Department of Transportation. It was not immediately known whether the construction, which did not involve the bridge's structure, was a factor in the roadway buckling.

Rescue workers said late Wednesday that no more victims had been pulled out alive, and that operations had shifted from rescue mode to recovery. Authorities called off the search as nightfall made the river — which was filled with chunks of the mangled bridge and at least 50 vehicles — too dangerous for divers.

Bright white lights from the collapse site created a haze over the river and formed silhouettes from the dark hulks of wrecked cars and trucks that lay on the bridge. Tired rescue workers made their way to nearby hotels, and bar patrons in the trendy Seven Corners neighborhood a block away commiserated about the day's events in awed tones.

The bridge went down suddenly and fast, witnesses said. They recounted how the center section of the 64-foot-high steel structure began to crumble first, in a "V" shape without warning, and the rest of the bridge then broke into huge sections.

Numerous vehicles caught on fire and rescuers plucked survivors from the water. The wreckage of the bridge was scattered along the east bank of the Mississippi, and a large piece of roadway remained on the west bank.

Peter Siddons was on his commute home north when he heard "crunching" and saw the bridge start to roll and then crumple, he told the Star Tribune. "It kept collapsing, down, down, down until it got to me."

His car dropped with the bridge but stopped when his car rolled into the car in front of him. He got out of his car, jumped over the crevice between the highway lanes and crawled up the steeply tilted section of broken bridge and jumped to the ground.

"I thought I was dead," said the senior vice president at Wells Fargo Home Mortgage. "Honestly, I honestly did. I thought it was over."


'The bridge was gone'


Chris Breer, 38, of Minneapolis, lives in a Seven Corners apartment near the bridge and took off on his bicycle after a television bulletin reported the collapse. Breer said he thought he would see collapsed scaffolding from the repair work under way at the bridge.

"The worst part was walking out there," he said. "It was sickening. I thought it was going to be a partial collapse. ...

"When I got out, it wasn't a partial collapse. The bridge was gone."

He said police officers were climbing over scaffolding at both ends of the bridge to get to victims. He was taking video of the scene from the 10th Avenue Bridge, next to the I-35W span, when an officer ordered him to leave.

Breer's 20-second video, taken almost 20 minutes after the collapse, shows people standing on flattened sections of the bridge just inches over the river, as well as pancaked cars and fires beginning to erupt on the bridge. The only sound was of distant sirens and a gust of wind.

"You could see people on the bottom outside their cars," he said. "They looked fine, like not even hurt. How that happened I don't know." The motorists had fallen about 50 feet in their vehicles, Breer said.

Early Thursday, college-age passersby lingered along South 2nd Street trying to get a better view of the scene over yellow police tape that cordoned off the area. A pizza delivery man stopped by to give a free pizza to police officers working at the scene.

Minnesota Gov. Tim Pawlenty called the collapse a "catastrophe of historic proportions for Minnesota."

Investigative team sent

A team from the National Transportation Safety Board was expected to arrive Thursday to begin a forensic analysis and comb through maintenance and inspection records. The safety board team will range from structural engineers to emergency response specialists. A spokesman for the Homeland Security Department said the collapse did not appear to be terrorism-related.

Minnesota transportation officials said the bridge deck was scheduled for replacement as early as 2020, but no structural deficiencies were detected during inspections last year and in 2005. Repairs described as "cosmetic" were made.

An evaluation of the bridge in 2001 turned up no signs of stress-related cracking in the bridge's deck truss. But the Minnesota Department of Transportation study showed several fatigue problems with the roadway connection leading to the bridge.

The current bridge work involved concrete repair, guardrail and lighting replacement and work on the joints, according to state transportation officials.

Mary Small, who lives in northeast Minneapolis, said I-35W is "not a bridge of strangers." Most of her family live along the corridor and use the bridge regularly. Her son was on the bridge four minutes before it collapsed, she said.

"When we heard about it, we had to do a complete head count," she said. "It's a bridge of our neighbors and our family and our friends."

People who work near the bridge said it had been under construction for most of the summer with resurfacing work. It is a structure that only carries vehicles, with other nearby spans carrying rail and pedestrian traffic.

The bridge is near the University of Minnesota campus as well as the Hubert H. Humphrey Metrodome, home of the Minnesota Twins and Minnesota Vikings.

"The bridge got a clean bill of health three years ago, and obviously something went terribly wrong," Minnesota Sen. Norm Coleman said on CNN.

Melissa Hughes of Minneapolis was driving a car that ended up under the north end of the bridge.

"It seemed like people and things were in the air that weren't supposed to be there," she said.

Four drivers and a 12-year-old boy were huddled nearby, their cars having slid into the water as the north end collapsed.

Emergency watercraft moved in quickly. Nearby, a bridge immediately east of the collapsed bridge was filled with emergency vehicles. A crane was on one section of the bridge, too, attempting to remove concrete barriers.

In office buildings on the riverbank near the University of Minnesota, office workers felt the collapse and rushed to their windows.

"I thought an airplane flew too low over our building. It just shook," said Danielle Behling of St. Paul. University students ran to the river.

As emergency crews worked, shaken bystanders stared. Many said they had driven across the bridge minutes before it collapsed.

One was Ken Savage, who drove an empty dump truck across the bridge half an hour before it collapsed. He said every time he drove across the bridge, with all the construction going on, he wondered what would happen if his truck had been loaded with topsoil.

Joe Hughes, 18, of Lake Elmo was helping someone move nearby when he heard the noise. He and a friend ran to the bridge to help carry stretchers. They saw crushed cars, a burning school bus and cars floating in the water.

He said the people they carried out were mostly silent or unconscious, except for the last man. "He wanted to call his fiance," said Hughes.


Survivor of '94 quake


Catherine Yankelevich, who survived the 1994 earthquake in Northridge, Calif., was on the I-35W bridge when it began to shake.

"Cars started flying and I was falling and saw the water," she said. Her car fell into the river. Climbing out the driver's side window, Yankelevich swam to shore uninjured.

"It seemed like a movie. It was pretty scary," said Yankelevich. "I never expected anything like this to happen here."

Tribune staff reporters John McCormick and Mary Owen contributed to this report, as did Tribune news services.

jhilkevitch@tribune.com

jjanega@tribune.com

Obama says he would target Pakistan

Obama says he would target Pakistan
By Edward Luce in Washington
Copyright The Financial Times Limited 2007
Published: August 1 2007 20:02 | Last updated: August 1 2007 20:02


Barack Obama on Wednesday said he would not hesitate to order military strikes against al-Qaeda targets on Pakistani soil with or without the permission of General Pervez Musharraf, Pakistan’s military ruler.

Mr Obama’s speech – one of the most belligerent by a Democratic presidential candidate – appeared to be have been prompted by Hillary Clinton, the frontrunner, who has portrayed her rival as doveish and inexperienced. Mr Obama sought to allay the impression that he would be slow to use force.

His remarks follow a US national intelligence estimate that says al-Qaeda has reconstituted itself in havens along Pakistan’s border with Afghanistan. “Let me make this clear,” said Mr Obama. “There are terrorists holed up in those mountains who murdered 3,000 Americans. They are plotting to strike again. If we have actionable intelligence about high-value terrorist targets and President Musharraf won’t act, we will.”

The 45-year-old senator criticised the Bush administration’s support for Gen Musharraf, who faces general elections later this year. “We must not turn a blind eye to elections that are neither free nor fair – our goal is not simply an ally in Pakistan, it is a democratic ally,” he said. “Pakistan needs more than F16s to combat extremism.”

Wednesday’s speech is likely to intensify the foreign policy debate with Mrs Clinton, whose lead over Mr Obama has stretched to 20 points in some polls. The two clashed last month when Mrs Clinton poured cold water on Mr Obama’s pledge in a presidential debate to talk to the leaders of Iran, North Korea, Venezuela and Cuba within his first year of becoming president. Mrs Clinton later described Mr Obama’s position as “irresponsible and, frankly, naive”, but on Wednesday Mr Obama reiterated his pledge to talk to leaders of hostile countries.

Political analysts said his speech was prompted by Mrs Clinton’s criticisms. “Obama has clearly been advised that he needs to do some of that George Bush swagger be-cause it plays well with the voters,” said Steve Clemons, a foreign policy blogger.

Mark Schmitt, a Democratic think-tanker, said: “Obama needs to get a debate going with Hillary because she remains in the lead in the polls. His numbers might go up or down. But he has to shake things up.”

The Short View: End to ‘carry trade’?

The Short View: End to ‘carry trade’?
By John Authers, Investment Editor
Copyright The Financial Times Limited 2007
Published: August 1 2007 18:27 | Last updated: August 1 2007 18:27


The credit market is not the only source of liquidity for world markets that is under threat. The “yen carry trade” – selling short the yen, at its low interest rates, and buying high-yielding currencies such as the New Zealand dollar – also looks sickly.

This trade, popular with hedge funds, is vulnerable to a rise by the yen. And in the last month, the dollar has lost 4.3 per cent against the yen, while the kiwi has lost more than 7 per cent.

This subject generates intense controversy. It is impossible to prove how important carry trade cash is for world stock markets.

But so far this year, the S&P 500 and the New Zealand dollar/yen exchange rate have tracked each other almost perfectly. The S&P strengthens on days when the kiwi goes up, and drops on days when the yen recovers. On fundamentals, there are few reasons why these two markets should be aligned. Thus this shows that traders believe cheap carry trade money is important for US stocks.

The yen could easily fall back from here. Japan is gripped by political uncertainty. But many analysts think the Bank of Japan will raise rates this month, and little chance of this has been priced into the market. So there is a risk of further appreciation for the yen, taking carry trade cash away with it. This adds yet more doubt when markets scarcely need it.

Some say the carry trade is not the speculative bubble it first appears. They rely on “Mrs Watanabe” – the archetypal Japanese retail investor. With tiny interest rates at home and a weakening yen, it makes sense for Mrs Watanabe to put her money overseas. She weakens the yen and boosts other markets as she does so. She even seems to be making more bets against the yen at present.

But Mrs Watanabe may not be reliable. A few weeks ago, she was sitting on gains of 40 per cent in a year, in yen terms on foreign stocks, as measured by the FTSE World ex-Japan index – which has since dropped 9 per cent. Might she take profits?

Germany rescues subprime lender

Germany rescues subprime lender
By Our International Staff
Copyright The Financial Times Limited 2007
Published: August 1 2007 21:49 | Last updated: August 2 2007 00:40


US mortgage turmoil hit investor confidence on the other side of the Atlantic on Wednesday as details emerged of a German government rescue of a domestic lender that suffered heavy losses on subprime investments.

The rescue of IKB, a specialist lender based in Düsseldorf, began on Sunday when Peer Steinbrück, German finance minister, called top banking executives to discuss a bail-out. According to people who took part in the conference call, Jochen Sanio, head of Germany’s financial regulator, is said to have warned of the worst banking crisis since 1931.

IKB surprised investors this week with a profits warning after a multi-billion euro fund it managed was hit by problems stemming from its US subprime exposure. The news sent its shares plunging and prompted KfW, the state-owned development bank, to step in with a pledge to guarantee obligations of more than €8bn ($10.9bn) – more than five times IKB’s stock-market value.

The further government intervention suggested that the problems at IKB were much worse than thought. Mr Steinbrück phoned several banking executives – including Josef Ackermann, chief executive of Deutsche Bank – on Sunday to bring them on board.

Deutsche Bank, Commerzbank and other German lenders are taking a 30 per cent stake in a rescue fund worth €3.5bn, FT Deutschland, the Financial Times’s sister paper has learnt, with the rest shouldered by KfW.

The report on the German intervention came as more bad news from hedge funds and the housing sector roiled markets.

Among the highest profile hedge funds hit by recent market turmoil was Paul Tudor Jones’ $9bn Raptor fund, which is managed by James Pallotta and invests mostly in stocks rather than bonds. The fund fell 9 per cent last month. Caxton Associates, founded by Bruce Kovner, the secretive billionaire, saw its flagship $11bn hedge fund fall 3 per cent last month, although it remains up for the year, according to investors.

Among hedge funds capitalising on the volatile markets was Pequot Capital’s core global offshore fund, which rose 9 per cent in July bringing its year-to-date return to 21 per cent, net of fees, an investor said.

UK and European stock markets fell, with the FTSE 100 down 1.7 per cent to 6,250.6 and the FTSE Eurofirst 300 ending 1.5 per cent lower at 1,526.26. The Dow Jones Industrial Average rose 1.1 per cent to 13,362.37 in volatile trading. The S&P was up 0.7 per cent at 1,465.87.

Interest rate futures markets are pricing in as a certainty that the Federal Reserve will make at least one rate cut by January.

Reporting by Tim Bartz and Elisabeth Atzler in Frankfurt, Anuj Gangahar and Deborah Brewster in New York and Joanna Chung, Paul J Davies and Stacy-Marie Ishmael in London

China says ‘over 99% of exports’ safe

China says ‘over 99% of exports’ safe
By Geoff Dyer in Shanghai and Eoin Callan in Washington
Copyright The Financial Times Limited 2007
Published: August 2 2007 14:15 | Last updated: August 2 2007 14:15


China on Thursday strongly defended the quality of its exports and said it would work with the US to improve product safety in the wake of another substantial recall of consumer goods made in China.

Mattel is recalling 1.5m toys worldwide, including replicas of popular children’s television characters such as Elmo, Dora and Big Bird, because they use paint that contains too much lead, the biggest such problem to face the US toy-maker in more than a decade.

The high-profile toy recall is the latest in a string of problems to face China-made goods in the US, ranging from contaminated pet food that was linked to the death of thousands of cats and dogs to toothpaste laced with industrial chemicals. Earlier this year, 1.5m Thomas the Tank Engine toys were recalled in the US because of excessive use of lead paint.

In the face of a growing crisis of confidence in Chinese goods, Bo Xilai, Commerce Minister, said that “over 99 per cent of China’s export products are good and safe”. In comments published on Thursday on the ministry’s website, he added: “We hope that all parties can treat Chinese products objectively, fairly and rationally. Don’t let this damage the normal development of trade.”

In recent weeks, China has launched a co-ordinated public relations drive to try and show that it is taking seriously criticisms of the quality of its goods, however it has also attacked foreign media for exaggerating the safety risks.

An official at China’s main product safety watchdog said on Thursday the government would work with the US to improve safety. “We want to co-operate with other countries including the US,” said Wei Chuanzhong, an official with the General Administration for Quality Supervision. However, he added: “We also do not agree with playing up the situation regardless of the facts.”

The recall of Mattel toys came as a surprise to the industry because the company is considered to have some of the best practices for monitoring overseas manufacturing, including owning many of the factories it uses in China. Mattel would not identify the manufacturer in this case, but said it was a long-standing supplier.

The lead was detected by internal tests and reported to US authorities because it breached regulations allowing up to 0.06 per cent lead content in children’s toys. The company said it was able to retrieve two-thirds of the toys before they reached store shelves after US regulators agreed to withhold details from the public until late Thursday to allow time for Fischer-Price, the Mattel unit that sells the toys, to organise its response.

Dane Chamorro, head of the Greater China practice at consultants Control Risks, said multinationals sourcing from China needed to pay attention to the entire supply chain in the country. “Lots of producers in China will sub-contract parts of the process, so you have to audit several layers down to get to the original source,” he said.

Nancy Nord, head of the US Consumer Product Safety Commission, said: “Ensuring that Chinese-made toys are safe for US consumers is one of my highest priorities and is the subject of vital talks currently in place between CPSC and the Chinese government.”

A group of US health official have been in Beijing this week to try and establish a new system between the two countries for ensuring the safety of food and drugs. The two governments hope to sign a memorandum of understanding by the end of the year.

China introduced new safety standards for toys in 2003 which limited the proportion of lead used in paint to less than 0.01 per cent. In a report issued in May, the quality watchdog said that 80 per cent of toys produced in the country met safety standards, which rose to 90 per cent for toys made by large companies. The main problems were to do with poor designs and badly-written instructions, and use of lead in paint was not mentioned in the report.

House Votes 411-8 to Pass Ethics Overhaul - Far-Reaching Measure Faces Senate Hurdles

House Votes 411-8 to Pass Ethics Overhaul - Far-Reaching Measure Faces Senate Hurdles
By Jonathan Weisman
Copyright by The Washington Post
Wednesday, August 1, 2007; Page A01

The House gave final and overwhelming approval yesterday to a landmark bill that would tighten ethics and lobbying rules for Congress, forcing lawmakers to more fully detail how their campaigns are funded and how they direct government spending.

The new lobbying bill would, for the first time, require lawmakers to disclose small campaign contributions that are "bundled" into large packages by lobbyists. It would require lobbyists to detail their own campaign contributions, as well as payments to presidential libraries, inaugural committees and charities controlled by lawmakers. The proposal would also put new disclosure requirements on special spending measures for pet projects, known as "earmarks."

"What we did today was momentous," declared House Speaker Nancy Pelosi (D-Calif.). "It's historic."

The bill is the most far-reaching attempt at ethics reform since Watergate, although it is not as aggressive as some legislators wanted in restricting the use of earmarks and in requiring the disclosure of donation bundling. The legislation, which had been stalled until negotiators worked out a deal in recent days to get it passed before the August recess, is a priority for Democrats, who won control of Congress in part because they had decried what they called "a culture of corruption" under Republicans.

Although it passed the House 411 to 8, the bill could face hurdles in the Senate, which is under a new ethics cloud after the FBI raid Monday on Sen. Ted Stevens's house. Last night, a group of Republican senators prevented Democrats from bringing up the bill, forcing the scheduling of a vote tomorrow to break the filibuster. Still, senators from both parties predicted easy passage by week's end.

Senate Majority Leader Harry M. Reid (D-Nev.) all but dared Republicans to try to block the proposal when it comes to a vote as early as tomorrow. "With that resounding vote in the House, 411-8, I think people ought to be concerned about voting against it," he said yesterday.

But in a closed-door lunch with fellow Republican senators yesterday, Stevens (R-Alaska) himself threatened to block the measure, objecting that the legislation's new restrictions on lawmakers' use of corporate jets would unfairly penalize members of Congress who live in distant states, such as himself.

The legislation would end secret "holds" in the Senate, which allow a single senator to block action without disclosing that he or she has done so. Members of Congress would no longer be allowed to attend lavish parties thrown in their honor at political conventions. Gifts, meals and travel funded by lobbyists would be banned, and travel on corporate jets would be restricted. Lobbyists would have to disclose their activities more often and on the Internet. And lawmakers convicted of bribery, perjury and other crimes would be denied their congressional pensions.

"These are big-time fundamental reforms," said Fred Wertheimer, president of the open-government group Democracy 21.

Rep. Michael N. Castle (R-Del.), who failed to get ethics legislation enacted last year, noted that the final bill's disclosure rules are considerably less tough on the "bundling" of small campaign contributions into large donations by lobbyists. The original ethics bill would have required the disclosure of bundled contributions over $5,000 every three months. Under the final bill, lawmakers would have to report every six months any bundled contributions from lobbyists totaling more than $15,000. In one year, a single lobbyist could funnel nearly $30,000 to a candidate or campaign committee without any of those actions having to be disclosed.

House negotiators also refused to lengthen the current one-year "cooling-off" period, during which former House members are prohibited from becoming lobbyists.

Some conservatives latched on to the weakening of earmark disclosure rules that had passed the Senate in January. An explicit prohibition on trading earmarks for votes was dropped by House and Senate Democratic negotiators. A prohibition on any earmark that would financially benefit lawmakers, their immediate families, their staff or their staff's immediate families was altered to say that the ban would apply to any earmark that advances a lawmaker's "pecuniary interest." Critics say that would mean the benefit would have to be direct for the measure to be prohibited, and that the ban would not apply to a project that would benefit a larger community, including the lawmaker.

House members are covered by earmark rules, passed earlier this year, that are tougher than the legislation, which would apply only to senators.

"Earmarks have been the currency of corruption and, unfortunately, this lobbying reform bill does not adequately address that problem," declared Rep. Jeff Flake (R-Ariz.), a longtime critic of earmarks.

Reform groups and Democrats accused opponents of using the earmark issue as a pretext to block the other rule changes. Sen. Tom Coburn (R-Okla.), who has blocked the legislation in the past, confirmed that he remains uncomfortable with the broader bill's mandates on lobbying disclosures and gift bans.

"You could've done nothing, or some staff member could have made an innocent mistake, and now you're defending yourself in a court of law," he said. "It's nuts."

Sen. Jim DeMint (R-S.C.), another critic, had single-handedly blocked the calling of a formal House-Senate conference to negotiate the final deal, forcing Democrats to hammer out the compromise on their own. The House passed it under fast-track procedures that prohibit amendments but require a two-thirds majority for approval -- a threshold that was easily met.

Now, Reid must get the bill through the Senate without any amendment, using a parliamentary tactic that has been roundly criticized by Republicans in the past as strong-arming. But in this case, Senate Minority Leader Mitch McConnell (R-Ky.) has given his tacit assent, laying the blame squarely on his own conservative hard-liners.

"In a sense, we made it difficult on ourselves," McConnell said.

It may be even more difficult for Republicans to block the measure while their senior senator, Stevens, is under a cloud of suspicion. FBI agents raided the powerful lawmaker's house Monday, looking for evidence in a long-running investigation of an Alaska energy firm, Veco, and its alleged efforts to bribe Alaska lawmakers.

And yesterday, the House ethics committee indicated that it may consider an inquiry into whether Rep. Heather A. Wilson (R-N.M.) violated rules by calling a federal prosecutor about a pending investigation. The committee's staff interviewed the prosecutor, former U.S. attorney David C. Iglesias, yesterday.

At least eight lawmakers -- six Republicans and two Democrats -- are under federal investigation. Earlier this year, the homes and business interests of Reps. Rick Renzi (R-Ariz.) and John T. Doolittle (R-Calif.) were searched, and Rep. William J. Jefferson (D-La.) was indicted on corruption charges.

The Main Provisions

Highlights of the ethics bill passed by the House yesterday.

• Senators must disclose special spending projects called “earmarks” two days before a vote and must certify that they or their family members do not have a financial interest in the project. (The House adopted similar rules in January.)

• Lawmakers and their staff may not accept gifts from lobbyists and their clients (The House adopted a gift ban in January.)

• Senators, Senate candidates and presidential candidates must pay charter rates when traveling on private planes. House members and candidates may not accept travel on private planes.

• Lawmakers convicted of bribery, perjury or similar crimes lose their retirement benefits.

ª Senators must wait two years before lobbying Congress after leaving office. House members and senior congressional staff members must wait one year.

• Lawmakers may not attend parties in their honor sponsored by lobbyists during national political conventions.

• Lawmakers and their staff may not influence employment decisions in exchange for political access.

• Lawmakers must disclose lobbyists who raise at least $15,000 for them within six months by “bundling” campaign donations from several contributors.

• Lobbyists must file reports twice as often each year, and for the first time must file them to a publicly searchable database.

Time for a Democracy Movement

Time for a Democracy Movement
by Naomi Wolf
July 31, 2007
© 2007 Huffington Post

America is looking less and less like America. And more and more Americans are worried about it.

What country is this? The president is claiming the right to keep his aides from testifying for Congress about the U.S. attorneys scandal; hundreds of men — according to a Seton Hall study, many of them innocent — are in legal limbo in Guantanamo Bay; U.S. agents are kidnapping people off the streets in Italy and Macedonia and `rendering’ them to be tortured; the president and his lawyers claim the executive has the right to call anyone — U.S. citizen or not — an `enemy combatant’ — and the person who should decide what that means is the President himself; civil rights organizations say peaceful citizens’ groups are being infiltrated and put under surveillance; and a new bill just made it easier, as Senator Patrick Leahy warned, for the president — any president of whatever party — to declare martial law.

Americans across the political spectrum are increasingly uneasy. We have always had a sense of our own invincibility in relation to our democracy: the system, many of us believe, simply rights itself. But we have to face the fact that when checks and balances are being systematically dismantled — when the Constitution is under such sustained assault — our assumption that democracy will protect us without our active intervention is dangerously naive.

The time has come for a grassroots democracy movement in America. I am relieved to be able to say that today the American Freedom Campaign (AFC) — a new organization prepared to engage hundreds of thousands of American citizens in restoring democracy and the rule of law — is ready for action.

The initial partners in the American Freedom Campaign represent a dynamic partnership of legal experts, human rights advocates, and grassroots expertise. Participating in the launch are the Center for Constitutional Rights , Human Rights Watch , and MoveOn.org . All Americans are welcome to join this campaign and it will undoubtedly grow larger and stronger over the coming months.

There is no time to waste. We have to get it — in a hurry — that the assaults we are witnessing are unprecedented and demand unprecedented responses from us. There have been times of state repression in our nation before now; as others such as Joe Conason, author of It Can’t Happen Here, and Bruce Fein, a founder of the American Freedom Agenda, have pointed out, `the pendulum’ has swung to extremes before now: President Lincoln suspended habeas corpus in some areas during the civil war — but it was restored after the war came to an end. 120,000 Japanese American citizens were interned in detention camps (the fear was that they would engage in `espionage’ and `sabotage’) during World War Two — and when that hysteria subsided, the camps were closed and these innocent Americans released. Both writers note that previous eras of repression had endpoints: the wars ended, the threat subsided — but the War on Terror is defined as open-ended in time and in space: there will never be a day of victory, and the whole world is a battlefield. So we can’t count on the pendulum to swing back as it always has — that is, not without a citizen uprising in defense of liberty.

Other times and places are worth thinking about when we witness these events. History, which Americans never take to naturally, has a great deal to warn us about right now. The historical record — and the contemporary record — is incontrovertible on the fact — a fact that flies in the face of the `democracy myth’ we cherish, that we are somehow exempt from these pressures — that while it is difficult to build and sustain a democracy, closing one down is actually quite easy. There is practically a blueprint for it, which would-be dictators and autocrats around the world have followed. All leaders who seek to close down an open society — or push back a democracy movement — do the same key things. Among other steps, they invoke an internal and external threat (it can certainly be real); create a surveillance apparatus aimed at ordinary citizens; establish military tribunals; infiltrate citizens’ groups; make it easier to detain citizens; target key individuals with job loss or other penalties if they speak out; reframe criticism as `treason’ or `espionage’; and pass laws that make it easier to circumvent or override a Constitution because of the threat that has been invoked or in the name of `restoring public order.’ It is also clear from the record that the Founders were right to tell us to be vigilant in defense of liberty — because democracy can become weakened and a point can be reached at which democracy cannot simply heal itself.

That is why everyone who is concerned about the abuses of power we are witnessing under the current administration should sign on to the American Freedom Campaign. As noted above, the AFC is backed by a dynamic coalition of some of the key organizations devoted to restoring the Constitution and defending freedom.

The mission of the AFC is to make the restoration of our democracy the paramount issue — especially at the level of the presidential campaign, but also at the level of citizen education and citizen pressure on Congress. Its ten-point agenda will, among other things, restore the right to a fair trial; make sure journalists can’t be intimidated with the Espionage Act; stop the president’s — any president’s — abuse of signing statements — an abuse that can basically override the will of the people as expressed by their representatives; and keep the state from breaking into our homes, tapping our phones and reading our emails illegally.

These are not partisan issues. It is about power, not politics. While it is ideal from a citizen’s point of view that leaders on both the left and the right are now pushing to restore our checks and balances, the issue transcends party affiliation. Without these horrific laws repealed, a President Hillary can be as dangerous to liberty — and to American citizens — as a President Giuliani.

It’s a good time now for citizens, as they are signing up to lead this grassroots movement to restore the rule of law and to confront the excesses of the executive branch, to reread the Founders’ debates. They would see how debased our discourse is right now. The excesses we are seeing in the power grab of the executive branch are presented to us in the name of patriotism; but if the Founders were around today, they would be outraged by the systematic dismantling of the checks and balances they put in place to protect us.

The framers and those who explained the new system to the public believed in their very souls that an American despot could easily arise — in America; that the reason each branch should `check’ the other is that leaders - even American leaders — tend, as part of human nature, to abuse power if they are not checked. They knew from their own experience or their family’s history how easy it is for an abusive leader to strip prisoners of their rights, send soldiers or agents of the Crown to break into people’s homes and go through their personal papers without proper warrants, and punish those trying to assemble with their neighbors or speak up about government overreaching.

One reason we need a grassroots democracy movement in this time of constitutional crisis is that many Americans have only a hazy sense of what democracy is — and what the Constitution really says. We are rarely reminded that the Founders enshrined our rights precisely because they or their parents had fled countries in which prisoners were detained without fair trial and turned into criminals and `traitors’ for using the kind of language that makes up the Declaration of independence. It was because they understood repressive governments and abusive monarchs so well that they set up our Constitution and Bill of Rights to make sure those evils would never take root again on our soil.

Few of us are taught in detail how easy it is to repress democracy movements and close down open societies — if you are willing to do a few key things. So that at just this moment of crisis, young people — and many citizens in general — are both disheartened and ill-equipped, lacking both the hope and the analytical tools they need to recognize the seriousness of these dangers and fight this fight.

But there has never been a more urgent time to change our minds and our behavior. The window can close — yes, even in America — if we fail as individuals to take up the patriot’s task. Our country needs us active — in the millions. The founders never intended for a professional caste to perform the patriot’s task of defending liberty: they expected ordinary people — farmers, small shopkeepers, schoolteachers — to be on the front lines.

The Founders would have been appalled at the helplessness that most people feel today in the face of serious encroachments upon our freedom and liberty — just as they would have been at the encroachments themselves. The system they set up — if it is working properly — is the most transformative and empowering of the individual on earth. They would have counted on each of us to rise up in defense of what they created and to directly challenge those who assert that they are not answerable to the American people — and not bound by the American system and the rule of law.

So in the name of those men and women who had the courage to establish this nation, let us all rise up together. Join the American Freedom Campaign and help defend our democracy.

Naomi Wolf was born in San Francisco in 1962. She was an undergraduate at Yale University and did her graduate work at New College, Oxford University as a Rhodes Scholar. Her essays have appeared in various publications including: The New Republic, Wall Street Journal, Glamour, Ms., Esquire, The Washington Post, and The New York Times. She also speaks widely to groups across the country.

International Herald Tribune Editorial - Time to act on U.S. voting reform

International Herald Tribune Editorial - Time to act on U.S. voting reform
Copyright by The International Herald Tribune
Published: July 31, 2007


Before the House of Representatives takes its August recess, it owes it to the voters to pass a bill that would fix the problems with electronic voting. And there is a good bill ready, sponsored by Rush Holt, Democrat of New Jersey, that would go a long way toward making elections more secure.

Electronic voting machines in their current form simply cannot be trusted. Just last week, a team of computer scientists from California released a study of three voting systems that once again showed how easy it is to hack into electronic systems and alter the count.

The most important protection against electronic voting fraud is the voter-verified paper trail, a paper record that the voter can check to make sure that it properly reflects his or her choices. There should then be mandatory audits of a significant number of these paper records to ensure that the results tallied on the voting machines match the votes recorded on paper.

Holt's bill would require that every voting machine produce a paper record of every vote cast in a federal election, and it would mandate random audits. It would also prohibit the use of wireless and Internet technology, which are especially vulnerable to hackers.

When Speaker Nancy Pelosi and the House majority leader, Steny Hoyer, took over in January, there was much enthusiasm for fixing the problem. But no progress has been made. Pelosi and Hoyer can show their commitment to reliable elections by scheduling a vote this week on the Holt bill.

The man behind Obama

The man behind Obama
BY CAROL MARIN
Copyright by The Chicago Sun-Times
August 1, 2007

When Obama political guru David Axelrod and I met for lunch Tuesday in Chicago, I confess, I had cosmetics on my mind.

With fresh memories of CNN's Wolf Blitzer delving into Hillary Clinton's cleavage, photos of a buff Barack Obama splashing in the Hawaiian surf, and reminders of John Edwards' $400 haircut, the first thing I felt compelled to do was inspect Axelrod's outfit.

He did not disappoint.

Khaki-colored, somewhat wrinkled short sleeve shirt. Blue jeans. The kind of hair unaccustomed to a blow-dry.

For those of us who have known David Axelrod over the years, we remember him first as a star Chicago Tribune reporter and political columnist and only later as the go-to media man and consultant to a long list of formidable local, state and national politicians, people with last names like Daley, Simon, Vilsack, Clinton, Edwards, and now of course, Obama.

This is the highest altitude of a very high-flying career for a guy who is only 52. No longer living paycheck to paycheck, Axelrod makes millions as a master of the political message. And his name is routinely invoked, as it was at least twice last Sunday, on NBC's "Meet the Press." Profiles of him have filled the pages of the Washington Post and the New York Times.

I suppose, if nothing else Tuesday, I wanted to see how living inside the longest, most harrowing presidential campaign season of all time was affecting him. I can't say I came away with a full answer to that. A lot of what we talked about was off the record as these kind of conversations often are. And yet, what's hard to miss in Axelrod's face and manner is both the inexorable responsibility and fatigue of this 24/7 kind of endeavor countered on a daily basis by the exhilaration of conviction and adrenaline that fuels it.

Today, as you read this, Axelrod is hitting the road again, hopscotching with Obama across primary and caucas landscapes while preparing for three debates this month, two of which will be staged here in Chicago. One of them, the YearlyKos Convention, will be at McCormick Place on Saturday, the other the AFL-CIO Democratic Forum to be held next Tuesday in Soldier Field.

Traveling with Obama, Axelrod will have a chance to assess how the campaign is evolving. He and his candidate will squeeze preparation time -- in between appearances, speeches and fund-raising -- for the grinding demands of a mushrooming number of debates.

The most recent matchup in South Carolina, you will recall, revealed a certain disconnect between Washington political pundits who considered Hillary Clinton the high scorer for saying she would not automatically meet with leaders of the enemy nations of Iran or Syria when Obama said he would. Post-debate citizen focus groups, however, declared Obama the winner.

Axelrod likes to remind observers of what Sen. Gary Hart said in Chicago back in 1987 when Hart was ramping up to run for what would become his own doomed '88 presidential bid. "Washington is the last to get the news," quoted Axelrod.

Ask him if he is, in fact, the single most influential or significant voice in the Obama effort, and Axelrod not only looks pained, he takes great pains to point out that a 400-member team propels the campaign and that he's just one of many voices in the candidate's choir.

Don't you believe it.

Chicago Sun-Times Editorial - Sharpton's to-do list - If he's serious about reform, here's what needs doing

Chicago Sun-Times Editorial - Sharpton's to-do list - If he's serious about reform, here's what needs doing
Copyright by The Chicago Sun-Times
August 1, 2007


We hope Al Sharpton will excuse us for not rolling out a red carpet for him. Besides our not wanting it to clash with that carpetbag he travels with, we're resistant to New Yorkers telling us how to solve our problems. But if the Rev. Sharpton thinks in setting up shop in Chicago he can help put an end to "a consistent pattern of police misconduct," we're willing to give him a shot.

"A lot of people feel Daley has been getting a pass," said Sharpton, calling for the mayor to adopt a zero-tolerance policy for police misconduct. He says he's the man to force the issue, having successfully pushed for the convictions of the officers who beat up Abner Louima in Brooklyn in 1997.

But if Sharpton wants to justify opening a chapter of his National Action Network here -- and not just generate more attention for his syndicated radio show -- then he's going to have to swing into action on other societal problems that confront African Americans in Chicago.

So here's our abbreviated to-do list:

• School funding reform. His Chicago counterpart, the Rev. Jesse Jackson, has made the glaring inequities between schools in poor neighborhoods and those in well-off communities a central issue for his Rainbow PUSH/Coalition. However difficult it may be for Sharpton to share a platform with another attention-craving rhetorician, he should work with Jackson to raise the volume on this problem.

• Gun violence. With heartbreaking frequency, innocent kids are becoming collateral damage in street wars. The NAN should use all its leverage to get handguns off the streets and assault weapons banned.

• Absentee fathers. The rising number of them in the black community is a recurring topic on "The Al Sharpton Show" (heard on WVON-AM 1690). He should become actively involved in working to reverse that trend.

We don't know if Sharpton has it in him to do more than talk. He is still best known for affixing himself to Tawana Brawley, the teen who concocted rape charges against six white men, among them police officers, in 1987. His recent Decency Initiative against the use of "bitch," "ho" and the "n" word in hip-hop and other entertainment media was an exercise in showboating. Some think he's coming here merely to boost the poor local ratings for his radio show.

He also could be coming to Chicago for the great food and the shopping. We hope he patronizes our hip boutiques and tips well at our eateries. Mostly we hope he'll roll up his sleeves and achieve something meaningful.

If that's beyond you, Reverend, certainly there are other stations airing your show in other cities that might need your "presence."

Iraq refugee summit offers help

Iraq refugee summit offers help
Copyright by The BBC
July 26, 2007.


Syria hosts the largest number of Iraqi refugees
An international conference in Jordan on the more than two million Iraqi refugees uprooted by war has pledged to help them with their difficulties.

But it insisted the solution to the problem lay in their return home and that the Iraqi government was directly responsible for its displaced citizens.

The UN refugee agency, UNHCR, said some 50,000 more Iraqis were escaping the violence in their homeland each month.

Most are ending up in Jordan and Syria, which want help to ease the burden.

The UNHCR said the wave of displacement sparked by the war in Iraq was the biggest in the Middle East since 1948, when hundreds of thousands of Palestinians fled the newly created Israel.

A final statement at the end of the conference, which was attended by Iraq's neighbours, as well as the UN, US and UK, called on the international community to provide all possible support to the Iraqi people.

It also insisted countries hosting refugees were given assistance "so that they can continue to provide an adequate level of services to Iraqi nationals", particularly in health and education.

The host countries should have the authority to regulate the entry and residence of Iraqi nationals "in line with their law and considerations", the statement added.

But the conference stopped short of addressing calls by Jordan and Syria earlier in the day for rich western nations to take in greater numbers of refugees.

The Iraqi government said it would make available a promised $25m for those straining under the load of the burgeoning numbers of refugees.

'Real humanitarian crisis'

Earlier, the secretary-general of the Iraqi foreign ministry, Muhammad Hajj Hamoud, said the refugee problem should not be underestimated.


We have lost [our] house, we are lost, my daughter is lost, my son [is] lost... help this family please
Najla Abda Karim Saleh
Iraqi refugee in Jordan

He added that efforts to stem the flow of refugees by Iraq's neighbours - who now impose tougher entry restrictions - resulted in cases of mistreatment at border crossings.

One refugee in Jordan, Najla Abda Karim Saleh, fled with her son and daughter. Another daughter was killed in sectarian violence.

She told the BBC she wanted help from the UN to bring her four grandchildren to safety in Amman, the Jordanian capital.

"We have lost [our] house, we are lost, my daughter is lost, my son [is] lost... help this family please," she wept.

Displaced Iraqi family
Violence forces thousands of Iraqis to flee their homes every month

The secretary-general of the Jordanian interior ministry, Mukhaimar Abu Jamous, told the summit that western countries had "relinquished their responsibility in shouldering the Iraqi refugee burden" and urged them to resettle the largest number possible.

The Syrian ambassador to Jordan, Milad Attiya, said the international community "must be involved, especially the United States because its policy led to the plight the Iraqis are currently in and it bears responsibility".

Although the US government announced earlier in the year that it would allow 7,000 Iraqis into the US by the end of September, it has allowed in just 133 over the past nine months because of stringent security measures.

Craig Johnstone, the UN deputy high commissioner for refugees, called for international assistance, since Syria and Jordan had few resources to cope with the influx.

"The international community, I think, has neglected the plight of the refugees from Iraq so far, but they are beginning to act," he told the BBC.

UNHCR says it hopes to find a permanent home for a total of 20,000 Iraqi exiles by the end of the year.

Spy chief discloses broader program - Bush order OKd series of activities

Spy chief discloses broader program - Bush order OKd series of activities
By Dan Eggen
Copyright © 2007 by The Washington Post
August 1, 2007


WASHINGTON - The Bush administration's chief intelligence official said Tuesday that President Bush authorized a series of secret intelligence activities under a single executive order in late 2001, making clear that a controversial National Security Agency surveillance effort was part of a much broader operation than the president previously described.

The disclosure by Mike McConnell, the director of national intelligence, appears to be the first time that the administration has publicly acknowledged that Bush's order included undisclosed activities beyond the warrantless surveillance of e-mails and phone calls that Bush confirmed in December 2005.

In a letter to Sen. Arlen Specter (R-Pa.), McConnell wrote that the executive order following the Sept. 11, 2001, attacks included "a number of ... intelligence activities" and that a phrase used by the administration -- the Terrorist Surveillance Program -- applied only to "one particular aspect of these activities, and nothing more."

"This is the only aspect of the NSA activities that can be discussed publicly because it is the only aspect of those various activities whose existence has been officially acknowledged," McConnell said.

McConnell's letter was aimed at defending Atty. Gen. Alberto Gonzales from allegations that he may have committed perjury by telling Congress that no legal objections were raised about the TSP. Gonzales said a legal fight in early 2004 was focused on "other intelligence activities" than those confirmed by Bush, but never connected those to Bush's executive order.

In doing so, McConnell's letter underscored that the full scope of the NSA's surveillance program under Bush's order has not been revealed. The TSP described by Bush and his aides allowed the interception of communication between the United States and other countries where one party is believed tied to Al Qaeda, so other types of communication or data are presumably being collected under the parts of the wider NSA program that remain hidden.

News reports have detailed activities linked to the program, including data mining to identify surveillance targets and the participation of telecommunication companies in turning over millions of phone records. The administration has not confirmed such reports.

Specter was non-committal on whether McConnell's explanation resolved his questions about the accuracy of Gonzales' testimony. Specter said he was waiting for a separate letter from the attorney general.

McConnell's letter leaves maneuvering room for both sides in the fracas over whether Gonzales has been truthful.

"If you think about it technically, it is pretty clear that the NSA desk that does communications intercepts is separate from the desk that does data mining of call records," said Kim Taipale, executive director of The Center for Advanced Studies in Science and Technology Policy, a New York-based nonprofit group. "Those are separate processes, and to think of them as separate programs is not a stretch."

At the same time, the activities were authorized under a single presidential order. That helps explain why many lawmakers and administration officials -- including FBI Director Robert Mueller -- viewed the wiretapping as part of a larger NSA program, rather than a separate effort, as Gonzales' testimony suggested.

"Both sides have a legitimate case, if you want to be legalist about it," Taipale said.

The 237 reasons to have sex - From piety to pity, love to lust, researchers find wide range of motivations

The 237 reasons to have sex - From piety to pity, love to lust, researchers find wide range of motivations
By Judy Peres
Copyright © 2007, Chicago Tribune
August 1, 2007

If you think people have sex for pleasure and for procreation, you're right. They also have sex to get rid of a headache, to celebrate a special occasion, to get a promotion and to feel closer to God.

New research published in the August issue of Archives of Sexual Behavior has come up with a list of 237 reasons that motivate people to have sex.

Who knew?

Cindy Meston, a professor of psychology at the University of Texas at Austin and the lead author of the paper, said most people assume there are a few simple reasons for having sex: "It feels good, you're in love, or you want to have a child. We found that people are having sex for lots of other reasons."

Knowing that, she said, could boost sex education, help devise more effective strategies for preventing the spread of sexually transmitted diseases and lead to improved treatments for people with sexual problems.

"You need to know why people are having sex if you're trying to put into place a safe-sex program," Meston said. "If you assume people have sex because they're in the heat of the moment, then [you tell them to] carry condoms. But if they're doing it for revenge or because they want to enhance their social status, that will require a different strategy."

Meston and co-author David Buss conducted their research in two stages. First, they asked a group of more than 400 students and volunteers to simply list "all the reasons you can think of why you, or someone you have known, has engaged in sexual intercourse in the past." That produced 715 reasons. After deleting identical or very similar entries, the researchers were left with 237.

Some were "pretty shocking," Meston said, such as "I wanted to give someone else a sexually transmitted disease." She said she also was surprised that some people said they had sex because "I wanted to get closer to God."

"Most of the literature shows that religious people have more sexual problems," she said. "But several people endorsed the idea that religion and sexuality were actually closely linked."

In the second stage of the research, they asked 1,500 other students to rate how important each of the 237 reasons was in their own sexual behavior.

The students were asked to indicate how frequently each reason had led them to engage in sexual intercourse in the past, on a scale from 1 for never to 5 for all the time. Those who had not had intercourse (27 percent of the women and 32 percent of the men) were asked to indicate the likelihood that each of the reasons would lead them to have sex in the future.

Men, women share reasons

Most of the students gave the usual reasons for having sex: "I was attracted to the person," "It feels good" and, "I wanted to show my affection" were high on the lists of both men and women. Lesser priorities on both lists were reasons such as, "Someone offered me money to do it," "I felt sorry for the person," "I wanted to punish myself" and, "Because of a bet."

Meston said she was somewhat surprised by the similarities between the genders. Men were more likely to endorse having sex for physical reasons (such as, "The person was too hot to resist") and to boost their social status ("I wanted to brag to my friends about my conquests.") But there was no difference in the emotional reasons, such as, "I wanted to express my love for the person."

"The stereotype that men have sex for physical reasons and women have sex for love -- our data didn't really support that," Meston said. "These young men and women were having sex for physical pleasure and also for emotional attachment, feeling connected to another person."

Meston and Buss said their findings contradict the stereotype that women, more than men, use sex to obtain special favors. In their study, men were more likely to endorse reasons for having sex that involved utilitarian goals ("To get a favor from someone").

Leonore Tiefer, a sex therapist and psychologist at New York University School of Medicine, said the findings did not really answer the question, "Why Humans Have Sex," as the title of the paper asserts.

"It's why Texas students say they have sex," Tiefer said.

Nevertheless, she said, it's "useful to discuss motives, as opposed to just counting."

Meston acknowledged the limitation of her research and said she planned to look at other populations.

"This is just the start," she said. "The next step is to see how these motivators change across time, how they differ between genders across the age range, how they differ by ethnicity."

Another limitation of the study, Meston acknowledged, was that people might have been reluctant to cite socially unacceptable motivations, such as the desire to make money or punish a partner. Conversely, they might have exaggerated their response rates to socially desirable reasons, such as expressing love.

But she said the survey, dubbed "YSEX?," already could be used to start developing new treatments for people with sexual problems. "Just giving the list to people to check off would give a therapist more to work with," she said.

In addition, Meston noted, people in therapy often are hesitant to talk about sexual experiences they're not proud of. "Learning you're not the only one who has had sex for a stupid reason might bring a bit of relief," she said.

Another benefit could be for people with very low sex drive. A recent landmark survey found that nearly one-third of women aren't interested in sex.

"A lot of people have low desire," Meston explained. "It's not a problem if their partner also has low desire. But if their partner wants to have sex much more often than they do, it could become a problem in the marriage. Some women really resent having sex, because they're not getting physical pleasure.

"If they learn that they're not so unusual -- that not everyone is having sex because it feels good -- they might find another reason that makes them feel less resentful, like 'Oh, yeah, having sex does make me sleep better.'"

The reasons people give are clustered in four groups:

Physical
-My hormones were out of control
-I was attracted to the person
-It seemed like good exercise
Goal-directed
-I wanted to get a raise
-Because of a bet
-I wanted to change the topic of conversation
Emotional
-I realized I was in love
-I wanted to say 'thank you'
Insecurity
-I didn't know how to say 'no'
-I felt obligated



jperes@tribune.com

Financial Times Editorial Comment: Subprime grenades

Financial Times Editorial Comment: Subprime grenades
Copyright The Financial Times Limited 2007
Published: July 31 2007 18:28 | Last updated: July 31 2007 18:28


Little debt market bombs are starting to explode on the balance sheets of financial institutions around the world. In the space of a couple of days, $3bn Boston hedge fund Sowood Capital has shut itself down after losing more than 50 per cent of its capital, while a parcel of subprime debt has blown up in the face of IKB, a German bank. These losses are rather encouraging.

They are encouraging because the pain is dispersed, spread among institutions of different kinds in different countries and buffered by those institutions’ capital. That makes a contagion, where losses at Fund A mean it cannot service its loans from Bank B, which in turn calls in debts from Company C, unlikely, and should prevent the current, healthy repricing of risky assets from turning into a crisis.

So far new tools for transferring risk such as credit default swaps, which insure investors against a company going bankrupt, seem to have done a good job of spreading risks from subprime borrowers and leveraged buy-outs far and wide. That should make the financial system more resilient than it has been during credit wobbles in the past.

One negative consequence is that losses will pop up in funny places, such as at the IKB Deutsche Industriebank, a specialist lender to the German Mittelstand. Further surprises are likely – at a Japanese credit union, perhaps, or a small insurer in the US Midwest – and it may turn out that some investors did not really understand they were buying bonds backed by subprime mortgages. No financial institution, however, should be criticised for trying to diversify its credit risk.

The current credit problems could yet get worse if more loans default. If prime US mortgage borrowers started to miss payments, or a lot more companies went bust, then losses could get so high that no amount of diversification would prevent a serious financial crisis.

But that looks unlikely to happen. The world economy is strong – unusually so – and the US is not in bad shape. Gross domestic product grew at an annualised rate of 3.4 per cent in the second quarter of 2007 and the labour market is tight. Growth in important Asian economies such as China and India is almost too fast for comfort and until economic conditions start to change, the chances of a severe deterioration in underlying credit quality are low.

None of which will make investors in Sowood Capital or the ousted chief executive of IKB any happier. Innovation may have made the financial markets more resilient as a whole, but for individual investors it is now even easier to lose a lot of money, and lose it fast.

Financial Times Editorial Comment: Memo to Bush: no more ‘Yo, Blair’

Financial Times Editorial Comment: Memo to Bush: no more ‘Yo, Blair’
Copyright The Financial Times Limited 2007
Published: July 31 2007 18:34 | Last updated: July 31 2007 18:34


The stiff body language was more eloquent than anything the president or the prime minister actually said. It tells you that the clearest outcome from this first encounter at Camp David between Gordon Brown and George W. Bush is that there will be no “Yo, Brown” moments in this relationship. And if there are, Mr Bush will find his new chum is not quite the “humorous Scotsman” he affected to discern.

Yet it is not so much the substance of Anglo-American relations that has changed but the tone. Mr Brown needs to distance himself from the legacy of Tony Blair – so eager to please and in awe of American power – without walking out on the disaster in Iraq. He needs to reaffirm the UK’s historic alliance with the US while reasserting Britain’s national interest. For the moment, he is relying on declarations of Atlanticist faith and finely calibrated ambiguity, a tricky mix.

Calculated ambiguity is a difficult tactic that requires a very sure grasp of both the fixed geography and the political swirl of geopolitics. Mr Brown risks confusing his audience on both sides of the Atlantic.

His US trip was preceded by comments by subordinates that were either over-interpreted or deniable spin – or maybe both. His recasting of “the special relationship” as “our single most important bilateral relationship” and description of his talks with Mr Bush as “full and frank” have already launched a thousand theses. Beyond mood music, however, decisions will soon have to be taken, notably on Iraq.

Mr Brown has deferred any decision on UK forces in southern Iraq until October, when parliament returns and after US commanders report on the effect of their troops “surge”. He wants to move fully to an “overwatch” role after handing over the last of four provinces, Basra, to Iraqi forces – in effect to local Shia militias. It remains to be seen how big a step towards British withdrawal this will be.

While the prime minister is fully committed to the struggle against jihadi totalitarianism, nothing he said suggested open-ended commitment to the Bush administration’s shifting goals and improvised tactics in Iraq – nor should it.

He has put the right emphasis on the importance of the battle in Afghanistan and, above all, on politics and the battle of ideas.

Washington needs political cover for its own, eventual withdrawal from Iraq. Meanwhile, it needs UK troops protecting its supply lines through south Iraq. Both as a loyal ally, and a leader of the European Union, Britain has leverage. Mr Brown’s businesslike approach, thus far, suggests he can use it.

Rice's absence from Asean forum puts regional influence in question

Rice's absence from Asean forum puts regional influence in question
By John Burton and Roel Landingin in Manila
Copyright The Financial Times Limited 2007
Published: August 1 2007 03:00 | Last updated: August 1 2007 03:00


Condoleezza Rice's absence this week from Asia's biggest security meeting has raised questions over whether Washington's preoccupation with the Middle East is causing it to lose influence in the region to China, write John Burton and Roel Landingin in Manila.

Ms Rice decided to skip the Association of South-East Asian Nations' regional forum in Manila, which begins tomorrow, to visit Egypt and Saudi Arabia in an effort to find ways to stabilise the situation in Iraq.

The US will be represented at the Asian Regional Forum (ARF) by John Negroponte, Ms Rice's deputy. But her absence means that she will have missed two of three forums held since she became secretary of state.

The ARF was founded by Asean in 1994 and has grown to include 27 members at its annual meeting, including theUS, China, Russia andthe European Union.

China is forging closer economic ties with Asean, with the goal of establishing a trade pact with the region by 2010. In contrast, the US recently said it was premature to discuss a US-Asean trade deal.

The Short View: Credit swaps

The Short View: Credit swaps
By John Authers, Investment Editor
Copyright The Financial Times Limited 2007
Published: July 31 2007 18:12 | Last updated: July 31 2007 18:12


Did the risk of default on US investment grade bonds really triple over the last month? And having done so, did this risk really drop by a third over the ensuing 24 hours?

Of course not. But movements in the prices of credit default swaps, which allow investors to buy protection against defaults, suggested exactly that. So we now know that the market for credit derivatives, which did not exist even five years ago, is inefficient.

That is no surprise. Markets do not always trade in line with fundamentals. All asset classes show inefficiencies, and much money is made exploiting them.

But this latest spasm raises questions about the vast and unruly market for credit derivatives. How does it operate, and how to gauge fundamental value?

The way the price of default swaps has ricocheted in the last few days appears to reflect a market in which there are only a few ultimate “sellers” (at the big investment banks), who if they do not feel confident about their ability to hedge their exposures can simply mark prices up to unrealistic levels. This is much less efficient than the markets for stocks or bonds.

As for the fundamentals, moves in swaps prices have far outpaced moves in underlying bonds. Both should be tied to the the risk of default, which has been cyclical in the past. Corporate defaults are running at historic lows at present, so they are likely to increase.

However, cool-headed analysis suggests that the cost of default insurance went beyond anything rational. At the end of last week, George Bory at UBS produced calculations showing that credit insurance prices implied that defaults would rise by more than 6 per cent in a year. This is conceivable, but Mr Bory points out that this has not happened in 25 years.

Calculations like this helped buyers regain their nerve this week. But the inefficiency of the market did not go away: it would be unwise to assume that credit’s convulsions are over.

UN to send 26,000-strong force to Darfur

UN to send 26,000-strong force to Darfur
By Mark Turner and Jean Eaglesham at the United Nations
Copyright The Financial Times Limited 2007
Published: July 31 2007 14:54 | Last updated: August 1 2007 02:42


The United Nations Security Council unanimously agreed on Tuesday to a 26,000-strong joint UN-African Union force for Darfur, as Gordon Brown, the prime minister, hailed the creation of the world’s largest peacekeeping operation during a speech in New York.

The decision follows months of negotiations over the “hybrid” force’s command structure and mandate. Sudan gave its consent earlier this year.

Jamie Balfour-Paul, humanitarian policy adviser for Oxfam, welcomed the decision, but warned that force would not deliver the immediate help people needed because “it will not be in place for many months”. To win agreement, the latest UK-French draft stepped back from earlier threats of new sanctions if the warring parties did not co-operate and deleted the right to the “seizure and disposal” of illegal arms. The force will monitor arms instead.

But it retained references to Chapter 7, under which the UN can authorise the use of force, for self-defence, to ensure the free movement of humanitarian workers and to protect civilians.

Speaking at the UN, Mr Brown called Darfur “the greatest humanitarian disaster the world faces today”, with 2m displaced and 4m dependent on food aid.

The conflict, between forces backed by the Sudan government and rebel groups, has killed more than 200,000 people since 2003. “The plan for Darfur is to achieve a ceasefire, including an end to aerial bombings of civilians; drive forward peace talks [in Tanzania] and, as peace is established, invest in recovery and reconstruction,” he said.

The resolution calls for a force of up to 19,555 soldiers and 3,772 police, alongside 19 “formed police units” of 140 people each. Command and control will be provided by the UN but day-to-day decisions will be taken by an African general. The aim is for most troops to be African.

In a separate development, the US House of Representatives passed legislation requiring the US Treasury to maintain a list of companies whose dealings directly benefit the regime.

Wall Street braced for more pain

Wall Street braced for more pain
By Anuj Gangahar in New York
Copyright The Financial Times Limited 2007
Published: August 1 2007 14:15 | Last updated: August 1 2007 14:15


Wall Street stocks were poised to fall again on Wednesday following the sell-off of the previous session as the problems in the subprime mortgage market looked set to inflict further pain.

About an hour before the opening bell in New York, S&P 500 futures were 7.6 points below fair value at 1,452.7 while Nasdaq futures were 10.8 points down at 1,934. Dow Jones Industrial Average futures were 85 points lower at 13,190.

But futures did rebound from earlier lows following remarks from Treasury Secretary Hank Paulson that the market impact of the US subprime mortgage fall-out was largely contained and that the global economy was as strong as it has been in decades.

Asian markets fell and European stocks were also lower in early trading.

A third Bear Stearns hedge fund has also put a halt to investor redemptions, adding to rising concern.

US stocks fell on Tuesday after American Home Mortgage Investment Corp said that lenders had cut off its access to credit and that it might have to liquidate its assets. Its shares fell by 90 per cent when they resumed following a day and a half halt. The mortgage provider also admitted it would not be able to fund $450m to $500m of loans.

Rupert Murdoch’s News Corp finally won its battle to buy Dow Jones, the publisher of the Wall Street Journal for $5.6bn.

Time Warner reported second-quarter earnings that beat analysts’ estimates and announced it had authorised an additional $5bn stock repurchase.

In economic news, the Institute for Supply Management’s report on nationwide manufacturing activity is due at 10am ET.

Also due out this morning is the National Association of Realtors’ report on pending home sales, a more forward-looking reading on existing home sales activity than its main home sales report. Economists are forecasting that index will continue to slide, falling 0.6 per cent.

Challenger, Gray and Christmas, a job placement firm, showed planned job cuts in July fell 23 per cent from June to a 12-month low.

Oil prices eased ahead of the government’s weekly report on crude inventories, due at 10.30am, after setting a record close Tuesday.

Murdoch clinches deal to buy Dow Jones

Murdoch clinches deal to buy Dow Jones
By Aline van Duyn and James Politi in New York
Copyright The Financial Times Limited 2007
Published: July 31 2007 16:07 | Last updated: August 1 2007 08:20


Rupert Murdoch on Wednesday clinched victory in his battle to acquire Dow Jones after securing support from enough Bancroft family members to secure majority backing for his $5bn cash offer for the owner of The Wall Street Journal.

Aline van Duyn on Ru­pert Mur doch’s bat tle for Dow Jones
The breakthrough came after nearly four months of often torturous negotiations between the media mogul and the fractious clan of heirs to a family which has controlled the leading US financial newspaper for more than a century.

In a joint statement with Dow Jones, Mr Murdoch, News Corp chairman and chief executive, said: ”I am deeply gratified at the level of support we have received from the Bancroft family and its trustees. Given the Bancrofts’ long and distinguished history as custodians of Dow Jones, we appreciate how difficult this decision was for some family members. I want to offer the Bancrofts my thanks, and an assurance that our company and my family will be equally strong custodians.”

The Bancroft family said in a statement: “After much soul-searching, hard work and analysis by Bancroft family members, trustees and advisors, shares held by family members and trustees representing approximately 37 per cent of the company’s voting power have been committed to support the News Corp transaction.

“It is our most fervent hope that in the years to come, The Wall Street Journal will continue to enjoy, and deserve, the universal admiration and respect in which it is held all over the world, and that the Journal and Dow Jones’s other print and online publications will continue to achieve great things as part of a larger, well-capitalized, global organization committed to upholding the long tradition of journalistic excellence, independence and editorial integrity of which we are all so proud.”

The family’s statement followed a letter to Wall Street Journal readers from Gordon Crovitz, the newspaper’s publisher, who said on Tuesday night that “a majority of the Bancrofts has decided to sell its shares to News Corp.”

Mr Murdoch overcame objections from inside and outside the family that his hands-on editorial style and tabloid newspaper sensibility would tarnish the Journal’s reputation for high editorial standards and independence.

His $60 a share offer, a 65 per cent premium to Dow Jones’ share price before news of News Corp’s interest emerged, carried the day after he agreed to a last-minute deal sweetener by helping to cover millions of dollars of legal and advisory costs incurred by the Bancroft family.

The 76-year-old mogul, who has in the past 50 years built News Corp from a small Australian newspaper group into a global media giant, has had his eye on the Journal for at least a decade.

By adding it to a stable of media properties that run from tabloids such as The Sun in London and the New York Post, to Fox News Channel and MySpace, Mr Murdoch cements his position as the dominant force in global media. Mr Murdoch has pledged to invest in the Journal as part of his plan to build up a global business news franchise. The Journal could lend credibility to a new business channel planned by Fox in the US, which will rival CNBC.

The Bancrofts control 64 per cent of Dow Jones’s voting shares, held through a complex series of privately-held trusts. More than half the family votes, representing more than 30 per cent of Dow Jones’s overall voting shares, are needed for News Corp to be confident that its offer will be voted through by a majority of the company’s shareholders.

A turning point came on Tuesday after a Bancroft family trust holding around 9 per cent of Dow Jones’s voting shares dropped its push for a higher price from Mr Murdoch. Instead, it agreed to back the deal after receiving assurances that the family’s fees would be paid as part of the deal.

Before this Denver Trust gave in, Bancroft family votes representing around 28 per cent of the company’s total votes were understood to be backing a sale to News Corp. The Denver Trust votes brings the total to at least 37 per cent.

The deal is not expected to run into any regulatory obstacles.

Shares in Dow Jones rose more than 10 per cent on Tuesday to close at $56.79.

Catholic dean on leave after YouTube outburst

Catholic dean on leave after YouTube outburst
Copyright 2007 Reuters
August 1, 2007


CANBERRA, Australia (Reuters) -- A Roman Catholic priest who unleashed a torrent of expletives and racist abuse against skateboarders outside his Australian cathedral, only to have the outburst filmed and placed on YouTube, has been put on leave.

St Patrick's Cathedral, Melbourne.

The Reverend Monsignor Geoff Baron, the dean of St Patrick's Cathedral in Australia's second biggest city, Melbourne, was videotaped swearing at and abusing a group of teenagers using the cathedral grounds as a skate park.

"Move, you f------ fool," Baron tells one skater in the video, slapping one of the group across the head and prompting a torrent of abuse in reply.

Pointing to a skater lying on the ground, Baron is heard telling the youth "Little foreigner there, look at the sleepy eyes, black hair".

"At least he's got hair. You f------ bald prick," one youth replies. Others spat on and shoved the furious priest.

The embarrassed Catholic Archbishop of Melbourne, Denis Hart, placed Baron on indefinite leave after the outburst appeared on YouTube, while security guards began patrolling the cathedral grounds on Wednesday amid threats of reprisal attacks.

"I want to relieve the dean of the pressures and responsibilities he carries as dean of the cathedral," Hart said, promising further action.

Baron apologized for the outburst on Tuesday, but on radio described the skaters as "jackals and hyenas" who had provoked him with allegations he was a pedophile.

"It was outrageous behavior. I let myself down terribly badly, quite clearly, and I've also brought scandal and shock to other people," he told local radio.

The video clip of the outburst, which was filmed a year ago but only recently posted on YouTube (http://youtube.com/watch?v=HQAfalqo340), was viewed tens of thousands of times.

Doctors blast Guantanamo treatment as unethical

Doctors blast Guantanamo treatment as unethical
Copyright 2007 The Associated Press.
July 31, 2007



CHICAGO, Illinois (AP) -- Military doctors violate medical ethics when they approve the force-feeding of hunger strikers at the U.S. prison camp at Guantanamo Bay, according to a commentary in a prestigious medical journal.

The doctors should attempt to prevent force-feeding by refusing to participate, the commentary's three authors write in Wednesday's Journal of the American Medical Association.

"In medicine, you can't force treatment on a person who doesn't give their voluntary informed consent," said Dr. Sondra Crosby of Boston University, one of the authors. "A military physician needs to be a physician first and a military officer second, in my opinion."

As of Tuesday, 20 of 23 fasting detainees at Guantanamo were being fed liquid meals through flexible tubes inserted through their noses and throats, said Guantanamo spokesman Navy Cmdr. Rick Haupt. The strikers are protesting conditions at the camp and their open-ended confinement.

A few physicians have declined to participate in force-feeding, although the specific number has not been tracked, Haupt said. The military does not punish doctors who won't participate in force-feeding, Haupt wrote Friday in an e-mail response to questions from The Associated Press.

A mass hunger strike began at Guantanamo in August 2005 and reached a peak of 131 detainees. Last year, the military started strapping detainees in restraint chairs during tube feedings to prevent the prisoners from resisting or making themselves vomit.

The restraint chairs constitute excessive force and coercion, Crosby said.

Department of Defense spokeswoman Cynthia Smith said force-feeding is done "in a humane and compassionate manner," using a method that is consistent with procedures used in U.S. federal prisons.

"No patient receives any medical treatment unless medically necessary," Smith said.

Last year, Crosby and another co-author reviewed the medical records of two detainees who were force-fed and wrote affidavits filed in federal court. They were not paid for that work, which they did at the request of the prisoners' attorneys.

Reviewing those medical records prompted the commentary, Crosby said.

"We were and still are disturbed by the practices," she said.

The medical records contained no evidence that the hunger strikers received ongoing psychiatric evaluations or had been adequately told about the risks of fasting or tube feeding, Crosby said. If they understand the consequences, the ethical approach is to let them fast without force-feeding, Crosby said. She said it's also unclear whether the strikers have access to independent medical consultation.

Haupt, the Navy spokesman, said strikers are seen once each week by mental health professionals. The strikers' physical and mental health is closely monitored, he said. However, they aren't allowed to consult with independent doctors, Haupt said.

The commentary calls on professional organizations to back doctors who refuse to participate in force-feeding. Commentaries are the opinions of the authors, not of the journal's editors or of the American Medical Association, but the AMA has endorsed the World Medical Association's policy against force-feeding.

About 360 men are still held at Guantanamo on suspicion of terrorism or links to al Qaeda or the Taliban. E-mail to a friend

Military fears political inertia in Iraq

Military fears political inertia in Iraq
By Demetri Sevastopulo in Washington
Copyright The Financial Times Limited 2007
Published: July 31 2007 23:06 | Last updated: July 31 2007 23:06


The White House nominee for top military adviser to George W. Bush warned on Tuesday that a lack of political reconciliation in Iraq could jeopardise the US being able to stabilise the country.

Admiral Michael Mullen, the current chief of naval operations who was nominated to replace General Peter Pace as chairman of the joint chiefs, said the US military “surge” was showing progress. But he warned that the Iraqi government had not taken the opportunity to implement political reconciliation.

“Based on the lack of political reconciliation at the government level...I would be concerned about whether we’d be winning or not,” Adm Mullen said during a hearing of the Senate armed services committee.

He avoided making any final judgment on whether the surge would prove successful, saying he wanted to wait for the September report by General David Petraeus, the top US commander in Iraq, and Ryan Crocker, the US ambassador to Baghdad.

But he said: “The surge is giving our operational commanders the forces they needed to execute more effective tactics and improve security...That is happening. Security is better. Not great, but better.”

At his confirmation hearing, senators held mixed views over the additional 30,000 troops. Most expressed concern about the lack of progress made by the government of Nouri al-Maliki, the Iraqi prime minister, which went into summer recess this week without passing any of the laws considered key to achieving stability.

“The Maliki government is sliding backwards and is failing in the partnership that was established as the predicate, the foundation for the surge concept of January 10,” said John Warner, one of the first Republican senators to raise concerns last year that the situation in Iraq was “moving sideways”.

While US military daily casualties increased significantly in the first few months of the surge, they have subsided since May. The US had lost 74 troops in July up to yesterday, the lowest monthly level since November last year.

US consumer spending slows

US consumer spending slows
By Eoin Callan in Washington
Copyright The Financial Times Limited 2007
Published: July 31 2007 14:39 | Last updated: July 31 2007 14:39


US consumer spending rose at the slowest pace in nine months in June in a sign of cooling household demand.

Spending rose 0.1 per cent after a gain of 0.6 per cent the previous month, according to the Commerce Department.

The slowdown is likely to be a source of concern for policymakers, although many economists expect consumer spending to hold up amid strong hiring and rising incomes.

Incomes rose 0.4 percent in June for the second month, according to the report, slightly less than economists were expecting.

Consumer spending accounts for more than two-thirds of the economy but has been replaced as the main driver of growth in recent months as business activity picks up.

The Federal Reserve’s preferred gauge of inflation rose less than forecast, increasing 0.1 per cent for the fourth straight month.

The core personal consumption expenditure index - excluding volatile food and energy prices - was up 1.9 per cent from a year ago, the smallest increase in three years.

Home foreclosure activity up 58% in first six months of 2007

Home foreclosure activity up 58% in first six months of 2007
Copyright © 2007, Chicago Tribune and The Associated Press
July 31, 2007


The number of U.S. homes facing foreclosure surged 58 percent in the first six months of the year, the latest sign of mounting problems in the mortgage industry, a data firm said Monday.

In all, 573,397 properties across the nation reported some sort of foreclosure activity in the first half of this year, including receiving notices of default, auction sale notices or being repossessed by lenders, Irvine, Calif.-based RealtyTrac Inc. said.

"We could easily surpass 2 million foreclosure filings by the end of the year, which would represent a year-over-year increase of over 65 percent," said RealtyTrac Chief Executive James Saccacio.

California led the nation in foreclosure filings and the number of homes receiving notices. Some 104,572 properties in the state received notices of default or other foreclosure notices, more than double the year-ago total.

Florida, Ohio, Texas and Michigan ranked second through fifth, respectively, in the highest number of homes receiving foreclosure-related notices, RealtyTrac said.

Notices of default, the first step in the foreclosure process, accounted for the largest slice of filings, a total of 416,937.

The national foreclosure rate through the end of June was one filing for every 134 U.S. households, the company said.

Chicago Tribune Editorial - Lazarus on Harrison Street

Chicago Tribune Editorial - Lazarus on Harrison Street
Copyright © 2007, Chicago Tribune
July 31, 2007


When we last looked in on the old Cook County Hospital, the patient was bruised and neglected but still bobbing and weaving well enough to avoid demolition by then-County Board President John Stroger. Now comes word that Stroger's son and successor, Todd, proposes a potentially excellent plan to preserve and rehab the stately building in ways that respect Chicago's history, taxpayers' dollars -- and common sense.

This is a triumph-in-the-making not only for preservationists, but also for the Chicagoans whose families got almost a century of good medical care at the legendary hospital on West Harrison Street. This also is a victory for Larry Suffredin and other county commissioners who've invested years of work in demonstrating how the old hospital can be reused.

John Stroger never advanced a compelling reason for razing a structure of such Beaux-Arts richness, structural strength and future promise. He spoke unconvincingly -- and, we concluded, disingenuously -- of trashing an important piece of Chicago's architectural heritage as the only way to create more green space on the county's Near West Side medical campus.

Several members of the County Board, including a few of John Stroger's allies, figured he wanted to swing the wrecking ball so drivers on the Eisenhower Expressway would have an unobstructed view of the county's new hospital. That's the institution named for ... John Stroger.

On Tuesday, county commissioners will discuss -- and probably send to their Construction Committee -- Todd Stroger's plan to move medical and administrative offices to the old hospital from current quarters in a dilapidated former nursing dormitory. The rehabbed hospital also would house medical libraries, a day-care center and other tenants.

How to pay the $140 million cost of redevelopment? The county could hand the project to a private developer and lease back space in the refurbished hospital. Suffredin says it may be more desirable -- and economical -- for the county to fund the project itself, using money set aside for medical campus redevelopment when the new hospital opened in 2002.

One strong argument for the rehab: It creates office space the county probably would have to construct from scratch to absorb the facilities now in the dilapidated nurses dormitory. Thus the hospital project should give county taxpayers a stunning gateway building to the city's large Medical District and a solution to a pressing office space problem -- all at a price lower than demolishing the old hospital and erecting a new building to house the medical offices.

We'll reserve final judgment on this project until we see the final plans (and until we learn which politically connected contractors get fat slices of the work). But Todd Stroger merits enthusiastic congrats for pursuing his own solution to a conundrum his father bollixed: What should become of Cook County Hospital?

One more thing: Under Todd Stroger's proposal, the nursing dorm would come down. That land, Suffredin says, would become green space. We hope John Stroger would approve.

How Much Jail Time? - Quindlen: How Much Jail Time for Women Who Have Abortions?

How Much Jail Time? - Quindlen: How Much Jail Time for Women Who Have Abortions?
By Anna Quindlen
© 2007 Newsweek, Inc.


Aug. 6, 2007 issue - Buried among prairie dogs and amateur animation shorts on YouTube is a curious little mini-documentary shot in front of an abortion clinic in Libertyville, Ill. The man behind the camera is asking demonstrators who want abortion criminalized what the penalty should be for a woman who has one nonetheless. You have rarely seen people look more gobsmacked. It's as though the guy has asked them to solve quadratic equations. Here are a range of responses: "I've never really thought about it." "I don't have an answer for that." "I don't know." "Just pray for them."

You have to hand it to the questioner; he struggles manfully. "Usually when things are illegal there's a penalty attached," he explains patiently. But he can't get a single person to be decisive about the crux of a matter they have been approaching with absolute certainty.

A new public-policy group called the National Institute for Reproductive Health wants to take this contradiction and make it the centerpiece of a national conversation, along with a slogan that stops people in their tracks: how much time should she do? If the Supreme Court decides abortion is not protected by a constitutional guarantee of privacy, the issue will revert to the states. If it goes to the states, some, perhaps many, will ban abortion. If abortion is made a crime, then surely the woman who has one is a criminal. But, boy, do the doctrinaire suddenly turn squirrelly at the prospect of throwing women in jail.

"They never connect the dots," says Jill June, president of Planned Parenthood of Greater Iowa. But her organization urged voters to do just that in the last gubernatorial election, in which the Republican contender believed abortion should be illegal even in cases of rape and incest. "We wanted him to tell the women of Iowa exactly how much time he expected them to serve in jail if they had an abortion," June recalled. Chet Culver, the Democrat who unabashedly favors legal abortion, won that race, proving that choice can be a winning issue if you force people to stop evading the hard facts. "How have we come this far in the debate and been oblivious to the logical ramifications of making abortion illegal?" June says.

Perhaps by ignoring or infantilizing women, turning them into "victims" of their own free will. State statutes that propose punishing only a physician suggest the woman was merely some addled bystander who happened to find herself in the wrong stirrups at the wrong time. Such a view seemed to be a vestige of the past until the Supreme Court handed down its most recent abortion decision upholding a federal prohibition on a specific procedure. Justice Anthony Kennedy, obviously feeling excessively paternal, argued that the ban protected women from themselves. "While we find no reliable data to measure the phenomenon," he wrote, "it seems unexceptionable to conclude some women come to regret their choice to abort the infant life they once created and sustained."

Even with "no reliable data," he went on to conclude that "severe depression and loss of esteem can follow." (Apparently, no one has told Justice Kennedy about the severe depression and loss of esteem that can follow bearing and raising a baby you can't afford and didn't want.) Luckily, there still remains one justice on the court who has actually been pregnant, and Ruth Bader Ginsburg roared back with a dissent that called Kennedy's caveat about regret an "anti-abortion shibboleth" and his opinion a reflection of "ancient notions about women's place in the family and under the Constitution—ideas that have long since been discredited."

Those ancient notions undergird the refusal to confront the logical endpoint of criminalization. Lawmakers in a number of states have already passed or are considering statutes designed to outlaw abortion if Roe is overturned. But almost none hold the woman, the person who set the so-called crime in motion, accountable. Is the message that women are not to be held responsible for their actions? Or is it merely that those writing the laws understand that if women were going to jail, the vast majority of Americans would violently object? Watch the demonstrators in Libertyville try to worm their way out of the hypocrisy: It's murder, but she'll get her punishment from God. It's murder, but it depends on her state of mind. It's murder, but the penalty should be ... counseling?

The great thing about video is that you can see the mental wheels turning as these people realize that they somehow have overlooked something central while they were slinging certainties. Nearly 20 years ago, in a presidential debate, George Bush the elder was asked this very question, whether in making abortion illegal he would punish the woman who had one. "I haven't sorted out the penalties," he said lamely. Neither, it turns out, has anyone else. But there are only two logical choices: hold women accountable for a criminal act by sending them to prison, or refuse to criminalize the act in the first place. If you can't countenance the first, you have to accept the second. You can't have it both ways.

Boston Globe Editorial - New Americans

Boston Globe Editorial - New Americans
Copyright by The Boston Globe
Published: July 30, 2007


A sensible immigration reform bill failed in Congress this year, at least in part because the immigrants with firsthand experience of America's dysfunctional system lack enough political clout to press for improvements. Fortunately, recent developments have spurred many immigrants to apply for citizenship and register to vote.

It's a far slower road to reform. But new citizens could help change immigration policy if they exercise their right to vote - and if government officials protect this right against fraud and intimidation.

On Monday, the fee to apply for citizenship was set to jump from $400 to $675. In response to the increase, applications have been surging, according to federal immigration officials, jumping from some 74,600 in May of last year to 115,000 in May of this year. A citizenship drive in Boston last week drew 200 people. And similar events in New Hampshire and Rhode Island drew another 300. This was part of a national effort to help 1 million immigrants become voting citizens.

And earlier this month, federal immigration officials announced that 421 members of the United States military who are serving abroad became citizens, including 160 service members who were sworn in on July 4 in Iraq.

Voter registration drives are already held at swearing-in ceremonies for new citizens, but Ali Noorani, executive director of the Massachusetts Immigrant and Refugee Advocacy Coalition, says this effort will be expanded.

As their numbers and visibility rise, new citizen voters may face more efforts to manipulate them or keep them away from the polls. Such abuses occurred across the United States during the 2006 election. In Virginia, voters received fraudulent calls wrongfully informing them that they were ineligible to vote. In Maryland, deceptive flyers listed the names of Republican candidates as is if they were Democrats. The flyers were handed out in minority communities on election day. And in California, registered voters got letters stating that it was a crime for immigrants to vote.

Last month, the House passed a bill that would make intentionally misleading voters a federal crime. Sponsored by Rahm Emanuel, an Illinois Democrat, the bill would also increase the penalty for voter intimidation, which is already a crime. The bill has been referred to the Senate Judiciary Committee.

Promoting the voting rights of new citizens is vital. Every vote has to count. Otherwise a damning message is sent: The democratic system is rigged, and shrewd players should use whatever means possible to get their turn at doing the rigging.

As slow as voting may be in producing new laws, it remains a fundamental way to enact lasting change. As new citizens claim that right, it must be scrupulously defended.

International Herald Tribune Editorial - Signs of contagion in the U.S. housing downturn

International Herald Tribune Editorial - Signs of contagion in the U.S. housing downturn
Copyright by The International Herald Tribune
Published: July 30, 2007


By the end of last week, any lingering hope that the housing downturn in the United States would be contained had vanished. As this week begins, signs of contagion seem to be everywhere.

Unnerved by mounting losses in mortgage-related investments, investors have started to shun tens of billions of dollars in corporate debt offers as well - and seem likely to go on doing so for months to come. That would stanch the flow of easy money that has fueled the leveraged buyout boom, which would, in turn, expose the extent to which stocks have also come to depend on cheap credit.

Stocks took a dive last week because debt-driven buyouts had long boosted the share prices of targeted companies. Stocks have also benefited directly from easy money because public companies have borrowed heavily to buy back their own stock, a ploy to drive up earnings per share.

The fallout of housing-related turmoil is also likely to extend beyond financial markets. Among the deals that faltered last week were the $7.4 billion buyout of the Chrysler Group and the $5.6 billion purchase of the Allison Transmission unit of General Motors. Unless investor capital is forthcoming, it could become increasingly difficult for the automakers to avoid bankruptcy. At the same time, the housing slump has also driven down analysts' monthly forecasts for car and truck sales to levels not seen in nearly a decade.

The double whammy of weakness in housing and in autos has already hit the chemical maker DuPont. Last Tuesday, the company was the Dow's biggest loser, in part because of lackluster demand for a pigment used in house paint and lower paint sales to automakers.

There is also growing evidence that housing woes are curtailing consumer spending, the mainstay of the economy. As home prices fall, home equity borrowing is drying up as a source of disposable income, while wages and salaries are hardly enough to cover many households' consumer and mortgage debt, along with the rising costs of food, energy and other essentials. As a result, consumption ebbs.

Officials at the Federal Reserve and the Treasury Department cannot manage these problems on their own. If the Fed wanted to reduce interest rates, for example - which financial markets are expecting in the wake of last week's plunge - it would need cooperation from other central banks to ensure that lower American rates would not dangerously weaken the dollar, provoking inflation.

Similarly, assurances that the economy will be fine, such as the one delivered Friday by Treasury Secretary Henry Paulson Jr., ring hollow in the absence of an international reporting framework to monitor the positions taken by globally active hedge funds. Otherwise, there's little reason to believe that government officials have all of the information they need to assess the risks to the financial system and the economy. To date, however, Treasury officials have played down the need for more monitoring.

Throughout the Bush years, international cooperation has been neglected. Last week's gyrations are another signal that the need to work with others cannot be safely ignored.

Oxfam report calls for more Iraq aid

Oxfam report calls for more Iraq aid
By Damien Cave
Copyright by The International Herald Tribune
Published: July 30, 2007


AMMAN: Poverty, hunger and public health continue to worsen in Iraq, according to a report issued Monday from Oxfam International, which demands more humanitarian aid from abroad and calls on the Iraqi government to immediately decentralize the distribution of food and medical supplies.

The report, a compendium of research from the United Nations, the Iraqi government and nonprofit organizations that Oxfam works with or funds, offers little original data but provides one of the most comprehensive pictures to date of the humanitarian crisis within Iraq, and what it describes as a slow-motion response from the Iraqi government, the United States, United Nations and the European Union.

The report states that as many as four million Iraqis are in dire need of assistance with food, many of them children; that 70 percent of the country now lacks access to adequate water supplies, up from 50 percent in 2003, and that 90 percent of the country's hospitals lack basic medical and surgical supplies.

One survey cited in the report, completed in May by the Iraqi Ministry of Planning, found that 43 percent of Iraqis live in "absolute poverty," on less than $1 a day.

Unemployment and hunger are particularly acute among the estimated two million people displaced internally from their homes by violence - those who "have no incomes and are running out of coping mechanisms," the report says.

The solutions proposed by Oxfam, an international aid organization that opposed the 2003 American invasion and supports groups in Iraq from an office in Amman, focus on both Iraqi policy and international funding.

Specifically, the report calls on Iraq to expand and decentralize its distribution of food rations and emergency cash payments to widows. Medical and other aid supplies, currently kept in seven Baghdad warehouses, should be pushed out to the provinces and managed by the local authorities rather than the inefficient central government, the report says.

Citing policies of nongovernmental organizations that restrict the acceptance of money from countries involved in Iraq's conflict, Oxfam also called on countries without troops in Iraq to send more money for aid. According to the report, funding cuts and the challenges of providing assistance in an insecure environment have limited what the United Nations and its partners can do for Iraqis. The UN High Commissioner for Refugees, for example, used to work with 20 partners in Iraq; it now has only 11, the report says.

"The government of Iraq, international donors, and the United Nations system have been focused on reconstruction, development, and building political institutions and have overlooked the harsh daily struggle for survival now faced by many," the report says.

The Oxfam analysis offers no suggestions on how to root out the corruption that has hobbled the Iraqi government and international aid efforts in the past, nor does it address the links between criminal militias and Iraqi government agencies, like the Ministry of Health, which is run by the political party loyal to Shiite cleric Moktada al-Sadr. It focuses almost exclusively on the need for more money and better-distributed aid.

Joost Hiltermann, deputy program director for the Middle East and North Africa at the International Crisis Group, an organization of experts on conflicts, said that at this point in Iraq, the focus is justified. Corruption, he said, is beyond the purview of groups like Oxfam and the lack of organized aid needs to be immediately addressed. "The priority," he said, "is to get aid going regardless of such problems."

Body of 2nd slain hostage found in Afghanistan

Body of 2nd slain hostage found in Afghanistan
BY AMIR SHAH
Copyright by The Associated Press
July 31, 2007

GHAZNI, Afghanistan---- Police discovered the body of a second South Korean hostage in central Afghanistan, and the Taliban threatened Tuesday to kill more captives if their demands were not met by a new deadline.

South Korea pleaded with the international community to set aside the normal practice of refusing to cave into hostage-takers' demands, urging a peaceful resolution to the standoff. Relatives of some of the 21 remaining hostages appealed for U.S. help in freeing their loved ones.

South Korea ''is well aware of how the international community deals with these kinds of abduction cases,'' said a statement from the president's office. ''But it also believes that it would be worthwhile to use flexibility in the cause of saving the precious lives of those still in captivity and is appealing (to) the international community to do so.''

The comments came after Afghan officials found the body of Shim Sung-min, 29, a former information technology worker who was volunteering with the South Korean church group on an aid mission to Afghanistan.

He was killed Monday after two deadlines given by the Taliban demanding the release of insurgent prisoners passed with no action. Last week, the church group's leader, Pastor Bae Hyung-kyu, was fatally shot in unclear circumstances.

A purported Taliban spokesman, Qari Yousef Ahmadi, said senior Taliban leaders decided to kill Shim because the government had not met Taliban demands to trade prisoners for the Christian volunteers, who were in their 13th day of captivity Tuesday.

''The Kabul and Korean governments are lying and cheating. They did not meet their promise of releasing Taliban prisoners,'' Ahmadi, who claims to speak for the Taliban, said by phone from an undisclosed location.

The Taliban commanders set a new deadline of noon on Wednesday.

''If the Kabul government does not release the Taliban prisoners, then we will kill after 12 o'clock -- we are going to kill the Korean hostages,'' Ahmadi said. ''It might be a man or a woman ... It might be one. It might be two, four. It might be all of them.''

The Afghan government said it does not support the release of militant prisoners.

''We are not going to discuss the details, releasing or not releasing of criminals in exchange for the hostages,'' said Humayun Hamidzada, spokesman for President Hamid Karzai. ''We are doing everything we can to secure their release.''

Shim's body was found on the side of the road at daybreak Tuesday in the village of Arizo Kalley in Andar District, about 5 miles west of Ghazni city, said Abdul Rahim Deciwal, the chief administrator in the area.

An Associated Press reporter at the scene said the man appeared to have a gunshot wound to the right temple.

Shim, who had recently left his job to prepare for graduate school, had previously visited the Philippines for five days as a volunteer worker and also had served as an army officer.

His father, Shim Jin-pyo, told reporters earlier Tuesday that he wondered how the Taliban ''could perpetrate this horrible thing.''

''I think they act like they are not human beings,'' he said.

Family members of other hostages appealed for support from the United States and other countries to resolve the crisis.

''Especially, the families want the United States to disregard political interests and give more active support to save the 21 innocent lives,'' said Kim Jung-ja, mother of captive Lee Sun-young.

The Al-Jazeera television network, meanwhile, showed shaky footage of what it said were several South Korean hostages. It did not say how it obtained the video. The authenticity of the video could not immediately be verified.

Some seven female hostages, heads veiled in accordance with the Islamic law enforced by the Taliban, were seen crouching in the dark, eyes closed or staring at the ground, expressionless.

The hostages did not speak as they were filmed by the hand-held camera.

The Taliban kidnapped the 23 South Koreans, who were riding on a bus through Ghazni province on the Kabul-Kandahar highway on July 19, the largest group of foreign hostages taken in Afghanistan since the 2001 U.S.-led invasion.

Seoul noted it did not have the power to comply with the Taliban demands ''because it doesn't have any effective means to influence decisions of the Afghan government.''

In March, Karzai approved a deal that saw five captive Taliban fighters freed for the release of Italian reporter Daniele Mastrogiacomo. Karzai, who was criticized by the United States and European capitals over the exchange, called the trade a one-time deal.

On Sunday, Karzai and other Afghan officials tried to shame the Taliban into releasing the female captives by appealing to a tradition of cultural hospitality and chivalry. They called the kidnapping of women ''un-Islamic.''

Separately, the government said a German man who was kidnapped on July 18 was in ''satisfactory'' health. Interior Ministry spokesman Zemerai Bashary said Afghan officials were ''hopeful that he will be released'' but provided no other details.

Another German man captured with him was found shot dead on July 21.

Contributing: AP writers Noor Khan in Kandahar, Afghanistan and Burt Herman and Jae-soon Chang in Seoul, South Korea

Chief Justice Suffers Seizure, Falls

Chief Justice Suffers Seizure, Falls
By MARK SHERMAN
Copyright © 2007, The Associated Press
7:13 AM CDT, July 31, 2007


WASHINGTON - Doctors who examined Chief Justice John Roberts after he had a seizure at his Maine vacation home said they found no tumor, stroke or any other explanation for the episode.

Roberts, 52, had a similar, unexplained attack in 1993.

The seizure Monday caused the chief justice to fall on a dock, where he sustained minor scrapes, Supreme Court spokeswoman Kathy Arberg said. She said he was kept overnight at the Penobscot Bay Medical Center in Rockport for observation.

Hospital officials said Tuesday they would not comment further on Roberts' situation and they referred all calls to the Supreme Court, where there was no early update on his condition.

By definition, someone who has had more than one seizure without any other cause is determined to have epilepsy, said Dr. Marc Schlosberg, a Washington Hospital Center neurologist who is not involved in the Roberts case.

Whether Roberts will need anti-seizure medications to prevent another is something he and his doctor will have to decide. But after two seizures, the likelihood of another at some point is greater than 60 percent.

Epilepsy is merely a term for a seizure disorder, but it is a loaded term because it makes people think of lots of seizures, cautioned Dr. Edward Mkrdichian, a neurosurgeon at the Chicago Institute of Neurosurgery and Neuroresearch.

Still, Mkrdichian said anyone who has had two otherwise unexplained seizures is at high risk for a third, and that he puts such patients on anti-seizure medications.

"Having two seizures so many years apart without any known culprit is going to be very difficult to figure out," agreed Dr. Max Lee of the Milwaukee Neurological Institute.

The incident occurred around 2 p.m. on a dock near Roberts' summer home in Port Clyde on Maine's Hupper Island. He had just gotten off a boat and was returning home after running errands, Arberg said. Port Clyde, which is part of the town of St. George, is about 90 miles by car northeast of Portland, midway up the coast of Maine.

Roberts was taken by private boat to the mainland and then transferred to an ambulance, St. George Fire Chief Tim Polky said.

"He was conscious and alert when they put him in the rescue (vehicle)," Polky said.

Once at the hospital, he underwent a "thorough neurological evaluation, which revealed no cause for concern," Arberg said.

Named to the court by President Bush in 2005, Roberts is the youngest justice on a court in which the senior member, John Paul Stevens, is 87. Bush was informed of the hospitalization by his chief of staff, Josh Bolten, the White House said.

Roberts is the father of two young children.

Larry Robbins, a Washington attorney who worked with Roberts at the Justice Department in 1993, said he drove Roberts to work for several months after Roberts' seizure that year. Robbins said Roberts never mentioned what the problem was and he never heard of it happening again.

In 2001, Roberts described his health as "excellent," according to Senate Judiciary Committee records.

Roberts became chief justice after the death of William Rehnquist in September 2005, although Bush had first chosen him to take Sandra Day O'Connor's seat when she announced her retirement earlier that year.

Roberts has led the Supreme Court to a more conservative stance. Helped by Justice Samuel Alito, who won confirmation in early 2006, conservatives have won twice as often as they lost on the Roberts-led court. The 2006-07 term brought limits on abortion rights, restrictions on school integration programs and greater freedom for political advertising.

Roberts earlier served as an appellate judge in Washington and spent more than a decade before that as a lawyer at the Hogan and Hartson law firm, where he specialized in arguing cases before the Supreme Court.

Roberts also served in the Reagan and Bush administrations in the 1980s and 1990s. He was a clerk for Rehnquist after graduating from Harvard Law School.

Roberts spent a couple of weeks in Europe in July, teaching a course in Vienna and attending a conference in Paris. He was at the court in Washington late last week.

* __

Associated Press writers David Sharp in Portland, Maine, Glenn Adams in Rockport and Lauran Neergaard in Washington contributed to this story.

Paulson says China needs broader reforms

Paulson says China needs broader reforms
By Richard McGregor in Beijing
Copyright The Financial Times Limited 2007
Published: July 30 2007 17:55 | Last updated: July 31 2007 03:48


Currency policy is just one part of broader economic reforms that Beijing must undertake to maintain growth and competitiveness, Hank Paulson, US Treasury secretary, said on Monday ahead of talks in the Chinese capital.

Mr Paulson said the currency had become a “proxy for reform” but that it had to be addressed alongside other structural problems in China – such as underdeveloped open capital markets.

“It is only by having capital markets that are efficient and function well that we are going to able to get to a market-determined currency,” Mr Paulson told the Financial Times.

Over the next two days Mr Paulson will be meeting Hu Jintao, China’s president, and Wu Yi, a vice-premier and his direct counterpart, in the twice-yearly strategic dialogue between Washington and Beijing established in 2006.

The former head of Goldman Sachs is under pressure from the US Congress to deliver concrete results from the dialogue, especially on the currency, which China’s critics in the US say is unfairly manipulated to benefit exporters.

“Although they have moved the currency, it clearly should move more,” Mr Paulson said.

The renminbi has appreciated by about 9.4 per cent against the US dollar since Beijing broke its peg to the greenback in mid-2005, but it has weakened against other currencies, notably the euro.

He said the strategic dialogue was “forward looking”, to manage an increasingly complex relationship, but could also handle sensitive issues when they emerged.

“I think many people in the world are focused on the wrong thing and are worried that China is going to keep doing as well as it has, and overtake and out-compete other countries,” he said.

“Frankly, China doing well economically is good for China – and the rest of the world.”

The next dialogue is due to be held in Beijing in December, just after the Communist party congress, which will choose China’s top leadership for the next five years.

Mr Paulson began his trip on Monday in Qinghai, in western China, allowing him to highlight Washington’s desire to increase co-operation on issues such as the environment and energy before the more contentious discussions in Beijing.

Mr Paulson’s efforts to solidify the relationship must combat tensions caused by the rising bilateral trade imbalance, which was a record $233bn in 2005, on US figures.

A senior Commerce Ministry official, Jin Xu, in a recent speech just published in a Chinese magazine, said the deficit “will probably continue to grow for the foreseeable future”.

He added: “As for what the root of the problem is and how to address it, I don’t think we have an answer.”

Credit insurance costs soar to record

Credit insurance costs soar to record
By Stacy-Marie Ishmael and Gillian Tett in London, and Saskia Scholtes in New York
Copyright The Financial Times Limited 2007
Published: July 30 2007 20:28 | Last updated: July 31 2007 01:57


The cost of insurance against credit defaults hit record levels on both sides of the Atlantic on Monday amid concerns that some investors were being forced to sell assets to cover losses on subprime mortgages.

In spite of the heightened risk aversion in credit derivatives markets US stocks rose. The Dow Jones Industrial Average closed up 0.7 per cent, the S&P 500 rose 1 per cent and the Nasdaq Composite gained 0.8 per cent.

The FTSE Eurofirst 300 traded in positive territory for much of the session but surrendered its tentative gains by the close. The index fell 2.3 points, or 0.2 per cent, to 1,517.74, extending last week’s sharp fall which dragged the index to its lowest level for four months.

The iTraxx crossover index, which tracks the cost of protecting a basket of risky European companies against default, rose more than 60bp on Monday to trade above 500bp for the first time.

That means it now costs €500,000 ($685,000) to insure against the default of €10m of bonds. Last week it would have cost less than €400,000. This was the largest one-day move yet seen, leaving the index at more than double its level in June.

Similar dramatic swings occurred in US credit derivatives, where the CDX index of investment-grade bonds was quoted 20bp higher to cross 100bp for the first time on Monday, before settling at 87bp.

Analysts warned that the financial markets could stay jittery in coming days, since the credit turmoil could force more financial institutions to offload troubled assets.

“At a minimum, credit travails are apt to create a higher volatility environment across all asset classes for much of this year,” said Alan Ruskin, global strategist at RBS Greenwich Capital. “Credit derivatives liquidity and risk management characteristics are finally being tested in a crisis and are performing poorly.”

The speed of the swing in the credit derivatives markets has shocked many investors, particularly since it has not come amid a sharp deterioration in the macroeconomic background. Some traders consequently blame price swings on hedge funds that may have been rejigging their portfolios before the end of the month.

However, there are also mounting concerns that some investors are being forced into liquidations because prime brokers are trimming credit lines to groups with heavy exposure to subprime mortgages.

Iraqi parliament misses key deadline

Iraqi parliament misses key deadline
By Steve Negus, Iraq Correspondent
Copyright The Financial Times Limited 2007
Published: July 30 2007 18:44 | Last updated: July 30 2007 20:49


Iraq’s government has missed its deadline to compile a list of people eligible to vote in a December referendum that will determine the fate of a large, oil-rich and bitterly disputed swathe of the country, officials of northern Iraq’s Kurdistan autonomous region said on Monday.

Politicians from the Shia-led bloc that dominates the government and the Kurdish parties that are its main allies had agreed before the formation of the national unity government in June 2006 that on Tuesday would be the deadline for a “census” of the inhabitants of Kirkuk and other “disputed territories” of northern Iraq.

Background

About 8m Iraqis need immediate aid because of the humanitarian crisis caused by the war, relief agencies said on Monday. A report by Oxfam and the NGO Co-ordination Committee network in Iraq said 15 per cent of Iraqis could not regularly afford to eat; 70 per cent were without adequate water supplies (up from 50 per cent in 2003); and 28 per cent of children were malnourished

However, the deadline appears to have passed without a census being completed, raising doubts as to whether the government is willing to follow through on its commitments.

The failure to meet the deadline “shows a lack of seriousness from all parties to implement...articles that were in the constitution that people had agreed and voted upon,” said Falah Mustafa Bakir, head of the the Kurdistan regional government’s department of foreign relations.

For many Kurds, the referendum is a chance to reclaim Kirkuk, which Jalal Talabani, Iraq’s Kurdish president, has called the “Jerusalem of Kurdistan” – a historic capital purged of much of its non-Arab population by the regime of Saddam Hussein, the deposed leader.

But although Iraq’s constitution calls for the referendum – which would ask people whether they wished to be part of the Kurdistan autonomous region – to be held no later than December 31, many Sunni and Shia Arabs strongly oppose Kirkuk ever becoming part of Kurdistan.

The Article 140 process – designed to undo the “Arabisation” policies pursued by Saddam aimed at solidifying Arab control of northern oil fields – has also drawn criticism from others who fear it will feed instability.

The former regime pushed Kurds and other non-Arabs out by denying them government jobs or in some cases confiscating properties. Arab settlers were brought in from other parts of the country, particularly the Shia south.

In addition, it shuffled the borders of the region’s provinces, handing away slices of Kirkuk to its neighbours in what Kurdish officials claim was an attempt at gerrymandering, ensuring the north’s main oilfields were in an Arab-majority province.

To reverse this demographic engineering, Arab settlers are to be offered nearly $16,000 in compensation and land in their home provinces to leave.

Some Arab politicians have accused the Kurdistan government of using harsher measures, driving the newcomers out by force. But while Kurdish officials admit that local commanders may have expelled settlers in the immediate aftermath of the 2003 ”liberation” of the region, they deny any sustained campaign of ethnic cleansing. Kurdish officials claim 16,000 families have voluntarily signed up to receive the cash and land but that the money has yet to be disbursed.

Iraq’s presidency council – comprised of Mr Talabani and a Sunni and Shia vice-president – was supposed to have addressed the border issue by restoring the north’s pre-Arabisation administrative boundaries. But that requires the approval of parliament and in Iraq’s slow-moving legislature, any contentious issue is delayed and delayed again, suggesting that the border change might be still be some time away.

The final and most contentious stage of the Article 140 process, the census and referendum, are equally elusive.

The compilation of the voter rolls, while technically dubbed a ”census”, will mostly involve the cross-checking of documents. Only descendants of the region’s pre-Arabisation inhabitants now living in the region are eligible to vote.

Mohammed Ihsan, a Kurdish member of the Article 140 committee, says that the voter registration rolls will be run through a series of ”filters” - censuses in 1957 and 1971, government contract lists, food ration rolls, and others - to determine who is an original inhabitant of the region and who is a ”settler.”

Given the depth of opposition to the process, some outsiders -- such as the Brussels-based International Crisis Group - have advocated the delay or even the cancellation of the referendum.

But Kurdish officials are emphatic that a process outlined in the constitution should not be shelved in the name of political expediency.

The Kurdistan government has probably calculated that this opportunity to regain Kirkuk, with a set timetable and a government in Baghdad that is at least nominally willing to implement it, may not come again.

But if their allies in Baghdad do not take the administrative steps needed to organise the referendum, a delay might be difficult to avoid.

■ Iraq’s parliament went into summer recess for a month on Monday after political leaders failed to agree on a series of laws that Washington sees as crucial to stabilising the country, Reuters reports.

The parliament is due to reconvene on September 4, just two weeks before the top US general in Iraq, General David Petraeus, and Washington’s envoy to Baghdad, Ryan Crocker, are due to report to Congress on the success of President George W. Bush’s new Iraq strategy and make recommendations.

Brown to delay Iraq troops decision

Brown to delay Iraq troops decision
By Jean Eaglesham at Camp David and Edward Luce in Washington
Copyright The Financial Times Limited 2007
Published: July 30 2007 20:47 | Last updated: July 30 2007 20:47


Gordon Brown put President George W Bush on two months’ notice that all British troops could be pulled from combat duties in Iraq. But the prime minister agreed to delay the decision until after the crucial General David Petreus report on US military strategy in September.

At his first prime ministerial summit with Mr Bush, Mr Brown announced that he would make a statement to MPs in October on troop deployment in Iraq. Aides said later the Petraeus report would be a factor in this decision, as well as the views of commanders on the ground. The UK wants to move troops back to barracks in Basra – the only Iraqi province where British forces are still in a combat role – as soon as possible.

Transatlantic tensions over Iraq were evident at the two leaders’ first joint press conference, although both tried to stress unity. Mr Brown, who is fully aware that Iraq was a political disaster for his predecessor, emphasised the “progress” being made in the British-controlled provinces. He described Afghanistan, not Iraq, as the “frontline against terrorism”.

Mr Bush, by contrast, told reporters: “There is no doubt in my mind that Gordon Brown understands that failure in Iraq would be a disaster for both our countries.”

The president admitted that critics had questioned, in the wake of his close relationship with Tony Blair, whether he would be able to “get along” with the new prime minister. “The answer is absolutely,” he said.

He portrayed Mr Brown in glowing terms that may play better in the US than the UK. The prime minister is a “glass half full man, not a glass half empty kind of guy”, a “humorous Scotsman” who “gets it”, in terms of the battle against terrorism. Mr Brown did not reciprocate with any praise for the president.

The contrast between Mr Blair and Mr Brown was readily apparent to observers in the US. Many commented on Mr Brown’s gravity.

“They looked like they had both just come out of church and listened to a sermon with which they’d particularly agreed,” said Reginald Dale, a senior fellow at the Centre for Strategic and International Studies in Washington. “But most Americans will have appreciated Brown’s seriousness of tone and the fact that he clearly has a moral streak.”

Both leaders were set on denying any impression their relationship would not be as close and harmonious as the Bush-Blair partnership. Mr Bush even said the US-UK relationship was “our most important bilateral relationship”. The usual formula is to say “there is no more important relationship” than that between the US and Britain – a form of words that can include other partners.

International Herald Tribune Editorial - Saudis going south on Iraq

International Herald Tribune Editorial - Saudis going south on Iraq
Copyright by The International Herald Tribune
Published: July 29, 2007


The Bush administration and Saudi Arabia's ruling family have a lot in common, including oil, shared rivals like Iran and a penchant for denial that has allowed both to overlook the Saudis' enabling role in the Sept. 11 attacks. But their recent wrangling over Iraq cannot be denied or papered over with proposals for a big new arms sale. And if these differences are not tackled, there is an increased likelihood that the war's chaos will spread far beyond Iraq's borders.

While Washington hasn't protested publicly, Riyadh is pouring money into Sunni opposition groups and letting Saudis cross the border to join Sunni insurgents fighting the U.S.-backed, Shiite-led government. Washington estimates that nearly half of the 60 to 80 foreign fighters entering Iraq each month come from Saudi Arabia.

So far, neither Washington nor Riyadh is spending any time thinking about containing the chaos that will follow the inevitable U.S. withdrawal. The only good news is that President Bush is sending Secretary of State Condoleezza Rice and Defense Secretary Robert Gates to Saudi Arabia for what we hope will be a frank discussion.

A failed Iraqi state with Saudi Islamists holed up in Qaeda sanctuaries in its western deserts is clearly not in the interests of the Saudi monarchy. But for Rice and Gates to have any chance of changing Saudi policies, they will have to go beyond the administration's usual mix of bullying and denial and address legitimate Saudi concerns.

One such concern is Iran, which is bankrolling and training Shiite militias, building a power base in Shiite areas of Iraq and drawing the prime minister, Nuri Kamal al-Maliki, into its orbit. Iran's expanding influence poses a major threat to Saudi Arabia.

After years of mistaken U.S. policy in Iraq, that threat cannot simply be conjured away. Washington needs to face up to these issues, sit down with Tehran and work out mutually acceptable solutions to these issues that the Saudis can live with as well.

Another concern is the plight of Iraq's Sunni minority under a sectarian Shiite government in league with vindictive Shiite militias. Saudi Arabia and Iraqi Sunnis have to get used to the idea of Shiite majority power. But the Saudis cannot be expected to sit still while the Iraqi Sunnis are driven from their homes, denied decent jobs and treated as second-class citizens by the Iraqi government.

If Washington wants Saudi backing for the Maliki government, Maliki must earn it by ending sectarianism in the security forces, reforming discriminatory anti-Baathist restrictions and pushing through an equitable oil revenue law.

It is past time for Bush to acknowledge that the U.S. has no realistic chance of winning a military victory in Iraq, and that it needs to be urgently preparing to manage the consequences of U.S. withdrawal. That will require working cooperatively with all of Iraq's neighbors, including Iran and Syria. Compared with those, Saudi Arabia should be easy.

International Herald Tribune Editorial - Gonzales' never-ending story

International Herald Tribune Editorial - Gonzales' never-ending story
Copyright by The International Herald Tribune
Published: July 29, 2007

President Bush often insists he has to be the decider - ignoring Congress and the American public when it comes to the tough matters on war, terrorism and torture. Apparently that burden does not apply to the functioning of the Justice Department.

Americans have been waiting months for Bush to fire Attorney General Alberto Gonzales. Bush refused to fire him after it was clear Gonzales lied about his role in the political purge of nine federal prosecutors. And he is still refusing to do so - even after testimony by the FBI director, Robert Mueller, that suggests that Gonzales either lied to Congress about Bush's warrantless wiretapping or at the very least twisted the truth so badly that it amounts to the same thing.

Gonzales has now told Congress twice that there was no dissent in the government about Bush's decision to authorize the National Security Agency to spy on Americans' international calls and e-mails without obtaining the legally required warrant. Mueller and James Comey, a former deputy attorney general, say that is not true. Not only was there disagreement, but they also say that they almost resigned over the dispute.

Both men say that in March 2004 - when Gonzales was still the White House counsel - the Justice Department refused to endorse a continuation of the wiretapping program because it was illegal. (Comey was running the department temporarily because Attorney General John Ashcroft had emergency surgery.) Unwilling to accept that conclusion, Vice President Dick Cheney sent Gonzales and another official to Ashcroft's hospital room to get him to approve the wiretapping.

Comey and Mueller intercepted the White House team, and they say they watched as a groggy Ashcroft refused to sign off on the wiretapping. Comey said the White House later modified the eavesdropping program enough for the Justice Department to sign off.

Last week, Gonzales denied that account. He told the Senate committee the dispute was not about the wiretapping operation but was over "other intelligence activities."

Lawmakers who have been briefed on the administration's activities said the dispute was about the one eavesdropping program that has been disclosed. So did Comey. And so did Mueller, most recently on Thursday in a House hearing. He said he had kept notes.

That was plain enough. It confirmed that Gonzales is more concerned about doing political-damage control for Bush than in doing his duty.

As far as we can tell, there are three possible explanations for Gonzales' talk about a dispute over other - unspecified - intelligence activities. One, he lied to Congress. Two, he used a dodge to mislead lawmakers and the public: The spying program was modified after Ashcroft refused to endorse it, which made it "different" from the one Bush has acknowledged. The third is that there was more wiretapping than has been disclosed, perhaps even purely domestic wiretapping, and Gonzales is helping Bush cover it up.

Democratic lawmakers are asking for a special prosecutor to look into Gonzales' words and deeds. Solicitor General Paul Clement has a last chance to show that the Justice Department is still minimally functional by fulfilling that request. If that does not happen, Congress should impeach Gonzales.

My GI brother can't say it: Get troops out now

My GI brother can't say it: Get troops out now
BY LAURA WASHINGTON LauraSWashington@aol.com
Copyright by The Chicago Sun-Times
July 30, 2007

People are always asking me how my younger brother is doing.

Thanks for asking, I say. Drew is fine. For now.

Army Sgt. Andrew Washington went to Afghanistan in 2002. A career enlistee, he was sent to Jordan in 2003 to help launch the Iraq war. After that, it was South Korea.

Now the word coming down from the Army brass: His unit may be headed to Iraq by the new year. That's a terrifying scenario, and not just for Drew.

He can't tell you that, of course. Our military heroes are asked to make the ultimate sacrifice to protect our democracy, yet they don't enjoy the opportunity to engage in the honest, freewheeling debate that our democracy is supposed to ensure.

Remember when the Pentagon forbade soldiers from posting on YouTube? You know why. The big boys with the medals were petrified of what they might say. Imagine if last week's You Tube/CNN debate had included a question from a soldier in Iraq. I can hear it now: The pitch to the Democratic presidential contenders: "Can you please get me the hell out of this hellhole?"

They can't say it. That's what I am here for. I am here to tell you that the thousands of singular men and women who signed up for duty deserve better than what this craven administration has offered them. They certainly don't deserve to die for the blatant lies and moronic mistakes that put us in the middle of a hellish civil war thousands of miles away from our soil. The Bush administration is asking the country which we invaded under false pretenses to remake itself into a place where American troops and commercial interests are welcome.

This whack-job of a policy was imposed on a political structure that has been turned topsy-turvy. Where Sunnis once ruled, now the Shiite hold sway. The Sunni leaders are expected to grin and be obsequious. Shiite leaders who look to Iran for inspiration are coddled and told to govern more effectively, and by the way, just ignore your centuries-long ally. These policies sound like something formulated while under the influence of some seriously mind-altering drugs.

More than 3,600 American soldiers have been killed in the Iraq War since March 2003. Thousands more -- 26,000 -- have been wounded and maimed. Since the government obviously didn't plan for such an extended conflict, preparations for wounded soldiers were given short shrift. Witness the scandalous incompetence and neglect at Walter Reed Army Medical Center.

It gets pretty basic. They were sent into this desert conflagration without properly working equipment. We all know the stories about the shortage of body armor and the lightly-armored Humvees. The scandals involving commercial contracting are legendary. Halliburton, the Republican-connected oil services giant, was so craven that it changed its corporate address to Dubai and spun off a subsidiary, KBR, into a separate, stand-alone company to avoid the legal stench.

I'm sure Dick Cheney is exceedingly proud of his former employer.

This administration won't admit that the jig is up. Instead, they just drone on and on, saying that those of us who are anguished by the waste of this war should stand aside and wait. Wait until September, wait until October, wait even until next spring -- and things are sure to turn around.

Our soldiers can't say it, but I will. It's time to get our people out of that hopeless quagmire. And don't dare send any more in. Now more than ever, I am petrified for Drew and all the other good soldiers who are next up to go. They will go to fight in a war that is long lost.

Is anyone in Washington listening?

Gonzales risks perjury investigation, Leahy says

Gonzales risks perjury investigation, Leahy says
By Hope Yen
Copyright © 2007, Chicago Tribune and The Associated Press
July 30, 2007

WASHINGTON - Atty. Gen. Alberto Gonzales must quickly clarify seeming contradictions in his testimony about warrantless surveillance or risk a possible perjury investigation, the chairman of the Senate Judiciary Committee said Sunday.

"This is going to have a devastating effect on law enforcement throughout the country if it's not cleared up," said Sen. Patrick Leahy (D-Vt.).

"If he doesn't correct it, then I think that there are so many errors in there that the pressure will lead very, very heavily to whether it's a special prosecutor, a special counsel, efforts within the Congress."

Leahy also said he was ready to work with the Bush administration to modernize a law that governs how intelligence agencies monitor the communications of suspected terrorists.

President Bush used his weekly radio address Saturday to urge Congress to update the Foreign Intelligence Surveillance Act of 1978 so the law can better keep pace with the latest technology used by terrorists.

Last week, four Democrats on Leahy's committee asked Solicitor General Paul Clement for a special probe of Gonzales. The request came after FBI Director Robert Mueller appeared to contradict Gonzales' statements to Congress about internal administration dissent over the president's secretive wiretapping program.

Gonzales told that committee the program was not at issue when then-White House counsel Gonzales made a dramatic visit to Atty. Gen. John Ashcroft's hospital room in 2004. Mueller, before the House Judiciary Committee, said it was.

On Sunday, Sen. Arlen Specter of Pennsylvania, the top Republican on Leahy's committee, said it would be premature to begin a perjury investigation until the committee could find out the facts.

Leahy and Specter appeared on CBS' "Face the Nation."

Obama hones youthful image - Strategy is to show himself as voice for change

Obama hones youthful image - Strategy is to show himself as voice for change
By Mike Dorning
Copyright © 2007, Chicago Tribune
July 30, 2007


COLUMBIA, S.C. - From the tieless look he's adopted on the campaign trail to his Facebook-style Web page, Barack Obama, the fresh-faced first-term senator from Illinois, has cultivated the aura of youth that naturally surrounds the youngest major candidate in the presidential race. So it was hardly surprising that the 46-year-old would be the first presidential candidate onstage when College Democrats met for their national convention last week.

"In this election, it's our turn. It's your generation's turn," Obama told a cheering crowd of college political activists that filled a ballroom at the University of South Carolina student union and overflowed into a nearby theater. "Let's bring a new generation of leadership to America."

For Obama's campaign, which runs camps for young volunteers, the pitch to college students carries far greater strategic importance than simply obtaining votes from a group not known for Election Day turnout. Rather, the sense of support from the young helps Obama promote himself, even to older voters, as reflecting change and a new generation.

Just as his mixed-race heritage and relative newness on the national political scene signal voters that his candidacy represents change, so does his youth, and that perception is strengthened by a broader following among the young. Enthusiasm from a generation that is just coming of age fits with the message of optimism that Obama seeks to convey.

The Illinois senator whose bid for the White House followed the launch of his book, "The Audacity of Hope," is striving to be the first Democratic president since Bill Clinton, the self-styled "man from Hope."

"He has this message of hopefulness and change, and the attachment of youth to that is very important in signaling, 'The new generation is with me, and it's time for a new generation of political leadership,'" said Ann Crigler, a political science professor at the University of Southern California who has studied the use of emotion in political campaigns.

Other candidates are also courting younger voters. Sen. Hillary Clinton (D-N.Y.) offered a hip Web video spoofing the finale of the HBO series "The Sopranos," as well as a Web contest to pick her campaign song that was geared toward younger, tech-savvy voters. John Edwards' crusade against poverty appeals to idealism, and his One Corps community service operation is oriented toward the young.

300,000 friends

But Obama, with his 300,000 Facebook friends and the purported crush of the hit Internet performer "Obama Girl," has generated more buzz. And his early opposition to the war in Iraq links him to a political cause that is motivating many young people, particularly those who lean Democratic.

"All of the candidates are trying for younger voters and want to have them with them," said Steve McMahon, a Democratic media strategist who advised Howard Dean's youth-oriented 2004 campaign. "He's more visibly succeeding."

A poll of voters age 18 through 24 by Harvard's Institute of Politics in March indicated that Obama was supported by 35 percent of Democratic-leaning voters, versus 29 percent for Clinton. In a June poll of 17- to 29-year-olds from both parties for MTV/New York Times/CBS News, 18 percent of respondents were "enthusiastic" about Obama and 17 percent about Clinton. Other candidates from both parties trailed.

The last Republican presidential candidate to receive much stronger support from young voters than from the overall public was Ronald Reagan in his 1984 "Morning Again in America" re-election campaign, though his bid did not have a theme of generational change, according to Curtis Gans, director of the non-partisan Committee for the Study of the American Electorate.

Of course, a strong following among youth doesn't necessarily translate into victory. Dean excited young voters in 2004 but was unable to broaden that support, and he lost the Democratic nomination to John Kerry.

Still, the connection between youth and an appeal for generational change is well-established in presidential politics.

John Kennedy, the youngest elected president at age 43, presented his campaign as a political coming-of-age for a new generation.

Contrasting himself with his elderly predecessor, Dwight Eisenhower, Kennedy projected an image of youthful vigor, with images of him sailing on the ocean or playing touch football and frequent references to his young family. He inaugurated his presidency by announcing that "the torch has been passed to a new generation."

MTV president

Bill Clinton was the first Baby Boomer president. He reached out to younger voters by appearing on MTV and donning shades to play saxophone on late-night television.

Now Obama is campaigning as the candidate who will take leadership of the country from the Vietnam generation. That contrasts with Hillary Clinton, who came of age during the struggle over Vietnam.

Obama regularly sounds the theme of generational change in campaign appearances. The word "generation" popped up 13 times during his campaign announcement speech in Springfield on a bitter-cold morning.

In the Democratic Party in particular, a youth following evokes romantic political movements of the recent past, particularly anti-Vietnam War candidacies that have a new resonance given the fervor in the party against the Iraq war. Waves of college students played a prominent role in the anti-war Democratic primary campaigns of Eugene McCarthy and Robert Kennedy in 1968 and George McGovern in 1972.

Today's youth are not galvanized in quite the same way, said Gans, a sociologist who studies voter behavior and had first-hand experience as staff director for McCarthy's New Hampshire and Wisconsin primary campaigns.

College students today lack the direct personal motivation that was created by the Vietnam-era draft. The major Democratic candidates now are united in supporting a withdrawal from Iraq, in contrast to the deep divisions within the party in the late '60s surrounding Vietnam, said Gans.

Younger voters tilted heavily toward Kerry over Bush in 2004, and youth turnout was the highest since 1972, Gans said.

Even so, turnout among the young remained relatively low. According to the U.S. Census Bureau, 47 percent of 18- to 24-year-olds turned out to vote in 2004, versus 64 percent turnout among the overall voting-age population.

----------

mdorning@tribune.com

American Home shares plunge 45%

American Home shares plunge 45%
By Paul Taylor in New York and agencies
Copyright The Financial Times Limited 2007
Published: July 29 2007 22:57 | Last updated: July 30 2007 15:41


Trading in shares in American Home Mortgage Investment was halted after they fell by almost half following the lender’s revelation that it is delaying paying dividends and may delay payments on its preferred shares because banks demanded it put up more cash.

American Home’s announcement came late on Friday, as the Melville, New York-based mortgage lender revealed it had written down the value of its loan and security portfolios significantly.

The move by the lender represents one of the first indications that the crisis facing sub-prime mortgage lenders in the US is expanding to affect lenders like American Home whose borrowers tend to have higher ‘prime’ ore ‘near prime’ credit ratings. American Home specialises in ‘Alt-A’ mortgages for home buyers who can’t satisfy all the conditions for prime borrowing.

Shares in American Home fell more than 45 percent to $5.74 in electronic composite trading, but trading was stopped to allow news to disseminate.

The company said its moves were necessary “in order to preserve liquidity until it obtains a better understanding of the impact that current market conditions in the mortgage industry and the broader credit market will have on the Company’s balance sheet and overall liquidity.”

American Home Mortgage, described the disruption in the credit markets over the past few weeks as “unprecedented,” and said this had caused “major write-downs of its loan and security portfolios and consequently has caused significant margin calls with respect to its credit facilities.”

The margin calls pose a significant problem for American Home Mortgage because it relies on short-term bank financing to temporarily fund the home loans it makes before the home loans are rebundled and sold to investors. If it does not have cash on hand to meet its banks’ demands, it may have to sell assets, find new financing, or restructure its debt.

It had $4.01bn of borrowings outstanding under its warehouse lines of credit as of March 31, and total liabilities of $19.3bn, according to its regular first-quarter filing with regulators. Its assets had a total book value of $20.6bn.

Rising mortgage rates and defaults this year have hurt mortgage lenders in the US, particularly sub prime lenders that lend to borrowers with less than perfect credit scores. So far, more than 50 lenders have filed for bankruptcy or sold themselves.

Earlier this month rumors that a bank had withdrawn one of American Home Mortgage’s credit facilities pushed the company’s shares 20 percent lower. American Home Mortgage told analysts that rumor was false.

The company said in late June that it would likely post a second-quarter loss after suffering credit losses from a type of loan it stopped making. It withdrew its earnings outlook for 2007, but said it expected losses to be contained. American Home Mortgage’s shares closed on Friday at $10.47, their lowest level since April 2003.

HSBC hurt by exposure to US subprime market

HSBC hurt by exposure to US subprime market
By Maggie Urry
Copyright The Financial Times Limited 2007
Published: July 30 2007 10:37 | Last updated: July 30 2007 10:37


Half-year profits at HSBC were hit by the bank’s exposure to the US subprime mortgage market and a $236m (£116.5m) charge for fee refunds in its UK retail banking operations.

UK Daily View

Video: Jane Croft on US sub-prime effect on HSBC profits
The loan impairment charge jumped 63 per cent, or $2.46bn, to $6.35bn in the half-year to the end of June. That followed a sharp rise in the charge in the second half of 2006, which in February forced HSBC to issue a profits warning. This was one of the first signs of problems in the US subprime market.

HSBC shares have been weak in recent months and responded to the news with a rise of 2.5 per cent, or 22p, to 902½p. Keith Bowman, analyst at Hargreaves Lansdown, said “the stock appears to be enjoying something of a relief rally – relief that bad debts were not even worse”.

Group pre-tax profits rose 13 per cent to $14.16bn, driven by good performances in Asia, and in corporate and commercial banking. But Stephen Green, chairman, said profits were boosted by a $1bn post-tax gain from the dilution of HSBC’s holdings in its mainland China associates. Excluding that, he said, underlying pre-tax profits rose 5 per cent.

Analysts at Keefe Bruyette & Woods pointed out that the income statement also included a $874m gain from fair value adjustments to financial instruments. The gain in the comparable period was $260m. Further, they said, the rise in trading income from $4.26bn to $5.51bn “may give rise to quality questions”.

Mr Green said that while the world economy remained buoyant, and global economic growth was forecast at 3.8 per cent, there were risks ahead, notably from nervousness about credit markets.

Reviewing the results he said, “pre-tax profits in personal financial services as a whole declined 20 per cent”. That was in spite of “very strong” results from Asia. Mr Green said conditions in the UK personal banking market were “challenging” but the main problem was in the US.

He said “the actions taken to restructure and manage down our exposure in this business are progressing well. The charge for impairments was lower than in the second half of last year and was in line with our expectations”.

Michael Geoghegan, chief executive, said that in personal financial services, Asia increased pre-tax profits by 38 per cent. However, the division’s profits fell by a fifth to $4.73bn.

In North America, profits fell 43 per cent compared with the first half of 2006, although they showed a strong recovery on the second half of last year. First-half profits were $1.8bn, a $1.5bn improvement on the previous six months.

In the half-year impairment charges on mortgages were $760m, and loans of $715m were written off against existing allowances, leaving the total allowance broadly unchanged at $2.1bn. Mr Geoghegan said the group had managed down its exposure to the mortgage business by $8bn to $41.4bn.

“We have stopped underwriting subprime mortgages and made management changes,” he said.

The group is calling customers facing interest rate resets, and has so far contacted 19,000 of them, modifying the loans of 5,000 on them.

In Europe, the personal finance business was down 34 per cent, hit by a decision to cut credit exposure where pricing did not adequately reflect risk. Refunding unauthorised overdraft fees in the UK cost the bank $236m. Mr Geoghegan said the group welcomed the Office of Fair Trading’s move last week to take a number of banks including HSBC to court to “achieve legal clarity”.

Offsetting the weakness in personal financial services, other divisions increased profits. The group’s investment banking arm, which has suffered from a series of personnel losses including last year the departure of John Studzinski, co-head of the division, increased pre-tax profits nearly a third to $4.16bn. It was aided by a good performance on its private equity investments.

Stuart Gulliver, now sole head of the division, said the division had refined its strategy away from the perception that HSBC was “trying to be a global bulge bracket firm”. He said the division would focus on emerging markets and financings rather than on M&A and equities. “What we have got works for HSBC because it works for our clients,” he said.

Mr Green said that the group had “one or two” leveraged buy-out positions that it was planning to distribute among other lenders. However, he said that if the recent turmoil in the credit markets prevented HSBC doing that “we would be comfortable” in taking the positions onto the balance sheet.

Pre-tax profits from North America as a whole fell from $3.74bn to $2.44bn, a 35 per cent decline. Profits from all other territories were up, with Hong Kong increasing pre-tax profits by 25.5 per cent to $3.33bn and the rest of the Asia-Pacific region more than doubling profits to $3.34bn.

A second interim dividend of 17 cents, added to the first interim dividend of the same amount, puts the pay-out so far in the year up 13 per cent.

The group said its Tier 1 capital and total capital ratios remained strong at 9.3 per cent and 13.2 per cent respectively.

Operating expenses rose 15 per cent to $18.6bn and the cost efficiency ratio was 48.3 per cent compared with 50.1 per cent in the first half of 2006.

Credit worries fail to halt Wall St bounce

Credit worries fail to halt Wall St bounce
By Michael Mackenzie in New York
Copyright The Financial Times Limited 2007
Published: July 30 2007 13:58 | Last updated: July 30 2007 15:47


Wall Street stocks were trading modestly firmer at midmorning on Monday, and while solid earnings from several companies had boosted sentiment, investors were scrutinising weakness in the credit market.

Last week, fears that markets face a credit crunch sparked a sharp slide in US stocks. The S&P 500 index experienced its worst performance since September 2002.

“Last week’s stock market swoon came just as crude prices retested the highs, housing prices continued their fall and business investment spending showed weakness heading into the second half of 2007,” said William O’Donnell, strategist at UBS. “This toxic mix of headwinds for the consumer bodes ill for the US economy.”

In overnight trading action Asian equities were mainly higher, while European stocks were firmer after Wall Street’s open.

Less than an hour after the opening bell, the S&P 500 was 0.4 per cent higher at 1,465. Volatility as measured by the Chicago Board Options Exchange’s Vix was down 6.2 per cent at a reading of 22.67. Vix has nearly doubled in value this year.

The Nasdaq Composite was up 0.2 per cent at 2,567.75.

The Dow Jones Industrial Average was 0.25 per cent higher at 13,298.96.

Small cap stocks were also firmer with the Russell 2000 index up 0.3 per cent. The Russell remains 1 per cent lower for the year to date, and the sharp rise in volatility and concerns over future deal activity has hit smaller companies hard.

The yield on the 10-year bond was a touch lower at 4.78 per cent. US Crude oil prices were weaker, and had reversed a brief rise above $77 a barrel earlier in the day.

Equity investors remain focused on the credit market. Anxiety over a pending flood of new debt issues, in the region of $300bn that are linked to this year’s record pace of mergers and buyout deals, and worries about further losses from mortgage-related investments has cast a pall over sentiment for credit. Premiums for credit derivative indices that track US and European investment grade and high yield bonds have more than doubled in cost since mid-June and continued to move higher on Monday.

In early trade, the CDX investment grade index widened above 100 basis points from a close of 77bp on Friday. In Europe the iTraxx crossover index that tracks corporate debt rated between high grade and junk, rose above 500bp for the first time.

“While the repricing of credit wider may yet lead to a significant bounce back on short covering, we think it is still too early to step in front of this moving train,” said analysts at Banc of America Securities.

The recent rise in volatility and in credit risk premiums has weighed on stock prices for many pending deals and also on the banks that could potentially be left holding bridge loans. This led analysts at Goldman Sachs to note on Monday that 22 pending leveraged buyouts deals currently offer investors an annualised return of 36 per cent if they are completed.

“It is impossible even for a wizard like Harry Potter to reconcile two facts: Stocks cannot both melt down because the market fears financial institutions will have to fund and hold levered loan commitments while at the same time shares of target companies sell off on the belief the same transactions will not close,” said Goldman. “This inconsistency presents an attractive entry point for investors.”

Shares in TXU, the Texas utilty, are currently trading at $65.92, below the $32bn or $69.25 a share buyout price offered by Kohlberg Kravis Roberts & Co. and Texas Pacific Group. The financing for the TXU deal includes an $11bn bridge loan and the banks behind the buyout include Citigroup, Goldman Sachs, JPMorgan, Morgan Stanley, Credit Suisse and Lehman Brothers.

While the S&P Investment bank index had rebounded 0.6 per cent higher on Monday, it remains 9.7 per cent lower for the year to date.

Among other pending buyout deals, First Data was trading at $31.90, below KKR’s $29bn buyout of $34 a share.

Penn National, the racetrack and casino operator which Fortress Group has offered to buyout for $67 a share was trading at $58.14 on Monday.

Hilton Hotels, which recently received a $47.50 a share buyout from Blackstone was trading at $44.10.

While the credit market was under pressure on Monday, some good news on the earnings front had helped stabilise sentiment in stocks.

Verizon, the second largest U.S. phone company reported a 4.5 per cent rise in second quarter. The Dow stock was down 2 per cent at $41.16. Verizon Wireless said it had agreed to buy Rural Cellular for $2.67bn in cash and debt. Rural was 34.4 per cent higher at $42.75.

Shares in Archer Daniels Midland were 0.5 per cent higher at $34.21. The grain processor’s fiscal fourth-quarter profit more than doubled to $954.8m.

Humana, the health insurer said its second quarter profit more than doubled to $216.8m and the stock was up 1.5 per cent at $65.78.

Wrigley, posted a 20 per cent rise in quarterly results and the stock was down 0.1 per cent at $57.04.

Meanwhile, Virgin Media was up 1.8 per cent at $25.15 on talk that John Malone’s Liberty Global is weighing a $23bn bid for the UK cable operator.

In other deal news, attention will focus on whether the $5bn bid for Dow Jones by News Corp will meet the approval of the Bancroft family, which control a majority of the company’s voting stock. A decision is expected late on Monday. Dow Jones was trading at $53.88, below the $60 a share offer made by News Corp.

Economic data was sparse on Monday, but the rest of the week is replete with reports capped by the July employment report and a manufacturing survey from the Institute for Supply Management on Friday. Economists expect a gain of 135,000 jobs last month after 132,000 were created in June. The unemployment rate is seen steady at 4.5 per cent for the fourth consecutive month.

At the close of trading in New York last week, the S&P 500 index was down 4.9 per cent for the week at 1,458.95 while the Nasdaq Composite Index was 4.7 per cent lower at 2,562.24. The Dow Jones Industrial Average was 4.2 per cent lower at 13,265.47.

Clinton or Obama? Many backing both - Urban League debate shows it's tough decision for blacks

Clinton or Obama? Many backing both - Urban League debate shows it's tough decision for blacks
BY MARY MITCHELL
Copyright by The Chicago Sun-Times
July 29, 2007

ST. LOUIS -- More than any other debate thus far, the National Urban League's presidential forum illustrated how sharply the Democratic primary is dividing the African-American community's political allegiances.

Although the National Urban League doesn't endorse political candidates, the presidential forum gave the front-runners -- Sen. Barack Obama (D-Ill.) and his closest rival, Sen. Hillary Clinton (D-N.Y.) -- their best chance yet to compete head-up for the urban black vote. There were a lot of signs that many of the Urban Leaguers -- who tend to be solidly middle-class entrepreneurs and professionals -- haven't made up their minds about whom they will support in 2008.

Four days after a bruising dust-up between Obama and Clinton over foreign policy, many of them wore Hillary buttons on one side of their tops and Barack's stickers on the other.

Similar to past debates, Rep. Dennis Kucinich -- who trails badly in the polls -- scored the most applause for his remarks, while former Sen. John Edwards stumbled into a round of audible "boos" when he criticized Obama and Clinton for their ongoing war of words over foreign policy.

The four Democratic candidates were warmly received (none of the Republican primary candidates appeared), and the audience rose to its feet at the end of each presentation.

Clinton continues to be a dominating presence in the debate arena. Although Obama has gotten better at delivering snappy sound bites, Hillary's oratory -- as one observer remarked -- had many in the audience on the "edge of their seats."

All of the candidates pledged to support the National Urban League's ambitious "Opportunity Compact" that lays out a blueprint for moving black America closer to parity in education, housing, entrepreneurship and employment. Of course, it isn't likely any of these candidates would disagree with an urban agenda presented by one of the nation's premier civil rights groups.

But in the end, black voters will have to decide which candidate will be their best advocate in the White House on issues closest to home.

That's why the spat between Clinton and Obama about the proper way to conduct diplomacy with hostile nations can only elevate Obama's standing among black voters. Like most African Americans, Obama vigorously opposed the Iraq war, even though those who disagreed with the Bush administration were labeled "unpatriotic." Also, black leaders have long argued that America's foreign policy toward Cuba is outmoded and unjust.

Except for Edwards, the presidential candidates stayed away from foreign policy, concentrating instead on trying to convince the audience that each is committed to fixing the long-neglected urban centers in America.

Obama trumpeted his experience as a community organizer, civil rights lawyer and state legislator who helped Illinois become the first state to require videotaped confessions in homicide cases.

"I have continued to fight to make sure those neighborhoods are paid attention to. That is how we reformed the death penalty in Illinois and passed racial-profiling legislation to bring some fairness to the criminal justice system. When I talk about hope and change, this is not just the rhetoric of a campaign, it is the cause of my life, the cause I will work for every single day of my life," he said.

The Urban League forum also gave Obama an opportunity to directly address the thorny issue of racial polarization when he was asked how he would improve race relations.

"The day a minority becomes president, the country looks at itself differently," Obama said, raising his right hand as if taking the oath of office.

Clinton, who spoke first, opened her remarks with an issue that pierces the hearts of many African Americans.

"I have never met a child without potential, and these 1.4 million [incarcerated] young men are no different. When we write them off and leave them behind, we squander their potential. We squander America's potential," she said.

While many gave Clinton points for her presentation, they still appeared to be leaning toward Obama.

"He not only has charisma, but he's a leader," said John Anderson of Brooklyn, N.Y. "The point is, he knows how to bring people together."

Highlighting the difficulty of the Clinton/Obama decision for the African-American community were the comments of National Urban League President and CEO Marc H. Morial at a post-debate press conference.

Morial wouldn't even declare a clear winner: "I'm staying away from that question," he said.

Chicago Sun-Times Editorial - It's time for Bush to deliver for vets

Chicago Sun-Times Editorial - It's time for Bush to deliver for vets
Copyright by The Chicago Sun-Times
July 29, 2007


President Bush says he wants to change the way wounded soldiers are treated when they return from war and last week ordered Veterans Affairs Secretary Jim Nicholson to follow the advice of the president's "wounded warriors commission."

The commission offered great advice: Streamline the bureaucracies that deal with returning wounded military, cut the paperwork, expand treatment of brain injuries and give disabled veterans more advocates to file for their benefits. Carrying out these far-reaching changes, though, shouldn't be left to someone who has one toe in retirement, as Nicholson has. (He announced July 17 that he will be leaving office after a two-year stint but may not vacate until October.)

The president needs to appoint a new secretary immediately and someone who will interpret the commission's broad recommendations in the best possible light for those who have already paid a high price for our freedom.

It was on Nicholson's watch, after all, that several embarrassing news reports -- including an investigation by this newspaper -- revealed substandard care in the VA hospital system and disparity in its disability payouts. Here in Illinois, wounded veterans have received among the lowest disability payouts in the country for nearly 80 years.

The estimated price tag for the commission's suggested improvements --$500 million for the first year and $1 billion annually in the years to come -- is not steep in the larger context of the money being spent in Iraq.

"The money is there," said Tammy Duckworth, the disabled Iraq war veteran who now heads the state's veterans affairs office. "This is part of the cost of the war. When we agreed to go to war, this is the cost we brought on ourselves. I think these recommendations can be effectively implemented. But there has to be a continued focus on this issue by veterans groups and the public and the media."

Duckworth, who ran unsuccessfully as a Democratic candidate for Rep. Henry Hyde's seat last fall, also agrees that the best way to convince veterans that Bush is serious about giving the wounded "the best possible care and treatment that this government can offer" is to quickly name a replacement for Nicholson.

"We can't let that office sit empty or with a lame duck in it," Duckworth said. "This is the man who wanted so little money for the VA that a bipartisan group in Congress had to push for more."

Among the commission's other recommendations was a push to adapt to a new kind of war that produces new kinds of injuries. With more advanced medical technology, more soldiers with grave injuries are surviving this war than in previous wars, and they are coming home with far more serious injuries and many more traumatic brain injuries.

Rep. Mark Kirk (R- Ill.), a commander with the U.S. Naval Reserve, called the commission's demand for improved treatment of post-traumatic stress disorder as finally laying "to rest any stigma attached to what used to be called shell shock." Kirk would know; he is a veteran who dealt with PTSD himself after serving in Iraq and Kosovo.

The commission study was a bipartisan effort, co-chaired by former Republican Senate leader Robert Dole and former Clinton Health and Human Services Secretary Donna Shalala. Clearly, caring for wounded warriors is neither a Republican nor a Democratic issue. It's simply a matter of extending the same humane commitment to soldiers who have risked their lives for us.

Water rights ... and wrongs - How to know what your plants and trees really need

Water rights ... and wrongs - How to know what your plants and trees really need
By Beth Botts
Copyright © 2007, Chicago Tribune
July 29, 2007


The gardening season means watering. But it shouldn't mean wasting water.

In fact, watering the wrong way can actually hurt plants. It also can waste money and exacerbate pollution.

But many people don't know how to water right or have never thought about it. Here are some tips for putting water only where it will do good. The Basics

Rule 1 for plants in the ground -- including lawns -- is this: Slow, deep watering at long intervals is better than watering often but lightly. A daily ritual of sprinkling flower beds with the hose in your hand makes plants grow short, weak, vulnerable roots right at the surface. A deep soak once a week encourages them to send those roots long and strong down into the soil. That makes plants more drought -- tolerant and more able to take up nutrients and support more leaves and flowers.

Overwatering can fill up the air space in soil and actually drown plants or cause roots to rot.

A rule of thumb is that most plants need the equivalent of 1 inch of rain a week (about .6 gallon per square foot). But many factors can affect this: Desert plants such as cacti obviously need much less. Established prairie plants, with deep root systems, need less watering than shallow-rooted, thirsty annuals such as impatiens. Get to know your plants and their needs.

Soil type makes a difference too. Water soaks right into sandy loam but easily runs off dense, clay soil. So observe how water behaves on your soil.

To measure rain or the output of sprinklers, buy a rain gauge (starting at about $3 at the hardware store). In fact, get two: One for the lawn and one to place under trees, where much less rain reaches the ground.

But the real criterion should be how much water is in the soil. Stick your finger in and feel for moisture (or dig down with a trowel). If it's dry 2 to 3 inches down, water.

Containers

Soil dries out quickly in pots. Check them every morning; for much of the summer you may have to water them once or even twice a day. Plastic or glazed containers lose water more slowly than unglazed terra cotta or moss baskets; small containers dry out fast. Self-watering containers, with hidden reservoirs, can help. Pots in sunny locations will need more watering.

Nozzles

* Buy heavy-duty metal nozzles with adjustable spray.

* Get a hose wand extension to water containers and hanging baskets.

Sprinklers

Sprinklers have drawbacks. They water foliage, not soil; much of the water they fling through the air or dribble on leaves evaporates uselessly; and they can rain water on sidewalks, patios and driveways, where it is wasted. However, sprinklers are the best way to distribute water over a large area.

Here are some tips:

* Water in the morning, so leaves dry in the sun. Wet foliage at night encourages fungus diseases.

* Have more than one sprinkler, so you can fit the watering pattern to different areas of your yard. A good assortment is an oscillating sprinkler, which waves back and forth over a rectangular area, such as a lawn; an impulse sprinkler, which flings water in a wide circle or part of one; and a pattern sprinkler, which can deliver a steady stream in several arrangements in tight spots.

* If a sprinkler does not have one, add a shut-off valve between it and the hose so you easily can reduce the water pressure to the area you need to water.

* In-ground sprinkler systems: Get a moisture sensor that only turns on the sprinklers when the ground is dry. Otherwise, learn to adjust the timer and turn it on and off as needed. Don't just leave it at the installed settings regardless of conditions; that's a huge water-waster.

Lawns

In summer, you can save water by letting the lawn go dormant. (Many leaves will dry and turn brown but each plant's crown and roots remain alive, waiting for cooler weather.) But decide to either let it go dormant or not. Don't try to revive it with heavy watering when it goes brown. A long soak every two weeks, or a good rain, will keep the roots alive.

* To keep grass green, water deeply once a week, no more often. Too much watering, or watering at night, can lead to lawn diseases and grubs.

* Mow the lawn high -- a good 3 inches -- to conserve water and encourage long roots.

* Don't fertilize in summer. Overfertilizing makes lawns weak and thirsty.

* Aerate the lawn every spring to help it absorb water.

Trees and shrubs

* New trees and shrubs, with struggling root systems, need watering for a year after they are planted. Turn the sprinkler on to just a dribble and set it on the root zone for several hours once a week. The following week, move it to a different spot.

* Established trees and shrubs rarely need supplemental watering except in drought, when they are sick or stressed or if they have a restricted root zone -- for example, hemmed in by house, path and driveway.

Water just the soil

* It's the roots that need the water, so the most efficient watering goes right to the soil.

* Soaker hoses are easy to set up; just lay them around in beds. But they must be taken indoors in winter.

* Drip irrigation is more finicky to set up, but can be left out in the winter. Start with a kit to get used to the parts and procedures.

Gadgets

Several devices make watering much easier.

* A two-way valve: Screw onto the faucet to give you two taps.

* Quick connectors: These allow you to quickly and easily swap sprinklers, nozzles and timers.

* Timers make it possible to water when you are not home.

Shut-off timers run the water for a certain time and then turn it off. (A flow meter is similar but measures gallons, not time.)

Electronic timers need batteries, but can be set to turn water on and off any time.

When did 'liberal' become a dirty word?

When did 'liberal' become a dirty word?
Clarence Page
Copyright © 2007, Chicago Tribune
July 29, 2007


The greatest triumph that conservatives ever achieved is to make liberals embarrassed to call themselves "liberal."

That thought came to mind as I watched Sen. Hillary Rodham Clinton rhetorically wriggle her way, as so many liberals do, right out of using the "L-word" to describe herself.

During the CNN/YouTube debate by Democratic presidential candidates, Clinton was asked, "How would you define the word 'liberal' and would you use this word to describe yourself?"

Briefly she showed off her knowledge of the word's various meanings over the past, oh, century or two.

She pointed out how the word used to mean that "you were for the freedom to achieve, that you were willing to stand against big power and on behalf of the individual."

She lamented that the word "in the last 30, 40 years" has been "turned up on its head" and "made to seem as though it is a word that describes big government."

So, she said, she would rather call herself a "modern progressive" who "believes strongly in individual rights and freedoms" and "working together" to "find ways to help those who may not have all the advantages in life get the tools they need to lead a more productive life for themselves and their family."

Nice speech. Historically accurate too. Early liberals were opposed to the oppression brought on by big government. Adam Smith, a founding father of free-market "invisible hand" capitalism, was a classic liberal in that sense.

That sense evolved under the trust-busting of Theodore Roosevelt into a protection of individuals from abuses by big institutions in the private sector too.

Franklin Roosevelt's New Deal shifted the meaning further in favor of big government as a benevolent shield and safety net against unpredictable disasters of life.

After President Lyndon B. Johnson's Great Society expansions, it was perhaps inevitable that liberals would go overboard and lose touch with growing middle-class resentments about taxes, welfare abuse and government inefficiency.

The conservative revival found its finest megaphone in Ronald Reagan, who declared:

- "Government is not the answer to the problem. Government is the problem."

- "The most frightening words in the English language are 'I'm from the government, and I'm here to help you.'"

Democratic presidential candidates were blindsided by the Reagan counterrevolution. It took the centrist Bill Clinton to reunite the coalition across racial and class lines that earlier liberal presidents enjoyed.

But for all the efforts by the Clintons to call their politics "centrist" or "progressive" they still get tagged with "liberal" by conservatives who define "liberal" as anyone who is not their idea of conservative.

So, just once I would like to hear a leading Democratic candidate answer the "Are-you-a-liberal" question with the candor of my late Uncle James. He drove ambulances in the Army during World War II and later at a steel mill in my hometown. He was a working-class Democrat since Roosevelt's New Deal wooed him away from the party of Abraham Lincoln.

He used to define liberal like this: "Government ought to help people. You got a problem with that?" I don't have a problem with that. That sentiment clearly defines a key difference between liberals and Reagan-style conservatives, which is what all of the current Republican candidates proudly claim to be. The Democratic candidates, by contrast, admire President John F. Kennedy, but seldom claim to be a Kennedy-style liberal.

Yet, conservatives are just as vulnerable as liberals to the hubris that makes successful politicians lose touch with the way their grand theories go over with real people. President Bush, for example, found out with the collapse of his one of signature issues, Social Security reform. The more speeches he gave, the more most Americans hated his plan. Given uncertain alternatives, government doesn't look so bad after all.

In fact, when it comes to big government, it's hard to beat Bush. Under his watch, according to a study by the libertarian Cato Institute, the federal government grew more than it did under Johnson and only slightly less than it did under fellow conservative Richard Nixon -- and that's not including Bush's defense or homeland security spending.

Nixon famously said in 1971 that we are all Keynesians now, referring to the economist John Maynard Keynes, who believed government should play an active economic role. Bush might appropriately quip, "We're all liberals now."

After all, the word is available. Democrats are afraid to go near it. They don't know a good thing when they've got it.

----------

Clarence Page is a member of the Tribune's editorial board. E-mail: cptime@aol.com

How to save the faster-expiring miles

How to save the faster-expiring miles
By James Gilden
Copyright by The Chicago Tribune
July 29, 2007


Now is the time to gather up all of your frequent-flier mileage program statements and take a good hard look. If you're not vigilant, by the end of the year you could see your hard-earned miles vanish into air thinner than that in which a 747 flies at 35,000 feet.

Some of the biggest U.S. airlines are changing the amount of time you have for frequent-flier mileage accounts to sit dormant. US Airways led the charge last fall when it announced it was changing the expiration for its inactive frequent-flier mileage accounts from 36 to 18 months. Predictably, other carriers have taken to the notion like lemmings to a cliff.

Delta shortly followed but with a 24-month expiration; United and American Airlines have since followed suit, each with an 18-month expiration.

"There were a hodgepodge of policies until 1999, when most major carriers adopted a three-year rule," says Tim Winship, editor and publisher of FrequentFlier.com.

Keeping your miles from expiring only requires some sort of program activity every 18 months (or 24 for Delta).

"There are hundreds of ways to keep your account active," said United spokeswoman Robin Urbanski.

The airlines are making a bid to get excess miles off their balance sheets. United, for example, had approximately 508.8 billion outstanding unused miles at the end of 2006. It estimates that 70.5 billion of those (about 14 percent) will go unused and probably expire under the new policy.

That's enough expiring miles at 25,000 miles per ticket for nearly 3 million free domestic flight awards. Or if each mile is worth 2 cents (using a common measure of the value of miles), about $1.4 billion dollars worth of miles. Just at United.

As of the beginning of 2006, frequent-flier guru Randy Petersen, publisher of the FlyerTalk frequent-flier forum Web site (www.flyer talk.com), estimated there were about 10 trillion miles outstanding in all frequent-flier accounts.

If 14 percent were allowed to expire (a big if), the cumulative loss to consumers would be about $28 billion.

For individual travelers, the loss is much less dramatic. As research for this column, I checked in on one of my "orphan" frequent-flier accounts. Like most good frequent fliers, I concentrate my flying in one program. Mine happens to be United's Mileage Plus. Between it and its Star Alliance partners I have flown 618,287 paid miles at last count. But I have over the years accumulated miles in other programs such as American Airlines' AAdvantage. A check there found 2,000 miles that would soon expire without some sort of activity.

That many miles may be worth only about $40, but heck, 40 bucks is 40 bucks. So I looked at some flights I've taken on AAdvantage program partners in the last 12 months to see if I could qualify for some flight credit and keep my account current. A flight on Iberia Airlines from Spain to London last fall qualified but I couldn't find my boarding pass. A flight on Alaska Airlines to Puerto Vallarta in March 2006 was outside the 12-month time frame.

In the past I have been lazy about providing a frequent-flier number for short flights that were not part of the Star Alliance. With the new expiration policies, I will be more vigilant. That strategy will prove more difficult for some travelers than others.

Lee Van Doren, an IT consultant from Wood- inville, Wash., has more frequent-flier mileage account orphans than Father Flanagan. He travels frequently to Baltimore to visit a client and racks up more than 100,000 miles per year on United, qualifying him for 1K, its highest level of frequent-flier status. But he also has accounts with American, Continental, Delta, US Airways and Alaska Airlines.

"For United ... I don't have to worry about it," he says. "But I am concerned about all these other little miles maybe I have 15 to 20,000 miles in all these little accounts and I'd like to keep them going."

When some miles in his American account were set to expire under the old 36-month rule, he set about trying to get some retroactive credit from a hotel stay, only to learn it had already been credited to his Continental account.

"I can't even keep track of them in a three- year period," he says. "An 18-month period, it's going to be a real challenge."

Getting frequent-flier miles programs' infrequent members to have more transactions is not an insignificant factor in the airlines' decision to cut the expiration date.

"Getting those liabilities off of their books very simply makes their books look better," says Tim Winship, editor and publisher of FrequentFlier.com. "What none of the airlines have owned up to is the effect on the revenue side of the equation.

"These foreshortened mileage expiration periods will inevitably . . . cause people to have more transactions with program partners be those the airlines or their partners, but in either case that ends up being a revenue generator for the airline."

Complaints about the change have been muted, says Winship. Though it may be a minor one to how the programs operate, he sees it as a sign of a continued degradation in their value.

"It's not that hard to earn or redeem a mile," he says. "That's true, at least for those people who are more or less actively engaged in the programs.

"But if you take that sort of blase attitude, eventually you won't have a program left to complain about."

In the meantime, I'm still hunting for my boarding pass from that Iberia flight last year. Maybe I stuck it in my passport.

Some ways to keep from losing those hard earned miles:

- Take a paid flight on the airline or an alliance partner (for example, a United frequent flier who takes a Lufthansa flight would qualify).

- Redeem miles for a flight, upgrade or even a magazine subscription.

- Use a credit card that awards frequent-flier miles. You can "buy a pack of gum for $1" and keep your account active, says United's Urbanski.

- Stay at a hotel that offers miles in the carrier's program. If you usually receive frequent-guest points in the hotel's program, you will have to forfeit them at least for one stay.

- Rent a car and ask to have miles credited to your program (though some car rental agencies will charge an added fee).

In minority neighborhood, kids' risk of cancer soars

In minority neighborhood, kids' risk of cancer soars
By Howard Witt
Copyright © 2007, Chicago Tribune
July 29, 2007



HOUSTON - Like so many of their poor and working-class Hispanic neighbors, Rosario Marroquin's family settled in the southeast Houston neighborhood of Manchester a generation ago because the clapboard houses were cheap, the streets were safe, transportation was convenient and downtown was only 20 minutes away.

It was an ideal neighborhood, except for the coughing spells, the nosebleeds, the burning odors and the acrid smoke.

Marroquin's family, like most everyone else in the neighborhood, did their best to ignore all that, because few could afford to move anywhere else. And they tried not to notice the dozens of oil refineries, petrochemical plants and waste disposal sites expanding all around them, their towering smokestacks and huge storage tanks lining the Houston Ship Channel, the city's principal outlet to the sea.

But then the cancers started to appear. First the neighbor in back, then another across the street, then a boy down the block. And finally, in 2003, Marroquin's son, Valentin, came down with leukemia at age 6.

The reality of living in the city's most toxic industrial zone -- in the middle of the largest concentration of petrochemical plants in the United States -- grew inescapable.

"The factories say they were here first, and I understand that," said Marroquin, 27, an apartment leasing agent who has lived in Manchester her whole life. "I understand that we need all this industry for our nation's economy. But when you look at the pain of a child in the hospital, why can't these plants do something better, invest more money in pollution controls?"

That is a question that Houston officials, environmental activists and neighborhood residents are grappling with in the wake of an alarming public health study released this year by the University of Texas School of Public Health. The study showed that children living within 2 miles of the heavily industrialized Houston Ship Channel, like Valentin Marroquin, have a 56 percent greater risk of contracting acute lymphocytic leukemia than children living farther away -- a risk that epidemiologists found was associated with some of the toxic pollutants released by petrochemical plants in the area.

A national trend

But such health risks are not just a local issue. Some environmental experts say the affected Houston neighborhoods, which are more than 90 percent Hispanic, illustrate a discriminatory national trend they call "environmental racism" in which hazardous polluting industries are routinely located closer to minority neighborhoods than white ones.

"All communities are not created equal," said Robert Bullard, director of the Environmental Justice Resource Center at Clark Atlanta University, who has been documenting racial and environmental disparities for more than 20 years. "If a community is low-income and comprised mostly of people of color, it generally gets more than its fair share of those things that people don't want."

For example, one analysis of data collected by the federal Environmental Protection Agency, conducted by The Associated Press in 2005, found that blacks are 79 percent more likely than whites to live in neighborhoods where industrial pollution is suspected of posing the greatest health danger.

Another study, released by Bullard in March, ranked the top 10 metropolitan areas in the U.S. with the largest number of minorities living in neighborhoods that contain hazardous waste facilities. Houston was second, behind only Los Angeles, featuring 10 such neighborhoods where the total population is more than 78 percent minority. (Chicago ranked fifth, with nine neighborhoods containing hazardous waste facilities where the total minority population is nearly 72 percent.)

The very concept of environmental racism is vigorously disputed by officials of the petrochemical industry, who say that in many cases, the plants were there long before residential neighborhoods grew up around them.

"The petrochemical facilities in the Houston Ship Channel region were established during World War II in areas that were very unpopulated at that time," said Christina Wisdom, general counsel for the Texas Chemical Council, an industry trade association. "There is no evidence that industry has intentionally targeted those neighborhoods, and frankly, it's not true."

But environmental justice activists say that communities like Manchester end up hosting so many refineries, petrochemical plants and other hazardous industries largely as a function of economics and politics.

The presence of such industrial sites in a neighborhood sharply depresses residential property values, which attracts families earning the lowest incomes. And the presence of low-income families, many of them minorities who often lack political clout, in turn makes it easier for hazardous industries to locate or expand nearby without opposition.

That is particularly true in Manchester, which the Census Bureau puts at 25,174, but which local residents say is larger because of the presence of uncounted illegal immigrants.

"It's very easy for industry and the politicians to wear down these communities because they don't believe they have a right to anything better, and many people are afraid to come forward and complain," said Rosalia Guerrero-Luera, community outreach coordinator for Mothers for Clean Air, a Houston environmental group. "But it isn't like this is a normal problem and it will just smell for a little while. This will affect these children living here for their whole lives."

"Normal" for children in Manchester means an elementary school where the principal routinely locks the children inside to "shelter in place" when the air outside grows too foul, and a new neighborhood high school built a few hundred yards from the flaming smokestacks of a petrochemical plant.

Yet fighting the toxic health threats along the Houston Ship Channel is made even harder by the fact that most of the industrial plants are not breaking any state or federal pollution laws. Neither the federal EPA nor the Texas Commission on Environmental Quality has established emissions limits for many of the toxic air pollutants, such as benzene and butadiene, that are released by the refineries and chemical plants in the area and that epidemiologists suspect are causing the increased cancer rates.

"In the absence of federal ambient air standards for toxics, states are allowed to set their own," said Elena Marks, director of health and environmental policy for the city of Houston. "Many states have done that. Texas has not."

Frustrated by the state's refusal to set and enforce new pollution limits, Houston Mayor Bill White wants to fill the void by expanding the city's nuisance laws to impose stiff fines on industrial plants that do not reduce their toxic emissions.

"Nobody should have the right to chemically alter air they don't own, breathed by other people, in a way that poses significant health risks," said White, a popular Democrat who is running uncontested for his third two-year term.

Industries fight back

But White faces strong opposition from the petrochemical industry, whose leaders point to progress they have made in recent years in voluntarily reducing emissions of some carcinogens. And state and regional officials question Houston's jurisdictional right to regulate the plants, some located just outside the city's borders.

As a compromise -- and a way to avoid what would likely be years of legal challenges to any new ordinance -- White agreed to the formation of an industry-government commission to study more voluntary emissions reductions. The commission is due to issue its report soon, but White warns that he will resurrect his proposed ordinance if the voluntary plan lacks teeth.

Dan Wolterman, president of Houston's Memorial Hermann Hospital and chairman of the commission, said the group has discovered through its research that reducing toxic emissions, though expensive, is well within the technological capabilities of the plants.

"It's very clear if you look at best practices by these same organizations that they have some better emissions results elsewhere in other states," Wolterman said. "So we asked them, what would it take to get the Houston region to the place where you would do here what you do elsewhere?"

Rosario Marroquin, for one, says she's not going to wait around to find out.

Valentin, who is now 10, is in remission after intensive chemotherapy for his leukemia. But his mother worries that every time the boy and his young siblings drink water from a tap in their home or breathe the air outside, they face dire risks.

"We have to get out," said Marroquin. "We are not going to be able to afford it, but we have to leave. I don't want the tiniest particle triggering his leukemia again."

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hwitt@tribune.com

THE DEBT THREAT

THE DEBT THREAT
By Patricia Nell Warren
Copyright © 2007 by Patricia Nell Warren. All rights reserved.
Originally published in Frontiers Magazine, July 2007
Also posted at the Bilerico Project


For weeks, gay media are buzzing that the big PlanetOut merger venture is in big trouble. Just a year and a half ago, PNO became the first gay-owned stock traded on the NASDAQ. As its price soared to $10 a share, CEO Lowell Selvin announced glowingly that the merger would “move us out of the gay ghetto and into a whole new gay world." Meanwhile gay media regale us with rosy advertising studies on the rise to power of the pink consumer.

Now that rosy glow is fading a bit, as PlanetOut showed a $6.9 million loss in the first quarter of this year, and the stock plummeted to less than $1 a share. While pundits speculate on what went wrong at PNO (mismanagement? hubris?), pessimists predict a big black eye for the gay business world if PNO goes Chapter 11.

But nobody is talking much about a bigger, scarier problem. The fact is, many thousands of those pink consumers are in big financial trouble themselves.

For decades Americans have worried about our country’s public debt, which reached a staggering $4.9 trillion in 2006. Just as scary is the private debt, meaning the total owed by millions of consumers. Since the launch of liberalized credit in the 1980s, private debt has skyrocketed to an equally staggering $3 trillion today. The old yardstick of the GLBT ten percent suggests that we own at least ten percent of that $3 trillion.

TV advertising insists that most Americans plunge into debt in reckless pursuit of luxuries. In the gay world, the double-income-no kids thing created a “spend, spend, spend” climate among A-list folks. But many of us are low- and middle-income. In recent years, with costs soaring ever higher and incomes stagnating, many people alike started using credit cards, re-fi's and home equity to cover basics –- housing, healthcare, student loans, transportation, even food. Credit-card debt has almost tripled in the last five years.

During the last year, a national tipping point on private debt was felt, like an L.A. earth tremor. According to Consumer Affairs, bank foreclosures on homes shot up 47 percent. Six out of 10 American households are falling behind on credit-card payments. Mortgage companies are closing, or going into mergers or layoffs, because of defaults. Banks are belatedly scrambling to throw lifelines to debtors, because sales are soft on foreclosed properties. Despite a new federal law that attempts to curb bankruptcies, filings are up by 422 percent, from slightly under 300,000 in 1980 to 1,500,000 today.

How many of those credit-card defaults, foreclosures and those million-and-a-half filings are happening to people in our own community? Hard figures are a little hard to come by. A recent UK study reveals that GLBT individuals have almost twice the credit-card debt of non-gay people. But in the U.S., judging by the recent explosion of GLBT debt-counseling websites and blogs like QueerCents.com across the Web, a disproportionate percentage of those statistics are pink people mired deep in the red.

Why might our demographic debt-curve be higher than that of most non-gay people? Per Larson, openly gay and widely published financial writer/consultant, says: “Market research says we have higher average incomes than straights. The average straight American has but a few weeks or months of salary in the bank….Market research reveals that our incomes are well above average because we equip ourselves with better skills to survive, because we're more mobile, because we've learned to live with risk, and because we simply don't invest in children and nonworking spouses. We not only earn more; potentially we can keep more.”

So, Per Larson asks, “Why is debt such a threat to our community?” On his website, GayMoney.com, he discusses what he calls our Achilles heel. “Our key weakness, that which often holds us back from the advantages that can come from being lesbian or gay, lies in our money connection to society at large. …Some of us compensate for discrimination by building expensive fortresses, filled with furniture and things. Some of us try to pass for straight by literally buying into America's consumer society, seeking acceptance by buying society's status symbols. Some of us get carried away with the freedoms of our lifestyle, losing some of society's financial wisdoms in the process. Some of us are so focused on our youth that life becomes one giant revolving credit card.”

If we want to understand the turmoil that might be going on with community-owned big business right now, and whether one high-profile gay-owned corporation may go into Chapter 11, we will have to hope that new market studies give us more real-life facts about the pink dollar. Out-of-control personal debt will surely impact the ability of each of us to sustain an independent and productive life outside of the closet.

International Herald Tribune Editorial - Don't veto, don't obey

International Herald Tribune Editorial - Don't veto, don't obey
Copyright by The International Herald Tribune
Published: June 22, 2007


President George W. Bush is notorious for issuing statements taking exception to hundreds of bills as he signs them. This week, we learned that in a shocking number of cases, the Bush administration has refused to enact those laws. Congress should use its powers to insist that its laws are obeyed.

The Government Accountability Office, a nonpartisan arm of Congress, investigated 19 provisions to which Bush objected. It found that six of them, or nearly a third, have not been implemented as the law requires. The GAO did not investigate some of the most infamous signing statements, like the challenge to a ban on torture. But the ones it looked into are disturbing enough.

In one case, Congress directed the Pentagon in its 2007 budget request to account separately for the cost of military operations in Iraq and Afghanistan. It was a perfectly appropriate request, but Bush issued a signing statement critical of the rule, and the Pentagon withheld the information. In two other cases, federal agencies ignored laws requiring them to get permission from congressional committees before taking particular actions.

The Bush administration's disregard for these laws is part of its extraordinary theory of the "unitary executive." The administration asserts that the president has the sole authority to supervise and direct executive officers, and that Congress and the courts cannot interfere. This theory has no support in American history or the Constitution, and is a formula for autocracy.

Other presidents have issued signing statements, but none has issued as many, or done so with the same contemptuous attitude toward the co-equal branches of government. The GAO report makes clear that Bush's signing statements were virtually written instructions to executive agencies to flout acts of Congress.

Congress has a variety of methods available to make the administration obey the law, including the power of the purse. When the Bush presidency ends, there will be a great deal of damage to repair, much of it to the Constitutional system. Congress should begin now to restore the principle that even the president and those who work for him are not above the law.

International Herald Tribune Editorial - The China puzzle

International Herald Tribune Editorial - The China puzzle
Copyright by The International Herald Tribune
Published: June 22, 2007


The "Chinese miracle" has been the biggest economic story for several years now, a tale of a nation rising from the ashes of a Stalinist command economy to become the world's premier trading partner. But China reminds us with distressing regularity that the progress has been selective.

The latest reminders are reports of slave labor in Chinese factories and the discovery that some of the popular Thomas the Tank Engine toys manufactured in China have lead in their paint. Before that, it was the contaminated dog food, the stubborn support of Sudan for its oil, the regular reports of human rights abuses, the huge economic disparities between city and country, the controls on the media.

Why rehearse these faults now? Because governments and companies tend to become so seduced or intimidated by China that they won't hold it to high standards of human rights and business ethics.

Western companies have been so anxious to transfer manufacturing to China's cheap factories that they have been happy to close their eyes to what else goes on over there - just as Google or Yahoo were happy to assist in repressing information to get a toe into the Chinese market, or as Washington and other Western capitals compete in trying to please visiting Chinese leaders. The ultimate source of China's failings is a Communist Party that has jettisoned worn-out Marxist economic theories but clings to its authoritarian rule on all other fronts, creating a dangerously unbalanced behemoth.

This is not an argument against trading with or investing in China. Globalization can be a potent force for democratization. But human rights violations cannot be relegated to untouchable internal affairs. Just as the world has not hesitated, rightly, to lambaste the United States over issues like Guantánamo Bay, it should not be shy about systematic and widespread violations of human rights in China.

China's unreformed political system fosters corruption and an undue focus on short-term economic gains, which will lead to more internal inequities and injustices and more tainted exports. A politically reformed China would be an even more formidable economic power, but a less destructive one.

25 Afghan civilians die in NATO crossfire

25 Afghan civilians die in NATO crossfire
By Barry Bearak and Taimoor Shah
Copyright by The International Herald Tribune
Published: June 22, 2007


KABUL: At least 25 civilians, including nine women, three babies and an elderly village mullah, were killed in an airstrike Friday when they were caught in a battle between Taliban and NATO forces in southern Afghanistan, the police chief of Helmand Province said.

The scenario was a grimly familiar one: The Taliban launched an attack under the cover of darkness and then retreated into the village of Kunjakak in the Grishk district of Helmand. NATO commanders ordered air support. The result was devastating.

A NATO spokesman, Lieutenant Colonel Mike Smith, reported in a written statement that perhaps 30 Taliban insurgents had been killed in the airstrike, adding that while an unknown number of innocents may have lost their lives, the fault was entirely the enemy's: "In choosing to conduct such attacks in this location at this time, the risk to civilians was probably deliberate. It is this irresponsible action that may have led to casualties."

The statement itself was a preemptive strike. Afghans are not only angry with the Taliban, whose tactics include suicide attacks and concealed roadside bombs. They are upset by what they see as the sometimes-indiscriminate death toll of allied bombs and rockets.

That concern has been echoed by foreign charities working in the country. Earlier this week, Acbar - a coalition of Afghan and international relief agencies such as CARE, Save the Children and Mercy Corps - criticized the United States and its allies, saying that hasty military action led to a minimum of 230 civilian deaths in 2007.

"Members of Acbar recognize the challenges faced by soldiers in a battlefield environment but military forces must at all times respect international humanitarian and human rights law," the organization said. "Notably, forces must distinguish between civilians and combatants and use force strictly in proportion with legitimate military objectives."

Acbar's critique went beyond airstrikes. It alleged 14 instances where civilians were "killed for simply driving or walking too closely" to foreign soldiers. It mentioned "abusive raids and searches of Afghan homes" that have sapped support for both international aid workers and the multinational military presence.

Little is yet known about the fighting in Kunjakak. The Helmand Province police chief, Muhammad Hussein Andiwal, said the battle started Thursday night.

The Taliban used at least two civilian compounds in their efforts to escape, he added.

These are brutal days in Afghanistan. The militants have launched several suicide attacks, including the bombing Sunday of a police bus in Kabul that killed 24 recruits. On Monday, seven children were killed in a religious compound during an airstrike by the U.S.-led coalition in the eastern province of Paktika. There were reports that dozens of civilians have died during days of fighting in the Chora district of Uruzgan in the south.

"This past week has been very tough," said Christopher Alexander, deputy special representative of the UN secretary general in Afghanistan. "I've seen the reports. In the Chora incident, the Taliban literally slit the throats of men, women and children and burned the bodies." He added that there was also close air support by NATO that killed civilians.

Various groups here in Kabul keep a running tally of casualties; there is wide variation in numbers. According to Alexander, during the past two years, the number of wartime dead has risen fourfold. So far this year, the United Nations has counted about 2,800 casualties, which is 20 to 30 percent above the pace of 2006. Roughly one-quarter of the deaths are civilians, with the vast majority killed by the Taliban, he said.

U.S. weighs speedier closing of jail in Cuba

U.S. weighs speedier closing of jail in Cuba
By David Stout
Copyright by The International Herald Tribune
Published: June 22, 2007

WASHINGTON: President George W. Bush's top advisers are considering a recommendation to speed up the process of closing the American detention unit for suspected terrorists at Guantánamo Bay, Cuba, according to administration officials familiar with the deliberations.

The recommendation comes from several deputies of cabinet members and reflects a growing belief that the continued use of the detention facility is tainting the image of the United States and hampering its campaign against terrorism, the officials said.

Bush has said that he wanted to shut down the camp at Guantánamo, which holds about 400 prisoners, including more than a dozen suspected Al Qaeda leaders, but that it was not possible to do so in the near future.

The cabinet deputies are recommending that the process be accelerated, and at a meeting scheduled for Friday they were expected to urge a White House announcement within weeks, according to the officials dealing with the issue.

The meeting was canceled as a result of a report Thursday by The Associated Press about it, said officials who knew about the session.

Secretary of State Condoleezza Rice, Defense Secretary Robert Gates, National Security Adviser Stephen Hadley and their top deputies were among those scheduled to attend.

[On Friday, The Associated Press reported that the United States was helping to build a prison in Afghanistan to take some prisoners now held at Guantánamo. But the White House said Friday that it was not meant as an alternative to the facility in Cuba, The AP added.]

Dana Perino, a White House spokeswoman, said Friday that there was no deadline for closing down the facility. "Everybody is working toward the goal to meet what the president has asked them to do, which is to do it as soon as possible," she said.

The abrupt cancellation of the meeting prompted a statement Thursday evening by Gordon Johndroe, a spokesman for the National Security Council.

"The president has long expressed a desire to close the Guantánamo Bay detention facility and to do so in a responsible way," Johndroe said. "A number of steps need to take place before that can happen such as setting up military commissions and the repatriation to their home countries of detainees who have been cleared for release. These and other steps have not been completed. No decisions on the future of Guantánamo Bay are imminent and there will not be a White House meeting tomorrow."

Guantánamo was chosen for the prison camp in the first place because, while it is an American military installation, it is not on American soil and thus not as subject to American law as are prisons within the United States.

Transferring the prisoners from Guantánamo would raise a host of legal, diplomatic and human rights questions, depending on whether they were sent to their home countries, other countries or to military prisons in the United States.

But the continued confinement of the prisoners, some from countries that are allies of the United States, has sparked intense criticism of the United States.

The Guantánamo detainees do not fit into easy categories. They are not prisoners of war in the traditional sense, in that they were not uniformed soldiers of countries at war with the United States. And only some of them have been charged with crimes.

Most of the prisoners are classified as "enemy combatants." Among them is Khalid Shaikh Mohammed, who the U.S. government says was the mastermind of the attacks of Sept. 11, 2001.

Administration hard-liners have opposed housing the prisoners in the United States, at least in part because they would presumably have legal rights and thus be able to challenge the conditions of their confinement and interrogations.

Since the Guantánamo detention unit was opened in 2002, Bush has said that the suspects there do not deserve all the legal rights enjoyed by American citizens, and that to grant them would hamper the search for intelligence that could help capture other terrorists and perhaps prevent a repeat of the Sept. 11 attacks.

But the administration has suffered repeated setbacks in American courts, which have held that the prisoners should at least be able to challenge the basis for their incarceration.

Congress has responded with legislation to limit the detainees' ability to go to court.

Lawyers for some prisoners have criticized the military tribunals established at Guantánamo, asserting that they are designed not to provide fair trials but to reinforce the impression that the Americans rounded up the right people.

The momentum for closing the camp has come in part from Gates, who has argued repeatedly that it has acquired such a shabby image abroad that legal proceedings involving the suspects would not be respected around the world.

Gates and Rice agree on the issue, in sharp contrast to Gates's predecessor, Donald Rumsfeld, who opposed shutting down the camp.

One sign of Gates's influence was his success in killing plans to build a $100 million courthouse complex at Guantánamo on the grounds that its construction would signal American intention to keep prisoners there for a long time. A much more modest, less costly facility was approved.

The move toward closing Guantánamo may also have picked up speed because Attorney General Alberto Gonzales, who opposes shutting down the camp, has lost influence within the administration because of the continuing calls for his resignation over the firings of several United States prosecutors and other turmoil within the Justice Department.

Vice President Dick Cheney also opposes closing the camp and has been silent for some time about the issue.

Perino, the White House spokeswoman, noted Friday that the United States planned to release about 80 of the detainees soon.

"America does not have any intention of being the world's jailer," she said.

Helene Cooper, Thom Shanker and David E. Sanger contributed reporting for this article.

A mystery in Beijing: Who runs the military?

A mystery in Beijing: Who runs the military?
By David Lague
Copyright by The International Herald Tribune
Published: June 22, 2007

BEIJING: As China converts its growing economic power into military muscle, a lack of transparency and a habit of secrecy pose formidable challenges in assessing the country's long-term ambitions, according to defense experts.

For foreign governments and analysts monitoring the Chinese military, one of the biggest mysteries is who is actually in charge.

Nominally, President Hu Jintao, who is also chairman of the Central Military Commission, the top military command body, is head of the armed forces, but there is considerable doubt among experts about the extent of the authority that he and his fellow civilian leaders exert over the 2.3 million-strong People's Liberation Army.

"I think Hu Jintao is still facing some challenges from top generals," said Philip Yang, an expert on the Chinese military and a professor of international relations at the National Taiwan University. "Especially those with their own agenda from the different services and others with their own agenda and perceptions about changes in the outside world, particularly in East Asia."

For China's neighbors and regional military powers, including the United States, this lack of knowledge about China's military decision-making is frustrating attempts to understand a buildup that could shift the balance of power in Asia.

Some of China's broad goals are clear from military publications, the speeches of senior leaders and the type and numbers of new weapons deployed.

The army's primary mission remains preserving the Communist Party's monopoly on power and protecting senior leaders.

In addition to defending Chinese territory, most Chinese and foreign analysts agree that Beijing aims to build a force capable of enforcing its claim of sovereignty over Taiwan.

But China's current thinking about when force is justified or what perceived threats are driving its accumulation of firepower remains unclear for most foreign governments and analysts.

Some foreign military analysts believe that there is now considerable debate under way in the Chinese military about the role of pre-emptive force in some circumstances including the use of nuclear weapons.

The Bush administration has repeatedly complained about this lack of transparency and called for increased military exchanges with Beijing.

"The outside world has limited knowledge of the motivations, decision making and key capabilities supporting China's military modernization," the Pentagon said in its annual report on China's military power released late last month. "China's leaders have yet to explain adequately the purposes or desired end-states of the PLA's expanding military capabilities."

Senior Chinese officials reject suggestions that a stronger army poses a threat to regional stability and insist that defense spending is strictly tailored to the country's needs.

Some influential Chinese analysts say that the PLA has made considerable strides in recent years in explaining its doctrine and spending plans, and they expect this trend to continue.

But they argue that Washington's military support for Taiwan makes it impossible for China to reveal more about its strategic thinking and force structure.

"We have to keep certain secrets in order to have a war-fighting capability," said Shen Dingli, a security expert at Fudan University in Shanghai. "We can't let Taiwan and the U.S. know how we are going to defeat them if the U.S. decides to send forces to intervene in a conflict over Taiwan."

Doubts about the chain of command in China were heightened in the aftermath of the PLA's successful test of an antisatellite missile on Jan. 11 when most analysts concluded that top officials from the Foreign Ministry and civilian bureaucracy were clearly in the dark about the military's plan to shoot down an obsolete weather satellite.

Despite widespread protest from the international community, it took almost two weeks before the Foreign Ministry confirmed the test.

Other analysts point to an incident in October when one of China's newest conventional submarines approached the U.S. aircraft carrier Kitty Hawk and its battle group in international waters off Okinawa and was only detected when it surfaced near the American ships.

U.S. officials played down the incident, but some experts questioned whether China's civilian leadership would have sanctioned what could be seen as a highly provocative move.

For some analysts, both incidents could be interpreted as a clear demonstration for Washington of China's growing military capabilities and perhaps evidence that elements in the PLA leadership were less concerned about the diplomatic consequences than their civilian counterparts.

There is also evidence that some military officers enjoy far more leeway for criticizing or contradicting official policy in a country where dissent remains tightly controlled.

Major General Zhu Chenghu escaped serious censure, according to Chinese officials, after he said in July 2005 that China would respond with nuclear weapons if the United States intervened in a conflict over Taiwan.

Amid an international outcry over Zhu's remarks, top civilian bureaucrats were extremely reluctant to criticize him or even comment on his views.

Tolerance has also been extended to another senior officer and influential thinker, Lieutenant General Liu Yazhou, who has publicly called for political reform in China, a move that would be dangerous for most senior Chinese officials.

To some observers, it is to be expected that Hu lacks the authority that revolutionary leaders like Mao Zedong and Deng Xiaoping exerted over the military after establishing their credentials in resisting the Japanese invasion and then winning the civil war.

"Since Deng Xiaoping, no one has had that kind of control or legitimacy," said Yang.

When Hu succeeded former President Jiang Zemin in 2003 as leader of the state, party and military, most analysts speculated that it would take time for him to match his predecessors' hold over the armed forces and begin building his own power base.

There were signs that Hu is attempting to assert his authority through the promotion of loyal senior officers, a crackdown on corruption in the armed forces and the tough disciplinary action against senior officers held responsible for two accidents last year in which about 90 troops were killed.

Hu is also expected to use the 17th party congress expected to be held in October to promote more of his supporters in the military to top posts.

From speeches and reports in military newspapers and magazines, it also appears that Hu has been attempting to demonstrate his credentials as a military leader and thinker.

In these speeches, Hu has exhorted the military to accelerate preparations to fight high technology wars in an age where the use of information is crucial on the battlefield.

Analysts say that his references in these speeches to the military and political thinking of former leaders Mao, Deng and Jiang is an attempt to portray himself as part of a tradition that has directed the modernization of the PLA from a mass, peasant army to a modern, high technology force.

Under Hu, the military has continued to enjoy double-digit annual budget increases to pay for increasingly sophisticated weapons and improved lifestyles for senior officers.

Despite his background as an engineer and civilian bureaucrat, Hu wears an olive green style military tunic - although without badges or insignia - when meeting senior officers or attending parades and functions.

In what is seen by some analysts as an attempt to consolidate his control, Hu has ruled out suggestions from some younger officers that the Chinese military should become a fully professional force that owes its loyalty to the state rather than the ruling party.

In a speech to military delegates to China's annual parliamentary session in March, Hu called for tighter political discipline.

This view was reinforced in an April edition of the party magazine, Qiushi (Seeking Truth), where General Zhao Keming, the political commissar of China's National Defense University, wrote that the military must resist pressure to distance itself from politics.

"We must uphold the Chinese Communist Party's absolute leadership over the army from beginning to end," Zhao wrote.

Macy's stock jumps on rumors of buyout - Harley-Davidson also subject of speculation

Macy's stock jumps on rumors of buyout - Harley-Davidson also subject of speculation
Copyright © 2007, Chicago Tribune and Bloomberg News
Published June 23, 2007

NEW YORK -- Shares and stock-option volume of Macy's Inc. and Harley-Davidson Inc. surged Friday on speculation the companies could be bought.

Macy's stock climbed $2.56, or 6.6 percent, to $41.43, on the New York Stock Exchange. It was the largest jump since November 2005.

"There is talk of a private-equity buyout this weekend" at $52 a share by Kohlberg Kravis Roberts & Co. and Goldman Sachs Group Inc., said Marc Weinberger, head trader at W. Quillen Securities in New York. At that price, the company would be valued at $23.9 billion.

Jim Sluzewski, a spokesman for the Cincinnati-based department-store chain, said the company doesn't comment on market speculation. David Lilly, a spokesman for KKR, and Goldman Sachs spokesman Michael DuVally declined to comment. The former Federated Department Stores Inc. changed its name to Macy's this month.

Trading in call options to buy the company's shares surged to a record 121,312, more than 35 times the 20-day average. The price of the most actively traded contracts, July calls at $42.50, jumped sixteenfold, to $1.70 from 10 cents. Each call option gives investors the right, without the obligation, to buy 100 shares of a company at a specified price by a given date.

Trading in options to buy shares of Milwaukee-based Harley-Davidson also jumped to a record on speculation that the nation's biggest motorcycle-maker might be acquired by the world's biggest, Honda Motor Co.

A combined firm would command as much as 60 percent of the U.S. motorcycle market, said Tim Conder, an analyst with A.G. Edwards & Sons in St. Louis.

The number of call options traded jumped to 49,848. Volume hadn't exceeded 25,000 contracts since October 2005. The most active call, which gives investors the right to purchase Harley-Davidson shares at $70 by July 21, rose sevenfold in price, to 35 cents.

"There are rumors of a potential takeover," said Frederic Ruffy, an options analyst at Redwood City, Calif.-based Optionetics.com. "Investors think it's credible. They expect an announcement in the short term and a big move in the stock."

Shares of Harley-Davidson increased the most since October, adding $2.43, or 4 percent, to $62.55, on the NYSE after touching $63.99 earlier in the session.

Conder called the speculation "false" because an offer from Honda might not survive Federal Trade Commission scrutiny and a merger might "alienate U.S. customers."

Bob Klein, a spokesman for Harley-Davidson, declined to comment. A Honda spokesman didn't return a call.

Traders "are looking to get as much leverage as possible" by buying contracts that expire next month at a strike price that's more than $7 higher than Harley-Davidson's share price, Ruffy said.

"That's a sign they expect something soon because it would take a major announcement to push the stock up to $70," he said.

Worries weigh on markets - Investors focus on subprime loans, tax legislation

Worries weigh on markets - Investors focus on subprime loans, tax legislation
By William Sluis, Tribune staff reporter. Tribune news services contributed to this report
Copyright © 2007, Chicago Tribune
Published June 23, 2007

A combination of worries centering on subprime mortgages and legislation in Washington that could restrict corporate dealmaking staggered traders on Wall Street Friday, sending stocks steeply lower.

The Dow Jones industrial average tumbled 185.58 points, or 1.4 percent, to cap off the worst week for investors since March. The index closed at 13,360.26.

Broader stock indicators also dropped sharply. The Standard & Poor's 500 index slid 19.63, or 1.3 percent, to 1502.56, and the Nasdaq composite index sagged 28.00, or 1.1 percent, to 2588.96.

The week was a rough one on the stock market. The Dow and the S&P 500 lost 2 percent, and the Nasdaq slid 1.4 percent.

"It was an extremely fluky day, with raw emotions taking over," said Chicago investment manager William Hummer.

One of the primary concerns centered on subprime mortgages, thousands of which are going into default. Such defaults prompted efforts by Bear Stearns Cos. to prevent one of its hedge funds from collapsing.

Bear Stearns said it will assume $3.2 billion of loans to the fund. That fueled concern of widespread markdowns of similar investments held by banks, pension funds and other investors. The funds hold large numbers of securities related to subprime mortgages.

Adding to the unease among traders was the prospect that lawmakers in Washington might toughen tax laws to create a less favorable climate for leveraged corporate buyouts.

"The sell-off was catalyzed by events in Washington," said mutual fund manager Henry Van der Eb. "The mass psychology of the stock market was changed by the possibility that the tax laws would change. That would mean the privatization boom is starting to dissipate."

He said that while the events involving the hedge funds "serve as a real black eye for Bear Stearns," it appears that the problems with subprime mortgages are contained, for now.

"But longer term, there will be some ripple effects, and that could prolong the housing slowdown," said Van der Eb, of the Gamco Mathers Fund in Bannockburn.

Such effects would undoubtedly mean higher mortgage rates for home buyers, he said.

The day's events "can't be blamed on higher interest rates because a rally in Treasuries sent bond yields lower," said Hummer, of Wayne Hummer & Co.

The yield on the bellwether 10-year Treasury note ended at 5.14 percent, down from 5.20 percent Thursday.

One concern, however, was that oil prices moved closer to $70 a barrel, Hummer said. A barrel of light, sweet crude for August delivery rose 49 cents, to $69.14, on the New York Mercantile Exchange.

Policymakers of the Federal Reserve will meet Wednesday and Thursday, and though they aren't expected to take any action on interest rates, they are expected to offer comments about inflation.

Any hint that they plan to tighten credit later this year will set off alarms on Wall Street, where there already are concerns about an implosion of the huge debts run up in the mortgage market and in highly leveraged corporate transactions.

"The economy, [excluding] housing, seems to be showing strong signs of recovery, which will prevent the Fed from lowering rates anytime soon," economist Eugenio Aleman of Wells Fargo & Co. said in a report for clients.

Friday's session began with a focus on the initial public offering of a stake in the management arm of Blackstone Group LP.

The most talked-about IPO since Google Inc. went public saw the buyout shop's stock open well above the $31 a share at which it had been priced late Thursday.

The stock finished the day up $4.06, or 13.1 percent, at $35.06. Enthusiasm over the Blackstone offering, however, wasn't broad enough to give the markets a boost.

"Nobody wants to go into the weekend overextended. Once you see start to see momentum push it down, it's hard to stay in the way of it," said Bill Schultz, chief investment officer at McQueen, Ball & Associates.

Losses in the mortgage market might be the "tip of the iceberg," as borrowers fail to keep up with rising payments on billions in adjustable-rate loans in coming months, Bank of America Corp. analysts said Friday.

Homeowners with about $515 billion on adjustable-rate mortgages will pay more this year, and an additional $680 billion worth of mortgages will reset next year, analysts led by Robert Lacoursiere wrote in a research note. More than 70 percent of the total was granted to subprime borrowers.

"When you see a hiccup like this, it's a reminder that there are a lot of potential problems down the road," Jack Kaplan at Carret Asset Management in New York said of Friday's decline. "We may not understand fully what's out there, and we're not going to know for sure until we have more time to really get a feel for what the possible implications are."

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wsluis@tribune.com

Green Bay heats up immigrant debate - City becomes one of largest in the nation to enact law targeting undocumented workers

Green Bay heats up immigrant debate - City becomes one of largest in the nation to enact law targeting undocumented workers
By Tim Jones
Copyright © 2007, Chicago Tribune
Published June 23, 2007

The business of doing business in Green Bay is changing this weekend because of a new ordinance that would let the city yank the operating licenses of employers who knowingly hire undocumented workers.

Proving that immigration reform is not simply a matter of congressional gridlock and talk-radio shouting, Wisconsin's unofficial football capital added its name this week to the growing number of local communities trying to address the issue.

"Look, had Congress done their job we wouldn't have this [ordinance] in Green Bay," Mayor Jim Schmitt said Friday. "I think at this time it's the right thing to do, given what's not happening at the federal level."

The new law, set to take effect Saturday, comes amid similar local efforts around the country, including Waukegan, Ill., where the City Council on Monday authorized giving the chief of police permission to apply to Washington for authority to enforce federal immigration laws.

Many of these efforts have spawned lawsuits or questions about enforceability. A common effect of nearly all of these laws is friction with rapidly growing Hispanic communities, such as the one in Green Bay.

Luis Bello, the CEO of La Uni-k Radio, a Spanish-language radio station in northeast Wisconsin, said most people in the Hispanic community "are pretty upset about it. They feel like they're being taken advantage of, doing jobs that most Americans aren't willing to do."

Bello added: "And now they feel targeted and afraid."

The local movement aimed at regulating immigration has generally been confined to smaller towns and cities. Hazleton, Pa., population 22,000, last year approved a law that prohibited hiring or renting to illegal immigrants. That law was challenged and is before a federal district court; a similar proposal in the Chicago suburb of Carpentersville has been delayed pending the outcome of the Hazleton case.

Last year, the mayor of the western Wisconsin town of Arcadia proposed an "illegal alien task force," designed to prevent renting to undocumented immigrants. He backed down after a public outcry.

Hispanic population growing

Green Bay, with 102,000 people, is a larger entrant into the debate. Hispanics represent a rapidly growing segment of the city's population, about 7 1/2 percent, according to the Census Bureau. As Congress wrestled with immigration reform in Washington, support for the law in Green Bay grew.

Matt Hollenbeck, who heads the mayor's Hispanic Advisory Council, said the law giving the city authority to penalize businesses is little more than a "political statement."

"There are people who believe some city official is going to be patrolling the streets to pick up undocumented workers. This doesn't do that," Hollenbeck said. "And there are a lot of folks who believe this will take care of the illegal immigration problem in Green Bay -- or the impression of a problem. And it won't do that either."

Schmitt, who is attending the U.S. Conference of Mayors meeting in Los Angeles, said he regrets the ill feelings that the debate has aroused.

"If there's any harassment, we'll shut it down right away. We won't allow that," Schmitt said. "We understand the city will be built on diversity; we've all got to work together. That's what this is all about."

The demographics of Northeast Wisconsin, which for generations has been overwhelmingly white, have changed in the past two decades. The city of Wausau, 90 miles to the west, opened its doors to Hmong refugees from Laos more than 25 years ago. The rapid growth of the Hmong community in Wausau spurred a backlash as the public school system struggled with an influx of students unfamiliar with English.

Doubting need for ordinance

Hollenbeck, whose council severed its ties to the mayor's office after the ordinance was approved Tuesday, said the city passed an ordinance it can't enforce to deal with a problem that doesn't exist.

"The schools are not overburdened with illegal immigrants. ... There's not a crime problem with the immigrant community. I just think it's a perception and a lot of ignorance and [City Council members] not doing their homework," he said.

City Council members said they were responding to what their constituents want. Supporters of the law say the October 2005 arrest by federal customs and immigration officers of seven Hispanic gang members helps build the case for the new law.

Green Bay Area Chamber of Commerce President Paul Jadin said there is a problem with illegal immigration. Jadin, who served for eight years as Green Bay's mayor, estimates that as many as half of the area's immigrants are undocumented.

"Given the demographics, we are certainly in need of that workforce," Jadin said.

But this is a matter for Washington, not local governments, to address, he added. "Without the cooperation with the federal government, this ordinance has no teeth."

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tmjones@tribune.com

Germany fears terror strike because of role in Afghanistan

Germany fears terror strike because of role in Afghanistan
By Mark Landler
Copyright © 2007, Chicago Tribune and The New York Times
Published June 23, 2007

FRANKFURT, Germany -- Germany faces a heightened threat of terrorist attacks because of its military involvement in Afghanistan, security officials here said Friday. The danger, they warned, is comparable to that in the months before the Sept. 11 attacks in the United States.

Three German residents believed to be radical Islamic militants have been arrested in Pakistan in recent days, said the Federal Criminal Police. Officials here suspect them of traveling to the border region between Pakistan and Afghanistan to join terrorist training camps.

"This tells us that German interests are in danger of being attacked, for example, by suicide bombers," a spokesman for the Interior Ministry, Christian Sachs, said by telephone.

Sachs said the authorities do not have concrete evidence of a terrorist plot being planned in Germany. But the police have tightened security at the borders and are scrutinizing people traveling to and from Pakistan and Afghanistan.

German soldiers and civilians in Afghanistan face the most immediate threat, officials said, citing an attack last weekend on a convoy outside Kabul that included vehicles from the German Embassy. No one was hurt.

Authorities gave few details about the German residents arrested in Pakistan, saying two had been under surveillance while at home and were viewed as potentially dangerous.

The authorities said they feared that the detained residents might have planned to return to Germany to carry out attacks. "We are following up all leads, and therefore I don't think there is any reason to panic," the deputy interior minister, August Hanning, said in Berlin. "But I do think that increased vigilance is needed."

Hanning likened the atmosphere to that in the summer before the terrorist attacks of Sept. 11, 2001, in the United States, "when obscure threats surfaced, which, as we know, became reality."

Several of the hijackers in that attack hatched their plot while posing as students in Hamburg.

The latest warning, which was amplified in public statements by the interior minister, Wolfgang Schaeuble, and by the head of the Federal Criminal Police, Joerg Ziercke, is likely to fan the country's debate about its military operations, which now range from Africa to Central Asia.

Germany has 3,000 troops in Afghanistan, part of the NATO force that has battled a growing Taliban insurgency.

Casting himself as reformer, Obama treads well-worn path

Casting himself as reformer, Obama treads well-worn path
By Mike Dorning
Copyright © 2007, Chicago Tribune
Published June 23, 2007

WASHINGTON -- Democrat Barack Obama claimed the mantle of reformer for his presidential campaign on Friday, pledging to impose new ethics and lobbying rules to blunt the influence of powerful business interests that he contends have fostered a "second Gilded Age" through dominance of Washington.

Speaking at a technical college in the early primary state of New Hampshire, the Illinois senator argued that undue influence of corporations has contributed to the income gap between rich and poor and has frustrated attempts to address issues such as high prescription drug costs and global warming.

"The people I've met across this country don't just want reform for reform's sake," Obama said. "They want reform that will help pay their doctor's bills, or ensure that their tax dollars are spent wisely, or put us on the path to energy independence. They want real reform and they're tired of the lobbyists standing in the way."

The reform proposals underscore a theme of discontent with Washington that has a long history in American politics and that Obama's campaign already has tapped into with the candidate's much-publicized refusal to accept campaign contributions from federal lobbyists.

Recent reformers vanquished

But even as the cause of reform has demonstrated political appeal -- the message provided powerful support for Republicans in seizing control of Congress in 1994 and Democrats in winning it back in 2006 -- it also has shown limitations in recent presidential politics.

Democrats Gary Hart in 1984, Paul Tsongas in 1992, Bill Bradley in 2000 and Republican Sen. John McCain in 2000 all faltered with presidential campaigns espousing reform. Successful presidential candidates have included reform as a component, as George W. Bush did in 2000, touting his record as governor of Texas with the slogan "Reformer with Results."

But the last presidential candidate to win on a campaign based primarily on reform was Jimmy Carter in 1976, shortly after the Watergate scandal and President Nixon's resignation.

In the current field, Obama has been the most aggressive in positioning himself as an agent of reform, and his ethics proposals bolster that identity.

The package includes a ban on gifts to executive branch officials from lobbyists. In an effort to reduce conflicts of interest in the "revolving-door" career path of many officials between government posts and lobbying jobs, presidential appointees would be barred for two years from working on regulations or contracts related to a former employer. Those who left their jobs before the end of an Obama presidency would be barred from lobbying for the duration of his term, he said.

Obama's Democratic rivals have incorporated calls for reform in their campaigns. Sen. Hillary Clinton (D-N.Y.) offered her package of ethics reforms in April, also in New Hampshire. And former Sen. John Edwards (D-N.C.) declared he would not accept campaign contributions from federal lobbyists or political action committees.

Still, the theme is more prominent in Obama's campaign. On the stump, he has regularly promoted his role in drafting ethics legislation for the Illinois legislature and the U.S. Senate. He has taken a perceived weakness -- his lack of national political experience after two years in the Senate -- and presented it as evidence that he has not been captured by the political establishment.

The 45-year-old lawmaker has been aided by his relative youth, newness on the political scene and mixed-race heritage -- all of which mark him as an outsider. His long relationship with Antoin "Tony" Rezko, who was indicted in an unrelated political corruption investigation, may give pause to some but so far has not taken on great significance to a national audience.

At the moment, the electorate appears unusually dissatisfied with the political status quo. Recent polls have shown public approval of both Republican President Bush and the Democratic-controlled Congress below 30 percent.

But in the past, calls for cleaner government have not resonated with voters in the same way as appeals on bread-and-butter economic concerns or anxieties over national security.

'Morally offensive laws'

Obama's campaign also has stressed issues of more immediate concern to voters, particularly his opposition to the Iraq war and support for expanded access to health care. In his speech Friday, he sought to make the case that the culture of influence in Washington affects the pocketbooks of Americans in myriad ways, from drug prices to student-loan interest rates -- both of which, he argued, are inflated through industry manipulation of public policy.

"What's most outrageous is not the morally offensive conduct on behalf of these lobbyists and legislators, but the morally offensive laws and decisions that get made as a result," Obama said.

In addition to stricter rules on lobbying, Obama promised he would reverse Bush administration policies limiting the public disclosure of government records and deliberations.



Criticizing the administration's refusal to release records of energy industry officials' roles in advising the White House, Obama promised to disclose all communication between White House staff and outsiders over regulatory policies. He said he would make a list of "every single tax break and earmark" available to the public on the Internet.

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mdorning@tribune.com

Bush Pick for No. 3 at Justice Withdraws

Bush Pick for No. 3 at Justice Withdraws
By MARY CLARE JALONICK
Copyright © 2007, The Associated Press
Published June 23, 2007, 3:05 AM CDT

WASHINGTON -- President Bush's pick to be the No. 3 official in the Justice Department asked to have his nomination withdrawn Friday, four days before he was to testify before the Senate Judiciary Committee.

Bill Mercer sent a letter to Attorney General Alberto Gonzales saying it was unlikely that the Senate would confirm him as associate attorney general, a post he has held on an interim basis since September. He plans to leave Washington and turn his full attention to his work as U.S. attorney for Montana.

"With no clear end in sight with respect to my nomination, it is untenable for me to pursue both responsibilities and provide proper attention to my family," Mercer wrote.

The Judiciary Committee had scheduled a hearing on Mercer's nomination for Tuesday. A spokeswoman for the committee had said senators needed the facts from an investigation into the firings of several federal prosecutors before he could be confirmed.

"The White House has found many ways to keep sunlight from reaching some of the darker corners of the Bush Justice Department, but this is a new one," Judiciary Committee Chairman Patrick Leahy, D-Vt., said in a statement. "With a confirmation hearing looming next Tuesday, they have withdrawn this nomination to avoid having to answer more questions under oath."

Mercer is the sixth senior Justice Department official to leave the tight-knit circle of Gonzales' advisers in the wake of the firings of eight U.S. attorneys last December. He is the only of the group, however, to remain with the Justice Department.

Mercer said in his letter to Gonzales that he believes he would not be confirmed promptly, if ever, "in part by statements suggesting that some senior Justice nominees will not be voted upon until the Senate receives e-mails and witnesses it has demanded from the White House."

In an interview with The Associated Press, Mercer noted that Judiciary Committee staff interviewed him for six hours in April about the prosecutor firings. He would not comment on the timing of his request to withdraw the nomination, but he said it was his decision.

"It's been a wonderful opportunity for 10 months and I'm saddened I won't be able to continue," he said.

White House spokesman Tony Fratto said it was unfortunate that the Senate has indicated it will not act to confirm nominees.

Mercer's name comes up at times in thousands of pages of e-mail exchanges between Justice Department and White House officials discussing the firings. The panel had authorized a subpoena for Mercer as part of its investigation.

The demise of his nomination points up the difficulty Bush faces as he tries to fill the top ranks of a Justice Department wilting under the weight of the Democratic-led congressional investigation into whether the White House, in effect, runs the agency.

Several lawmakers, including Pennsylvania Sen. Arlen Specter, the top Republican on the Judiciary Committee, have said the department is so dysfunctional and that it suffers with Gonzales still at the helm. But with Bush's support behind him, Gonzales shows no signs of resigning. He has said he plans to stay in the post until the end of Bush's term, virtually ensuring that majority Democrats will push ahead with their investigations of his stewardship.

Montana's two Democratic senators, Jon Tester and Max Baucus, have criticized Mercer for working two jobs and have called for him to resign as the state's U.S. attorney or give up his Justice Department post. In his letter, Mercer said he "heard the call" from the senators and said the change would address their concerns.

But a spokesman for Tester said Mercer's request for withdrawal "was too little, too late and something doesn't smell right."

"He decided to sneak out the back door only days before having to face, under oath, tough questions that he's been avoiding for months," said the spokesman, Matt McKenna.

Baucus appeared more forgiving.

"Max respects Mr. Mercer's decision," said Baucus spokesman Barrett Kaiser. "Montanans deserve a full-time U.S. attorney."

In a statement Friday, Gonzales praised Mercer as the No. 3 official at Justice and said he was "very pleased that the department will continue to benefit from his leadership, talent and experience through his role as U.S. attorney in Montana."

Documents released as part of the congressional inquiry of the firings indicate Mercer was not intimately involved in planning the firings, but he tried to quell the controversy they created.

Two days before the firings, former Gonzales chief of staff Kyle Sampson sent Mercer a short e-mail to make sure the department's third in command was aware they were about to happen.

"Wanted you to know in case you get some calls from the field and so you can help manage the chatter that may result," Sampson wrote in the e-mail.

The documents show that one of the fired prosecutors, Daniel Bogden of Nevada, claimed that Mercer told him the day he was fired that the dismissals were to make room for others to gain experience to let the Republican Party stack federal judgeships with loyalists.

____

Associated Press writers Laurie Kellman and Lara Jakes Jordan contributed to this report.

Glucose may affect more pregnancies

Glucose may affect more pregnancies
By Robert Mitchum
Copyright © 2007, Chicago Tribune
Published June 23, 2007

Expectant mothers are warned frequently of the dangers of gestational diabetes. Now, doctors say a wider range of pregnant women may need to be concerned about high blood-sugar levels.

Researchers at the annual meeting of the American Diabetes Association in Chicago on Friday presented data showing that even a moderately elevated glucose level during pregnancy was associated with more cesarean sections and heavier babies, among other complications.

Although most expectant mothers in the United States are tested for glucose levels, only women with blood sugar above a certain point and with no history of diabetes are officially diagnosed with the gestational diabetes. The condition affects about 4 percent of pregnant women.

If gestational diabetes is not treated through diet or insulin, large amounts of glucose can be transmitted to the fetus via the placenta.

In addition to higher birth weight and increased risk of birth complications, high fetal glucose also can trigger increased production of insulin in the fetus, which scientists link with obesity and diabetes as the baby grows up.

The new study sought to establish the effect of less severe levels of blood sugar during pregnancy.

"One of the issues is where on the spectrum of normal to abnormal does glucose in pregnancy begin to have a clinically significant effect on the outcome of the pregnancy," said Boyd Metzger, principal investigator of the study and professor of medicine at Northwestern University. "That's the big unanswered question."

To help answer it, researchers measured glucose levels and pregnancy outcome in nearly 25,000 women from nine countries, including the United States.

They found that women with the highest measured blood glucose were six times more likely to have an overweight baby and 10 times more likely to have a newborn with elevated blood insulin than women with the lowest levels of glucose.

However, women in a range just below established criteria for gestational diabetes were still two to four times more likely to deliver a baby with high birth weight or elevated insulin levels.

"This study will finally give us the chance to reach a consensus in all countries on how to diagnose diabetes in pregnancy," said one of the authors, Dr. Moshe Hod, a professor of obstetrics and gynecology at Tel Aviv University.

Metzger said more discussion will be necessary before any changes are made to guidelines for diagnosis of gestational diabetes and treatment of high glucose levels.

"You can't point to [a] number and say this is obviously the point" of diagnosis, he said.

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rmitchum@tribune.com

Financial Times Editorial Comment: Different but not dangerous

Financial Times Editorial Comment: Different but not dangerous
Copyright The Financial Times Limited 2007
Published: June 22 2007 22:00 | Last updated: June 22 2007 22:00


There is an anecdote about Lionel Nathan de Rothschild, a keen gardener and very wealthy banker of the 1930s: “No garden, however small,” he said to the City Horticultural Society, “should contain less than two acres of rough woodland.” It is clearly rather nice to be super-rich and the creation of wealth is good for society. But to avoid a backlash billionaires must show that they earned their money fair and square.

This week the US private equity group Blackstone raised $7.7bn in a public offering that made billionaires of founders Stephen Schwarzman and Peter Peterson. But politicians did not congratulate the executives on their business success. Instead they are considering the abolition of a tax break that helps private equity partners and hedge fund managers. In the UK, where a group of buy-out executives were mauled by a parliamentary committee, the story is similar.

Populist attacks on successful financiers and entrepreneurs are dangerous and wrong. Entrepreneurs take risks, and from them come new products, new jobs and higher standards of living. Financiers allocate capital and, if they do it well, there are huge gains in economic efficiency and wealth. Most businesses fail, but people keep starting them because of the possible rewards: punish those who succeed and businesspeople will either stop trying or escape offshore.

We should allow the rich to be rich, but there is a caveat, which is that the competition to become rich should be fair. Income from different sources should be taxed equally, monopolies should be broken down and, most of all, wealth should be earned. Those who make their money through privilege or inside connections taint the whole system.

Private equity plays fair. It performs an important economic role and its leading lights deserve to be very rich indeed, but on both sides of the Atlantic it does seem that the tax system may be having unintended consequences. Taper relief on capital gains tax, introduced by Britain’s Labour government in 1998, was meant to help entrepreneurs, but also slashed the tax rate for private equity partners. A review of that system makes sense.

There are going to be more and more super-rich: the most recent data in the UK show that the top 1 per cent of UK taxpayers are pulling away from the rest, and the incomes of the top 0.1 per cent are growing even faster than that. In scalable businesses such as finance, where investing $10bn needs little more effort than investing $10m, the most talented can reap a disproportionate share of the total rewards.

Fiddling tax systems against private equity would have unforeseen consequences. A political witch-hunt could also have dangerous effects, not least encouraging the public to believe all business gains are ill-gotten. It is time to think about what financiers do, not just how much they make.

The one-man coalition

The one-man coalition
By Christopher Grimes and Edward Luce
Copyright The Financial Times Limited 2007
Published: June 23 2007 03:00 | Last updated: June 23 2007 03:00


Most politicians view their party affiliation as something they will have for life, like their eye colour or an old tattoo. Not Michael Bloomberg. New York's mayor has had three party designations in the past six years, which must be some kind of record for a leading American politician. His latest switch came this week, when he ditched the Republican party to become "unaffiliated", a move that many believe was his first step toward a bid for the US presidency as an independent candidate.

There is precedent here: Mr Bloomberg began his campaign for mayor in 2001 by abandoning the Democratic party - he would have faced a crowded field for the nomination - to become a Republican. It was a shrewd move. After spending $75m (£38m) of his own money and a timely endorsement from Rudolph Giuliani, Mr Bloomberg defied conventional wisdom by being elected New York's 108th mayor.

Only someone with Mr Bloom-berg's wealth - his fortune is estimated as high as $13bn, thanks to the success of Bloomberg LP, the financial information group he founded - could flout the political parties the way he has. Throughout his brief political career his fortune has let him disregard the will of campaign donors - a message New Yorkers appear to be hearing: his approval rating has hovered around 70 per cent for nearly two years. Despite his almost technocratic style, Mr Bloomberg has impressed the electorate as manager of the once "ungovernable" city. Now halfway through his second (and final) term Mr Bloomberg is weighing whether his non-partisan, managerial message will play off Broadway.

Mr Bloomberg still insists that he "is not a candidate", often defusing that question with a deftly crafted piece of self mockery about his unlikely prospects: "I'm a white billionaire, Jewish, pro-choice, pro-gay rights, anti-gun and anti-Creationism. How do you phrase that? It is a new coalition - of five people."

But he and his aides have encouraged the speculation for over a year, which has raised Mr Bloomberg's national profile. Even if he decides not to run, his skill at drawing attention to his agenda has shown that Mr Bloomberg is no longer the political novice who came to City Hall in January 2002. "He's gotten tremendous at the political game," says Ed Koch, New York's mayor from 1978-1989. "I believe he is running and, while he is an underdog, I believe he can win."

Mr Bloomberg, born in 1942, grew up in a modest household in Medford, Massachusetts, the son of a book-keeper for a dairy company. He was an overachiever from the beginning, earning his Eagle Scout badge before entering Johns Hopkins University, where he was the first Jew admitted to his fraternity. While he was away at college, his father, William, died; his mother, Charlotte, went to work after years of being a housewife. (Bloomberg still calls his mother every morning.)

After a graduate degree from Harvard Business School, he went to work at Salomon Brothers in New York, where he quickly figured out how to have a good time as a single man on a Wall Street salary. He had "a girlfriend in every city, skied in every resort, ate in every four-star restaurant, and never missed a Broadway play," he wrote in his 1997 autobiography Bloomberg by Bloomberg. The fun ended briefly when he was forced out of the bank in 1981 with a $10m payoff, used to found Bloomberg LP. After business success came, Mr Bloomberg, who is amicably divorced with two grown daughters, relished the role of the single billionaire. (He now has a steady girlfriend, Diana Taylor, the former New York banking commissioner.) But despite his swinging image, friends say he never forgot his father's lessons about charity. "Long before he was mayor, I could always call Michael if I was raising money for some charitable cause," said Georgette Mosbacher, a Republican fundraiser and friend.

Discussing life after City Hall, Mr Bloomberg says he expects to devote his time to giving away his fortune. "The most likely scenario is that I will run the second or third-largest foundation in the world," he told the FT last year, focusing on "public health and education and the arts."

But some wonder whether he will be satisfied with a life of philanthropy and golf. "The foundation will be fabulous, but it's not full-time work," said one long-time friend. "The man has more energy than anybody you will ever meet in your life."

Does that mean he will run for president, something he mentioned he might do in his autobiography? Some friends say that even he does not know yet.

Most of the Washington cognoscenti have written off a potential candidacy as quixotic. The last time an independent candidate took a large chunk of the vote was in 1992, when the Texas billionaire Ross Perot shook up the contest between then-president George HW. Bush and challenger Bill Clinton. One Repub-lican consultant contends: "Bloomberg is a much stronger and saner figure than Perot."

Mr Bloomberg's prospects may be better than is assumed, says Charlie Cook, a veteran political analyst in Washington. Independent candidates fare best when the public's mood is worst. By almost every polling metric the public is in a state of high dissatisfaction with one recent poll showing three-quarters believe the country is on the wrong track. Disapproval ratings for Congress, and each of the national parties, are close to all-time highs.

Aides to Mr Bloomberg say he would only run if several conditions were met. He plans to wait until after the party primaries next January and February to assess whether the other nominees were sufficiently damaged to permit space for a third party bid. He would also require 70 per cent of Americans still to agree that the country was "on the wrong track". He is already positioning himself as the sage outsider to Washington, which he described last weekas "sinking into a swamp of dysfunction".

Finally, some analysts question whether he has the charisma to win a national campaign. "If Bloomberg lacks the personality then what do you say about Gore or Kerry?" says Mr Cook. "They got half and just under half of the national vote."

Mr Bloomberg is aware that independent candidates have not historically won elections - rather they generally help someone else lose. Friends speculate he would not run only to spoil the chances of someone he believes would make an effective president. Whatever he decides, he will play a role, either as a kingmaker or a man who thinks he has a shot at being king.

Candidates wait for news of Bloomberg

Candidates wait for news of Bloomberg
By Christopher Grimes in New York and Andrew Ward in Washington
Copyright The Financial Times Limited 2007
Published: June 20 2007 22:47 | Last updated: June 21 2007 03:04


Michael Bloomberg’s decision on Tuesday to leave the Republican party will have sent a chill through the campaign headquarters of presidential candidates from both main US parties.

The announcement provided the strongest sign to date that the multi-billionaire mayor of New York is seriously considering a run for US president next year.

His entry, as a self-financed independent candidate, would add further uncertainty to a presidential race that is already considered the most open for more than half a century.

As a political moderate who left the Democratic party to run for mayor as a Republican in 2001, Mr Bloomberg could siphon support from both main candidates if he decides to run.

His vast wealth would also increase pressure on rivals to raise funds for what is already certain to be the most expensive presidential election in history. Mr Bloomberg’s entry could pit him against his predecessor as mayor if Rudy Giuliani, currently the leading Republican candidate, wins his party’s nomination.

Both occupy similar political territory, holding moderate views on social issues such as gun control and abortion, and have reputations as competent leaders.

A lifelong Democrat, he joined the Republican party in 2001 to run for New York mayor in place of Rudy Giuliani. As mayor, his hallmarks have been managerial expertise, balanced budgets and a relative social liberalism.
Without the burden of having to raise funds, Mr Bloomberg can afford to wait until early 2008 to enter the race formally. Friends who have spoken to him say his decision will be based on whether voter disillusionment with both parties continues to be strong, and if the front-runners in each party appear vulnerable.

Many political analysts say Mr Bloomberg has little chance of winning as an independent. The US system presents a number of challenges for third-party candidates, starting with the time-consuming process of getting on the ballot in all 50 states. Mr Bloomberg could be forced to go to court in some states to get on the ballot.

But Scott Rasmussen, president of Rasmussen Reports, a polling firm, says Mr Bloomberg could win enough support to deny the main parties a clear victory. A recent Rasmussen poll found 27 per cent of US voters would be likely to support Mr Bloomberg.

“These numbers suggest that if Bloomberg can find a message that resonates, he might win some states and deny either major party candidates a majority in the Electoral College,” said Mr Rasmussen. In the absence of a clear majority, the constitution mandates the House of Representatives to choose the president – something that has not happened since the 19th century.

Matthew Towery, chairman of Insider Advantage, a polling firm, said there was an opportunity for an independent to exploit widespread disenchantment with the existing choice of candidates in 2008.

While Mr Bush’s approval rating is close to record lows, polls show public approval of the Democratic-controlled Congress is even lower – indicating danger for both parties from a candidate challenging their political duopoly.

“There are very serious people in Washington who feel the time is right for a third-party candidate,” said Mr Towery.

N Korea vows to axe reactor quickly

N Korea vows to axe reactor quickly
By Anna Fifield in Seoul
Copyright The Financial Times Limited 2007
Published: June 22 2007 06:02 | Last updated: June 22 2007 21:56


North Korea has pledged to shut down its main nuclear reactor promptly and carry out its obligations under the February 13 deal, Christopher Hill, US chief negotiator, said on Friday after a visit to Pyongyang.

The International Atomic Energy Agency later announced that senior UN inspectors will arrive in North Korea on Tuesday to work out details in verifying the shutdown of Pyongyang’s nuclear weapons programme.

Mr Hill, who is also assistant secretary of state, was optimistic that the six-party process aimed at convincing North Korea to give up the project was moving again after the resolution of the Banco Delta Asia debacle.

But he realised how difficult the process would be. “I came away from these two days of meetings buoyed by the sense we are going to be able to meet our objectives. But I am burdened by the realisation that we are going to have to spend a great deal of time and effort in achieving them,” he told reporters in Seoul.

“[North Korea] indicated that they are prepared to promptly shut down the Yongbyon facility,” Mr Hill said. But they had to “work out details”.

Mr Hill is the highest-level official to visit North Korea since 2002, when the current crisis began. The visit was an attempt to kickstart a process that had been bogged down over the return of $25m in North Korean funds from Banco Delta Asia in Macao to the Foreign Trade Bank in Pyongyang, via Russia.

Under the February agreement, North Korea must shut down the Yongbyon reactor and discuss all its nuclear programmes. Mr Hill said he reminded North Korea of its responsibility to provide a list of all nuclear programmes, “and when I say all, I mean all”.

Visa sets up litigation fund ahead of IPO

Visa sets up litigation fund ahead of IPO
By David Wighton in New Yor