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Tuesday, October 31, 2006

Climate Change - Compelling case for action to avoid catastrophe

Climate Change - Compelling case for action to avoid catastrophe
By Martin Wolf
Copyright The Financial Times Limited 2006
Published: October 31 2006 18:56 | Last updated: October 31 2006 18:56

Repent, for the end of the world is nigh. That is a warning one would expect to come from an evangelical preacher or an environmental doomsayer, not from a sober economist. Yet that is, in essence, what Sir Nicholas Stern, author of the British government’s new report on climate change, is saying.* The tone may be sober, but the conclusion – act now before it is too late – is not.

Hitherto many economists, business-people and politicians, particularly in the US, have argued that, given both the uncertainties and the high costs of taking possibly unnecessary action, the best policy is to wait, see and, if necessary, adapt. The contribution of this report is to reverse that logic. It argues that, given these very same uncertainties and the relatively low costs of acting now, the best policy is action.

How and how convincingly does the review make this case? The answer, I suggest, is: “Sufficiently so.”

The starting point has to be with the consequences of “business as usual”. The underlying scientific argument on this is straightforward. Since the industrial revolution the stock of greenhouse gases in the atmosphere has risen from the equivalent of 280 parts per million (ppm) of carbon dioxide to 430ppm. If current emission trends continue, the stock of greenhouse gases in the atmosphere could more than treble by the end of this century.

Greenhouse gases trap heat, which is why there is abundant life on earth. It is also, argue the scientists, why the earth has warmed by about 0.7°C since 1900. Should current trends continue, temperatures might rise by between 3°C and 10°C by 2100 (see chart). By the middle of this century and, so, within the life-span of many now alive, warming could be between 2°C and 5°C. Since the earth is only 5°C warmer today than during the last ice age, a change of that magnitude would be enormous.

Should the temperature rise by 5°C, there may be adverse effects on crop yields; significant rises in sea levels that threaten developing countries, such as Bangladesh, but also coastal cities, such as London, Shanghai and New York; water shortages affecting more than a billion people; mass extinctions; increasingly intense storms; and, conceivably, huge shifts in the climate system, with local cooling and intense local warming. All this sounds biblical.

If warming is so dreadful, would a proto-Stern of 12,000 years ago have warned his contemporaries of the dire results of the looming end of the ice age? The answer to this query is presumably no. Warming can be – and, in that case was – highly beneficial. But this does not mean rapid warming would now be so. We – and the rest of life – are well adapted to today’s world. While human beings cope superbly with change, the speed and scale of the potential disruption would test that ability to the limit.

Modelling work done for the review concluded the costs of climate change over the next two centuries could be equivalent to a reduction of 5 per cent in average consumption per head. This is itself equal only to the loss of two years of economic growth. But the costs of failure to act might be as much as 20 per cent of gross world product. The report compares such costs with those associated with “the great wars and the economic depression of the first half of the twentieth century”. Worse, in this case, “it will be difficult or impossible to reverse these changes”. Moreover, these costs would fall heavily on the poorest.

It seems simple common sense, therefore, to reduce the dangers, provided the costs of doing so are modest. Houses rarely catch fire, but few would question the wisdom of buying cheap smoke alarms.

The question is how expensive the recommended actions would be. On this the review is encouraging. The economic costs of mitigating the rise in greenhouse gas seem modest. The review estimates them at as little as 1 per cent of global gross product, though, here too, there is a range of uncertainty. One per cent is itself just a few months of economic growth.

The report argues for setting a target of 450-550ppm of carbon dioxide equivalent: anything higher, it argues, would be too risky; anything lower would be too costly. Given the trends, even achieving that target would require a massive shift (see chart). The longer change is postponed, however, the bigger the dangers and the higher the costs of forestalling them: “Delay in taking action would lead both to more climate change and, ultimately, higher mitigation costs.” Given the costs and benefits estimated in the report, early action seems sensible. But that conclusion depends in part on the discount rate used. The review argues, sensibly, that there is no reason why the welfare of our generations should be intrinsically more important than those of our grandchildren. The only other reason for a high discount rate is high economic growth. But if climate change slows economic growth significantly, as seems likely, a low discount rate makes sense. Under that assumption, the case for early action becomes even stronger.

What needs to be done? Adaptation is part of the answer, partly because further warming is certain, given the concentrations of greenhouse gases already in the atmosphere. But mitigation must also be central. Fortunately, many of the technologies needed to lower greenhouse gas emissions per unit of output are known already. What also emerges from the analysis is that there is no dominant solution. A mixture of technologies will be needed, instead (see chart). Among them are: increases in efficiency; carbon capture and storage; nuclear power; use of biofuels; and domestic combined heat and power. Also important, however, is forestation.

How are such shifts to be brought about? The broad answer is through a combination of pricing of greenhouse gas emissions, investment in new technologies and regulation of energy efficiency.

This raises the biggest question of all: how is humanity to deal with what is both the biggest “market failure” ever seen and an unprecedented challenge to its capacity for large-scale and enduring co-operation. Is it imaginable that the countries of the world, with their vastly different views and interests, will rise to the collective action challenge climate change poses?

Hitherto, the answer to that question has been a resounding “no”. The report may have made a case for early action. But it could easily end up as just another futile exhortation. Whether that has to be so is the question I plan to address next week.

* The economics of Climate Change,

US consumer confidence blips down

US consumer confidence blips down
By Daniel Pimlott in New York
Copyright The Financial Times Limited 2006
Published: October 31 2006 17:32 | Last updated: October 31 2006 17:32

Consumer confidence fell as American workers became more concerned about job availability and the state of the economy, despite the sharp fall in energy prices. Meanwhile, pay and benefits grew at their fastest rate in two years between July and September, raising inflation concerns.

The consumer confidence index slipped to 105.4, down from an upwardly revised level of 105.9 in September. Economists had expected the index to hit 108 this month.

Consumers’ assessment of present conditions was less favorable in October than a month earlier. Those claiming conditions were “bad” rose to 17.1 per cent from 15.6 per cent.

Views of present labour market conditions were also less positive. Consumers saying jobs were “plentiful” declined to 25.8 per cent from 26.2 per cent. Those claiming jobs were “hard to get” increased to 22.0 per cent from 20.9 per cent in September. The outlook for the jobs market was mixed with some expecting more and some expecting fewer jobs to be available in the months ahead.

“October’s dip in confidence was prompted by consumers’ mixed assessment of present-day business conditions and a less favourable view of the job market,” said Lynn Franco, Director of The Conference Board Consumer Research Center, which conducts the survey.

The data is good deal weaker than expected and comes in the face of a series of other consumer confidence indicators which have shown that consumers have a more positive outlook on the state of the US economy at the moment. Energy prices have fallen sharply since the summer, while interest rates have been kept steady after a prolonged period of consecutive rises and stock prices have risen, all factors which would be expected to improve consumers’ hopes for the future.

“It is tempting to blame the realisation that housing is sinking fast for the relative softness of the numbers but one month does not make a trend,” said Ian Shepherdson, chief US economist at High Frequency Economics. “Still, if the drop in gas prices and the rise in stock prices really is having so much less effect than history suggests, something else must be worrying consumers.”

The lower than expected confidence figure raises further questions over whether falling house prices or lower energy costs will determine future levels of consumer spending, argued Alan Ruskin, chief currency strategist at RBS Greenwich Capital.

“The consensus is that the latest confidence data hints at limitations to the positive energy impact on future personal consumption expenditures, and the jobs breakdown ... only reinforces concern that the economy remains at risk to a softer consumption-employment dynamic taking hold,” he said.

But others questioned the reliability of the data. The lower than expected level of the index could be because it is less sensitive to price movements in energy than other measures, said Mike Englund, chief economist for Action Economics. “It seemed to be less affected than other measures in the summer by high commodities prices, and it seems to benefiting less now as energy prices have fallen,” he said. “We have enough evidence from other consumer confidence surveys suggesting the contrary. We have to write it off as a fluke.”

In other data there was evidence of continuing tightness in the labour market. Pay and benefits rose at the fastest rate in two years between July and September, according to data released by the Labor Bureau, suggesting an increasing threat from inflation which may worry the Federal Reserve.

Total compensation costs rose by 1.0 per cent in the third quarter of the year, up from 0.9 per cent in the three months from March, the Employment Cost Index showed. It was also above the 0.9 per cent economists had been expecting.

Wages and salaries rose 0.9 per cent, while benefit costs were up 1.1 per cent. In the private sector, both numbers were a tenth lower, but state and local government employees saw wages jump 1.4 per cent, while benefit costs rose 1.5 per cent.

“Certainly the increase in the growth of top level total compensation costs will garner some attention at the next meeting of the Federal Reserve’s FOMC,” said Brian Bethune, US economist at Global Insight.

“However, to the extent that the acceleration in private industry costs is entirely due to an outsized gain in benefit costs in the third quarter, while actual wages and salaries decelerated, the FOMC should not be unduly perturbed by this report.”

New York Times Editorial - Nicaragua bans abortion

New York Times Editorial - Nicaragua bans abortion
Copyright by The New York Times
Published: October 29, 2006

The rights and safety of Nicaragua's women took a giant step backward last week when the country's legislature passed a law criminalizing all abortions, with no exceptions. The previous law permitted an abortion if the mother's life was in danger.

Latin America has the world's strictest laws on abortion. But that does not discourage it. Latin America also has the world's highest abortion rates, averaging nearly one per woman over the course of her reproductive lifetime.

Nicaragua's ban, which passed 52- 0, was a clear bid to curry support from the Catholic Church before next weekend's presidential elections. Conservative parties were expected to vote for the legislation. But Daniel Ortega's Sandinistas also backed it. Once the party of social revolution, the Sandinistas have become the party of political opportunism.

If Nicaraguans want to see the possible consequences of their new law, they can look next door to El Salvador, where all abortions have been banned since 1998. If doctors find evidence of an abortion, they are required to report their patients to the police. Women who sought medical help after a botched abortion have been handcuffed to their hospital beds. And some women with late- term abortions have been given 30- year prison terms.

The only good news out of Nicaragua is that legislators declined to take up a proposal that would drastically increase prison sentences for women who have abortions and people who perform them.

New York Times Editorial - Conserving that compassion

New York Times Editorial - Conserving that compassion
Copyright by The New York Times
Published: October 29, 2006

When future generations of Americans look back on the current era, they'll puzzle over what it was about George W. Bush that made people imagine there was anything compassionate to his conservatism.

Having apparently lost all hope that he can use terrorism to scare voters into electing Republicans this November, the president has now begun raising the threat of gay marriage.

The moment the New Jersey Supreme Court issued a ruling on the subject last week, Bush began using every possible excuse to bring up "activist" judges and gay weddings on the campaign trail.

"I mentioned his love for his family," Bush said at a rally for a Republican Senate candidate in Michigan. "He understands what I know, that marriage is a fundamental institution of our civilization. Yesterday in New Jersey we had another activist court issue a ruling "

The court in New Jersey, for what it's worth, was hardly activist.

The state Legislature had given gay couples the ability to unite in domestic partnerships that gave them most, but not all, of the legal protections available to married heterosexuals.

The court simply said that both kinds of partners deserved the same legal protection, and left it up to the lawmakers to figure out how to do it.

Hardly a thunderbolt from the sky, but Bush took up the cause of protecting the "sacred institution that is critical to the health of our society" as if a cadre of anti-family jurists had just abolished matrimony.

All this is, as everyone knows, just a show for rousing the base. If the last month has taught us anything about the Republican Party, it is that homophobia is campaign strategy, not conviction.

Congressmen who trust their careers to gay staffers vote for laws to enshrine second-class citizenship for gays in the Constitution. Gay appointees and their partners are treated as married people at official ceremonies and social gatherings. Then whenever an election rolls around, the whole team pretends it's on a mission to save America from gay marriage.

Bush and his faithful acolytes seem perfectly willing to stoke fears that create division and sorrow in a country that doesn't need any more of either.

The president has just a little more than two years left in office. You'd think that for once he'd want to consider devoting his time to making things better instead of worse.

International Herald Tribune Editorial - The fence campaign

International Herald Tribune Editorial - The fence campaign
Copyright by The International Herald Tribune
Published: October 30, 2006
President George W. Bush signed

a bill to authorize a 700-mile border fence last week, thus enshrining into federal law a key part of the Republicans' midterm election strategy. The party of the Iraq war and family values desperately needs you to forget about dead soldiers and randy congressmen, and to think instead about the bad things immigrants will do to us if we don't wall them out. Hence the fence, and the ad campaigns around it.

Across the country, candidates are trying to stir up a voter frenzy using immigrants for bait. They accuse their opponents of being amnesty- loving fence-haters, and offer themselves as jut-jawed defenders of the homeland because they want the fence. But the fence is the product of a can't-do, won't-do approach to a serious national problem. And the ads are built on a foundation of lies:

Lie No. 1: We're building a 700- mile fence. The bill signed by Bush includes no money for fence building. Congress has authorized $1.2 billion as a down payment for sealing the border, but that money is also meant for roads, electronic sensors and other security tactics preferred by the Department of Homeland Security, which doesn't want a 700- mile fence. Indian tribes, members of Congress and local leaders will also have considerable say in where to put the fence, which could cost anywhere from $2 billion to $9 billion, depending on whose estimates you believe. "It's one thing to authorize. It's another thing to actually appropriate the money and do it," said Senator John Cornyn, republican of Texas.

Lie No.2: A fence will help. A 700-mile fence, if it works, will only drive immigrants to other parts of the 2,000-mile border. In parts of the trackless Southwest, building the fence will require building new roads. Who uses roads? Immigrants and smugglers. And no fence will do anything about the roughly 40 percent of illegal immigrants who enter legally and overstay their visas.

Lie No.3: The Senate's alternative bill was weak, and its supporters favored amnesty. In May, the Senate passed a bill that had a fence. Not only that, it had money for a fence. It also included tough measures for cracking down on illegal hiring. It demanded that illegal immigrants get right with the law by paying fines and taxes, learning English and getting to the back of the citizenship line. It went overboard in some ways, weakening legal protections for immigrants and hindering judicial oversight. But it went far beyond the fence-only approach. Its shortcomings and differences with the House bill might have been worked out in negotiations over the summer. But instead, House Republican leaders held months of hearings to attack the Senate bill. And all we were left with was the fence.

Will the Republican strategy work? We'll know next week, but we hold out hope that hard-line candidates are misreading the electorate.

Voters all over are concerned about immigration, of course, but many polls have repeatedly shown that they warm to reasonable solutions and not to stridency. They can recognize the difference between the marauding army of fence-jumpers they see in commercials and the immigrants who have become their neighbors, co-workers, customers and friends. Citizen anger cuts both ways, and many voters, Latinos in particular, say they are put off by the Republican hysteria.

Poll results in some races suggest that xenophobia and voter deception are not necessarily a ticket to victory. In Arizona, Randy Graf, a Republican, is running for Congress as a single-issue candidate focused on border security. He is trailing Gabrielle Giffords, a moderate Democrat who supports the comprehensive approach to immigration reform endorsed by the Senate and (once upon a time) by Bush.

Whatever happens in November, Congress will eventually have to deal with the 12 million illegal immigrants unaffected by the fence, and the future flow of immigrant workers. The sad thing is that Democrats and moderate Republicans (and Bush) already did this, and settled on an approach that is both tough and smart.

But now is the time for stirring up voters, and the pliant Bush has decided to go along, adding his signature to the shortsighted politics of fear.

Sunday, October 29, 2006

I'm raising a glass to singlehood

I'm raising a glass to singlehood
By Angela Rozas
Copyright © 2006, Chicago Tribune
Published October 29, 2006

My sister is having a baby.

So I'm having a Hawaii.

It goes like this. She's pregnant with her second child, adding yet another baby to the 14 under-4-footers in my extended Southern family. My six siblings, all married, all bearing fruit.

And then there's me: the 29-year-old single woman with no children.

My unattached status is a fact I have often worried about. But no more.

I'm crossing a new threshold in my singledom. No longer will I feel bad about the life choices I have made, or the choices life has made for me.

I'm going to embrace my single life. Celebrate it.

So, I've booked myself a last-minute ticket to Hawaii next month, where I will sip pina coladas, kayak and maybe sleep all day at the beach. Because that's what single people do.

Don't get me wrong. I'm not anti-marriage. I like the idea of a legal commitment to forever. And I love babies and someday wish I could have five children. But after a series of meaningful, but not permanent, relationships, I've found myself not married and--gasp!--happy.

And apparently a majority of households out there just might feel the same way. The U.S. Census Bureau, in a recently released report called the American Community Survey, determined that about 50.3 percent of U.S. households in 2005 were made up of unmarried people, single or otherwise. That's up from five years ago, when 48 percent of households were made up of unmarried folks.

That number should be tempered by the fact that many people live together--and have children together or are single parents--without getting married.

But the point still stands: We unmarrieds, as my dad refers to my single status, are no longer in the minority. But for me, it often doesn't feel that way.

In some places, such as Louisiana, where I'm from, a woman my age is practically an old maid. The average age for first-marriage for women in Louisiana is 25.2, slightly lower than the average for the whole U.S. (25.4) and less than for Illinois (25.9), according to a 2004 Census Bureau estimate.

Add to that the average age when a woman in this country has her first child (25), and I don't think I'm insane for feeling as if everybody's jumped on the family track but me.

Take the hipster neighborhoods in Chicago: Bucktown, Wicker Park, Andersonville. In each of these neighborhoods, as well as my own Roscoe Village, any sullen, Converse-wearing Puppie (what a dear friend coined Punk-Yuppies) will tell you there's been an influx of stroller-pushing moms.

That influx has sometimes led to clashes between babied and non-babied families, such as a silly incident at an Andersonville cafe that asked customers to make sure their children behave in the restaurant.

Some clashes are more subtle, such as the backhanded sales pitches I recently got from a maternity store clerk that I interpreted as missives. I was looking for a baby gift for a friend, and as I thumbed through the clothing racks and admired the cleverly un-babylike oversize bags, the store clerk piped up:

"That dress is really cute, and you don't have to be pregnant to wear it!"

And "That bag is just fabulous, and you could use it for a beach bag, you know, if you're not pregnant!"

Maybe I was reading too much into it, but in my head all I heard was, "Don't forget! You're not pregnant!"

I thanked her and quickly headed for the door, embarrassed and insulted, probably unbeknown to her.

I'm not saying I think mothers shouldn't move to or shop in hip neighborhoods. But it's almost as if other people want to apologize for the fact that I'm not married and don't have children--or expect me to apologize. That's just ridiculous. At a time when half the country's marriages end in divorce, and women are delaying childbearing longer each year, I don't think single women need to apologize for any path we take.

So I'm not going to. I'm just going to take advantage of my single status for now. Take last-minute trips, stay up late and work long hours. Because I think no matter what you hope your life will be like in the future, it's important to be happy with where you are right now.

Recently several colleagues of mine have gotten pregnant or had children. I'm happy for them. But when one person in our office, at the birth of a colleague's baby, suggested that we have a day to bring in all of our children, to swaddle, pat, pinch cheeks and generally drool over, I decided I won't be there.

On that day, I'm calling in single.


98 deaths in October - fourth-deadliest month for American forces since the war began

98 deaths in October - fourth-deadliest month for American forces since the war began

Copyright © 2006, Chicago Tribune
Published October 29, 2006

U.S. DEATH: The U.S. military on Saturday reported the combat death of a Marine in Anbar province, raising to 98 the number of U.S. personnel killed this month, the fourth-deadliest month for American forces since the war began.

BAGHDAD REIGNITES: One person was killed and 35 wounded when a rocket hit an outdoor market in Baghdad's southern neighborhood of Dora, and a bomb in a mini-bus killed a second person and wounded nine in an eastern district, police said. The attacks broke a five-day relative calm after the end of Ramadan.

BODIES DUMPED: Police found 10 bodies of victims of apparent sectarian violence--seven across Baghdad and three in Baqouba, 35 miles northeast of the capital.

CAPTURED: The Iraqi army captured a man thought to be the cameraman for Abu Musab al-Zarqawi, the slain leader of Al Qaeda in Iraq, according to the Defense Ministry, which did not say when the man was detained. Khalid al-Hayani was captured in Diyala province, northeast of Baghdad.

Saturday, October 28, 2006

Republicans tarnished by failure to clean up government

Republicans tarnished by failure to clean up government
By Edward Luce and Holly Yeager in Washington
Copyright The Financial Times Limited 2006
Published: October 27 2006 22:34 | Last updated: October 27 2006 22:34

Twelve years ago the Republican Party swept to control of the US House of Representatives for the first time in a generation on the promise “to restore accountability to Congress, to end its cycle of scandal and disgrace and to make us all proud again of the way free people ­govern themselves”.

If, as polls suggest, the Democrats regain ­control of the House in mid-term congressional elections next month, Dennis Hastert, the speaker since 1999, will attract much of the blame. Indeed, many of Mr Hastert’s fellow Republicans are dishing out “pre-criminations” in anticipation of defeat.

Mr Hastert, who signed the “Contract with America” that helped the Republicans to victory in 1994, was this week questioned by the House ethics committee for his alleged role in helping cover up the behaviour of Mark Foley, a colleague, who made lewd advances to teenage interns via e-mail over a period of years. Mr Hastert denies that he learned of Mr Foley’s behaviour more than a year ago.

But many congressional observers say the Foley sex scandal, which has damaged Republican electoral prospects since it became public this month, has overshadowed far more serious allegations about what has taken place under Mr Hastert’s speakership.

Among these were a detailed investigation into Mr Hastert’s flourishing personal finances published in the Chicago Tribune, which showed the speaker had booked $2m (€1.6m, £1.05m) in profits from a land sale in his home state of Illinois.

The sale was in December 2005, three months after President George W. Bush signed the $286bn highways bill into law. Mr Hastert had inserted a $207m earmark (a tailored clause) into the bill to fund a public highway in Illinois that runs three miles from his property.

Following the bill, the value of the land soared and Mr Hastert, who owned most of the 138-acre property, booked the profits. He bought one parcel of land in 2002 and a second, held in a secret trust, in 2004. He has denied any impropriety. “I owned land and I sold it, just like millions of people do every day,” he said. Mr Hastert did not return calls seeking ­comment.

But Mr Hastert’s response failed to convince sceptics for whom the episode serves as an emblem of what has gone wrong under his speakership. “Here you have the speaker inserting federal money into federal legislation that directly results in his personal enrichment,” said Scott Lilly, a former career staff member in the House appropriations committee. “It is breathtaking.”

Others, including a growing number of disenchanted Republicans, point to a culture of runaway deficit spending fuelled by the influence of lobby groups.

The number of federal investigations into congressional ­corruption has leapt. One of Mr Hastert’s colleagues was imprisoned this year and two more face trial. A further seven are under investigation.

“The Republicans swept to power on the promise of cleaning up government and controlling deficits and the opposite has happened,” said Thomas Mann, a veteran observer of Congress at the Brookings Institution in Washington. “As speaker, Mr Hastert has done more damage to the institution of Congress than any other in my lifetime. He has been willing to set aside any rule, procedure, tradition or norm to further whatever agenda he was serving.”

Recent polls show public approval for Congress has fallen to a record low of 16-23 per cent, depending on the pollster. “When you get down that low, you’re down to blood relatives and paid staffers,” John McCain, a senator and likely Republican presidential contender in 2008, told an audience in South Dakota last week. “We need to reform ethics. We need to reform lobbying. We need to restore the faith and confidence of the American people in our institutions of government.”

Many are sceptical as to whether Nancy Pelosi, the House minority leader who will probably succeed Mr Hastert if the Democrats win, can fulfil her promise to clean up Congress by tightening its ethics and requiring lawmakers to declare any interest in the earmarks they sponsor.

But few can miss the irony that Ms Pelosi is promising very similar reforms to those put forward by Mr Hastert and his colleagues in 1994. “It would certainly be in Ms Pelosi’s interests to attempt to clean up Congress,” said Mr Mann.

“My guess is that she’ll try for a while. But sooner or later the larger forces at work will start to reassert themselves.”

Halliburton arm accused of ‘abuse’ in Iraq

Halliburton arm accused of ‘abuse’ in Iraq
By Stephanie Kirchgaessner in Washington
Copyright The Financial Times Limited 2006
Published: October 27 2006 19:08 | Last updated: October 27 2006 19:08

A Halliburton subsidiary that has been awarded billions of dollars in federal contracts in Iraq has been accused by an independent watchdog of “abuse” of government regulations that protect US taxpayers.

Stuart Bowen, the special inspector-general for Iraq reconstruction, said in an interim audit released on Thursday that Halliburton subsidiary Kellogg, Brown and Root (KBR) had, in effect, routinely inappropriately hidden data about one of its contracts from public scrutiny by marking the information as “proprietary”.

As a result of the investigation, army officials said they would prepare a modification to a multi-billion dollar Halliburton contract – known as Logcap – to “provide guidance” to KBR on the marking of proprietary data.

It is unclear how much the US military has paid for the contract, but one estimate put the figure at $7bn (€5.5bn, £3.7bn) last year. The contract gives the company the exclusive right to provide logistics support to the US military.

KBR said on Thursday it had used proprietary marking on the majority of its data in support of US army contracts for “at least the last decade” and that the practice was required under the US Trade Secrets Act. The company said the use of proprietary markings were appropriate because, as announced earlier this year, the Logcap contract is expected to be resubmitted for a competitive bid and divided among several contractors.

Questions about the transparency of data KBR provides the government were raised in July, after Mr Bowen announced his office would investigate whether services the US government was receiving under one KBR contract were “reasonable, efficient, and cost-effective”.

In his probe of a KBR contract that provides support to the US embassy in Iraq – a contract that falls under the larger Logcap contract – Mr Bowen found that the company wrongly shielded from public consumption data including: daily dining facility headcount; and the number of litres of fuel issued to generators maintained by foreign embassies in Iraq.

The company also initially refused to provide Mr Bowen, a former attorney for President George W. Bush who has emerged as a tough critic of the reconstruction effort, with cost data in a format that was acceptable to his office.

By illegitimately using privacy provisions, which are in place to protect companies competing for federal contract work by allowing them to keep some data secret, the special inspector-general said KBR had prevented the government from releasing “normally transparent information, thus potentially hindering competition and oversight”.

The critical audit comes on the heels of a separate report released this week that found that overhead costs had consumed between 11 per cent and 55 per cent of the cost of a handful of reconstruction projects.

New York Times Editorial - A political outrage

New York Times Editorial - A political outrage
Copyright by The New York Times
Published: October 27, 2006

The sleazy way in which U.S. political parties use loopholes in the campaign finance laws to evade responsibility for their attack ads is on full display in the Tennessee Senate race. Slick as a leer, pernicious as a virus, a campaign commercial transparently honed as a racist appeal to Tennessee voters has remained on the air, despite assurances from Republican sponsors that it was pulled down.

The ad is directed at Representative Harold Ford Jr., the Democratic candidate for the Senate, who is African-American. It includes a bare- shouldered white woman claiming to have met the candidate at a Playboy party and signing off with a close-up, whispered come-on: "Harold, call me."

The ad, resonating with the miscegenation taboos of Old South politics, may or may not be the nadir in the low-blow salvos now assailing America. But it takes the statuette for political hypocrisy as Republican leaders insist they were hobbled by campaign law from cutting off what is clearly their own handiwork. "We didn't have anything to do with creating it," insisted Ken Mehlman, the chairman of the Republican National Committee.

All Mehlman's committee did was finance the ad by way of a supposedly "independent" political shop that serves as a shadow party operation specializing in attack ads on behalf of the Republican candidate, Bob Corker. Corker eventually criticized the ad as tacky and not part of his campaign, asking that it be killed. But Republican assurances that it was finally off the air after days of damage have proved untrue, according to news reports. The 30- second fiction continued to air like some monstrous Republican orphan.

Strategists from both political parties use the "independent" route of the campaign law for launching sleaze and disclaiming provenance. Voters across America are hard- pressed to separate wheat from chaff in the whirlwind of political ads. But one of the few keys they have in figuring out who's responsible for something particularly egregious is the tag line required at each commercial's close.

In the anti-Ford ad, viewers transfixed by the blonde's vixenish sign- off may miss the commercial's only truly enlightening statement, tacked on in quick-talk: "The Republican National Committee is responsible for the content of this advertising."

It sure is.

New York Times Editorial - Real timetables for Iraq

New York Times Editorial - Real timetables for Iraq
Copyright by The New York Times
Published: October 27, 2006

Funny how a few weeks before the election Bush administration officials start hinting at timetables for getting American troops out of Iraq. But spinning out implausible scenarios - like the claim that it might take only 12 to 18 more months for the Iraqis to be able to defend themselves - won't get Iraq any closer to containing the mayhem, nor this country any closer to extricating itself.

What is needed is an explicit, credible and public set of deadlines - for Iraq's leaders but also for President George W. Bush - to confront the most difficult problems, including disarming sectarian militias, stabilizing Baghdad, protecting minority rights and apportioning Iraq's oil wealth.

That's the only way Iraqis and Americans can judge whether progress is being made and whether the effort is worth the cost.

The American ambassador in Baghdad, Zalmay Khalilzad, seemed to be moving down that road this week when he announced that Iraq's leaders had agreed to a timeline for "making the hard decisions" necessary to reduce sectarian bloodletting. The New York Times's review of the unpublished "notional political timetable" suggests that it is a lot less demanding than advertised.

For example, it gives the Iraqi Parliament until December to outline the terms for demobilizing militias. But it sets no deadline by which Prime Minister Nuri Kamal al-Maliki - whose government is backed by two religious parties with powerful militias - must disarm the militias. The day after Khalilzad announced the existence of a timetable, Maliki held his own news conference denying that he had agreed to anything.

The Iraqis weren't the only ones backpedaling. A day after the top American general in Iraq, George Casey, acknowledged that more troops may be needed to help stabilize Baghdad, his office issued a "clarification" saying that wasn't really what he meant.

And while General Casey suggested that the Iraqis should be able to provide their own security in 12 to 18 months, Bush let slip that he had a far different timeline in mind. When asked at a news conference whether he would renounce any claim to permanent bases in Iraq, Bush said that was something for the Iraqi government to decide. He added, "And, frankly, it's not in much of a position to be thinking about what the world is going to look like five or 10 years from now."

This week we described what we believe must be done immediately to lessen the chances of chaos in Iraq after American troops withdraw. The Iraqis need to begin national reconciliation talks and disarm the militias. The Americans need to make a credible push to secure Baghdad and elicit the help of Iraq's neighbors.

There's no time left for notional timetables. Bush said the other day that "we're making it clear to the Iraqis that America's patience is not unlimited." We hope it's clear to Bush that Americans have already lost patience with his bumbling conduct of this war, and the remaining grace period can be measured in months, not years. That's a real deadline, for concrete progress, not for more rosy notions of victory.

U.S. urged to begin 'talking to enemies'

U.S. urged to begin 'talking to enemies'
By Helene Cooper
Copyright by The New York Times
Published: October 27, 2006

WASHINGTON Ever since President George W. Bush proclaimed there to be an "axis of evil" in 2002, pundits, diplomats and politicians have urged him to talk to its members. But the cries for dialogue have grown louder in recent weeks with North Korea's nuclear test, Iran's defiance of a UN order to stop enriching uranium, and the mounting violence in Iraq.

James Baker, the Republican former secretary of state, said this month that he believed "in talking to your enemies." After North Korea tested its nuclear device earlier this month, the former president Jimmy Carter said "the stupidest thing that a government can do that has a real problem with someone is to refuse to talk to them."

Senator Barack Obama of Illinois, a Democratic rising star, said last weekend that even at the peak of the Cold War, "when there were nuclear missiles pointing at every major U.S. city, there was a direct line between the White House and the Kremlin."

The question arises: Are these arguments cutting any ice with the administration?

Officially, the administration is sticking to form. Bush said as much during a news conference on Wednesday, when he was asked, again, whether he would be willing to work with Iran and Syria if it was determined that they could help bring stability to Iraq, their neighbor.

His reply did not veer from the script, which basically withholds U.S. dialogue from "axis of evil" members until they change their ways.

"Iran and Syria understand full well that the world expects them to help Iraq," Bush said.

He said that if the Iranians stopped enriching uranium, U.S. diplomats would talk to them. He also had a lengthy to-do list for President Bashar al-Assad of Syria to get into America's good graces: "Do not undermine the Siniora government in Lebanon; help Israel get back the prisoner that was captured by Hamas; don't allow Hamas and Hezbollah to plot attacks against democracies in the Middle East; help inside of Iraq."

But within the administration, things are a little more nuanced, Bush officials said. One administration official distilled the internal deliberations this way: "On Syria, there's a very healthy debate about whether we should talk to them; on Iran, there is no debate internally."

The American officials who agreed to speak about the internal discussions are all involved in that debate, with some opposed to any discussions with Iran, Syria and North Korea, and others saying that such talks should be considered.

Among those inside the administration who are urging more engagement with Damascus, most come from the State Department's Bureau of Near Eastern Affairs, including the assistant secretary, C. David Welch, the officials said.

But, surprisingly, in recent months, the usually hawkish deputy national security adviser, J.D. Crouch, has been pushing for the administration to talk directly to Syria, officials say. "His style with the Syrians is that we need to be very strict with them," one senior administration official said.

The administration officials would not speak on the record, because they did not want to be named when discussing internal deliberations.

The "axis of evil," as originally defined by Bush, comprised Iraq, North Korea and Iran. But after the U.S.-led invasion that toppled Saddam Hussein, Iraq was replaced by Syria, in light of the 2005 assassination in Lebanon of Rafik Hariri, the former prime minister.

American officials and some at the United Nations have said that Syria had a hand in the Hariri assassination. The Bush administration and Israel have also accused Syria of supporting Hezbollah in its cross-border raid into Israel this summer, an attack that sparked a monthlong war.

Officially, the United States has diplomatic relations with Damascus, where there is a U.S. embassy. But it is manned by a chargé d'affaires and not an ambassador; Bush recalled the ambassador to Syria, Margaret Scobey, after the Hariri assassination.

There is less debate within the administration when it comes to talking to Iran. Secretary of State Condoleezza Rice is believed to have pushed the White House as far toward dialogue with Iran as it was willing to go when she prodded Bush in May to offer to join European talks with Iran over its nuclear ambitions.

As for North Korea, U.S. officials continue to espouse the view that the United States, by insisting on talking to North Korea only within the confines of a regional group, can better share the burden of power.

Rice offered reporters the diplomatic version of that argument last week. "What we've been unwilling to do is to negotiate bilaterally, with the North Koreans, another agreement that they are going to be free to disregard because it will only be with the United States and not with states that frankly have more leverage than the United States, like China and South Korea," she said.

But the administration will continue to take hits until it can show that this strategy has had results, diplomats said. Said one European diplomat in Washington: "They've isolated Cuba for 40 years and you see how well that's worked."

Economy in the U.S. slams on the brakes

Economy in the U.S. slams on the brakes
By Jeremy W. Peters
Copyright by The New York Times
Published: October 27, 2006

NEW YORK The U.S. economy grew more slowly in the third quarter than at any time since early 2003, held back by a deflating housing market, the Commerce Department reported Friday,

The total output of goods and services in the United States expanded at an annual rate of just 1.6 percent in the three months ended Sept. 30. That preliminary estimate compares with a revised rate of 2.6 percent in the second quarter and the robust 5.6 percent rate recorded in the first. The figures are seasonally adjusted.

The slowdown in the third quarter was worse than economists were expecting. The consensus forecast compiled by Bloomberg News was for 2 percent growth.

Stocks in New York skidded on the news, with major indexes falling. The Dow Jones industrial average declined 73.40 points to 12,090.26.

Yet to some extent, the U.S. economy is still acting as a global engine of growth. In the third quarter, the growing U.S. trade deficit reduced domestic economic growth by 0.58 percentage point - transferring this demand to producers in other countries.

This has added to vigorous global output. Last month, the International Monetary Fund forecast that global output would grow 5.1 percent this year, up from 4.8 percent in 2005.

But as the U.S. economy slows, economists expect that its contribution to growth overseas will decline.

"Trade numbers should improve because world growth is faster than U.S. growth," said David Kelly, economic advisor at Putnam Investments in Boston. The IMF expects global growth to slow somewhat, to 4.9 percent next year.

A major question hanging over both the U.S. economy - and the Congressional elections this autumn - has been just how severely the slump in housing would drag down growth. The Commerce Department's report, which will be revised twice in coming months as more complete data become available, shows that the drag was indeed substantial.

Residential construction fell by nearly one-fifth in the quarter, the steepest decline in 15 years. That trend alone knocked 1.1 percentage point off the overall figure for economic growth. As recently as the spring of 2005, that sector was a major motor of growth, adding more than one percentage point to the overall figure.

With the economy shifting into low gear, analysts said they thought that the Federal Reserve would be unlikely to resume raising interest rates soon. The Fed paused in August after a two- year campaign of steady increases in its benchmark overnight lending rate, meant to combat inflation. It has kept the rate steady at 5.25 percent through three policy-setting meetings since then, even though the inflation rate has remained stubbornly high.

The majority view at the Fed is that the economy is already on a slowing trend that will bring inflation to heel, and the new report supports that view.

A closely watched measure of inflation in the report Friday, the GDP price index, rose at a 1.8 percent annual rate in the third quarter, seasonally adjusted, compared with 3.3 percent in the first and second quarters. Falling fuel prices helped bring the rate down.

With midterm Congressional elections less than two weeks away, the new figures offer something for both Republicans and Democrats to cheer. The weak growth rate suggests that the economy is not as robust as it once was, bolstering Democrats' criticism of the Bush administration's economic policies. But the report also finds consumer spending gaining strength, rising 3.1 percent in the third quarter, compared with 2.6 percent in the second.

Increasingly, American consumers are growing more confident. A report issued Friday by the University of Michigan found that consumer confidence rose in October to the highest level in more than a year. Falling gasoline prices were the main reason.

Analysts are now wondering where the economy goes from here.

"The bigger question is what happens in 2007," Nigel Gault, an economist with Global Insight, wrote in a note to clients. "As the declines in residential construction ease, does the economy bounce back to trend growth (3 percent) or above, or does the weakness in housing begin to affect the rest of the economy?"

Eduardo Porter contributed to this report.

Friday, October 27, 2006

Oil and housing put brake on US growth

Oil and housing put brake on US growth
By Krishna Guha in Washington
Copyright The Financial Times Limited 2006
Published: October 27 2006 16:54 | Last updated: October 27 2006 21:06

US economic growth slowed to an annualised rate of just 1.6 per cent in the third quarter of 2006, figures revealed on Friday, as a brutal correction in housing construction and an oil-fuelled rise in imports dragged down economic activity.

The news of the sharper-than-expected slowdown comes at a bad time for the Republican party, which has been leaning on its economic record to shore up support damaged by the war in Iraq in the run-up to midterm elections for Congress on November 7. Growth in the quarter was the slowest since early 2003.

However, strong consumer spending – particularly on automobiles – ensured the economy continued to expand, though below its potential growth rate.

Inflation pressures eased a little, with the core personal consumption expenditure deflator rising at an annualised rate of 2.3 per cent, down from 2.7 per cent.

Bond prices rallied on the evidence of economic weakness, with the yield on 10-year Treasuries falling to 4.68 per cent, while equity prices stalled.

Most analysts expect growth will rebound in the current fourth quarter, as lower oil prices depress imports, though it will probably remain below trend.

Figures from the eurozone showed growth in lending to the private sector equalled its highest rate since the launch of the euro in 1999, highlighting robust economic activity in Europe but raising expectations of possible further interest rate rises by the European Central Bank.

Democrats seized on the weak US third-quarter growth numbers as more evidence that the US was “on the wrong track”.

However, Hank Paulson, the Treasury secretary, dismissed weak third-quarter growth as a “blip”.

In an interview with the Financial Times, Carlos Gutierrez, the commerce secretary, said the capacity of the economy to absorb the correction in housing was “another example of how resilient and how strong this economy is”.

Although headline growth was lower than consensus, the report is unlikely to prompt the Federal Reserve into early consideration of interest rate cuts. This week, it issued a statement saying: “Going forward, the economy seems likely to expand at a moderate pace.”

The statement was widely seen as a pre-emptive strike ahead of the third-quarter growth report.

Additional reporting by Michael Mackenzie

Bush OKs fence for U.S.-Mexico border - But 700-mile plan lacks funding

Bush OKs fence for U.S.-Mexico border - But 700-mile plan lacks funding
By Nicole Gaouette, Tribune Newspapers: Los Angeles Times; Times staff writer Hector Tobar in Mexico City and Tribune staff reporter John Biemer in Chicago contributed to this report
Copyright © 2006, Chicago Tribune
Published October 27, 2006

WASHINGTON -- Legislation authorizing 700 miles of fencing along the southern U.S. border was signed into law by President Bush on Thursday at a ceremony that underscored Republican divisions over immigration policy and left questions about whether the entire barrier will be built.

Flanked by House Majority Leader John Boehner (R-Ohio) and other Republicans who blocked his bid for a broader overhaul of immigration law, Bush used the opportunity to push back. "We have more to do," he said during the low-key event.

Promises by GOP congressional leaders to alter the law when lawmakers reconvene later this year and a lack of funding specifically set aside for the fence have cast doubt on how much of it will be built. Changes to the measure likely would include giving local governments and private property owners the chance to raise objections to the fence's location.

Bush did have words of praise for the fence bill, calling it "an important step toward immigration reform."

But he made clear that he opposed the enforcement-only position taken by the House and favored instead the approach embraced by the Senate: a combination of tougher border security and work-site enforcement with a guest-worker program and a path to citizenship for some of the nation's estimated 12 million illegal immigrants.

The president said he looked forward to working with Congress on finding a "rational middle ground" between automatic citizenship for illegal immigrants and launching "a program of mass deportation."

He also said, "We must reduce pressure on our border by creating a temporary-worker plan."

Rep. James Sensenbrenner (R-Wis.), House Judiciary Committee chairman and lead sponsor of the House immigration measure, called the law a "great first step."

"Border security should come first, and the fence is part of border security," Sensenbrenner said Thursday at a campaign appearance in Chicago with Republican 6th Congressional District candidate Peter Roskam. "The next steps have got to be the enforcement of employer sanctions and giving employers a way to weed out the fake documents that many illegal immigrants present when they're applying for a job.

"When we do that we will not only dry up the job market for illegal immigrants but we will take away the incentive for people who entered the United States legally through non-immigrant visas simply to overstay their visas because they can get a job," he said. "And 40 percent of the illegal immigrants currently in the United States are visa overstays."

Illegal immigration has become one of Roskam's central themes in his tightly contested race against Democrat Tammy Duckworth in the west suburban district long held by retiring Rep. Henry Hyde. Duckworth supports Arizona Sen. John McCain's "pathway to citizenship" bill. Roskam backs Sensenbrenner's measure.

Election issue

Some GOP leaders had pressed a reluctant White House for the signing ceremony so that as November's election nears, Republicans could promote the fence bill as an accomplishment, party aides said.

"House and Senate Republicans . . . will stop the hemorrhaging along our nation's borders," said a statement by Senate Majority Leader Bill Frist (R-Tenn.) and House Speaker Dennis Hastert (R-Ill.).

The House Republican leadership, in particular, views the fence not only as a needed security improvement but as a powerful political statement that will win support for the party. Other Republicans, however, worry that it could cost the GOP support among Hispanic voters.

Mexican officials have harshly denounced the fence plan, and they continued their criticism Thursday.

"Walls don't resolve anything; it's a grave error," said President-elect Felipe Calderon, traveling in Canada.

President Vicente Fox called the measure "an embarrassment for the United States."

Commenting in Cancun, Fox said, "It's an example of the inability of the United States to see the issue of immigration as one of shared responsibility."

Currently there are about 90 miles of fencing along the southern border.

The bill contains detailed instructions for placement of "at least 2 layers of reinforced fencing" around Tecate and Calexico, Calif., and across vast stretches of Arizona, New Mexico and Texas. But a letter written by Hastert and Frist to other congressional leaders when the measure cleared Congress on Sept. 29 detailed changes they wanted made to it when lawmakers return to Washington in mid-November.

Hastert and Frist indicated they want to provide flexibility on where the fence should go and whether parts of it take a physical or virtual form--potentially using sensors, cameras and unmanned aerial vehicles instead of reinforced metal.

Their letter called for requiring the Department of Homeland Security to erect fencing in areas of high illegal entry, but also giving the agency the option "to use alternative physical infrastructure and technology when fencing is ineffective or impractical."

Also, Hastert and Frist want to require agency officials to consult with state and local governments, including Indian tribes, on the exact placement of fencing and other infrastructure, such as vehicle barriers.

Tab at least $2.1 billion

Money poses another potential problem. Cost estimates range from $3 million to $10 million per mile--for a total price tag of at least $2.1 billion, before maintenance costs. The bill Bush signed includes no money for the fence.

A separate budget measure for the Homeland Security Department provides $1.2 billion for border security that Republicans have referred to as the "first installment" for the fence. But that money can be allocated as Homeland Security Secretary Michael Chertoff sees fit.

Agency officials have told Congress they would prefer 300 to 400 miles of fencing in areas where they believe it would be effective and the latitude to employ other methods elsewhere.

"In urban areas, we've found that fencing is very effective, but in rural areas, sensors and other technology are more effective," said Homeland Security Department spokesman Russ Knocke.

Wealthy campaign donor (Stuart Levine ) pleads guilty

Wealthy campaign donor pleads guilty
By Jeff Coen and Matt O’Connor
Copyright © 2006, Chicago Tribune
Published October 27, 2006, 2:57 PM CDT

Political insider Stuart Levine pleaded guilty this afternoon to one count each of mail fraud and money laundering stemming from his activities on two state regulatory boards.

The guilty plea in Chicago federal court by Levine, reappointed by Gov. Rod Blagojevich to the two state posts, could reverberate on the campaign trail a little more than a week before the election.

``How do you plead?'' U.S. District Judge Amy J. St. Eve asked Levine.

``Guilty,'' said the 60-year-old lawyer-entrepreneur who has been cooperating with federal prosecutors for more than six months in an effort to reduce the number of years he will spend behind bars.

Under the agreement, Levine is facing a sentence of five years and seven months in prison for mail fraud and money laundering. Without the deal, Levine could have gone to prison for life.

Levine is accused of scheming to extort kickbacks from investment firms seeking to do business with the state while he was on the Illinois Teachers' Retirement System board. He also plotted to share in a $1 million kickback in his duties with the Illinois Health Facilities Planning Board, prosecutors charge.

Sources said Levine's plea agreement would closely track the 65-page indictment against himself and Antoin "Tony" Rezko, a Blagojevich confidant and fundraiser.

Levine "is anxious to complete the agreement and is looking forward to resolving this chapter," his lawyer, Jeffrey Steinback, said Thursday.

Among the allegations is that Levine used his post on the teachers board to hold up $220 million in business for an investment firm. Authorities said the firm was told either to pay a kickback or give $1.5 million in campaign contributions to the fund of an unnamed public official, an official sources have since identified as Blagojevich.

Blagojevich has sought to distance himself from Rezko since the indictment, saying that he was unaware of any illegal activity and that the one-time member of his inner circle had violated his trust.

The governor's Republican challenger, Judy Baar Topinka, has sought to use the corruption case to her advantage and has repeatedly referred to Levine's court date while on the campaign trail.


Big drop for area home sales - `Stubborn' sellers keep Chicago prices up so far, analyst says

Big drop for area home sales - `Stubborn' sellers keep Chicago prices up so far, analyst says
By Mary Umberger
Copyright © 2006, Chicago Tribune

Published October 26, 2006

Chicago-area home sales plunged last month, though prices managed to hang in there. That disparity drew experts into a debate on whether the worst of the post-housing boom hangover has played out or is yet to come.

The sales numbers were particularly ugly: Illinois existing-home sales fell about 20 percent in September, with Chicago-area sales plummeting 26 percent from last year's record levels, according to an Illinois Association of Realtors monthly report released Wednesday.

Chicago-area condo sales were off 18.7 percent in September, though the median price was up 2.5 percent compared with the year earlier.

Yet prices generally remained steady. The median for a single-family home in the nine-county area declined $1,000 from last year's median, to $269,000, the Realtors said. Statewide, prices fared less well, with the median dropping about 8 percent.

That Chicago prices have not declined as precipitously as the sales figures may be due to a number of factors, experts say, and some warn that prices may be poised to head south.

"The sellers in Chicago are very stubborn," said David Lereah, chief economist of the National Association of Realtors. "They're not bringing their prices down, so sales are going down."

But David Thorpe, for example, has lowered the price on his Glen Ellyn residence to $389,000 from $429,000 in March. He took it off the market Oct. 1, and he and his wife, Norma, who have moved to Naperville, will dress it up before relisting it in January.

"I just don't think there's any action out there right now," he said. "We had so few people look."

Leah Rarick and Renee Creamean, next-door neighbors in Lockport, have not found showings to be a problem.

"I think an average of two showings a week seems pretty good," Rarick said. She and Creamean listed their houses about a month ago. "While it sounds like the market is bad, my husband comes from a family of six siblings, and three of them have purchased homes in the last three months. I know people are buying."

Creamean has lowered her price to generate interest in the home.

"I'd say the market is saturated," she said. "It's not that people aren't buying homes; they just have so much to choose from."

Lereah says Chicago prices are in the typical pattern after a boom. "Price always lags, so as sales drop off, prices will follow," he said. He also said he doubted that the sales data for Chicago was correct.

"Chicago shouldn't be down that much, year-over-year," he said. "I would look at two or three months in a row to see where Chicago is. I suspect you will get better numbers in the next couple of months."

Pete Flint, chief executive of, a residential real estate search engine based in San Francisco, said speculative buying had fueled the price run-up in the last several years. Those investors generally have fled the market now, he said.

"Investors or speculators have disappeared completely," Flint said. "On a median basis, prices seem to be relatively steady and firm" because control of the market has reverted to ordinary consumers.

Nationwide, existing-home sales also declined, though less dramatically than in Illinois. The NAR reported Wednesday that sales nationally were off by about 2 percent and that prices had dropped, for the second consecutive month, by 2.2 percent.

Year-to-date sales are down 14.2 percent, and the trade group said median prices are unlikely to rise until early spring. Sales were at a seasonally adjusted annual rate of 6.18 million homes, the lowest since January 2005, and slightly worse than many economists had forecast.

But Lereah sees the market as improving.

"This is likely the trough in sales," he said. "We are going to see some more declining prices, but on sales, we're close to bottoming out. Buyers are coming back, and inventories have really stabilized nationally.

"We've had three months in a row of 7.3 months' supply of homes for sale, and that's very good news," he said. "It looks like the worst is over."

Not so, said Ian Shepherdson, chief U.S. economist for High Frequency Economics, a data analysis firm in Valhalla, N.Y. He expects the market to worsen and take prices with it.

"The longer-term downward trend in mortgage applications and sales should reassert itself over the next few months as people balk at using borrowed money to buy depreciating assets," he said.

He expects "a steep and prolonged downturn" in housing, with sales and housing starts dropping 50 percent or more from their peaks.

The national price drop in September was "the worst performance since the data series began in 1969," he said. "High and rising inventory is killing prices."

About 96,000 residential properties were for sale in the Chicago market the week of Oct. 17-23; a year ago there were about 69,000, according to the Chicago Association of Realtors.

Chicago real estate agents say the market is stronger than the Wednesday data suggest.

"I'm surprised that the numbers are showing that much down," said broker Mike Golden, co-founder of AtProperties in Chicago. "We're seeing more supply on the market but not a downtick in demand and activity.

"We haven't seen the floor drop out on pricing, and we don't expect to see it," Golden said. "The market is by no means dead."

As grim as the Wednesday figures for Chicago were, they were grimmer elsewhere. Existing-home sales sank nearly 32 percent in California; Florida's dropped 34 percent, the same rate of decline as in August.

In Jacksonville, Fla., where sales were down 23 percent, Pulte Homes, a national builder, said Wednesday that it is laying off one-third of its workforce.


Dermatologist stabbed to death in downtown office

Dermatologist stabbed to death in downtown office
Tenant reports seeing man in bloody shirt
By Emma Graves Fitzsimmons
Copyright © 2006, Chicago Tribune
Published October 26, 2006

Police on Wednesday were investigating a tenant's account that a young man in a bloody shirt was seen in the downtown high-rise where a dermatologist was stabbed to death in his office.

Detectives said they had reviewed surveillance camera footage from the lobby of the building at 30 N. Michigan Ave., where Dr. David Cornbleet, 64, was killed Tuesday night.

Cornbleet, of Lincolnwood, was found about 8:10 p.m. by his daughter in his 12th floor office, said police spokeswoman Monique Bond. He was pronounced dead at the scene about three hours later, officials said.

An autopsy determined Cornbleet died of multiple stab wounds, and the Cook County medical examiner's office ruled the death a homicide.

No one was in custody Wednesday night, but police said they had collected "a lot of evidence" from the 21-story building.

Cornbleet, a father of two, had an office in the high-rise for 28 years, according to colleagues in the building.

Cornbleet did not have staff to check in patients or answer phones, which was unusual, said Dr. Omeed Memar, another dermatologist in the building.

Memar said Cornbleet often saw first-time patients and typically left the building by 6 p.m.

"He was at the mercy of every person who walks in there," said Memar.

Guests at the building, which mostly consists of medical offices, are required to sign in with a security guard after 6:30 p.m., said Lis Weiner, a spokeswoman for Marc Realty, which manages the building.

Otherwise, they come and go freely during the day in the busy building, which faces Millennium Park, she said.

Weiner said the Washington Street entrance is staffed with a security guard at a desk until 9 p.m. After that, the only way in is by swiping a key card.

The company released a statement saying staff is cooperating with police.

Friends and neighbors gathered at Cornbleet's one-story red brick home Wednesday afternoon in Lincolnwood.

The family released a statement that read: "We are all incredibly saddened and shocked by this tragic and horrible loss. Dr. Cornbleet was a devoted father, husband, and friend. Selfless and caring, Dr. Cornbleet devoted his life to treating patients and improving their lives."

Colleagues and friends echoed that sentiment Wednesday.

Cornbleet, whose father was also a dermatologist, loved to travel and collect art, said Memar.

Alan Jaffe, a psychologist who worked across the hall from Cornbleet for more than 20 years, said the dermatologist was "a very gentle, kind man--someone who would put you at ease in a moment."

Jaffe said he was concerned about security in the building and hoped the management would require guests to produce identification when entering.

"I was dumb-founded," he said of hearing about Cornbleet's death.

"It's very frightening to know someone came in and murdered a colleague in such proximity to where I work every day."

Bond said a tenant reported seeing a young man in a bloody shirt in an elevator on Tuesday evening.

Police sent out an alert to tenants of the building Wednesday asking for help from anyone who might have seen the young man exiting the building, said Bond.

Glenn Penaranda, an employee at the Philippine Consulate, which occupies the building's top floor, said he was worried about security.

"We don't want these things to happen," he said.

"Everyone is concerned about safety."


Reverse discrimination gets another look

Reverse discrimination gets another look
By Steve Chapman
Copyright by The Chicago Tribune
Published October 26, 2006

Time travel, long a staple of science fiction, has so far amounted to nothing more than a fantasy. But anyone interested in paying a visit to the past may soon get the chance. On Nov. 7, voters in Michigan will decide on a ballot initiative banning racial preferences in the public sector, and if it passes, opponents say, it will put the state back into the Dark Ages.

Proposal 2 represents a reaction to the University of Michigan's use of racial double standards in selecting its students. In 2003, the U.S. Supreme Court ruled that the preferences used in undergraduate admissions were unconstitutional but those used for law school admissions were not. The court said it was OK to favor minority applicants--and discriminate against whites--in order to promote diversity, as long as the school wasn't too blatant about it.

The outcome didn't satisfy losing litigant Jennifer Gratz, who was rejected despite credentials that would have virtually assured admission to a black or Hispanic applicant. She organized a campaign to put affirmative action to a referendum. The resulting measure, similar to one passed in California in 1996, would amend the state constitution to bar the use of racial or gender preferences by public universities and government agencies.

If it passes, no one would be penalized or rewarded for their skin color or sex. That was the point of the 1964 Civil Rights Act. Today, though, colorblind policies are denounced as a form of oppression.

The critics foresee the direst of consequences if Proposal 2 becomes law. The Michigan Catholic Conference invokes memories of Jim Crow while warning that the measure would kill or cripple "any program in Michigan that aims to create access for women and minorities." The University of Michigan says that it would no longer be able to "pursue the educational benefits of a diverse student body."

But Proposal 2 does not deny access to anyone--it merely mandates that everyone be assessed according to criteria (grades, test scores, personal accomplishments, and so on) other than race or sex. The measure also wouldn't prevent universities from promoting diversity by favoring students from poor families, or children who have overcome special challenges, or kids from high schools where few graduates go on to college.

At the University of California at Berkeley and at Los Angeles, California's most selective state schools, the percentage of students qualifying for need-based federal aid has risen sharply since 1996. In socioeconomic terms, those campuses have become more diverse, not less. But in Michigan, the concept of diversity begins and ends with race.

The claim that women would suffer without special help in college admissions is a particularly outlandish invention. At Berkeley and UCLA, women increased their numbers after gender-based preferences were scrapped.

There is not much doubt that Proposal 2 would reduce the number of black and Latino students at the University of Michigan, the flagship public institution. But in California, the top schools have not become replicas of Ole Miss, circa 1960. The biggest gainer has been another racial minority--Asian-Americans.

Nor have African-Americans and Hispanics been exiled from higher education. The total number of blacks at all University of California campuses has fallen only slightly, and Hispanic numbers have risen substantially. The chief difference is that many (though certainly not all) minority students have been shifted from the most selective state schools to somewhat less selective ones.

Are these students worse off for not getting into Berkeley or UCLA? Quite the contrary. In the old days, black and Hispanic students generally got worse grades and flunked out at much higher rates than whites and Asian-Americans. But that is changing.

At the University of California at San Diego, the state's third-most selective, an internal report found "no substantial [grade point average] differences based on race/ethnicity." The four-year graduation rate for African-Americans at UCSD has jumped by 44 percent in the last decade.

Which is better--being a UCLA dropout or a UCSD graduate? Attending a more prestigious school is valuable only if you get a degree, which far too many minority students did not in the era of racial favoritism. By putting many of these students in schools whose academic standards they couldn't meet, affirmative action set them up for failure.

Racial preferences, always a clear detriment to whites and Asian-Americans, have now been exposed as a false friend to those they are supposed to help. Michigan will have a better future if its voters abandon this relic of the past.


Steve Chapman is a member of the Tribune's editorial board. E-mail:

Economic outlook isn't quite so rosy as Bush says it is

Economic outlook isn't quite so rosy as Bush says it is
by Molly Ivins
Copyright © 2006, Chicago Tribune and Creators Syndicate
Published October 26, 2006

AUSTIN, Texas -- Oh, goody. According to the White House press office, President Bush will spend much of his time leading up to the Nov. 7 election discussing what a swell economy we have. Did you know that the Dow Jones Industrial Average is at its highest point ever? And the Nasdaq, ditto. Wow, breathtaking, huh? But the Dow is not a good indicator of how thing are really going for the majority of Americans.

I just love listening to the Bushies play with numbers. When Bush took over in 2001, he had predicted a surplus of $516 billion for fiscal year 2006. Last week, the administration announced a 2006 deficit of $248 billion, missing its projection for this year by $764 billion. Bush said the numbers are "proof that pro-growth economic policies work" and are "an example of sound fiscal policies here in Washington."

This is highly reminiscent of Vice President Dick Cheney's recent observation about the Iraqi government: "If you look at the general overall situation, they're doing remarkably well."

Bush's main talking point on the budget is that he "cut the deficit in half"--that would be from 2004, the year the White House inflated the projected deficit for political reasons. Even conservatives disagree. Brian Riedl, the Heritage Foundation's lead budget analyst, said: "The White House has a track record of projecting budget numbers to be a lot worse than they end up, which therefore helps them defeat the gloomy expectations and declare victory." If Bush manages to make the tax cuts permanent, it will add more than $3 trillion to the national debt over the next 10 years. The budget would be virtually in balance if there had been no tax cuts.

Bush's version of "doing remarkably well" includes a trade gap--a record $69.9 billion in August--up 2.7 percent since July. "Short of a big correction in consumer spending, the best we can hope for is that the trade deficit stabilizes," Stephen Stanley, chief economist at RBS Greenwich Capital, told

Meanwhile, what we see in the economy as a whole is an immense shift of wealth from the poor and middle class to the very rich. It seems a little painful to have to point this out yet again after six solid years of it, but these are lies, damn lies and statistics.

Just to give you an idea of how dependable the Bush numbers are, the Department of Health and Human Services put out a news release a few weeks ago telling senior citizens they will have "new options with low costs" and that monthly premiums in '07 will be the same as in '06.

"The Medicare prescription drug benefit ... just keeps getting better," burbled HHS. They seem to have been taking too much in the way of prescription drugs. Rep. Henry Waxman (D-Calif.), one of the most singularly useful members of Congress, found that average premiums will actually increase by more than 10 percent next year. And for the lowest-priced plans, average premiums will be up more than 44 percent. "It is not merely confusing arithmetic, it is deceptive advertising," said Waxman.

While lightening the tax burden for the rich, other parts of the Bush economic program continue to undermine the middle class in this country. As you may recall, in 2005 the credit industry successfully rammed a disgraceful bankruptcy reform bill through Congress. It's working out just the way we expected it to: Middle-class families are borrowing more than ever to make ends meet. Most families go under if: (a) they lose a job or (b) they have a health crisis.

One attorney sums up the legislation's impact: "It's designed to make life miserable for anybody who owes money. It's a help-the-banks, squish-the-little-guy law."

Bush's remarkably good economy is only good for the richest--for the rest of us, incomes are stagnant and education and health-care costs are skyrocketing. The Republican Congress blindly rubber-stamps policies designed to help only a few. Are you better off than you were six years ago?


Molly Ivins is a syndicated columnist based in Austin, Texas. E-mail:

Justices rule for gays in N.J. case - Same-sex couples are due marriage benefits

Justices rule for gays in N.J. case - Same-sex couples are due marriage benefits
By Stevenson Swanson
Copyright © 2006, Chicago Tribune
Published October 26, 2006

NEW YORK -- In a ruling that could make New Jersey the second state to legalize same-sex marriage, the state Supreme Court said Wednesday that gay couples have the same right to the benefits of marriage as heterosexual couples.

The court, whose decision had been awaited for months by advocates on both sides of the contentious debate over same-sex unions, said the New Jersey Constitution's guarantee of equal rights applies to gay and lesbian couples, but it stopped short of ordering state officials to legalize gay marriage.

Instead, it gave the Legislature until April to amend the state's marriage statute to include same-sex couples or to pass a civil union law that provides those couples the same benefits as marriage.

"We do not consider whether committed same-sex couples should be allowed to marry, but only whether those couples are entitled to the same rights and benefits afforded to married heterosexual couples," Justice Barry Albin wrote for the 4-3 majority. "Cast in that light, the issue is not about the transformation of the traditional definition of marriage, but about the unequal dispensation of benefits and privileges to one of two similarly situated classes of people."

The ruling is similar to a 1999 decision by Vermont's Supreme Court, which resulted in a civil union law. A 2003 ruling by Massachusetts' highest court was more sweeping, making that state the first--and only--state with legalized gay marriage, starting in 2004.

Connecticut allows civil unions between same-sex couples, the result of legislative action that was not prompted by a court ruling.

The case that resulted in Wednesday's ruling was brought by seven same-sex couples who were denied marriage licenses in New Jersey. The dissenting justices, led by Chief Justice Deborah Poritz, argued that the majority didn't go far enough, saying that only marriage would enable gay couples to achieve equal benefits.

In making its ruling, the court reflected on the changes that have transformed marriage during the last 200 years, such as granting women greater rights within marriage.

"The institution of marriage reflects society's changing social mores and values," the majority said in its opinion. "Although courts can ensure equal treatment, they cannot guarantee social acceptance, which must come through the evolving ethos of a maturing society."

After setbacks this year in state courts in New York, Nebraska, Washington and Georgia, gay-marriage advocates greeted Wednesday's decision with relief.

"We received a unanimous decision on one aspect, which is that all seven justices agreed that it violates the guarantee of equal protection not to give same-sex couples the same benefits as heterosexual couples," said Jon Davidson, legal director of the gay-rights advocacy group Lambda Legal, which argued the case on behalf of the plaintiffs. "So now the struggle in New Jersey moves to the Legislature."

Cases similar to New Jersey's are pending in California, Connecticut, Iowa and Maryland.

Foes call it judicial arrogance

Opponents of gay marriage said the New Jersey court had shown the same judicial arrogance as the Vermont and Massachusetts courts.

"It amounts to taking the future of marriage out of the hands of the people of New Jersey," said Matt Daniels, president of Alliance for Marriage, which advocates amending the U.S. Constitution to define marriage as the union of a man and a woman.

"Nationally, it will add momentum to the marriage amendments that are on the ballots across the country, and more importantly, it will add momentum to the marriage amendment in the Congress," Daniels said.

That amendment, which President Bush has endorsed, failed to garner support in two votes in the Republican-controlled Congress.

Political observers said the New Jersey decision, coming less than two weeks before the Nov. 7 midterm elections, could rally evangelical Christians and other conservative voters to turn out in heavier numbers than expected in the eight states where constitutional amendments defining marriage as a union between a man and woman are on the ballot.

Two of those states, Virginia and Tennessee, are seen as key battlegrounds in the struggle for control of the Senate.

But because the justices stopped short of ordering New Jersey officials to legalize same-sex marriage, the ruling's impact on the election could be diluted, even in the Garden State, which is in the midst of its own tight Senate race. Incumbent Sen. Robert Menendez, a Democrat, is being challenged by Republican Tom Kean Jr.

"There was a sense that this could really reshape the Senate race here," said Tim Vercellotti, of the Eagleton Institute for Public Interest Polling, at Rutgers University. "But this is a much more muted effect. I think it's going to be a close race, and I don't think this ruling is going to affect that."

Reacting to the ruling, Kean called for the state Legislature to pass an amendment to New Jersey's Constitution defining marriage as a heterosexual union, similar to amendments that voters in 20 states have approved.

Menendez said he believes marriage should be reserved for a man and a woman but added that he supports civil unions for same-sex couples.

3 N.J. lawmakers vow a bill

Three New Jersey legislators said they would introduce a bill to legalize gay marriage. The state already has a domestic partnership statute, which grants some rights to same-sex couples, such as the right to make medical decisions for each other and to file joint state income-tax returns.

Gov. Jon Corzine has said he supports domestic partnerships for same-sex couples but also has said he would not sign a bill prohibiting same-sex marriage.

A June poll by the Eagleton Institute indicated that New Jersey voters are almost evenly divided on gay marriage, with 49 percent of those polled supporting it and 44 percent opposed.

Support for civil unions was far stronger, with 66 percent in favor and 29 percent opposed.


Wednesday, October 25, 2006

‘Grey’s Anatomy’ star comes out

‘Grey’s Anatomy’ star comes out
Copyright by The Chicago Free Press
October 16, 2006

NEW YORK—“Grey’s Anatomy” star T.R. Knight says he is gay, but hopes people do not consider that “the most interesting part of me.”

The 33-year-old actor addressed rumors of his sexuality in a statement to People magazine last week.

“I guess there have been a few questions about my sexuality, and I’d like to quiet any unnecessary rumors that may be out there,” Knight’s statement read. “While I prefer to keep my personal life private, I hope the fact that I’m gay isn’t the most interesting part of me.”

Knight plays Dr. George O’Malley on the popular ABC drama. A former stage actor, his television credits also include “CSI: Crime Scene Investigation” and “Law & Order: Criminal Intent.”

Knight’s “Grey’s Anatomy” character, a bumbling, puppy-eyed surgeon, has long been in love with Dr. Meredith Grey (Ellen Pompeo).

Knight’s revelation came after reports of tension on the set of “Grey’s Anatomy” following the use of an anti-gay slur by another star on the show, Isaiah Washington. The slur could cost Washington his job, sources said.

Chicagoans help gay man in Michigan congressional race

Chicagoans help gay man in Michigan congressional race
By Gary Barlow
Copyright by The Chicago Free Press
October 25, 2006

Chicago GLBTs gathered at a well-attended fundraiser in Lakeview Oct. 18 to support openly gay Kim Clark’s bid to unseat incumbent U.S. Rep. Fred Upton (R-Mich.) in southwest Michigan’s 6th district.

“Kim has stood up, has worked hard against incredible odds and has a good shot at winning this congressional seat in Michigan,” said Art Johnston, co-owner of North Halsted Street’s Sidetrack, where the fundraiser was held.

Clark is badly trailing Upton in the fundraising race—as of last week Upton had almost $900,000 in the bank, to Clark’s $105,000. But Clark is hoping voter dissatisfaction with Republican leadership boosts him to an upset victory.

“We’re going up against an incumbent Republican who’s been there for many, many terms,” Clark said. “Nothing’s perfect in this world, but we can make it better.”

Clark has campaigned hard against the Iraq War, but Upton, who voted to authorize it, has now distanced himself from President Bush’s policy in Iraq. Clark also assails the Bush administration’s spending, budget deficits and tax cuts.

Johnston said Clark, who teaches at DePaul University in Chicago, needs the support of Chicago GLBTs.

“We can make a difference,” Johnston said. “Our country is in a desperate position. We are heading the wrong way. ÉThere could not be a better time for Kim Clark to be running for Congress than right now.”

Clark and his partner of 15 years, David Fink, own several businesses in Three Oaks, Mich., including a restaurant, Bailey’s Café, that was destroyed in a fire Oct. 16. Clark and Fink pledged to rebuild it.

Financial Times Editorial - Fed should pause now to fight inflation later

Financial Times Editorial - Fed should pause now to fight inflation later
Copyright The Financial Times Limited 2006
Published: October 25 2006 03:00 | Last updated: October 25 2006 03:00

Few doubt that the Federal Reserve will keep US interest rates unchanged today. The question in the mind of every investor concerns US monetary policy as the economy enters 2007. Growth is expected to weaken and inflation to remain higher than tolerable, making this a testing time for the Fed. The US could afford a slight moderation in growth, but it should certainly not allow a take-off in inflation.

Upward pressures on inflation are now about more than just oil prices. Since early 2005, the Fed has been brushing aside headline inflation of above 3 per cent by focusing on other measures excluding energy. But now even core inflation is at a 10-year high: the latest reading showed prices growing by 2.9 per cent in September. Fed officials have made it clear that such levels of inflation are too high.

It looks like the much-feared spectre of second round effects could be making an entrance. Because of their lower tax wedge, the past year has seen petrol and energy prices increase much more in the US than in Europe. This, in turn, has resulted in demands for higher salaries. In fact, wage inflation has jumped to 4 per cent from 2.7 per cent only a year ago. In the same way that higher oil prices failed immediately to push up core inflation, cheaper petrol could at best take months to feed through. At worst, higher inflation expectations may require more aggressive policy reaction at a later date.

The Fed's fight on inflation has to be balanced against its support for a cooling economy. Output figures to be released this Friday are likely to show a continuation of the weak growth seen in the second quarter. The main culprit is a slowing housing market, hitherto the engine of a booming US economy but now the main risk to the outlook.

Opinions abound on the length and depth of the adjustment, but a consensus is emerging that a soft landing - while not a certainty - is possible. The experiences of Australia and the UK, where the peak in house prices was not followed by recession, provide some encouragement.

Moreover, a slight rotation of world growth away from the US would lower the probability of a disorderly unwinding of global imbalances. The alternative of persistently high inflation could increase the risk of a sudden bout of market volatility, as seen in May.

The Fed should pause today to await developments in activity and inflation. Beyond this, the market does not really have a feel for how the Fed will strike a balance in 2007. This is undesirable. Ben Bernanke, chairman, has not yet established his hawkish credentials, having missed the opportunity to do so in August when market views on the Fed decision were most evenly split. In explaining future interest rate decisions, Mr Bernanke could draw inspiration from Europe's central bankers and emphasise the need for vigilance. Higher inflation, not weaker growth, is the greater evil.

America needs to negotiate with N Korea

America needs to negotiate with N Korea
By Maurice ‘Hank’ Greenberg
Copyright The Financial Times Limited 2006
Published: October 24 2006 19:46 | Last updated: October 24 2006 19:46

I was in Moscow when North Korea conducted its underground nuclear test, brazenly announcing to the world that it now had the bomb. The Russians I spoke to that day – high-level government officials and business leaders – were appalled, just as I was. “Sanctions”, however, was not the first word on their lips. “Negotiation” was. But not a continuation of the failed six-party talks, in which they have long been a participant. Yes, the Russians voted for trade sanctions at the United Nations Security Council, but in private they will tell you the best way to handle North Korea and Kim Jong-il, its isolated despot, is through direct bilateral talks with the US.

I agree. Two-way negotiations offer the best hope for bringing this prickly situation to a peaceful conclusion. Consider what Mr Kim has done: in the face of international condemnation, he chose to detonate his atomic device. His act was like that of a child crying out for attention – in this case, attention from the ultimate daddy state, the US. As Robert Gallucci, America’s former top negotiator with North Korea, recently said: “I think the North Koreans in their hearts still see the United States as nine feet tall.”

The Chinese, who were as surprised and irritated as anyone by Mr Kim’s nuclear adventure, will no doubt do their part to make sure bilateral talks bear fruit. They desperately want a nuclear-free Korean peninsula. The prospect of North Korea, South Korea and Japan locked in a deadly arms race is a nightmare scenario for Beijing and the rest of the world. So is the prospect of political instability across China’s 880-mile border with North Korea. The last thing Beijing needs to deal with is the gaping power vacuum that would follow the disintegration of Mr Kim’s government.

That is why, when the US, Japan, Britain, Australia and other key allies vowed to press ahead with trade ­sanctions, limiting Mr Kim’s access to ­everything from fine wines to finely tuned weapons systems, China demurred somewhat, saying it would not engage in stopping and searching North Korean cargo ships at sea. Maybe that annoys Washington, but for China, the implications of a destabilised North Korea are grim.

China is not interested in regime change in North Korea. Behaviour change is what Beijing wants. China already has its hands full trying to raise living standards for its 1.3bn ­citizens – some 150m of whom struggle with poverty every day. A political meltdown in North Korea, where an estimated 2.5m people starved to death in the 1990s, would most likely touch off a humanitarian crisis, with a flood of impoverished North Koreans pouring into China. (Imagine Washington countenancing a Security Council resolution that caused illegal immigration from Mexico to quadruple overnight.) No wonder China supplies more food aid to North Korea each year than any other nation.

Oil supplies, however, are another story. China, which accounts for most of North Korea’s oil – and outside trade and investment, for that matter – has reportedly threatened to shut off the petroleum spigot to North Korea. A very gutsy step, given the potentially destabilising consequences. And a very effective one. If anything is going to compel a change in Mr Kim’s behaviour, oil deprivation will. As a Korean war veteran, I can tell you it gets mighty cold over there in winter.

Clearly, the key to a negotiated solution to the North Korean crisis lies in applying China’s enormous leverage while simultaneously conducting an honest, hard-nosed dialogue directly between North Korea and the US. There are plenty of creative ways this can be done – such as quietly holding two-way discussions on the margin of the six-party talks in Beijing – but doing anything less will only prolong and deepen the crisis.

Negotiations, of course, do not mean concessions. But they do require the US to be more pragmatic and less sanctimonious. After all, it is easy for America to make tall demands of others when the problem is not in its own backyard. Listening is never a sign of weakness – as a matter of fact, a little humility can be a superpower’s most useful tool.

We can always turn the screws tighter on Mr Kim if talks stall. At that point, the world community, including China, will surely follow suit knowing that the diplomatic route has been exhausted. But it is not exhausted yet. To avoid a broader crisis, the time to act is now.

The writer, former chairman of the US-Korea Business Council and former chairman and chief executive officer of AIG, is chairman and CEO of CV Starr & Co, the global investment company

Colors in the Rainbow: Race, Culture, and Sexual Orientation Part II: Latino/Hispanic Culture

Colors in the Rainbow: Race, Culture, and Sexual Orientation Part II: Latino/Hispanic Culture
by Stephen M. White, Psy.D.
Copyright by Stephen M. White, Psy.D.

Hispanic individuals come from many different countries and cultural backgrounds, making generalizations difficult. Despite these differences, the majority of Hispanic cultures regard homosexuality as unacceptable, particularly for men. This apprehension derives from different sources, including the cultural concept of machismo and the role the Roman Catholic church plays in the lives of Latinos.

Cultural issues strongly influence Latino views on homosexuality, especially male homosexuality. The concept of machismo dictates that men serve as a provider and protector of their family and act as the head of the household. Latino families also generally maintain traditional sex roles, with clear delineations of what is proper for men and women. For gay men, the adoption of what is seen as a submissive role is a serious violation of machismo and expectations of male behavior. Anyone who commits such a violation is subject to sanctions that range from disapproval to physical violence.
The conservative views on sexuality held by the Roman Catholic church are well known, and the Vatican continues to express disapproval of homosexuality. There is some variation in how much of a problem this conflict poses in different Hispanic countries. Despite the large number of Roman Catholics, homosexuality is more tolerated in Spanish culture than in many other Hispanic countries, as evidenced by the recent legalization of gay marriage in Spain.
Some Latino men avoid the stigma of homosexuality by denial: they do not identify as gay despite same-sex activity. The major disadvantage of this strategy is risky sexual behavior. In his book Latino Gay Men and HIV, author Rafael M. Diaz discusses the impact that the attitudes in Latino culture toward homosexuality has on the behavior of gay men, including decreased safer-sex practices.
Fortunately for the future of the gay Latino community, the denial of homosexuality in Latino culture is not universal. As more gay men and women come out in the broader culture, gay Latinos are also beginning to come out over time. Although they risk condemnation from traditionalists, brave figures in politics, film, and literature are beginning to acknowledge that they are gay.
Gay politicians are rare to begin with, much less openly gay Latino politicians. The small number of gay Latino elected officials have included Cuban-American Jarrett Barrios in the Massachusetts state Senate, Puerto Rican Margarita Lopez on the New York City Council, Louis Escobar, President of the City Council in Toledo, and Joe Santiago on the Cleveland City Council.
Gay Latinos in film have come a long way from George Hamilton's campy portrayal of Zorro the Gay Blade in 1981. Spanish filmmaker Pedro Almodovar has long been at the forefront of gay cinema, directing Antonio Banderas in Labyrinth of Passion and Law of Desire prior to Banderas' most visible portrayal of a gay man in the landmark film Philadelphia. Almodovar has made a number of other films of interest to LGBT audiences including High Heels, Kika, and All About My Mother.
In addition to Almodovar, acclaimed Mexican director Jaime Humberto Hermosillo has made over 20 films, and is best-known to U.S. audiences for his 1985 film Doña Herlinda and Her Son.
Gay Latino actors include Wilson Cruz of My So-Called Life and Party of Five, and the film All Over Me and bisexual actor Gabriel Romero on the Telemundo sitcom Los Beltran. Prominent gay Latino characters have also appeared in Strawberry and Chocolate (Cuba), and A Year Without Love (Argentina). Documentaries include Paris Is Burning, portraying New York's Black and Latino drag queen community, and De Colores, depicting the struggle of Latino culture to come to terms with homosexuality.

The literary world has also seen many important works by gay Latino authors. Among the most influential works of fiction are John Rechy's 1960s novels City of Night and Numbers, Arturo Islas' The Rain God and Migrant Souls, and Jaime Manrique's Latin Moon in Manhattan, as well as Michael Nava's mystery novels featuring a gay attorney.
With the tension of different levels of acculturation to the larger society. While gay men and women have always been a part of Hispanic cultures, until recently they have been largely invisible. More and more, Latinos are learning that it is possible to be gay, Latino, and proud, all at the same time.

Chicago: ALMA (Association of Latino Men for Action) www.almachicago. org, and Amigas  Latinas, www.amigaslatinas. org
Los Angeles: GLLU (Gay and Lesbian Latinos Unidos) (213) 660-9681
Austin, Texas: ALLGO (Austin Latino/Latina Lesbian, Gay, Bisexual & Transgender Organization