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Wednesday, February 28, 2007

Financial stocks hit by mortgage fears

Financial stocks hit by mortgage fears
By David Wighton in New York
Copyright The Financial Times Limited 2007
Published: February 28 2007 02:00 | Last updated: February 28 2007 02:00

Financial stocks were battered yesterday, with Goldman Sachs tumbling more than 8 per cent on concerns about the US mortgage market and the impact of a possible slowdown in China.

NYSE Group was down 6 per cent and Nasdaq down almost 5 per cent amid fears about the health of the long bull market.

Investors are also nervous about the effect rising defaults on subprime mortgages will have on the Wall Street banks' lucrative business securitising the loans.

Lehman Brothers stock dropped nearly 5 per cent to $74.19 for a fall of almost 10 per cent in the past three trading sessions. Bear Stearns was down 4 per cent at $152.31, 8 per cent lower than Thursday's close.

Lehman and Bear Stearns are seen as the most exposed to the loss of securitisation revenues from subprime mortgages and losses from any retained portions of subprime securitisations on their balance sheets. Brad Hintz, analyst at Sanford Bernstein, estimates a worst case earnings reduction of 4 and 5 per cent respectively.

A number of Wall Street banks have acquired subprime mortgage lenders recently to ensure a continued supply of loans for securitisation, increasing their potential exposure to problems in the market.

Merrill Lynch, which paid $1.3bn for First Franklin, a subprime lender, in September, saw its shares fall nearly 4 per cent to $83.43 yesterday, giving it a drop of almost 9 per cent since Thursday's close.

Among the Wall Street banks, Goldman Sachs was hardest hit yesterday, although the fall in its stock of about 10.4 per cent since Thursday is in line with that of Morgan Stanley, which was down 5.6 per cent yesterday.

Goldman has a larger exposure to China than other Wall Street banks partly because of its 5 per cent stake in Industrial and Commercial Bank of China.

Analysts said the sharp fall in brokerage stocks was unsurprising given the strong run they have had over the past couple of years. Goldman stock is still up almost 90 per cent since the start of 2005.

The stocks of the big Wall Street banks were hit at the end of last week as concerns about the subprime mortgage market intensified. The perceived risk of owning lowly rated mortgage-backed bonds rose to another record yesterday.

Lenders are pulling back on loans to the riskiest borrowers.

US hit in global equity slump

US hit in global equity slump
By Richard Beales and Michael Mackenzie in New York and,Christopher Brown-Humes in London
Copyright The Financial Times Limited 2007
Published: February 28 2007 02:00 | Last updated: February 28 2007 02:00

US stocks suffered their steepest drop since the invasion of Iraq in March 2003 as global investors fled risky assets after the biggest fall in Chinese shares for a decade.

The Dow Jones Industrial Average was down more than 500 points at one stage yesterday afternoon as worries about the US economy and subprime mortgage market and a warning from Alan Greenspan, former chairman of the Federal Reserve, about a possible US recession punctured recent market optimism.

European stock markets also sold off, as did higher-risk debt markets. A sharp rise in the yen signalled the beginnings of an unwinding of the global carry trade, where investors borrow in currencies with low interest rates to buy higher-yielding assets elsewhere. Shares in banks fell sharply.

Mainland Chinese shares kicked off the carnage, falling nearly 9 per cent amid fears that the authorities were planning a crackdown to cool the market's exuberance. Traders saw the drop partly as a symptom of broader concerns over global valuations.

"The China explanation seems a little bit too convenient," said Paul Hickey, analyst at Birinyi Associates. "Every day there is some new concern. These things don't matter until they matter, then you get a sell-off like today."

The FTSE Eurofirst 300 index dropped 2.86 per cent - its biggest daily fall for four years - while the FTSE 100 index fell 2.31 per cent, its largest fall since June.

On Wall Street, the Dow Jones Industrial Average was 3.3 per cent, or 415 points, lower at the close, after the New York Stock Exchange had introduced trading curbs during the afternoon - the first time computer trading had been limited since July. The S&P 500 index was down 3.4 per cent.

Leading emerging markets were among the hardest hit, with Turkish shares falling 4.5 per cent, Russia's RTS index down 3.3 per cent and Brazil's Bovespa index off 6.5 per cent.

"Markets that have risen faster than others will face a sharper decline as hedge funds reduce their exposure," said Mary Ann Bartels, chief US market analyst at Merrill Lynch.

The global sell-off was aggravated by a weaker-than-expected 7.8 per cent fall in US durable goods orders in January, although that was partly offset by positive news on consumer confidence and housing. There was a flight to safety in bond markets, with yields on 10-year US Treasuries falling 12 basis points to 4.513 per cent. European junk-rated credit saw one of the biggest one-day rises thatthe derivatives markets have seen.

Bob Parker, deputy chairman of Credit Suisse Asset Management, said: "This is going to be more than just a one-day event and could go on for a few weeks. But it's not the start of a one-year bear market trend."

Simon Hayley, senior international economist at Capital Economics, said: "If today's global sell-off tells us anything, it is that sentiment in developed markets is fragile."

Additional reporting by John Authers and Geoff Dyer

Europe lower as global stock slide continues

Europe lower as global stock slide continues
By Neil Dennis
Copyright The Financial Times Limited 2007
Published: February 28 2007 10:32 | Last updated: February 28 2007 12:04

European equity markets put in another downbeat performance as the global sell-off continued, but losses were capped as US futures trade indicated a strong opening rally on Wall Street.

By midday, the FTSE Eurofirst 300 recovered from its early 2 per cent decline to stand 0.8 per cent lower at 1,494.37. Frankfurt’s Xetra Dax fell 0.8 per cent to 6,764.22, the CAC 40 in Paris shed 0.7 per cent to 5,548.15 and London’s FTSE 100 slid 0.8 per cent to 6,235.2.

Eon, the German utility fell 4.2 per cent to €98.86 after further doubts were cast on its €41bn bid to takeover Spain’s Endesa. Italian power generator Enel jumped into the fray after it purchased 10 per cent of Endesa shares and added that it could lift its stake to 24.99 per cent.

European emerging markets were hit for a second successive session as investors lowered their exposure to risk. Turkey’s Istanbul share index fell 2 per cent, while Russia’s RTS index was off 2.1 per cent.

Most stocks with gearing to emerging markets were lower, but Raiffeisen International, the Austrian bank which owns assets across Russia and eastern Europe, recovered from its early sharp fall to stand 0.5 per cent higher at €103. EFG Eurobank, the third-largest Greek bank which has exposure through its Turkish assets, fell 1.1 per cent to €28.10.

Greece’s second-largest lender Alpha Bank fell 4 per cent to €22.84 after reporting 24.6 per cent full-year profit growth, falling just shy of expectations, and forecast intensifying competition in its retail credit division.

Elsewhere in Greece, Bank of Piraeus fell 2.9 per cent to €25.82.

Swiss bank Julius Baer, the best performing stock on the SMI index this year, fell 3.4 per cent to SFr154.70. Rival Swiss wealth manager EFG reported a near doubling of full-year net profit and raise its targets. Its shares added 1.6 per cent to SFr45.80.

Munich Re, the German reinsurer, fell 2.1 per cent to €122 after it posted record full-year earnings of €3.536bn, but added that it expected a “general tendency towards a somewhat softer market”.

French construction group Eiffage missed market expectations with its full-year operating profit, but raised its dividend. The shares fell 0.8 per cent to €76.52.

US to discuss Iraq with Syria and Iran

US to discuss Iraq with Syria and Iran
By Steve Negus, Iraq Correspondent and Guy Dinmore
Copyright The Financial Times Limited 2007
Published: February 27 2007 21:54 | Last updated: February 28 2007 12:06

Condoleezza Rice, US secretary of state, on Tuesday welcomed an initiative by the Iraqi government to call at least two international conferences giving the US an opportunity to discuss the Iraqi insurgency with Iran and Syria.

The US and Britain will sit down with officials from Syria and Iran and other western and regional powers in Baghdad next month.

“We hope that all governments will seize this opportunity to improve the relations with Iraq and to work for peace and stability in the region,” Ms Rice told a Senate hearing.

US officials did not exclude the possibility of bilateral discussions with Iran on the subject of Iraq. However, it would refuse to discuss the nuclear issue, where the US insists that Iran first suspend its nuclear fuel programme. At previous conferences called by the international community on Iraq, Ms Rice and Colin Powell, her predecessor, avoided direct meetings with their Iranian counterparts in Brussels and Egypt.

The Bush administration accuses Iran’s Revolutionary Guards of supplying weapons and explosives to Iraqi Shia militia. Syria has also been accused of destabilising Iraq by allowing Sunni insurgents to cross its border. Robert Gates, defence secretary, on Tuesday said it was “categorically” untrue that the US was preparing to launch air strikes against Iran.

“In the conduct of diplomacy, you need to have a certain amount of flexibility if you are going to achieve the goals that you want to achieve,” Sean McCormack, State Department spokesman, told reporters.

The first conference is planned to be held in Baghdad at the level of ambassadors in mid-March, bringing together Iraq and its neighbours and the five permanent members of the United Nations Security Council.

A second meeting, to be attended by foreign ministers is scheduled for April outside Iraq.

Daley cruises to 6th term

Daley cruises to 6th term
By Gary Washburn and Robert Becker
Copyright © 2007, Chicago Tribune
Published February 28, 2007, 12:30 AM CST

Richard M. Daley laid claim to history on Tuesday, steamrolling two opponents and winning a sixth term that promises to make him the longest-serving mayor in Chicago history.

Another four years in the office will push Daley past the current record-holder—his father and role model, the late Mayor Richard J. Daley.

With more than 95 percent of precincts reporting, Daley had received about 71 percent of the vote to defeat challengers Dorothy Brown and William "Dock" Walls. But Chicagoans apparently considered it a ho-hum election, with only about a third of the city's 1.4 million registered voters turning out to cast their ballots.

A jubilant Daley walked into a ballroom of the Chicago Hilton & Towers to the strains of "Takin' Care of Business" and, in a speech that lasted just a few minutes, claimed victory before excited supporters.

"An election is not an end," Daley declared. "Instead it offers a new beginning. ... I want to thank the people of Chicago for their continued support.

"It means the world to me. I will keep working just as hard as I can for the next four years to justify your faith and confidence in me."

Miguel del Valle, Daley's running mate for clerk, was victorious as well.

Daley's other running mate, Stephanie Neely, won her race for city treasurer without opposition.

Despite his big win, Daley's coattails were not long enough to help all of his City Council allies.

The mayor could face a more independent council because several of his aldermanic allies lost their elections or faced runoffs.

Daley's victory came despite an ongoing federal investigation into City Hall contracting and hiring fraud, marring the mayor's record, putting him on the defensive and threatening to erode his political support.

But polls, borne out by Tuesday's results, have indicated that voters cared less about the federal inquiry and the corruption it brought to light than what they saw as Daley's strong leadership and the direction he was taking the city.

In his victory speech, Daley referred to the scandal, saying that "our city hiring and contracting systems have been reformed," and adding that he will make them even stronger.

Though large by traditional political standards, Daley's margin of victory apparently was smaller than it was in 2003, when he won more than 78 percent of the ballots cast.

But that race was against three political neophytes with little or no name recognition.

This time, Daley faced Brown, a countywide officeholder who has a political base and a proven record as a vote-getter. In her 2004 re-election bid for clerk of the Cook County Circuit Court, she won nearly 800,000 ballots cast in the city.

In her contest against Daley, Brown got about 20 percent of the vote.

About a half hour after Daley declared victory, Brown gave a concession speech at the Hyatt Regency McCormick Place.

"I want to congratulate the mayor," Brown said. "We started this campaign with a will to believe. Those of you here continue to have hope and strive for justice."

Brown called on Chicagoans "to hold this mayor accountable," and vowed, "You have not seen the last of Dorothy Brown."

Walls, a one-time aide to the late Mayor Harold Washington, failed to break into double digits.

"It doesn't matter how large the vote total was against us," Walls said Tuesday night. "No one promised us a rose garden. And we're cool with that. ... We're victorious in a lot of ways, even though we didn't win this particular election."

Both Brown and Walls are African-Americans, but neither was able to generate widespread enthusiasm among black voters, and the challengers had little crossover appeal with other racial groups.

In a city with a history of racial division, Daley has sought to build coalitions. He has been careful to include minorities in the top ranks of his administration and has prided himself on spreading resources and public development, including new schools, libraries and police and fire stations, across the city's neighborhoods.

In what foes have contended has been an effort to co-opt potential opposition, Daley has spread millions of dollars of city grant money to church-related and other non-profit organizations that provide social and community services. Many of them are in minority areas and are controlled by local black and Hispanic leaders.

Earlier, with nearly 80 percent of the vote in, Daley had the most votes in all 50 of the city's wards, including those where African-Americans represent more than 95 percent of the population.

Daley was given considerable breathing room last fall when two prominent Chicago Democrats, U.S. Rep. Jesse Jackson Jr. and U.S. Rep. Luis Gutierrez, announced their decisions not to challenge him. Both had considered mayoral runs but said the Democratic takeover of the U.S. House after November's elections persuaded them to stay in Washington.

Some Chicago political veterans theorized that the main reason Jackson and Gutierrez took a pass on the mayoral race was because they concluded Daley would throttle them.

The federal investigation put out of business or severely weakened a formidable list of pro-Daley political groups that had fielded political workers for him at election time.

But Daley was able to overcome that manpower deficiency by using troops of traditional Democratic ward organizations; depending on volunteers who signed up for his campaign; relying on his name recognition and popularity; and outspending his underfunded challengers.

At the end of January, state records show that a potent money-raising effort had put nearly $6 million in the mayor's war chest. Brown had less than $200,000, Walls less than $10,000.

Daley, 64, was first elected mayor in 1989. If he serves out his term, he will surpass his father's time in office on Dec. 26, 2010, when he hits 7,915 days as mayor.

But the current mayor has insisted he is not focused on the record and certainly is not seeking to upstage Richard J. Daley.

Still, when asked if Richard J. would be proud of him, he said Tuesday: "I think my dad would be very proud."

The record, of itself, would not mean much, Daley said last week.

"You don't stay here to stay here," he declared. "You want to accomplish things."

Tribune staff reporters Jon Yates, Ray Quintanilla and Gerry Doyle contributed to this report.

Chicago Election Results
Mayor - Chicago - General
2555 of 2605 Precincts Reporting - 98.08%
Name Votes Pct
Daley, Richard (i) 317,266 71.18
Brown, Dorothy 89,235 20.02
Walls, William 39,217 8.80

City Clerk - Chicago - General
2555 of 2605 Precincts Reporting - 98.08%
Name Votes Pct
Del Valle, Miguel (i) 238,984 57.94
Jones, Diane 141,289 34.26
Cerda, Jose 32,163 7.80

Alderman - Ward 2 - General
58 of 60 Precincts Reporting - 96.67%
Name Votes Pct
Fioretti, Bob 2,927 28.07
Haithcock, Madeline (i) 2,130 20.43
Askew, David 1,648 15.81
Johnson, Kenny 1,482 14.21
Doody, Larry 1,168 11.20
Davis, Wallace 1,072 10.28

Alderman - Ward 3 - General
53 of 54 Precincts Reporting - 98.15%
Name Votes Pct
Tillman, Dorothy (i) 3,383 42.75
Dowell, Pat 3,020 38.16
Monroe, Mell 1,325 16.74
James, Angelo 97 1.23
Harris, Benjamin 89 1.12

Alderman - Ward 4 - General
55 of 55 Precincts Reporting - 100.00%
Name Votes Pct
Preckwinkle, Toni (i) 7,593 76.00
Bolden, Norman 2,398 24.00

Alderman - Ward 5 - General
53 of 55 Precincts Reporting - 96.36%
Name Votes Pct
Hairston, Leslie (i) 6,412 74.54
Worrill, Oscar 1,686 19.60
Hendricks, Sylvester 504 5.86

Alderman - Ward 6 - General
60 of 64 Precincts Reporting - 93.75%
Name Votes Pct
Lyle, Freddrenna (i) 6,488 52.83
Davis, Eugene 3,540 28.83
Norington-Reaves, Karin 1,717 13.98
Andrews, Thelma 535 4.36

Alderman - Ward 7 - General
63 of 65 Precincts Reporting - 96.92%
Name Votes Pct
Jackson, Sandi 6,462 57.47
Beavers, Darcel (i) 3,703 32.93
David, Ron 869 7.73
Brown, Eric 210 1.87

Alderman - Ward 8 - General
68 of 70 Precincts Reporting - 97.14%
Name Votes Pct
Harris, Michelle (i) 8,196 60.72
McAfee, Joseph 1,239 9.18
Shabazz, Faheem 1,131 8.38
Underwood, Cliff 1,001 7.42
Prince, Derrick 742 5.50
Newell, Van 535 3.96
Allen, Dennis 333 2.47
Adams, Sharon 322 2.39

Alderman - Ward 9 - General
53 of 53 Precincts Reporting - 100.00%
Name Votes Pct
Beale, Anthony (i) 5,591 57.93
Rayburn, Earick 1,986 20.58
Levi, Deborah 1,665 17.25
Ward, Harold 409 4.24

Alderman - Ward 10 - General
49 of 49 Precincts Reporting - 100.00%
Name Votes Pct
Pope, John (i) 6,209 70.36
Ramirez, Dinah 1,676 18.99
Malesh, Thomas 939 10.64

Alderman - Ward 11 - General
50 of 50 Precincts Reporting - 100.00%
Name Votes Pct
Balcer, James (i) 7,598 78.92
Segvich, Carl 2,030 21.08

Alderman - Ward 12 - General
24 of 24 Precincts Reporting - 100.00%
Name Votes Pct
Cardenas, George (i) 2,589 59.27
Sanchez, Carina 1,222 27.98
Salazar, Jesus 178 4.08
Bocanegra, Alberto 163 3.73
Mercado, Alan 155 3.55
Iniguez, Jesse 61 1.40

Alderman - Ward 14 - General
35 of 35 Precincts Reporting - 100.00%
Name Votes Pct
Burke, Edward (i) 5,013 89.71
Andrade, Paloma 575 10.29

Alderman - Ward 15 - General
51 of 52 Precincts Reporting - 98.08%
Name Votes Pct
Foulkes, Toni 2,005 33.95
Simmons-Stovall, Felicia 1,556 26.35
Dixon, Denise 464 7.86
Burch, William 329 5.57
Jeffries, Janice 303 5.13
Monroe, Shawn 288 4.88
Lewis Dixon, Vesta 222 3.76
Grayer, Tommie 204 3.45
Mallory, Sandra 180 3.05
Dunn, Brian 179 3.03
Anderson, Richard 175 2.96

Alderman - Ward 16 - General
43 of 46 Precincts Reporting - 93.48%
Name Votes Pct
Thompson, Joann 2,328 42.09
Coleman, Shirley (i) 2,023 36.58
Baskin, Hal 707 12.78
Brown, Denise 307 5.55
Lewis, Jeffrey 90 1.63
Johnson, Eddie 76 1.37

Alderman - Ward 17 - General
62 of 64 Precincts Reporting - 96.88%
Name Votes Pct
Thomas, Latasha (i) 5,698 66.30
Hawthorne, Tyrone 1,330 15.48
Williams, Yvette 1,165 13.56
Partlow, Charles 401 4.67

Alderman - Ward 18 - General
60 of 62 Precincts Reporting - 96.77%
Name Votes Pct
Lane, Lona (i) 6,303 49.11
Stewart, Paul 3,382 26.35
Ziegler, Joseph 1,472 11.47
Washington, Sydney 917 7.15
Davis, Eldora 760 5.92

Alderman - Ward 19 - General
67 of 67 Precincts Reporting - 100.00%
Name Votes Pct
Rugai, Virginia (i) 11,659 54.53
Somerville, John 5,949 27.82
Sheehan, Timothy 3,773 17.65

Alderman - Ward 20 - General
48 of 50 Precincts Reporting - 96.00%
Name Votes Pct
Cochran, Willie 4,198 62.51
Troutman, Arenda (i) 2,149 32.00
Chaney, Edward 369 5.49

Alderman - Ward 21 - General
72 of 74 Precincts Reporting - 97.30%
Name Votes Pct
Brookins, Howard (i) 6,292 46.09
Jones, Leroy 4,706 34.47
Jones, Sylvia 1,203 8.81
McClendon, Mildred 1,048 7.68
Belle, Dwayne 403 2.95

Alderman - Ward 22 - General
29 of 29 Precincts Reporting - 100.00%
Name Votes Pct
Munoz, Ricardo (i) 2,463 56.80
Gutierrez, Jose 1,079 24.88
Salamanca, Joaquin 440 10.15
Sallas, August 354 8.16

Alderman - Ward 23 - General
54 of 56 Precincts Reporting - 96.43%
Name Votes Pct
Zalewski, Michael (i) 8,818 71.16
Maida, Charles 3,574 28.84

Alderman - Ward 24 - General
56 of 59 Precincts Reporting - 94.92%
Name Votes Pct
Chandler, Michael (i) 2,881 36.03
Dixon, Sharon 1,620 20.26
Anderson, Julius 944 11.81
Worthy, Thomas 850 10.63
Patterson, Donald 840 10.51
Carter, Mark 628 7.85
Brooks, Willie 233 2.91

Alderman - Ward 25 - General
30 of 31 Precincts Reporting - 96.77%
Name Votes Pct
Solis, Danny (i) 3,153 50.36
Morfin, Cuahutemoc 1,449 23.14
Soliz, Juan 581 9.28
Padilla, Martha 526 8.40
Del Valle, Aaron 296 4.73
Acevedo, Joe 256 4.09

Alderman - Ward 26 - General
63 of 63 Precincts Reporting - 100.00%
Name Votes Pct
Ocasio, Billy (i) 3,569 65.99
Granato, Jesse 865 15.99
Maldonado, Sammy 676 12.50
Vera, Onix 298 5.51

Alderman - Ward 28 - General
60 of 61 Precincts Reporting - 98.36%
Name Votes Pct
Smith, Ed (i) 4,404 60.06
Walker, Shawn 1,726 23.54
Rover, Chubby 493 6.72
Colvin, CaSandra 291 3.97
Greer, Donald 248 3.38
Lyons, Alex 171 2.33

Alderman - Ward 30 - General
40 of 41 Precincts Reporting - 97.56%
Name Votes Pct
Reboyras, Ariel (i) 3,436 70.27
Alvarez, Jose 852 17.42
Strnad, Wayne 602 12.31

Alderman - Ward 31 - General
51 of 51 Precincts Reporting - 100.00%
Name Votes Pct
Suarez, Ray (i) 4,519 86.08
Hernandez, Ray 731 13.92

Alderman - Ward 32 - General
52 of 52 Precincts Reporting - 100.00%
Name Votes Pct
Matlak, Ted (i) 3,793 46.83
Waguespack, Scott 3,185 39.32
Zaryczny, Catherine 1,122 13.85

Alderman - Ward 34 - General
60 of 61 Precincts Reporting - 98.36%
Name Votes Pct
Austin, Carrie (i) 8,394 69.82
Moses, Henry 1,414 11.76
Kelly, Bernard 1,369 11.39
Mayden, Michael 845 7.03

Alderman - Ward 35 - General
36 of 36 Precincts Reporting - 100.00%
Name Votes Pct
Colon, Rey (i) 3,038 46.40
Colom, Vilma 2,218 33.88
Sotomayor, Miguel 1,291 19.72

Alderman - Ward 36 - General
55 of 55 Precincts Reporting - 100.00%
Name Votes Pct
Banks, William (i) 8,094 75.89
Sposato, Nicholas 2,572 24.11

Alderman - Ward 37 - General
43 of 43 Precincts Reporting - 100.00%
Name Votes Pct
Mitts, Emma (i) 4,462 59.25
McKennie, Eric 1,183 15.71
Giles, Percy 759 10.08
Abina, Tommy 511 6.79
Jones, Daryl 334 4.44
Jones, Arlene 282 3.74

Alderman - Ward 39 - General
47 of 47 Precincts Reporting - 100.00%
Name Votes Pct
Laurino, Margaret (i) 6,275 79.30
Belz, Christopher 1,638 20.70

Alderman - Ward 41 - General
56 of 57 Precincts Reporting - 98.25%
Name Votes Pct
Doherty, Brian (i) 9,990 72.48
Markham, Don 2,260 16.40
Hannon, Michael 1,534 11.13

Alderman - Ward 42 - General
68 of 69 Precincts Reporting - 98.55%
Name Votes Pct
Reilly, Brendan 6,802 54.32
Natarus, Burton (i) 5,721 45.68

Alderman - Ward 43 - General
57 of 59 Precincts Reporting - 96.61%
Name Votes Pct
Daley, Vi (i) 4,334 48.20
Smith, Michele 2,960 32.92
Egan, Tim 1,059 11.78
Zelchenko, Peter 370 4.11
Goodstein, Rachel 269 2.99

Alderman - Ward 45 - General
53 of 53 Precincts Reporting - 100.00%
Name Votes Pct
Levar, Patrick (i) 7,380 56.23
Boyke, Terrence 4,004 30.51
Klocek, Anna 1,086 8.27
Bank, Robert 655 4.99

Alderman - Ward 46 - General
46 of 47 Precincts Reporting - 97.87%
Name Votes Pct
Shiller, Helen (i) 5,834 53.20
Cappleman, James 5,133 46.80

Alderman - Ward 47 - General
52 of 52 Precincts Reporting - 100.00%
Name Votes Pct
Schulter, Gene (i) 7,241 78.52
Cooney, Martin 1,981 21.48

Alderman - Ward 49 - General
42 of 42 Precincts Reporting - 100.00%
Name Votes Pct
Moore, Joe (i) 3,657 49.33
Gordon, Don 2,162 29.16
Ginderske, Jim 939 12.67
Adams, Chris 656 8.85

Alderman - Ward 50 - General
45 of 45 Precincts Reporting - 100.00%
Name Votes Pct
Stone, Bernard (i) 5,059 48.32
Dolar, Naisy 2,958 28.25
Brewer, Greg 1,906 18.21
Aftab, Salman

The Surge That Might Work - It would cost $100 million to restart all of Iraq's state companies.

The Surge That Might Work - It would cost $100 million to restart all of Iraq's state companies. That's as much as the military will spend in the next 12 hours.
By Fareed Zakaria
© 2007 Newsweek, Inc.

March 5, 2007 issue - We are now fighting a war intelligently in Iraq. The only problem is, it's the last war, not the present one. The United States has gambled all its efforts on a troop surge that tackles the conflict that defined Iraq from 2003 to 2005—the insurgency—rather than the civil war now raging across the country. Worse, in trying to solve yesterday's problem we are exacerbating today's. In Baghdad, Shiite militias have melted away. Almost all U.S. military operations are now directed against Sunni insurgents. If those are successful, the picture could look less violent in six months, but it will be a dangerous stasis. A senior U.S. military officer, who is not allowed to speak on the record on these matters, said to me, "If we continue down the path we're on, the Sunnis in Iraq will throw their lot behind Al Qaeda, and the Sunni majority in the Arab world will believe that we helped in the killing and cleansing of their brethren in Iraq. That's not a good outcome for the security of the American people."

We don't intend to side with anyone. We're trying to be evenhanded and build a single, democratic nation. But this attempt at neutrality is collapsing in Iraq's bloody sectarian reality. Last week's uproar over allegations that Shiite policemen in Baghdad had raped a 20-year-old Sunni woman vividly illustrates how trust between the two communities has been shattered. Shiite Prime Minister Nuri al-Maliki first ordered an investigation, then 12 hours later declared the woman a liar, freed and rewarded the alleged rapists and later fired a Sunni official who had called for an unbiased investigation. Meanwhile we're stuck in the middle, promising to uncover the truth while both sides are convinced that we've betrayed them. This is the definition of a no-win strategy.

The United States needs to find fresh approaches that won't feed the sectarian dynamic and will address the needs of ordinary Iraqis, not the political elites who are jockeying for power. Most important, we need to find a strategy whose costs are sustainable. Militarily this means drawing down our forces to around 60,000 troops and concentrating on Al Qaeda in Anbar province. The surge we should be pushing instead is a political one, and even more critically, an economic one.

An economic surge is long overdue. One of the less-remarked-upon blunders of the Coalition Provisional Authority was that—consumed by free-market ideology—it shut down all of Iraq's state-owned enterprises. This crippled the bulk of Iraq's non-oil economy, threw hundreds of thousands of workers into the streets and further alienated the Sunnis, who were the managerial class of the country. The economic effects of this decision have been seismic. For example, Iraq's agricultural productivity has plummeted because fertilizer plants were summarily closed. Unemployment in non-Kurdish Iraq remains close to 50 percent, which helps explain why so many young men are joining gangs, militias and insurgent groups. For the moment at least, democracy in Iraq has sharpened the country's divisions. Capitalism and commerce can make them less relevant. That is the lesson of many conflict-ridden countries from Northern Ireland to Mozambique to Vietnam.

Paul Brinkley, a talented deputy under secretary of Defense, is trying to get the bulk of these state-owned factories up and running. He's already restarted a bus factory in Iskandariyah, south of Baghdad, and the experience has been telling. Hundreds of workers still in the area showed up for work and the machines are now humming busily. There have been no attacks on the factory. "The insurgents attack people working for the police, Army or the Americans. They do not want to alienate locals trying to make ends meet," said one official working on the project.

Of the original 193 state enterprises, 143 could be restarted soon, says Brinkley. Management and workers are desperate to get jobs. The problem is money. Brinkley points out that his next target, a ceramics factory in Ramadi, is only waiting for two generators before it can reopen. They cost $1 million each. But funds for this purpose are hard to find. Washington has pledged more than $18 billion to fund "reconstruction" in Iraq but will not appropriate a cent to start up state-owned Iraqi companies. The Iraqi government has billions in oil revenue of its own but is so dysfunctional that it cannot move a new project through the system. So the factory is idle. A major global consulting firm has reviewed Iraq's state-owned enterprises and estimated that it would cost $100 million to restart all of them and employ more than 150,000 Iraqis—$100 million. That's as much money as the American military will spend in Iraq in the next 12 hours.

Tuesday, February 27, 2007

From the guys who gave you the Iraq war, another fine idea

From the guys who gave you the Iraq war, another fine idea
By Gideon Rachman
Copyright The Financial Times Limited 2007
Published: February 27 2007 02:00 | Last updated: February 27 2007 02:00

The country is developing weapons of mass destruction; its leader is a new Hitler; he has connections with terrorists; time is running out; containment has failed; we must strike before it is too late.

If you think you have heard it all before, you have. The arguments for an attack on Iran are almost exactly the same as the arguments that were made for an attack on Iraq. The people making the case have not changed either.

Here is James Woolsey, a former director of the CIA, speaking at a conference last month about Mahmoud Ahmadi-Nejad, president of Iran, and his talk of wiping Israel off the map: "Hitler meant it when he said he wanted to exterminate the Jews. It was spelt out in Mein Kampf. We need to take seriously what people like Ahmadi-Nejad and others say to their own followers. They are not lying; they are stating their true objectives." And here is

Mr Woolsey, speaking on American television in January 2003: "Saddam sounds very much, with respect to the 250m people or so in the Arab world, as Hitler sounded before world war two, with respect to Europe. The Ba'athist parties really are fascist parties . . . they're anti-Semitic like them; they're fascist."

And here is the official summary of comments made at the same conference in Israel last month by Richard Perle, a former Pentagon official: "In possession of nuclear weapons, Iran is capable of using their terrorist networks to enable damage . . . The issue is one of timing and intelligence. You can't afford to wait for all the evidence." Once again, this is a reprise of a favourite tune. Appearing on American television in February 2003, Mr Perle argued: "Let us just agree that Saddam Hussein had those weapons and he is perfectly capable of transferring them to al-Qaeda." Mr Perle emphasised the urgency of the problem: "There is a threat and

I believe it is imminent."

Newt Gingrich, a likely candidate for the Republican nomination for the presidency next year and a member of the Pentagon's Defense Policy Board, argued only last month that "the US should have as an explicit goal, regime change in Iran" because Iran is "the leading supporter of terrorism in the world". In 2002, Mr Gingrich wrote: "The question is not should we replace Saddam? The question is should we wait until Saddam gives biological, chemical and nuclear weapons to terrorists."

The people arguing for an attack on Iran allege that containment is failing. They said the same thing about Iraq. As early as 1997, William Kristol, the editor of The Weekly Standard, was arguing that: "Rather than try to contain Saddam, a strategy that has failed, our policy should now aim to remove him from power." Nine years later, Mr Kristol was urging a military strike against Iranian facilities and demanding: "Does anyone think a nuclear Iran can be contained?"

Dick Cheney, the US vice-president, was one of the most enthusiastic advocates for an attack on Iraq and is also a leading hawk on Iran. In 2002 he told America's Veterans of Foreign Wars that "there is no doubt that Saddam Hussein now has weapons of mass destruction" and linked Saddam to terrorism. This month, he was warning that a nuclear Iran would be particularly dangerous because of the country's "history of sponsorship of terrorist organisations".

Of course, just because somebody has been catastrophically wrong in the past does not mean that he will always be wrong in the future. Even the boy who cried "Wolf!" was ultimately vindicated.

As it happens, the evidence that Iran is developing weapons of mass destruction is much stronger than it ever was in the case of Iraq. Colin Powell's feeble presentation to the United Nations about Saddam's WMD programme was an embarrassment. By contrast, Iran undoubtedly does have an active nuclear programme - the UN has just reported that it plans to have a large-scale uranium enrichment facility ready by May. From that point on, estimates for the length of time it could take Iran to develop the bomb vary from 18 months to 10 years. By sponsoring Hizbollah in Lebanon and Hamas in Palestine, Iran is clearly also stirring up trouble in the Middle East - much more actively, in fact, than Saddam was in the run-up to the invasion of Iraq in 2003.

Advocates of a strike on Iran could also point out that nobody, this time, is arguing for a full-scale ground invasion or a long-term occupation. The idea would be to destroy Iran's nuclear facilities through air power - although any bombing campaign could last several weeks.

It might be possible to make a convincing case for an air strike on Iran if you could somehow erase the memory of the disaster of Iraq. But such amnesia is neither possible nor desirable. There are valuable lessons to be learnt from Iraq. "Intelligence" is often highly unreliable. Talking about a "new Hitler" is a shopworn rhetorical trick that should be banned. Military actions that look straightforward when they are launched have a nasty habit of developing in unexpected ways. (The very fact that American and allied troops are on the ground in Iraq and Afghanistan increases the possibility of unpredictable escalation.) And America and its allies pay a huge price in political capital around the world every time they resort to force - particularly if the use of military power is "pre-emptive".

The fact that the neo-conservatives and their allies are unabashed by their failure in Iraq does not mean that the rest of the world should be so forgiving. After all, these people positively begged to be judged by the results of the Iraq war.

In a notably smug editorial written on the eve of the war with Iraq, the editors of The Weekly Standard wrote: "The war itself will clarify who was right and who was wrong about weapons of mass destruction." Well, indeed. And they ended with a flourish: "History and reality are about to weigh in and we are inclined simply to let them render their verdicts." Well, the verdict's coming in, chaps - and it is not looking good.

In most professions, a record of failure counts against you. Architects whose buildings fall down and doctors who maim their patients tend to suffer some sort of consequence. The same rules should apply to people who advocate disastrous wars. Take a look at the people who are arguing for an attack on Iran, consider their records - and run a mile in the opposite direction.

Shares slide on fears of global slowdown

Shares slide on fears of global slowdown
By Neil Dennis
Copyright The Financial Times Limited 2007
Published: February 27 2007 09:24 | Last updated: February 27 2007 16:43

Global stocks slumped on Tuesday, with US and European markets driven sharply lower after Chinese equities plunged from record levels on fears of overvaluation, slowing growth and tensions over Iran.

Wall Street suffered sharp losses, hampered also by signs of slowing growth in economic activity as durable goods orders fell 7.8 per cent in January.

By midday in New York, the Dow Jones Industrial Average was down 1.2 per cent at 12,479.25, the S&P 500 shed 1.2 per cent to 1,432.26 and the Nasdaq Composite slid 1.8 per cent to 2,459.25.

European indices endured their biggest single-session declines since last May, when high valuations and fears that inflation growth would spark rapid interest rate increases drove the markets into a two-month period of volatile trading conditions.

The FTSE Eurofirst 300 ended the session down 2.8 per cent to 1,507.06, Frankfurt’s Xetra Dax shed 2.9 per cent to 6,823.63 and the CAC 40 in Paris slid 3 per cent to 5,588.43.

In London, the FTSE 100 was lower by 139 points, or 2.2 per cent, at 6,295.9 by the close, with all but one stock trading in negative territory. The heavyweight commodity stocks that have dictated the market’s direction were hit by concerns over a potential ‘windfall’ tax in South Africa.

China’s Shanghai Composite index tumbled nearly 9 per cent to 2,771.79, its biggest single-session fall in 10 years. The benchmark Chinese mainland index had hit a record high in the previous session.

Financial stocks led the decline, and the leading component Industrial & Commercial Bank of China, fell 8 per cent to Rmb4.69, while Bank of China lost 7.2 per cent to Rmb4.62.

As in Asia, it was financial stocks that took the biggest hit in continental Europe – particularly those geared to emerging markets – as investors removed cash from exposure to risk. Raiffeisen International, the Austrian bank with assets in Russia, Ukraine and other eastern European markets, fell 8.7 per cent to €102.54. National Bank of Greece, which owns assets in Turkey, fell 6.3 per cent to €39.28.

Fears of overvaluation have come amid a series of record highs for several Asian equity markets, including China and South Korea, and six-year peaks for Europe’s benchmarks.

Meanwhile, concerns about possible action on Iran, Opec’s number-two oil producer, intensified as a UN conference began in London to discuss possible sanctions.

Adding to the downbeat sentiment, former Federal Reserve chairman Alan Greenspan said on Monday that it was “possible” the US economy may fall into recession later this year.

Eurozone bond futures hit a seven-week high, echoing gains for US Treasuries overnight as the gloom in the equity market and increased geopolitical risk drove investors towards safety.

Rising aversion to other risky strategies, such as the carry trade – where investors sell low-yielding currencies to invest in higher-yielding assets – helped fuel gains for both the Swiss franc and the Japanese yen.

The Swiss franc, which has traditionally been a safe-haven asset at times of heightened risk gained 0.7 per cent against the dollar to SFr1.2215. The yen gained 1.6 per cent to a two-month high of Y118.70 against the dollar, and by 1 per cent to Y157.30 against the euro.

US durable goods orders slide

US durable goods orders slide
By Daniel Pimlott in New York
Copyright The Financial Times Limited 2007
Published: February 27 2007 15:17 | Last updated: February 27 2007 15:17

New orders for manufactured goods plummeted in January, raising concerns about the underlying strength of the economy. Meanwhile, sales of existing homes rose by 3 per cent last month, the biggest rise in two years, as the warm winter encouraged home buyers to spend.

Data published by the commerce department on the manufacturing industry on Tuesday showed that orders for durable goods fell by much more than expected last month, suggesting that the downturn in the manufacturing sector is not yet over.

New orders for durable goods plunged 7.8 per cent to $203.9bn in January, the largest fall on record. Excluding volatile transportation orders, which reflect numbers for aircraft, durable goods orders fell by 3.1 per cent, the biggest drop since July 2005.

Orders were dragged down in particular by plummeting aircraft orders, which fell 59 per cent, and a 5.1 per cent drop for motor vehicles and parts.

Economists had forecast a fall of 2.5 per cent, or 0.2 per cent excluding transportation.

“This is a big deal as far as the industrial sector goes,” said Paul Ashworth, senior economist at Capital Economics. “Although its no secret that large parts of the industrial sector such as the motor industry are suffering. But its not disastrous.”

The disappointing figures come after two months of rising orders, including growth of 2.8 per cent in December, a figure which was downwardly revised from 3.1 per cent.

A widely-watched gauge of business investment - non-defence capital goods orders excluding aircraft - fell 6 per cent over the month and is down 9.3 per cent on a three-month annualised basis.

“The fact that it has dropped for the last four months ... suggests that manufacturing and investment activity is slowing markedly,” said James Knightley, an analyst at ING Bank NV.

In the housing market, sales were boosted by warm winter weather, and may slip back after the severe snowstorms in late January and February, economists said.

Sales of existing homes rise to 6.46m in January from 6.27m the month before, according to data from the National Association of Realtors. But the median price of a home fell by 3.1 per cent to $210,600 from the same period last year.

The strong rise in home sales surprised economists, who had expected only a slight increase to 6.24 - 6.3m in January. Sales were still 4.3 per cent down on last year, however.

The housing figures may add to the Fed’s concerns that a strengthening economy could put pressure on inflation, but weak durable goods orders seemed likely to balance that out, according to analysts.

“Today’s figures are consistent with a steady Fed stance,” said Nick Bennenbroek, a senior currency strategist at Brown Brothers Harriman. “Signs of consumer sturdiness and hints of housing stabilization are an offset to manufacturing weakness.”

Pat Combs, president of NAR, said he saw the housing market stabilising. “The market is trending up from its low last fall,” he said.

The strongest performance was in the west, where sales rose 5.6 per cent, while they rose 4.8 per cent in the midwest.

The data suggested an overall negative view of the state of the economy, analysts said.

“I think the Fed view will be largely negative,” said Mr Ashworth. “The weakness in durable goods was very disappointing, and the strength in existing home sales was responding to a temporary blip we already knew about.”

Existing home sales can be a lagging indicator for housing, because they only register sales at the end of the process of buying a house. Other recent housing data on the number of new houses that builders started in January was down sharply. Figures on new home sales are due out on Wednesday.

Monday, February 26, 2007

Chicago Sun-Times Editorial - Stroger won budget battle -- now wage war on patronage

Chicago Sun-Times Editorial - Stroger won budget battle -- now wage war on patronage
Copyright by The Chicago Sun-Times
February 26, 2007

The 2007 budget that was approved by the Cook County Board in the wee hours last Friday was a clear political victory for President Todd Stroger. In his first big test as county leader, he won a showdown with a bloc of commissioners who pushed a rival spending plan. But a political win for Stroger is not necessarily a victory for Cook County residents. There are still troubling questions about whether fat and patronage were preserved while essential services got chopped.

On the bright side, the board passed a budget that covered a $500 million gap not by raising taxes but by refinancing bonds and by slashing programs and 1,700 jobs. Such an achievement would have been unthinkable as recently as a year ago, and taxpayers should be pleased. This year also saw commissioners far more engaged in vetting the president's budget -- that is, doing their jobs -- than in years past.

But while we understand that it would have been impossible to craft a perfect budget given the county's poor fiscal health, we think commissioners could have come closer. Stroger's final budget preserved the jobs of most of the 400 managers that Commissioner Forrest Claypool (D-Chicago) and other commissioners in the rival bloc wanted to ax in favor of retaining more nurses, police, prosecutors and other frontline workers. Claypool argued those managers are political hacks, but where he saw patronage, Stroger saw indispensible workers. Who is right? It's going to take some time to sort that out, but the person with the credibility problem is Stroger, who has been thumbing his nose at county taxpayers since he took office by giving jobs and raises to friends and relatives.

The final budget makes hefty cuts in nurses, sheriff's police, court deputies and prosecutors, and it cuts 13 health care clinics. But Stroger's original budget proposed deeper cuts; all were scaled back following furious negotiations Thursday between the president and individual commissioners. Those changes resulted in some management cuts and helped Stroger persuade several commissioners to switch their support to his plan from the rival proposal.

After the smoke cleared, Stroger declared that the budget was leading the county in the right direction. We hope that's true. The 2007 spending plan was hastily crafted in the midst of a huge fiscal crisis by a rookie leader, and it still produced some significant, albeit incomplete, results -- but also troubling cuts in law enforcement and health care. The county now has a year in which to get ready for 2008. It should build on the momentum and continue to streamline operations. It should audit every position and take a serious whack at patronage jobs. If Stroger is serious about reform -- and the jury is still out on that -- the hard part is just beginning.

International Herald Tribune Editorial - A necessary vaccine

International Herald Tribune Editorial - A necessary vaccine
Copyright by The International Herald Tribune Editorial - A necessary vaccine
Monday, February 26, 2007

Debate over a new vaccine to prevent cervical cancer and genital warts has reached a high pitch. State legislatures are debating whether to mandate the vaccine or insist that its use be kept voluntary. The manufacturer stopped a vigorous lobbying campaign lest it provoke more opposition than support. And some health professionals who had been championing the vaccine flinched at making it mandatory, at least for now.

Even so, state legislatures should require that all young girls be given this vaccine, which protects against a virus that causes some 10,000 new cases of cervical cancer in the United States each year — and 3,700 cancer deaths.

Some 20 states have bills pending to require the vaccinations against the human papillomavirus for school attendance.

We have endorsed a mandate because the vaccine — Merck's Gardasil — looks highly effective against strains that cause 70 percent of all cervical cancer. With more than 2 million doses already distributed, the reported side effects have been mostly minor, such as dizziness or fainting.

Many parents who oppose a mandate are aghast at the thought of vaccinating such young girls against a sexually transmitted disease. Social conservatives object that the vaccine will encourage promiscuity. But it seems farfetched to believe that protection from cervical cancer will change any girl's behavior, and the vaccine works only if taken before a girl becomes infected.

The strongest arguments against moving ahead quickly tend to be practical and financial. States have typically used school mandates for vaccines that are already in wide use, and it is possible that unexpected side effects could emerge (though any mandate could be suspended if that happened). Health professionals also need to be certain that there are stable supplies, adequate insurance coverage, ample public money to vaccinate low-income children and physician support.

Merck deserves praise for developing Gardasil at a time when many companies shun the vaccine business as risky and unprofitable. But it is charging $360 for a three-dose regimen, a price that might come down if a competing vaccine enters the market soon, as expected. The vaccine could prevent thousands of new cases of cervical cancer annually and hundreds of thousands of cases of genital warts and precancerous growths.

Scorsese departs Oscars triumphant

Scorsese departs Oscars triumphant
By Nigel Andrews
Copyright The Financial Times Limited 2007
Published: February 26 2007 11:16 | Last updated: February 26 2007 13:08

Astounding scenes were witnessed at the 79th annual Academy Awards ceremony. The Best Actress made a sensible speech. The best director won the Best Director prize. No one wore a weird dress. No white person commented that anyone was black (or vice versa). No one said they had been brought up in a trailer park. And Al Gore, winning the Best Documentary Oscar for An Inconvenient Truth, began to announce his candidacy for the Democratic presidential nomination, only for a twinkle to give him away as the music police, otherwise known as the Academy orchestra, took the liberty of drowning him out.

Most astoundingly, the evening’s stage set verged on the tasteful. Imagine an indented Venetian ceiling taken down, turned to sheet metal and split into giant front-drops. It looked like bubble-wrap gone monumental. Backward of these, giant Oscars stood in two rows of open-front presentation cases, with a more giant one in the middle. They were cleared for dance numbers, when a scrim allowed silhouetted bodies, seemingly nude, to group themselves into shapes resembling giant floral bouquets or giant guns. (I think we can take the word ‘giant’ as read in relation to Oscar décor).

Ellen DeGeneres, looking perky in a kind of haute couture builder-and- plasterer’s outfit, showed aplomb and inventiveness when it was needed. It was needed quite early, when it became clear that there would be few surprises in the minor categories. These are reserved for the cinema of infantile regression, with Caribbean pirates and digitised penguins winning for special effects and animation, while Little Miss Sunshine – all right, so I’m the only person in the world who doesn’t like it – picked up Best Original Script and Best Supporting Actor (Alan Arkin).

The evening’s first and almost only trend-bucker was the Best Song Oscar. This was surely, we thought, going to Dreamgirls, which had about four nominations out of five. Instead it went to An Inconvenient Truth, to the visible startlement of audiences trying to remember what on earth that global-warming eco-doc’s song could have been. (“Warming has bro-ken, like the first war-ming”...?) Fittingly, in a moment of heady acclamation for political correctness, the winner Melissa Etheridge thanked her “wife”, seen beaming from the front stalls. With that moment and the night’s leading role played by Miss DeGeneres, the 2007 Oscars did for a bigotry-oppressed sexual constituency what the 2002 awards famously did for a disadvantaged racial community.

By 4am British time – the time we Oscar-watchers are propping open our eyelids with cocktail sticks – the ceremony was becoming a bit too well-behaved and respectful. Like good citizens, almost everyone observed the 45-second limit on speeches, to which the only exception was Ennio Morricone, who was allowed 45 hours. Or maybe it seemed that way as the composer receiving a career Oscar expatiated at length in Italian, while Clint Eastwood stood at his side, replacing himself during comfort breaks with a convincing waxwork, translated into American.

Ellen DeGeneres had warned the night’s winners not to do speeches about having being brought up in the Bronx eating lumps of frozen poison. But that nearly didn’t stop Jennifer Hudson. The Best Supporting Actress for Dreamgirls looked as if a rags-to-riches marathon was teetering on her lips. Instead she made a tearful, simple speech, while doing something obscure and fiddly with her hands, possibly sticking pins into a Simon Cowell doll.

The evening’s one humdinger speech came from Forest Whitaker, named Best Actor for his Idi Amin in The Last King of Scotland. After murmuring “Just a second” for the fending off of audible-visible grief, Whitaker went on to say a great deal, some of it comprehensible, about the interaction of dreams, beliefs, lights, connections, art, faith, religion and destiny. At the end he thanked the people of Uganda, his ancestors and God. A shot from the wings showed there was an unusual number of people in white coats waiting for him to finish.

The 2007 Best Actress award confirmed that “HM the Queen” now stands for Helen Mirren the Queen. Dame Helen wore a gold lamé Jessica Rabbit-style dress with full cups and a flowing hip-shape. The Americans adored her, especially when she said, raising high her Oscar, “I give you the Queen”. Since America has no idea what this toasting locution means, they thought we were offering to loan the monarch to a country grateful for any cut-glass classiness it can get.

Frozen in time, numbed by the act of keeping smiles on our faces, we were in no condition to register surprise at the evening’s concluding bouleversement. But it was wonderful that Martin Scorsese finally got the Best Picture and Best Director double, while so very Oscarish that he got it for a film representing a B-plus on his report card.

The Departed is not Raging Bull, Taxi Driver or Goodfellas. But it is good enough. And it saved us from the horror of seeing Babel win, in another vote that would have shown, like last year’s honouring of Crash, that the Motion Pictures Academy has no idea what the difference is between self-importance and importance. But maybe Hollywood’s heedlessness of fine distinctions is one of the reasons we love it.

History leaves Bush and Blair behind

History leaves Bush and Blair behind
By Philip Stephens
Copyright The Financial Times Limited 2007
Published: February 22 2007 18:39 | Last updated: February 22 2007 18:39

It was the end of the affair. There were some valiant protests otherwise: the relationship, we heard, is as special as ever. The White House was perfectly content for Britain to withdraw troops from Iraq just as US reinforcements are surging into Baghdad. Downing Street chimed in that George W. Bush and Tony Blair had talked it all through. President and prime minister were as one. It sounded awfully unconvincing.

The early return of 2,000 British soldiers from southern Iraq, it is fair to say, is technically consistent with the agreed strategy progressively to transfer control of security to Iraqi forces. And Basra, of course, is not Baghdad. Politics, though, reaches beyond detail. The importance of Mr Blair’s announcement this week lay in the symbolism.

With an eye on his legacy, the British prime minister has decided that there is nothing more to be done save create a framework for disengagement.

Thus for the first time since the toppling of Saddam Hussein, Britain has decoupled its own commitment from decisions taken in Washington. By late summer the British presence will be down to around 5,000 troops. Simultaneously, Mr Bush’s staunchest ally will be leaving 10 Downing Street. To all intents and purposes the president will be on his own.

I do not imagine that Gordon Brown, Mr Blair’s presumed successor, will want anything but friendly relations with Mr Bush. The attachment to Washington is embedded too deeply in the DNA of Britain’s political establishment for a new prime minister to risk an open breach. That said, it would be more curious still if Mr Brown did not seize the opportunity now presented to him to set a more independent course.

For Mr Bush, the symbolism of British troops departing Iraq is awful. As the Republican senator John Warner put it, the American public will be “quite perplexed” by the sight of the president adding US forces as his principal ally begins to pull out. Privately, US officials concede that the British decision strengthens the perception that Mr Bush is fighting a war that is already lost.

The tide of anti-war opinion in middle America has anyway advanced still further since the Republicans’ heavy defeat in last November’s mid-term congressional elections. Thus far the political caution of the Democrats – they fear being accused of undermining the troops already in Iraq – and the residual loyalty of enough Senate Republicans have given Mr Bush something of a breathing space. It is unlikely to last.

In Washington this week, the impression I have taken is of an administration that has lost for ever the capacity to set the terms of political debate. Among senior officials there is gathering talk of an exodus of the best and brightest. An increasingly beleaguered and irascible vice-president Dick Cheney is driven to accusing Democrats in Congress of offering comfort to the enemy. At the White House, the commander-in-chief repeats his mantra about staying the course in Iraq, but is visibly powerless to shape events.

On the other side of the Atlantic, senior British officials and diplomats still seethe with frustration at the degree to which Britain has been dragged into the mess that is Iraq. Some blame Mr Blair for his readiness to back the US president. Others, aware that British deference to Washington has longer antecedents than the present prime minister, speak of the arrogant incompetence in Washington.

The Bush administration, it is commonly said in London, has lacked the strategic grasp to understand the myriad and complex connections between conflicts in the Middle East. It has never appreciated the centrality of the Israeli-Palestinian dispute to regional instability. Nor has it realised that, by seeing everything through the prism of a war on terrorism, it has denied itself important strategic options. By setting stringent preconditions for dialogue – with Iran, Hamas and others – it has limited its own capacity to act.

These are not simply the criticisms of instinctive anti-Americans; nor necessarily of people who opposed the Iraq war from the outset. I have heard it said many times that Mr Bush has been personally attentive to Mr Blair’s views. What has been missing has been strategic intelligence and a willingness at the White House to follow through on commitments made to Mr Blair. Britain’s mistake was to shoulder responsibility without any commensurate authority to determine policy.

Mr Blair, it should be said, recoils from such criticisms of the US. Whatever his personal frustrations with Mr Bush, and they must be intense, the prime minister holds firmly to the view that Britain’s security interests remain inextricably tied to those of the US. There is nothing to be gained from bad-mouthing the nation’s most valued ally.

In a broad sense he is right. Look around the world – at the chaos in the Middle East, poverty in Africa, proliferation of unconventional weapons, Islamist terrorism, competition for scarce energy resources, broken states and the rest – and the US remains the indispensable power. Measure the differences between America and Europe and, though substantial and real enough, they are slight when compared with, say, the values and world views of Russia or China.

Paradoxically, this week’s parting of the ways comes at a moment when the administration seems more aware than it has ever been of the price it has paid for hubristic unilateralism. The recent outline agreement with North Korea seems, at a glance, to mark a return of pragmatism to the conduct of foreign policy.

Over dinner this week I heard a senior administration official say that the media and much of the international community had misread Washington’s recent decision to ratchet up pressure on Iran. The tougher stance was not a prelude to war but part of a determined effort to make diplomacy work in persuading Tehran to abandon its ambitions for a nuclear weapons capability.

Welcome as it is – and I am mystified as to why some Europeans prefer to scoff at rather than applaud the shift – this rediscovery of the efficacy of multilateralism comes too late for this administration to regain the trust of its allies. The war in Iraq has anyway crystallised the more fundamental change in the nature of the transatlantic alliance since the end of the cold war. History is leaving Messrs Bush and Blair behind.

International Herald Tribune Editorial - The truth about coal

International Herald Tribune Editorial - The truth about coal
Copyright by The International Herald Tribune
Published: February 25, 2007

Last Wednesday, members of the Rainforest Action Network, a scrappy little advocacy group, assembled in New York outside the Citigroup Center, where Merrill Lynch has a branch office. Dressed in top hats, carrying bags of coal and calling themselves "Billionaires for Coal," the group was protesting what it felt was the hypocrisy of a giant investment bank that proclaims a devout commitment to "environmental excellence" even as it provides financing for dirty power plants.

Merrill is a lead underwriter for TXU, a Dallas-based utility that plans to build a dozen coal-fired power plants in Texas that will add significantly to atmospheric concentrations of carbon dioxide. Though Merrill was the protesters' target, Citigroup must have been feeling queasy. It has also trumpeted its environmental virtues and is among TXU's lead underwriters.

There are at least two points to be made here. One, obviously, is that there is a difference between talk and reality. Much of corporate America now appears to be out in front of the Bush administration in facing up to global warming. Some big players like Pacific Gas and Electric and DuPont seem seriously committed to mandatory controls on carbon dioxide emissions — in sharp contrast to the administration's voluntary approach.

Others, notably big investment banks, are still doing what comes naturally: seizing opportunities, whether or not those opportunities fit their green posturing. TXU can fairly claim that its plants, outfitted with the latest technology, will emit fewer pollutants that cause smog and acid rain than the clunkers that have been around for 50 years. But these plants will still be using the same basic technology — burning coal, with no ability to dispose of immense amounts of carbon dioxide. That's distressing from a global warming perspective. It is also distressing because cleaner, if costlier, technologies are available that could capture greenhouse gases before they enter the atmosphere (that is, if TXU or the private equity group that is negotiating to buy the utility were willing to make the investment).

Which leads to the second point: There is a need to put a price on carbon to force companies to abandon dirtier technologies for newer, cleaner ones. Right now, everyone is using the atmosphere like a municipal dump. Start charging for the privilege, and people will find smarter ways to do business. A carbon tax is one approach. Another is to impose a steadily decreasing cap on emissions and let individual companies figure out ways to stay below the cap.

International Herald Tribune Editorial - Al Qaeda resurgent

International Herald Tribune Editorial - Al Qaeda resurgent
Copyright by The International Herald Tribune
Published: February 25, 2007

Almost five and a half years ago, America, united by the shock of 9/11, understood exactly what it needed to do. It had to find, thwart and take down the command structure of Al Qaeda, which was responsible for the deaths of 3,000 innocent people on American soil.

Despite years of costly warfare in Afghanistan and Iraq, America today is not significantly closer to that essential goal. At a crucial moment, the Bush administration diverted America's military strength, political attention and foreign-aid dollars from a necessary, winnable war in Afghanistan to an unnecessary, and by now unwinnable, war in Iraq. Al Qaeda took full advantage of these blunders to survive and rebuild. Now it seems to be back in business.

As New York Times reporters Mark Mazzetti and David Rohde reported last week, American intelligence and counterterrorism officials believe that Al Qaeda has rebuilt its notorious training camps, this time in Pakistan's loosely governed tribal regions near the Afghan border.

Camp graduates are fighting in Afghanistan and Iraq — and may well be plotting new terrorist strikes in the West. The same officials point to more frequent and more current videos as evidence that Al Qaeda's top leaders, Osama bin Laden and Ayman al-Zawahri — once on the run for their lives and unable to maintain timely communications with their followers — now feel more secure. Al Qaeda is not as strong as it was when its Taliban allies ruled Afghanistan. But, the officials warn, it is getting there.

Al Qaeda's comeback didn't have to happen. And it must not be allowed to continue. The new Qaeda sanctuaries in Pakistan do not operate with the blessing of the Pakistani government. But Pakistan's military dictator, General Pervez Musharraf, has not tried very hard to drive them out. In recent months he has virtually conceded the tribal areas to local leaders sympathetic to Al Qaeda. President George W. Bush needs to warn him that continued American backing depends on his doing more to rid his country of people being trained to kill Americans.

Washington also has to enlist more support on the Afghan side of the border. NATO allies need to drop restrictions that hobble their troops' ability to fight a resurgent Taliban. Afghan leaders need to wage a more aggressive campaign against corruption and drug trafficking. And Washington needs to pour significantly more money into rural development, to give Afghan farmers alternatives to drug cultivation. One reason Musharraf has been hedging his bets with the Taliban and Al Qaeda is his growing doubt that Washington is determined to succeed in Afghanistan.

Having failed to finish off Al Qaeda in Afghanistan, Washington now finds itself fighting Qaeda-affiliated groups on multiple fronts, most recently in Somalia. Al Qaeda's comeback in Pakistan is a devastating indictment of Bush's flawed strategies and misplaced Iraq obsession. Unless the president changes course, the dangers to America and its friends will continue to multiply.