CarlosNewsletter

Brady needs to do his homework

2010-03-06T10:01:00.000-08:00

Brady needs to do his homework
BY CAROL MARIN
Copyright by The Chicago Sun-Times Columnist
March 6, 2010
http://www.suntimes.com/news/marin/2087276,CST-EDT-carol07.article

Been a bit bumpy for Bill Brady lately. But he is finally the official gubernatorial nominee of the Illinois GOP, now that the state Board of Elections has determined he won by a tiny but decisive 193 votes.

And so, after a kickoff Friday at the Union League Club, he headed out at rush hour to meet and greet Metra commuters.

His campaign billed it as "Sen. Brady thanks Chicago voters," but it was a little hard to imagine what exactly he was thanking them for. He got only 1,800 votes out of 34,000 Republican votes cast in the city.

Or to put it another way, his Chicago voters could barely fill the right-field bleachers at Wrigley. And in Cook County, 90 percent of the Republican vote went to his five opponents, not him.

Sen. Brady, of Bloomington, neither has a mandate nor has he done much to win new converts since the February primary.

Worse, he has given his detractors an opening the size of Soldier Field to go after him.

For starters, he's had to fend off inflammatory accusations that he's a homophobic puppy killer.

That's the result of legislation he sponsored (and has subsequently un-sponsored) permitting mass euthanasia of shelter animals, opposing same sex marriage and civil unions and advocating the weakening of some gay discrimination restrictions.

Worse is how he stumbled by panic-peddling a story last week on early prisoner release that lacked foundation in fact.

Designed as an attack on Gov. Quinn, something Quinn's Democratic opponent Dan Hynes did masterfully in the primary, Brady blundered.

The released prisoner in question is 21-year-old Jonathan Phillips, who has recently been charged with a new crime -- murder. The fact is that Phillips, a convicted carjacker, was by all accounts -- except Brady's -- released back in November within established guidelines and -- here's the important point -- not because of Quinn's two controversial, discontinued prisoner release programs.

At a press conference in Springfield, Brady was flanked by Senate and House Republican leaders Christine Radogno and Tom Cross.

It had the feel of one of those "Saturday Night Live" congressional skits where the characters playing Nancy Pelosi and Joe Biden look like they'd rather be undergoing dental surgery.

Brady's defenders contend reporters were out to sandbag their guy. And that news accounts overlooked or de-emphasized what Brady was really there to talk about: his bill requiring the state to post information and photos of all early release inmates. The legislation is headed to a vote before the full Senate.

What Brady did not seem to know until reporters told him was that the Illinois Department of Corrections had already begun posting early release inmates on its Web site.

(Note to Brady: preparation, preparation, preparation.)

There is no question, however, that the long knives are out.

Just as Pat Quinn, the accidental, novice governor, stumbled and fumbled on issues -- including early release -- after taking office a year ago, Brady is hitting his own learning curve.

Make this a teachable moment, therefore.

The tanked economy, the state budget crisis and the roadkill specter of Rod Blagojevich on trial will certainly aid the Republican quest to regain the governor's mansion.

But it's no slam-dunk.

Brady won his primary victory Downstate, where Democrat Dan Hynes also did far better than Quinn. But Brady's challenge is in Cook and the collar counties, where more than half of the votes will come. And where Republican governors in years past have occupied the moderate center, not the conservative right.

Brady may upend the conventional wisdom.

But he's going to have to do better in dodging the minefield of his own creation.

Has your paycheck taken a hit? You're not alone

2010-03-06T09:58:00.000-08:00

Has your paycheck taken a hit? You're not alone
COOK COUNTY | If you're not a teacher or in health care or 'professional services,' chances are your pay has shrunk in the last year -- but things are looking up
BY SANDRA GUY Staff Reporter
Copyright by The Chicago Sun-Times
March 6, 2010
http://www.suntimes.com/business/2087395,CST-NWS-wages07.article

If it feels like your paycheck has been shrinking, you're not alone.

Last year, wages in Cook County shrank 1.2 percent from midyear 2008, according to the latest midyear figures from the U.S. Bureau of Labor Statistics.

» Click to enlarge image

From top left, clockwise: Geraldine Kimerough an IT professional, Tom Stillwell a law clerk in Albany Park, Natalize Zavis an accountant, and Rick Spencer a Cook County employee all say they've felt the squeeze of a pay cut and the rough economy.

(Scott Stewart/Sun-Times)

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That's the first decline in pay here since the government began compiling such data in 2002.

Only a few types of workers saw pay gains:

• State and local government workers.

• Educators.

• Health care workers.

• And lawyers, accountants and others in "professional services."

Overall, 18 percent of Chicago area employers cut their workers' pay last year, according to a survey by the Management Association of Illinois.

But there are signs that things will be turning around. Chicago area companies' pay plans for 2010 show that businesses that froze wages last year are planning to start raising pay this year. And average hourly earnings nationwide have gone up 1.9 percent in the last 12 months, according to the government's monthly jobs report for February.

For now, though, most workers in the Chicago area -- union and non-union alike -- are still facing a pay squeeze. That includes involuntary -- and unpaid -- furloughs, higher health insurance premiums and frozen or reduced pension and 401(k) contributions.

Geraldine Kimerough is one of them.

"I didn't get a raise, and they increased the benefit deductions from my paycheck, so I'm making less," says Kimerough, 49, an information technology worker from Roselle. "I don't like to call it a pay cut because that makes me feel bad. It cuts into my fun money. I like to go on vacation to places that are hot -- Phoenix or Las Vegas. But I won't this year. What's the point if you have nothing to spend when you get there?"

Even those who work in professional services -- jobs that, on average, saw pay grow -- are under pressure.

"I got a raise and a bonus this year, but they were both half the size they normally are," says Natalie Zavis, 28, a Chicago accountant. "I'm not happy about it. But, compared to everybody else, it's good, so I can't complain. I'm thankful to be working."

Nonunion workers at some of the area's biggest employers -- Motorola, Sears and Navistar International -- saw their base pay frozen in 2009.

Unionized employees continue to work under contracts that call for pay increases. But they're facing delays in contract negotiations and increased pressure because of layoffs and their employers hiring more part-time workers, union spokesmen say.

Unemployment now stands at 9.7 percent nationally. In the Chicago area, it's even worse -- 11.1 percent.

Declines in pay and in wage growth reflect "the hidden cost of this recession," says Heidi Shierholz, a labor economist with the Economic Policy Institute, a Washington, D.C., think tank.

"People are hanging on to what they have, but they are feeling this recession in terms of reduced hours and reduced paychecks," says Shierholz.

And the future? Economists are projecting that unemployment will go no lower than 8 percent for the next two years before reaching 5.3 percent in 2014, according to the Congressional Budget Office.

For now, Shierholz says, there's nothing to push wages higher.

"Employers don't have to pay a wage premium to keep or to get good workers when unemployment is high," she says. "Wage growth will take this on the chin for years to come . . . . People at the middle level of income will really take the hit."

Where pay stands -- A sampling of Chicago-area employers

CHICAGO PUBLIC SCHOOLS

Last year, most employees at the Chicago Public Schools' central office had a pay freeze and also six unpaid furlough days -- which amounted to a 2.2 percent pay cut. This year, they face another pay freeze and three weeks of furloughs, which would reduce their pay by 5.7 percent. Teachers got a 4 percent raise under their contract. But top school officials have warned that the district can't afford the 4 percent raise this year. They want concessions from the Chicago Teachers Union, such as a pay freeze or furlough days. If the union doesn't agree, the district has the authority to increase class sizes and lay off teachers.

COOK COUNTY

On average, the county government's nonunion work force -- about 25 percent of the total of 24,000 employees -- gets 2 percent annual wage hikes, with "step" increases based on job title, experience and years of service. And 2009 was no different, said Joe Sova, who heads Cook County's human resources office. It's more difficult to track an average for unionized county workers, who are represented by four major unions and covered by about 50 collective-bargaining agreements. The Services Employees Union International has roughly 3,000 employees -- more than half of those working in health and hospitals and the rest scattered throughout the county government -- who have been working without a contract since Nov. 30, 2008. That means pay has been frozen for those workers, except for the step increases.

CITY OF CHICAGO

Nonunion city employees and civilian union city employees saw their wages reduced by a net 1.5 percent from 2008 to 2009. Their pay rose 3 percent in January 2009 -- the first increase for nonunion employees since January 2007. Most unionized non-police or fire employees have received annual increases for that same two-year period. But, through reduced workweeks and required unpaid days, most ended up with a 4.5 percent wage reduction in July 2009 -- with the exception of members of the American Federation of State, County and Municipal Employees and the Teamsters, who chose layoffs of their members over pay reductions. Because police and fire labor contracts have been under negotiation, and their unions having chosen not to participate in the furloughs, wages for those workers remained level from 2008 to 2009. Also, if the sworn unions are awarded pay increases through arbitration, the city will pay those increases retroactively. For 2010, nonunion and civilian union city employees will see, on average, a 9 percent reduction in wages resulting from a full year's worth of reduced workweeks, or furlough days and unpaid holidays. The 5,000 City of Chicago employees who are members of AFSCME got a negotiated 3 percent pay raise in 2009 and will receive a 3 percent raise this year. AFSCME members did not accept Mayor Daley's demand to take unpaid holidays and furlough days, but they did have to concede to the city's mandatory three unpaid shutdown days, which amounts to a 1.15 percent pay cut.

STATE OF ILLINOIS

AFSCME's 40,000 members who work for the state received a 2.75 percent pay raise for the 2009 budget year and another 2.5 percent raise this year. They have deferred another 0.5 percent raise slated to go into effect in July and are being encouraged to take voluntary, unpaid furlough days because of the state's budget crisis.

CTA

The CTA's unions have negotiated annual salary increases of 3.5 percent a year over the next two years. The CTA has asked unions to forgo this year's increase, as well as to accept other cuts, to help address a $95.7 million budget deficit. But the unions have refused, and, on Feb. 7, the CTA laid off 1,057 workers and cut bus service by 18 percent and L service by 9 percent. Nonunion CTA employees had no pay raises in 2009 and none this year. In 2009, upper management took three unpaid furlough days and three unpaid vacation days. This year, all nonunion employees will take from six to 12 furlough days, depending on their salary, plus six unpaid holidays. Employees who make more than $70,000 have to take the maximum of 16 unpaid days this year. Also, all CTA employees -- union and nonunion -- have seen the amount of their pension contributions increase from 3 percent three years ago to 6 percent in 2009 and to 8.35 percent this year.

NAVISTAR

Navistar -- a Warrenville-based truck manufacturer suffering through the worst truck market in 41 years -- froze base salaries for nonunion workers in 2009. No decision has been made on merit-pay increases for 2010, according to the company.

MOTOROLA

At Schaumburg-based Motorola, U.S.-based employees' base pay was frozen last year and this year. But workers still received promotions, equity grants and bonuses for superior performance and will again this year, the company said.

SEARS

Sears hunkered down in 2009 because of poor retail sales and the economic downturn, but the Hoffman Estates-based retailer said it will reinstate pay increases this year for employees deemed to be high-performing.

GRAINGER

Grainger, a facilities-maintenance supplier based in Lake Forest, plans to reinstate merit pay raises this year for eligible employees, after freezing them for executive and salaried employees in 2009.

INTEGRYS

Employees of Integrys Energy Group, the parent company of Peoples Gas, gave eligible nonunion employees a 3.2 percent base pay increase in 2009 and plans a 2 percent base-pay increase this year. But, because of the recession, the company is requiring those employees to take one week of unpaid furlough this year -- which amounts to no pay increase this year.

New York Times Editorial: The Democrats’ Choice

2010-03-06T09:45:00.000-08:00

New York Times Editorial: The Democrats’ Choice
Copyright by The New York Times
Published: March 3, 2010
http://www.nytimes.com/2010/03/04/opinion/04thu1.html?ref=global

Republicans’ lock-step opposition to comprehensive health care reform seems to be as much a matter of politics as principle. But either way, they have made clear that there is no dialogue or any possible compromise that will persuade them to change their minds.

That means it’s up to Congressional Democrats to move legislation forward — or throw away a once-in-a-generation opportunity to fix this country’s broken health care system.

On Wednesday, President Obama called on Congress to quickly take an up-or-down vote. He and Democratic leaders in Congress are going to have to work overtime to corral skittish members of their caucus. And Mr. Obama is going to have to keep making the case to the American people that reform is essential for all Americans’ security and for the nation’s future fiscal health.

The most straightforward way to enact reform would be for the House — which only needs a majority — to approve the bill passed by the Senate and send it straight to the president for his signature. Unfortunately, House Democrats appear unwilling to do that.

Liberal members of the caucus think the Senate bill should spend more money to cover more people and provide more generous subsidies. Fiscal hawks are nervous about the projected costs of either bill. And legislators who strongly oppose abortion think the restrictions on coverage for abortion in the Senate’s bill are too weak.

The multiple sniping has forced the Democrats to consider amending the Senate bill by “reconciliation,” a procedure that can sidestep a Republican filibuster.

Don’t be misled by Republican charges that the president is planning to “ram through” reform with a rarely used maneuver. The Senate already has approved its bill with a 60-vote majority. Both parties have used reconciliation in the past. The Republicans happily used it to approve the Bush tax cuts in 2001 and 2003.

Senate Democrats should be able to muster the 51 votes needed. So what will it take to win over the House?

Liberal Democrats are right that the Senate bill is too stingy. More money should be added to make subsidized insurance affordable and to help states pay for expanding their Medicaid rolls. That would drive up the cost somewhat and make fiscal conservatives even more nervous. Yet there is much in the Senate bill for them.

The two most important points they — and all Americans — need to remember is that the Senate and House bills are fully paid for by tax revenues and budget savings, and both would reduce future deficits.

The Senate bill also has two additional cost-control mechanisms: a tax on high-cost insurance plans designed to push people toward cheaper plans, and an independent board to push cost-cutting measures into the Medicare program. Both could probably be strengthened in reconciliation.

Neither the liberals nor the fiscal hawks will be able to get everything they want. Mr. Obama and Congressional leaders will have to persuade both camps that failure is the worst option of all.

Do House liberals really want to deny 30 million uninsured Americans the chance at coverage? Do House deficit hawks want the deficit to rise even more? Because without reform, there are no plans to rein in the relentless rise of medical costs and the Medicare obligation.

The issue of abortion coverage can’t be addressed in a reconciliation bill that must deal only with budgetary matters. The Senate bill already has onerous provisions that would likely discourage insurers on new exchanges from offering policies that cover abortions. The House bill is even more restrictive. Both are outrageous intrusions on a woman’s right to make health care decisions.

House Democrats who say they cannot accept the Senate’s abortion provisions must ask themselves a fundamental question: Are they willing to scuttle their party’s signature domestic issue and a reform that this country desperately needs, rather than accept the almost-as-tough language of the Senate bill?

U.S. Aiding Somalia in Its Plan to Retake Its Capital

2010-03-06T09:41:00.000-08:00

U.S. Aiding Somalia in Its Plan to Retake Its Capital
By JEFFREY GETTLEMAN
Copyright by The New York Times
Published: March 5, 2010
http://www.nytimes.com/2010/03/06/world/africa/06somalia.html?ref=global-home

MOGADISHU, Somalia — The Somali government is preparing a major offensive to take back this capital block by crumbling block, and it takes just a listen to the low growl of a small surveillance plane circling in the night sky overhead to know who is surreptitiously backing that effort.

“It’s the Americans,” said Gen. Mohamed Gelle Kahiye, the new chief of Somalia’s military, who said he recently shared plans about coming military operations with American advisers. “They’re helping us.”

That American assistance could be crucial to the effort by Somalia’s government to finally reassert its control over the capital and bring a semblance of order to a country that has been steeped in anarchy for two decades. For the Americans, it is part of a counterterrorism strategy to deny a haven to Al Qaeda, which has found sanctuary for years in Somalia’s chaos and has helped turn this country into a magnet for jihadists from around the world.

The United States is increasingly concerned about the link between Somalia and Yemen, a growing extremist hot spot, with fighters going back and forth across the Red Sea in what one Somali watcher described as an “Al Qaeda exchange program.”

But it seems there has been a genuine shift in Somali policy, too, and the Americans have absorbed a Somali truth that eluded them for nearly 20 years: If Somalia is going to be stabilized, it is going to take Somalis.

“This is not an American offensive,” said Johnnie Carson, the assistant secretary of state for Africa. “The U.S. military is not on the ground in Somalia. Full stop.”

He added, “There are limits to outside engagement, and there has to be an enormous amount of local buy-in for this work.”

Most of the American military assistance to the Somali government has been focused on training, or has been channeled through African Union peacekeepers. But that could change. An American official in Washington, who said he was not authorized to speak publicly, predicted that American covert forces would get involved if the offensive, which could begin in a few weeks, dislodged Qaeda terrorists.

“What you’re likely to see is airstrikes and Special Ops moving in, hitting and getting out,” the official said.

Over the past several months, American advisers have helped supervise the training of the Somali forces to be deployed in the offensive, though American officials said that this was part of a continuing program to “build the capacity” of the Somali military, and that there has been no increase in military aid for the coming operations.

The Americans have provided covert training to Somali intelligence officers, logistical support to the peacekeepers, fuel for the maneuvers, surveillance information about insurgent positions and money for bullets and guns.

Washington is also using its heft as the biggest supplier of humanitarian aid to Somalia to encourage private aid agencies to move quickly into “newly liberated areas” and deliver services like food and medicine to the beleaguered Somali people in an effort to make the government more popular.

Whenever Somalia has hit a turning point in the past, the United States has been there, sometimes openly, sometimes not.

In 1992, shortly after the central government imploded, Marines stormed ashore to help feed starving Somalis. In early 2006, when an Islamist alliance was poised to sweep the country, the C.I.A. teamed up with warlords to stop them, and when that backfired, the American military covertly supported an Ethiopian invasion.

Last summer, when Somalia’s transitional government was nearly toppled by insurgents linked to Al Qaeda, the American government hastily shipped in millions of dollars of weapons.

Since then, the insurgents’ imperative to retake the capital, and eventually other parts of the country, has grown, American officials say, as Al Qaeda has even considered relocating some of its leaders from Pakistan to here.

American officials said several high-ranking Qaeda agents were still active in Somalia, including Fazul Abdullah Mohamed, one of the suspected bombers of the American Embassies in Kenya and Tanzania in 1998, who is now believed to be building bombs for the Islamist insurgent group known as Al Shabab.

The Somali government has tried limited offensives before and has failed, leaving much of the country in the hands of Al Shabab, who have chopped off heads, banned music and brought a harsh and alien version of Islam to Somalia.

But officials say that this offensive, or at least the preparations for it, feels different. First, the government has the advantage of numbers, about 6,000 to 10,000 freshly trained troops, compared with about 5,000 on the side of Al Shabab and its allies.

In the past six months, Somalia has farmed out young men to Djibouti, Ethiopia, Uganda, Kenya and even Sudan for military instruction and most are now back in the capital, waiting to fight. There are also about 5,000 Ugandan and Burundian peacekeepers, with 1,700 more on their way, and they are expected to play a vital role in backing up advancing Somali forces.

The government is also better armed and equipped. Parked in neat rows behind Villa Somalia, the president’s hilltop villa in the center of Mogadishu, are newly painted military trucks, tanks, armored personnel carriers and dozens of “technicals,” pickup trucks with their windshields sawed off and a cannon riveted on the back of each one. The government also recently bought 10 Chevrolet ambulances.

There seems to be a qualitative difference, too. Somalia’s forces are now led by General Gelle, a colonel in Somalia’s army decades ago who most recently was an assistant manager at a McDonald’s in Germany. He is known among Somali war veterans as one of the best Somali officers still alive.

Many Somalia observers are confident that the offensive will push back Al Shabab. The question is what will happen afterward. “To take you need force, to hold you need discipline,” said Ahmed Abdisalam, a deputy prime minister in the last Somali government. “What’s going to guarantee those troops don’t turn on the population?”

Or turn on themselves: many Somalis worry the troops could split along clan lines, which is what brought down Somalia’s government in 1991. One lingering criticism of Somalia’s president, Sheik Sharif Sheik Ahmed, is that he has been too holed up in Villa Somalia and has not engaged with local power brokers and played clan politics better.

Even though there is a new religious overlay to Somalia’s civil war, with a moderate Islamist government battling fundamentalist Islamist insurgents, clan connections still matter and could spell success — or disaster.

That said, the government did recently strike a political agreement with a powerful moderate Islamist militia, which may join the offensive from the inland regions of the country. There has also been talk of a militia made up of Somali refugees living in Kenya advancing from the Kenyan side.

Why a VAT Tax Is Where It's At Adoption of a value-added tax in the U.S. would be a fair, efficient way to help restore the country's financial health

2010-03-06T08:39:00.000-08:00

Why a VAT Tax Is Where It's At - Adoption of a value-added tax in the U.S. would be a fair, efficient way to help restore the country's financial health, argues Bloomberg BusinessWeek columnist Chris Farrell
By Chris Farrell
Copyright by Business Week
March 5, 2010, 10:30PM EST
http://www.businessweek.com/investor/content/mar2010/pi2010035_752130.htm?campaign_id=widget_topStories

FINANCE

The U.S. government's debt is triple-A rated, and with good reason. Could the adoption of a value-added tax help keep it that way for generations to come? Simply put: yes.

The U.S., as both the world's wealthiest economy and a vibrant democracy, remains the investing safe haven of choice in times of financial and political turmoil. Witness the flight of capital into U.S. Treasury securities from investors around the world during the Great Recession, a remarkable measure of trust considering the epicenter of the financial crisis was the U.S. housing market. Treasury securities are the gold standard of the global capital markets. The embrace of the full faith and credit of the American taxpayer and the federal government are worth honoring.

Now, there's no shortage of folks worried about the federal government's budget deficit and soaring debt levels. The concern is misplaced in the short-run. Much of the current fiscal situation largely reflects the cost of combating the Great Recession, the worst downturn since the 1930s. But long-term, the budget deficit and steep government debts are an ominous combination. The underlying budgetary issue is the Holy Trinity of entitlement programs: Social Security, Medicare, and Medicaid, with the primary emphasis on health care. Spending on those three programs alone accounts for about half of the government's noninterest spending. It is only going to go up with an aging population.

LINES THAT GO STRAIGHT UP

The Woodstock Generation, aka the roughly 76 million baby boomers born between 1946 and 1964, is getting ready to retire. The oldest boomers were eligible to start collecting Social Security at age 62 in 2008. They'll be eligible for Medicare next year. Eventually, over the next half-century or so, if the nation's total tax burden stays around its current 18% of gross domestic product, Uncle Sam will end up borrowing to pay interest on the interest, according to Rudolph G. Penner, economist at the nonpartisan Urban Institute. "At that point, total spending, the deficit, and the national debt begin to go straight up," he writes.

Clearly, the long-term fiscal numbers are unsustainable. Something has to give long before the fiscal disaster strikes, Yet any solution will take years to come into law, so now is a good time to get started. It's long past time to lay to rest such deficit solutions as "starve the beast." Mantras such as "tax cuts pay for themselves" aren't true no matter how often repeated. Social Security, Medicare, and Medicaid are popular programs that aren't going to fade away. The government may take on even greater obligations with health-care reform. Indeed, between the aftermath of 9/11 and the Great Recession, the government has taken on enormous responsibilities, from waging war on two fronts and boosting domestic security to expanding Medicare and bailing out the banks. Any viable solution will have to involve both the spending and the tax side of the fiscal ledger.

That means it's time to consider a value-added tax, or VAT. Unlike a sales tax, which is levied by 45 states and many municipalities only on the retail consumption of a good or service, a VAT is collected at each stage of production and distribution rather than just from retailers. A VAT is a highly efficient tax from an economic point of view. It's essentially a flat consumption tax, and the way it's collected minimizes compliance problems. More than 100 countries use a VAT to help fill their coffers. New Zealand, for instance, has a 12.5% VAT, and Denmark's is 25%.

"FRENCH FOR BIG GOVERNMENT"

To be sure, a VAT has never gained much traction in the U.S. Many liberals oppose it because they believe it falls heaviest on the poor and elderly. Many conservatives dislike it because it's a new tax—and an efficient one. "The greater (but often unspoken) fear of many conservatives is that a VAT would be too efficient a revenue-raiser," writes Joel Slemrod, tax economist at the Stephen M. Ross School of Business at the University of Michigan. A number of conservatives worry that an efficient VAT might allow government to get even bigger. Perhaps Grover Norquist, the longtime tax opponent at the conservative lobbying group Americans for Tax Reform, put the opposition best. "VAT," he said, "is French for big government."

Yet it's the very efficiency of the VAT that makes it attractive for taking a large step toward meeting America's future obligations. The VAT works best as a supplement to the income tax. Indeed, President Bush's bipartisan White House commission on tax reform in the middle of the decade did consider the option. Businesses would pay tax on the difference between their sales receipts and the cost of their inputs purchased from other businesses. The VAT would be joined with a greatly simplified income tax system.

It's an idea worth reviving. No one really defends the current income tax system anymore. It's far too complicated, with all kinds of loopholes and special interest favors, from various tax-sheltered retirement savings plans to multiple tax deductions and credits for home ownership to separate tax treatment for asset sales. Worse yet, arbitrary phase-outs of various levies, such as the estate tax, needlessly complicate the tax code and add to a widespread sense that it's fundamentally unfair. Congress and the Administration could reward taxpayers with serious tax simplification. They could lower income tax rates greatly by broadening the tax base through eliminating as many credits and deductions and shelters as are politically practical. The highly efficient VAT would then supplement the income tax to restore long-term fiscal discipline.

MELDING EINSTEIN WITH EMERSON

The University of Michigan's Slemrod wonderfully opened an essay on tax reform by quoting Ralph Waldo Emerson: "We ascribe beauty to that which is simple; which has no superfluous parts; which exactly answers its end." He ended the discussion with Albert Einstein's legendary admonition that "everything should be made as simple as possible, but not simpler." Taxation involves contentious issues of ethics, values, efficiency, and social goals, Slemrod says. Pure simplicity is possible only on paper, not in the real world.

But much can be done with the tax code, keeping Einstein's caution in mind but moving closer to Emerson's standard of beauty. Simplify the tax code and embrace the VAT. Together, the actions would show that the American democracy can run a sound fiscal policy. Investors around the world could continue to sleep soundly, knowing their money is safe in U.S. Treasuries.

Farrell is contributing economics editor for BusinessWeek. You can also hear him on American Public Media's nationally syndicated finance program, Marketplace Money, as well as on public radio's business program Marketplace. His Sound Money column appears on BusinessWeek.com.

New York Times Editorial: Refereeing the Health Care Debate

2010-03-06T07:45:00.000-08:00

New York Times Editorial: Refereeing the Health Care Debate
Copyright by The New York Times
Published: March 5, 2010
http://www.nytimes.com/2010/03/06/opinion/06sat4.html?th&emc=th

Even before the health care showdown begins, Republican lawmakers have begun questioning the fairness of the Senate parliamentarian, the obscure but well respected career expert who must referee from the wings when points are challenged in floor debate.

The Republicans have done a great deal in the cause of obstructionism, but it’s patently absurd to pick on the lawyerly, apolitical Alan Frumin. He has worked in the office for 33 years and has been accepted by both Republican and Democratic majorities to be the arbiter when appeals were made to Senate rules and tradition.

No one will envy the parliamentarian if the Democrats use the reconciliation process to restore majority rule — 51 votes for approval — on health care reform and foil endless Republican demands for 60-vote supermajorities. Reconciliation was created in 1974 as a budgetary prod and to restrain demagogic filibusters.

The Republicans used it repeatedly when they held the majority — notably to pass the previous Bush administration’s huge upper-bracket tax cuts that helped balloon the budget deficits that are suddenly such a concern to the same Republicans.

“Is there something wrong with majority rules?” asked Senator Judd Gregg when he was in the Republican majority opposing a Democratic filibuster to protect the Arctic National Wildlife Refuge from oil drilling. Now Mr. Gregg denounces reconciliation as an underhanded violation of the will of the people.

He insists that it has never been used for installing such a sweeping program. But that is not true. The health care bill has already been approved by a 60-vote majority. The coming debate will be over amendments. Beyond that, reconciliation was a tool in such major changes as welfare reform, children’s health insurance and the balanced budget mandates of the 1990s.

Mr. Frumin is not the issue. The true issue is whether the long-delayed effort to reform health care will rise or fall on the merits.

Apple iPad to Arrive in Stores on April 3

2010-03-06T07:42:00.000-08:00

Apple iPad to Arrive in Stores on April 3
By NICK BILTON
Copyright by The New York Times
March 5, 2010, 9:45 am
http://bits.blogs.nytimes.com/2010/03/05/apple-ipad-arrives-in-stores-on-april-3/?th&emc=th

Apple iPad announcementapple.com An announcement on Apple’s Web site that the iPad will arrive in stores on April 3.

Apple announced on Friday that the Wi-Fi versions of its long-awaited iPad will arrive April 3 in stores in the United States. The models that can tap into AT&T’s 3G wireless data network will be available in late April.

Customers can pre-order the iPad on Apple’s Web site beginning next Friday.

Apple’s tablet computer is expected to ship with 12 new applications designed specifically for the device, and it will run almost all of the more than 150,000 applications available for the iPhone and iPod Touch.

Apple has been aiming the iPad squarely at e-book readers like Amazon.com’s Kindle. And in its news release Friday, Apple said that an updated version of its iBooks app that will include Apple’s iBookstore will be available as a free download on April 3 in the United States, with additional countries to be added later.

The company has been aggressively recruiting personnel for the new iBookstore, listing a variety of iBook-related job openings on its corporate job board — including “Manager, iBooks Asia Pacific & Canada,” “Independent Publisher Acct. Mgr., iBookstore” and a “Merchandising Manager, iBookstore.”

Apple said that pricing for the device will be the same as it initially announced in January:

iPad will be available in Wi-Fi models on April 3 in the United States for a suggested retail price of $499 for 16GB, $599 for 32GB, $699 for 64GB. The Wi-Fi + 3G models will be available in late April for a suggested retail price of $629 for 16GB, $729 for 32GB and $829 for 64GB. iPad will be sold in the United States through the Apple Store® (www.apple.com), Apple’s retail stores and select Apple Authorized Resellers.

Apple said the iPad will be available in both Wi-Fi and 3G models in late April in Australia, Canada, France, Germany, Italy, Japan, Spain, Switzerland and the United Kingdom, with more countries added later this year.

G.M. Plans to Reinstate 661 Dealerships

2010-03-06T07:41:00.001-08:00

G.M. Plans to Reinstate 661 Dealerships
By NICK BUNKLEY
Copyright by The New York Times
Published: March 5, 2010
http://www.nytimes.com/2010/03/06/business/06dealers.html?th&emc=th

DETROIT — General Motors, seeking to avoid a protracted legal battle as it focuses on increasing sales, said on Friday that it planned to reinstate 661 dealerships cut last year as part of its bankruptcy reorganization.
Enlarge This Image
Scott Olson/Getty Images

Larry Noga working last May at the Balzekas Chrysler dealership in Chicago. The dealership was slated to lose its franchise.

That is more than half of the roughly 1,100 dealers who filed to challenge G.M.’s terminations through an arbitration process established by Congress.

G.M. said that it was calling and sending letters to the dealers being allowed to stay open and that they would receive notification by Monday.

“By doing this, we save a lot of time, energy and dollars, saving us and dealers from going through what could be a very long arbitration process,” Jim Bunnell, G.M.’s general director of dealer network support, said in a conference call with reporters.

Mark L. Reuss, the president of G.M. North America, said the dealers to be reinstated were chosen based on business criteria, not because they were likely to win in arbitration or to put up a costly fight.

“We’re trying to do the right thing for our dealerships, for G.M. and for the taxpayer, quite frankly,” Mr. Reuss said.

The arbitration process was established by Congress after its members were inundated by complaints from G.M. dealers in their districts.

But as its sales fell last year by about 50 percent, the company said it needed to thin out its dealership network so it and the remaining dealers could be more profitable.

Congress has made no similar demands that G.M. revive its factories.

Representative Steven C. LaTourette, a Republican of Ohio who helped establish the arbitration process, said the loss of dealerships affected individual communities. “You’re talking almost 40,000 people going back to work, potentially. The car dealer, in many cases, supports the Little League and supports the Chamber.” By forcing the dealerships to close, he said, “you’ve destroyed the fabric of some communities.” G.M. softened its opposition to the dealer cuts after Edward E. Whitacre Jr. became chief executive in December. It had more than 6,000 dealers before bankruptcy and now could have close to 5,000 when the arbitrations conclude. It had previously set a target of fewer than 4,000, but Mr. Bunnell said on Friday that the reinstatements would not make G.M.’s dealership network too large.

G.M. had been concentrating on consolidating its operations to match its diminished market share, but Mr. Whitacre has pushed people at all levels of G.M. to focus primarily on selling more vehicles. Having more dealerships could help him accomplish that goal.

The dealers that G.M. is allowing to stay open will have 10 days to review and sign the letter of intent they will receive from the company, then 60 days to fulfill new requirements, including maintaining adequate capitalization and financing.

Meanwhile, 418 dealerships are still fighting to be reinstated at Chrysler, the other Detroit automaker to go through bankruptcy protection last year. Chrysler forced 789 dealerships to close last June.

“To some degree there’s been some precedent set,” said Michael Boudreau, a director with a consulting firm, O’Keefe & Associates in Bloomfield Hills, Mich. “The Chrysler dealers will probably dig in their heels and fight a little bit harder now.”

Many of the terminated G.M. dealers never announced their status publicly and continued to operate much like other dealers except that they were not allowed to order new vehicles from factories. Still, their inability to sell the most popular models since last May undoubtedly cost them customers and hurt G.M.’s overall sales.

In February, the Ford Motor Company outsold G.M. by 471 vehicles. If each of the dealers now being reinstated had been operating normally and sold just one additional vehicle last month, G.M. would have stayed in first place.

Separately Friday, G.M. appointed Patricia F. Russo, a former chief executive of the French telecommunications company Alcatel-Lucent, as its new lead outside director. Under a new bylaw, Ms. Russo, one of 10 people the Treasury Department appointed to G.M.’s board after the carmaker emerged from bankruptcy in July, was given the authority to convene special board meetings as needed.

Millions of Toyotas Recalled, None in Japan

2010-03-06T07:38:00.000-08:00

Millions of Toyotas Recalled, None in Japan
By HIROKO TABUCHI
Copyright by The New York Times
Published: March 5, 2010
http://www.nytimes.com/2010/03/06/business/global/06toyota.html?th&emc=th

TOKYO — Feeling her Toyota Mark X station wagon lurch forward at a busy intersection, Masako Sakai slammed on the brakes. But the pedal “had gone limp,” she said. Downshifting didn’t seem to work either.

Fumio Matsuda, a Japanese consumer advocate. He said Japanese authorities saw consumer activists as dangerous.

“I tried everything I could think of,” Mrs. Sakai, 64, said, as she recently recalled the accident that happened six months ago.

Her car surged forward nearly 3,000 feet before slamming into a Mercedes Benz and a taxi, injuring drivers in both those vehicles and breaking Mrs. Sakai’s collarbone.

As shaken as she was by the accident, Mrs. Sakai says she was even more surprised by what happened after. She says that Toyota — from her dealer to headquarters — has not responded to her inquiries, and Japanese authorities have been indifferent to her concerns as a consumer.

Mrs. Sakai says the Tokyo Metropolitan Police urged her to sign a statement saying that she pressed the accelerator by mistake — something she strongly denies. She says the police told her she could have her damaged car back to get it repaired if she made that admission. She declined.

The police say it was a misunderstanding and that they kept her car to carry out their investigation.

But veterans of Japan’s moribund consumer rights movement say that Mrs. Sakai, like many Japanese, is the victim of a Japanese establishment that values Japanese business over Japanese consumers, and the lack of consumer protections here.

“In Japan, there is a phrase: if something smells, put a lid on it,” said Shunkichi Takayama, a Tokyo-based lawyer who has handled complaints related to Toyota vehicles.

Toyota has recalled eight million cars outside Japan because of unexpected acceleration and other problems, but has insisted that there are no systemic problems with its cars sold in Japan. The company recalled the Prius for a brake problem earlier this year.

Critics say many companies benefit from Japan’s weak consumer protections. (The country has only one full-time automobile recall investigator, supported by 15 others on limited contracts.)

In a case in the food industry, a meat processor called Meat Hope collapsed in 2008 after revelations that it had mixed pork, mutton and chicken bits into products falsely labeled as pure ground beef, all under the noses of food inspectors.

A 2006 police inquiry into gas water heaters made by the manufacturer Paloma found that a defect had resulted in the deaths of 21 people over 10 years from carbon monoxide poisoning.

Paloma initially insisted that users had tampered with the heaters’ safety device; the company ultimately admitted that the heaters were at fault — and that executives had been aware of a potential problem for more than a decade. Executives are now being charged with professional negligence, and a court verdict is due in May.

When it comes to cars, the rapid growth of the auto industry here and of car ownership in the 1960s and ’70s was accompanied by a spate of fatal accidents. A consumer movement soon emerged among owners of these defective vehicles.

The most active was the Japan Automobile Consumers Union, led by Fumio Matsuda, a former Nissan engineer often referred to as the Ralph Nader of Japan. But the automakers fought back with a campaign discrediting the activists as dangerous agitators. Mr. Matsuda and his lawyer were soon arrested and charged with blackmail. They fought the charges to Japan’s highest court, but lost.

Now, few people are willing to take on the country’s manufacturers at the risk of arrest, Mr. Matsuda said in a recent interview. “The state sided with the automakers, not the consumers,” he said.

It has become difficult for drivers to access even the most elementary data or details on incidents of auto defects, says Hiroko Isomura, an executive at the National Association of Consumer Specialists and a former adviser to the government on auto recalls. “Unfortunately, the Automobile Consumers Union was shut down,” she said. “No groups like that exist any more.”

For the government to order a recall, it must prove that automobiles do not meet national safety standards, which is difficult to do without the automakers’ cooperation. Most recalls are done on a voluntary basis without government supervision.

An examination of transport ministry records by The New York Times found that at least 99 incidents of unintended acceleration or surge in engine rotation had been reported in Toyotas since 2001, of which 31 resulted in some form of collision.

Critics like Mr. Takayama charge that the number of reports of sudden acceleration in Japan would be bigger if not for the way many automakers in Japan, helped by reticent regulators, have kept such cases out of official statistics, and out of the public eye.

In 2008, about 6,600 accidents and 30 deaths were blamed on drivers of all kinds of vehicles mistakenly pushing the accelerator instead of the brakes, according to the Tokyo-based Institute for Traffic Accident Research and Data Analysis.

But Mr. Takayama has long argued that number includes cases of sudden acceleration. “It has become the norm here to blame the driver in almost any circumstance,” he said.

“Regulators have long accepted the automakers’ assertions at face value,” said Yukiko Seko, a retired lawmaker of the Japan Communist Party who pursued the issue in Parliament in 2002.

The police strongly deny pressuring drivers to accept the blame in any automobile accident. “All investigations into auto accidents are conducted in a fair and transparent way,” the Tokyo Metropolitan Police said in response to an inquiry by The Times.

Figuring out who is really to blame can be hard because of Japan’s lack of investigators.

Japan’s leniency has also meant that automakers here have routinely ignored even some of the safety standards for cars sold in the United States. Until the early 1990s, Japanese cars sold domestically lacked the reinforcing bars in car walls required of all vehicles sold in the United States. Critics say skimping on safety was one way automakers generated profits in Japan to finance their export drive abroad.

A handful of industry critics like Mr. Takayama and Ms. Seko have, over the years, voiced concern over cases of sudden acceleration in Toyota and other cars in Japan. Under scrutiny especially after the introduction of automatic transmission cars in the late 1980s, Toyota recalled five models because a broken solder was found in its electronics system, which could cause unintended acceleration.

In 1988 the government ordered a nationwide study and tests, and urged automakers to introduce a fail-safe system to make sure the brakes always overrode the accelerator. This month, more than 20 years later, Toyota promised to install a brake override system in all its new models.

Meanwhile, Toyota maintains a large share on the Japanese market, with about 30 percent. The Prius gas-electric hybrid remained the top-selling car in Japan in February despite the automaker’s global recalls, figures released Thursday showed.

But Japan’s pro-industry postwar order may be changing.

In 2009, in one of the last administrative moves by the outgoing government, a new consumer affairs agency was set up to better police defective products, unsafe foods and mislabeling.

The new government’s transport minister, Seiji Maehara, has been outspoken against Toyota.

He said last week that he would push to revamp the country’s oversight of the auto industry, including adding more safety investigators. The government has also said it was examining 38 complaints of sudden acceleration in Toyotas reported from 2007 through 2009, as well as 96 cases in cars produced by other automakers.

Toyota continues to deny there are problems with unintended acceleration in Japan.

“Yes, there have been incidents of unintended acceleration in Japan,” Shinichi Sasaki, Toyota’s quality chief, said at a news conference last week. “But we believe we have checked each incident and determined that there was no problem with the car,” he said.

Mrs. Sakai said she has called and visited her Toyota dealer, as well as Toyota Motor itself, but has not received a response.

A Toyota spokeswoman, Mieko Iwasaki, confirmed that the automaker had been contacted about complaints of a crash caused by sudden acceleration in September. She said, however, that she could not divulge details of how the company handled each case.

“We are investigating the accident alongside the police, and are cooperating fully with investigations,” she said. “Anything we find, we will tell the police.”

Makiko Inoue and Yasuko Kamiizumi contributed from Tokyo.

Jobless Rate Holds Steady, Raising Hopes of Recovery

2010-03-06T07:35:00.000-08:00

Jobless Rate Holds Steady, Raising Hopes of Recovery
By PETER S. GOODMAN and JAVIER C. HERNANDEZ
Copyright by The New York Times
Published: March 5, 2010
http://www.nytimes.com/2010/03/06/business/economy/06jobs.html?th&emc=th

The American economy lost fewer jobs than expected last month, bolstering hopes that the worst may finally be over in the wrenching event known as the Great Recession.

Job seekers are shown waiting to enter the UJA-Federation of New York’s job fair this week.

The monthly snapshot of the job market released by the Labor Department on Friday was hardly cause for celebration: about 36,000 jobs disappeared from the economy in February, while the unemployment rate remained unchanged at 9.7 percent.

Yet compared with monthly job losses of more than 650,000 a year earlier, and against a backdrop of recent news viewed as pointing to the possibility of a slide back into recession, most economists construed the report as a sign that a tenuous recovery might be gaining momentum.

“It’s strikingly good,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington, who has been skeptical about earlier signs of recovery. “It’s much better than it had been looking.”

The February job losses followed a drop of 26,000 in January. Most experts now expect the economy to begin steadily gaining jobs during the spring, as employers edge toward hiring.

But even as the report eased worries that the economy might tip back into decline, it did little to dislodge the widespread notion that the recession had given way to a tepid and tentative expansion, one unlikely to significantly cut the ranks of the jobless.

Nearly 15 million Americans were unemployed in February, and four in 10 had been there for six months or longer. The so-called underemployment rate — which counts people whose hours have been cut along with those working part time for lack of full-time positions — reached 16.8 percent, up from 16.5 percent in January.

Some labor experts say the downturn has accelerated a refashioning of the economy that has been under way for decades, eliminating jobs in less competitive industries — particularly manufacturing, and more recently, housing construction and financial services. In this view, many of those jobs are unlikely to return regardless of growth.

Yet, in other industries, jobs are already returning at a much faster pace than after the last two recessions, according to research by Lakshman Achuthan, managing director of the Economic Cycle Research Institute.

“It’s almost two separate Americas,” he said, meaning that much of the work force is already seeing the return of work opportunities, while those mired in long-term joblessness are facing the worst prospects since the Great Depression. “They have been left behind, and their problems are not solved by recovery.”

In Beaumont, Calif., nearly two years have passed since Rebecca Miranda lost her job as a hospital recruiter, losing her paycheck of about $4,000 a month for a $1,500 monthly unemployment check.

A single mother of a 2-year-old girl, she is barely paying her bills, while worrying that her exile from the workplace has eroded her worth. “I’ve been out of work so long, I’m going to be the last kind of person they are going to hire,” she said.

President Obama greeted the jobs report while touring a Virginia company that produces software aimed at helping lower energy use. There, he highlighted his administration’s embrace of cleaner-burning ventures as a way to create jobs.

“The country that leads in clean energy and energy efficiency today, I’m absolutely convinced, is going to lead the global economy tomorrow,” he told reporters. “I want that country to be the United States of America.”

On Wall Street, investors welcomed the jobs report, and stocks rose over 1.2 percent on Friday.

Labor experts say the economy must add more than 100,000 jobs a month just to keep pace with new entrants to the work force, so even a sustained surge in hiring would leave joblessness and anxiety for years to come.

“We’ve really hit the bottom, but we haven’t embarked on a robust recovery,” said Kathleen Stephansen, chief economist at Aladdin Capital Holdings.

Manufacturing added 1,000 jobs in February, on top of a larger increase in January, but some experts say that trend will soon wane because businesses that slashed inventories are merely rebuilding their stocks. Health care and education — both stalwart sources of growth throughout the downturn — added a net 32,000 jobs.

Construction lost 64,000 net jobs in February after a modest improvement in January.

The monthly jobs report is the dominant economic indicator and the subject of considerable debate among professional economists seeking to divine its message. The February report came draped in special uncertainty given heavy snowstorms during the month, slowing business.
Multimedia

In years past, job reports in snowy months have come in weak, then subsequently been revised upward sharply, a pattern that may hold this time.

But the report did little to resolve contrasting views of the basic dynamics at play, with economists in roughly two camps. Some say a now-tepid economic recovery will eventually become vigorous; others envision a long slog through relatively anemic growth. Optimists point to modest expansion on the factory floor and continued increases among temporary workers (whose ranks rose by 48,000 in February) as a sign that commerce has reawakened.

Even if manufacturing is merely growing because of a shift in inventories, they say, that is translating into paychecks that workers will spend at other businesses, generating new jobs.

In what some economists took as a sign that such an upward spiral had begun, raising confidence, consumer credit expanded by $5 billion in January, a 2.4 percent annualized rate, the Federal Reserve announced. That rise was led primarily by auto loans.

But others point to uncertainties gnawing at businesses and households as portents of subdued growth. After years of borrowing against home equity to finance buying sprees, many households are tapped out.

Housing prices fell in January, prompting worries of another downturn that could hit homeowners and banks — a fear enhanced by a growing wave of foreclosures.

Uncertainty itself is spawning uncertainty: Even healthy businesses are deferring expansion until they are sure of a recovery.

In Adrian, Mich., Brazeway, a refrigeration tubing manufacturer, has trimmed its work force more than 30 percent in the last two years, and now has about 900 employees.

Even as orders and production expand, Brazeway remains cautious about hiring, bringing on mainly temporary workers. The company has added only three permanent positions.

“We have people beating down our doors for jobs,” said its chief executive, Stephanie H. Boyse. “We’re in this mind-set of adding only the absolute must-haves, and the nice-to-haves stay on the back burner.”

Javier C. Hernandez contributed reporting.

In Final Push, Obama Urges ‘Up-or-Down’ Vote on Health - President Obama called for an up-or-down vote on the health care bill on Wednesday/Obama urge

2010-03-03T13:08:00.000-08:00

In Final Push, Obama Urges ‘Up-or-Down’ Vote on Health - President Obama called for an up-or-down vote on the health care bill on Wednesday.
By SHERYL GAY STOLBERG
Copyright by The New York Times
Published: March 3, 2010
http://www.nytimes.com/2010/03/04/health/policy/04health.html?ref=global-home

WASHINGTON — President Obama, making his final push for a health care overhaul, called Wednesday for Congress to set aside political gamesmanship and allow an “up-or-down-vote” on the measure, so that Democrats can pass the legislation and he can sign it into law, after nearly a year of debate.

“I believe the United States Congress owes the American people a final vote on health care reform,” Mr. Obama said in a brief 15-minute speech in the East Room of the White House. He called on Democratic leaders of both chambers to schedule a vote in the next few weeks, adding, “From now until then, I will do everything in my power to make the case for reform.”

Moments after Mr. Obama spoke, the White House announced that he would travel to Pennsylvania and Missouri next week to talk about the health legislation.

Wednesday’s remarks, made to a group of sympathetic medical professionals, many of them clad in traditional white lab coats, marked Mr. Obama’s entry into the end game of Washington’s long and divisive health care debate. With Republicans unified in opposition to the measure, Mr. Obama used his appearance to make the case to the public that while he is willing to accept Republican ideas, starting over, as Republicans are demanding, does not make sense.

He called on Democrats to stick with him.

“This has been a long and wrenching debate,” Mr. Obama said, adding that while health care “easily lends itself to demagoguery and political gamesmanship,” that is no reason “for those of us who were sent here to lead to just walk away.”

In the short 15-minute speech, the president avoided using the word “reconciliation,” the name for the parliamentary tactic that Democrats must now use to avoid a Republican filibuster of the bill. But senior advisers to the president made clear that is his plan.

“This has been laid out in a way that provides us the maximum flexibility to get it done,” Robert Gibbs, the White House press secretary, told a small group of reporters who gathered in his office before Mr. Obama spoke. But reconciliation could prove a heavy lift on Capitol Hill. At a bipartisan health forum at Blair House last week, Mr. Obama laid out an 11-page synopsis of his plan, without providing the House and Senate Democratic leadership with legislative language. It will now be up to Nancy Pelosi, the speaker of the House, and Harry Reid, the Senate majority leader, to produce that language, and then send it to the Congressional Budget Office for an analysis of how much the measure will cost. Getting that done in several weeks, as Mr. Obama says he expects, could prove difficult.

Friday will mark one year since Mr. Obama kicked off his plans for a major health care overhaul, with a high-profile forum at the White House that included lawmakers, insurance industry and hospital executives, medical professionals, representatives of the pharmaceutical industry and others with a stake in the debate.

On Wednesday, after 12 months of legislative hearings, town hall meetings, speeches, polls and debates, Mr. Obama made clear that he expects Democrats to line up behind the plan, no matter how skittish they feel about their re-election prospects in the fall.

“The American people want to know if it’s still possible for Washington to look out for their interests and their future,” Mr. Obama said. “They are waiting for us to act. They are waiting for us to lead. And as long as I hold this office, I intend to provide that leadership. I don’t know how this plays politically, but I know it’s right. And so I ask Congress to finish its work, and I look forward to signing this reform into law.”

Since he convened last week’s forum at Blair House, Mr. Obama has been laying the groundwork for the course he is now pursuing. He concluded the Blair House meeting by saying he was open to incorporating Republican ideas, but that Democrats would go forward on their own if he did not see any evidence of Republican cooperation.

On Tuesday, in a letter to Congressional leaders, Mr. Obama said he was open to pursuing four specific ideas raised by Republicans during the Blair House forum, including establishing “health courts” to resolve medical malpractice claims and encouraging the use by individuals of medical savings accounts that get favorable tax treatment.

But even as Mr. Obama sent the letter, his chief of staff, Rahm Emanuel, and top health policy adviser, Nancy Ann DeParle, went to Capitol Hill to meet with House Speaker Nancy Pelosi and Senate Democratic leader Harry Reid and prepare a final legislative package that they would be able to pass with simple majorities in each house. The leaders are still working on the details of that package. “We’re getting closer,” Jim Manley, Mr. Reid’s spokesman, said shortly before the president’s remarks. He did not elaborate.

With Republicans accusing Democrats and Mr. Obama of trying to ram the bill through Congress, the president and his allies are making the case that in fact, comprehensive health legislation has already passed both chambers, garnering a majority in the House and a supermajority in the Senate. Technically, they say, reconciliation will be used only to pass a small package of fixes to the original bills.

The health bill, Mr. Obama said, “deserves the same kind of up-or-down vote that was cast on welfare reform, the Children’s Health Insurance Program, Cobra health coverage for the unemployed, and both Bush tax cuts,” Mr. Obama said, citing other measures that have been adopted using reconciliation.

Under their tentative plan, the House would first approve the bill that was adopted by the Senate on Christmas Eve. Mr. Reid and Ms. Pelosi would also draft a package of changes to be approved by both chambers in a separate reconciliation bill. The reconciliation package would effectively smooth out some of the differences between the House and Senate versions.

The whole bundle would be sent to Mr. Obama to sign into law.

But while that sounds feasible, carrying out the strategy could yet prove tricky. Senate Republicans could try offering countless amendments as a delaying tactic. And Ms. Pelosi could have difficulty rounding up the necessary votes to pass the reconciliation package in the House, because it will strip out anti-abortion language that some Democrats favor.

Obama urges Congress to 'finish its work' on reform bill
By William Branigin and Michael D. Shear
Copyright by The Washington Post
Wednesday, March 3, 2010; 3:28 PM
http://www.washingtonpost.com/wp-dyn/content/article/2010/03/03/AR2010030302213.html?hpid=topnews

President Obama urged Congress on Wednesday to "finish its work" on health-care reform legislation and indicated support for a Democratic legislative strategy that includes a politically risky procedure known as reconciliation.

In a speech at the White House, Obama told an audience of medical professionals that Congress "owes the American people a final vote on health-care reform." He did not mention the reconciliation procedure by name but said the legislation now stalled in Congress "deserves the same kind of up-or-down vote that was cast on welfare reform, the Children's Health Insurance Program, COBRA health coverage for the unemployed and both Bush tax cuts -- all of which had to pass Congress with nothing more than a simple majority."

The programs he mentioned were passed under reconciliation rules, which would enable the Senate to approve a health-care overhaul with a simple majority, rather than a filibuster-proof 60 votes. Obama said he has asked House and Senate leaders to schedule a vote "in the next few weeks."

Republican lawmakers immediately and bitterly blasted Obama's apparent acceptance of the reconciliation procedure and vowed to keep fighting to kill the proposed legislation.

Forging ahead despite the GOP objections, Obama defended health-care reform as crucial to American families and businesses. He said his proposal, projected to cost at least $950 billion over 10 years, would lower skyrocketing costs and end abuses by insurance companies, including discrimination against people with preexisting conditions.

He emphatically rejected Republican demands to abandon existing proposals and "start over" with an incremental approach.

Flanked by doctors and nurses in white coats, Obama said, "I do not see how another year of negotiations would help. Moreover, the insurance companies aren't starting over. They are continuing to raise premiums and deny coverage as we speak. For us to start over now could simply lead to delay that could last for another decade or even more. The American people and the U.S. economy just can't wait that long."

Declaring that "it's time to give the American people more control over their own health insurance," he said his proposal represents "an approach that has been debated and changed and, I believe, improved over the last year." He said it "incorporates the best ideas from Democrats and Republicans," including some that GOP participants offered during last week's "health-care summit," such as funding state grants on medical malpractice reform and curbing waste, fraud and abuse in the health-care system.

"My proposal also gets rid of many of the provisions that had no place in health care reform -- provisions that were more about winning individual votes in Congress than improving health care for all Americans," Obama said.

At stake is not only Washington's ability to resolve the health-care issue, "but our ability to solve any problem," Obama said. "The American people . . . are waiting for us to act. They are waiting for us to lead. And as long as I hold this office, I intend to provide that leadership. I don't know how this plays politically, but I know it's right. And so I ask Congress to finish its work, and I look forward to signing this reform into law."

In response to the speech, Sen. John Cornyn (R-Tex.) said Obama embraced "the hyper-partisan reconciliation tactic" despite previous pledges of transparency and statements that health-care reform should not be passed in the Senate with just 51 votes.

"The American people have made it abundantly clear that they do not want a job-killing, one-size-fits-all, $2.3 trillion dollar, Washington takeover of our health care system," Cornyn said in a statement. "Instead, they want a step-by-step approach that tackles the real problems in our health care system."

House Minority Leader John A. Boehner (R-Ohio) said Obama "voiced support for a partisan scheme to jam the bill through Congress" while trying to "get away with sprinkling a few sensible Republican proposals onto a fundamentally-flawed 2,000-page bill."

He added: "Americans do not want a trillion-dollar government takeover of health care stuffed with tax hikes, Medicare cuts, and giveaways to Washington special interests. . . . They know that the president's job-killing health care plan would put bureaucrats in charge of medical decisions. . . . That's why they want us to start over with a clean sheet of paper and step-by-step common-sense reforms to lower health care costs."

Asserting that "this debate is far from over," Boehner said, "The final battle will be in the House of Representatives, and if the American people stay engaged, we can win this fight."

Before Obama spoke, senior aides made it clear that the White House would launch an aggressive, final push for health-care reform during the next several weeks.

"Whatever it takes to get health care done" said Press Secretary Robert Gibbs. Asked what Obama wants done in that period, Gibbs said: "the whole thing getting done."

That new public push is scheduled to begin Monday with a presidential trip to Philadelphia and another on Wednesday to St. Louis. The White House described the visits as opportunities for Obama to discuss health-insurance reform.

But White House advisers are already trying to turn up the heat on Republicans who oppose reconciliation, accusing them of flip-flopping by supporting the procedure when it helps them and opposing it when it does

"Republicans were for reconciliation before they decided they were against it," Gibbs told reporters.

In his speech, Obama rejected the idea of "government-run health care" in the United States as "neither practical nor realistic," and he similarly spurned what he described as the Republican approach to "loosen regulations on the insurance industry," giving it "even freer rein to raise premiums and deny care."

He said his proposal would "end the worst practices of insurance companies," including dropping coverage when people get sick and "arbitrarily and massively" raising premiums. And he stressed that "our proposal is paid for" and would reduce health-care costs for millions of people, businesses and the federal government.

While a leading Republican proposal would extend coverage to only 3 million uninsured Americans, Obama said, his approach would cover more than 31 million. He emphasized that key elements of the plan are interrelated, saying that "health reform only works if you take care of all these problems at once."

The complex, wrenching issue of health-care reform "easily lends itself to demagoguery and political gamesmanship, misrepresentation and misunderstanding," Obama said. "But that's not an excuse for those of us who were sent here to lead to just walk away. We can't just give up because the politics are hard."

Dismissing speculation about the effort's impact on future elections, he said he would leave it to others to "sift through the politics, because that's not what this is about."

The House and Senate passed separate health-care reform bills last year, but the process of reconciling them has stalled, in part because the election of a Republican senator in Massachusetts in January ended the 60-vote Senate majority won by Democrats in the 2008 elections.

In an effort to move the process forward, Obama last week held a bipartisan health-care summit with key lawmakers and urged Republicans to "do a little soul-searching" on measures they would accept to address the core problems of covering more than 30 million Americans without health insurance and requiring insurance companies to cover those with preexisting conditions. However, Republicans maintained their position that the proposed legislation represents a "government takeover" of health care, and they demanded that it be scrapped entirely in favor of starting from scratch.

Obama rejected the GOP prescription in a letter to congressional leaders Tuesday. "Piecemeal reform is not the best way to effectively reduce premiums, end the exclusion of people with pre-existing conditions or offer Americans the security of knowing that they will never lose coverage, even if they lose or change jobs," he wrote. "Both parties agree that the health care status quo is unsustainable. And both should agree that it's just not an option to walk away from the millions of American families and business owners counting on reform."

He said he was open to several Republican proposals offered at the health-care summit with the aim of lowering health costs while making coverage more affordable. The proposals include expansion of health savings accounts, permitting insurance companies to sell high-deductible policies through new state-run insurance exchanges, stepping up efforts to root out fraud in Medicare and Medicaid, funding state projects aimed at averting medical malpractice lawsuits, and finding a "fiscally responsible" way to increase payments to doctors who treat Medicaid patients.

Under the White House strategy, the House would adopt the bill the Senate passed on Christmas Eve and approve a separate package of fixes to reflect a compromise worked out between Democrats in the two chambers. Invoking reconciliation rules for budget provisions would mean that the fixes could not be filibustered, and Senate Democrats could approve them with a simple majority vote, possibly sending the package to Obama for signature before Congress's Easter recess begins March 29.

The reconciliation procedure was created in 1974 to help lawmakers advance politically difficult budget legislation, particularly measures that reduce the deficit. Both parties have used it a total of at least 22 times since 1980 to push through a variety of policies, including creating COBRA health benefits in 1986 for people who lose their jobs, overhauling the welfare system in 1996, and passing President George W. Bush's two huge tax-cut packages in 2001 and 2003.

Staff writers Lori Montgomery and Shailagh Murray contributed to this report.

Gay Marriage Is Legal in U.S. Capital

2010-03-03T13:06:00.000-08:00

Gay Marriage Is Legal in U.S. Capital
By IAN URBINA
Copyright by The New York Times
Published: March 3, 2010
http://www.nytimes.com/2010/03/04/us/04marriage.html?ref=global-home

WASHINGTON — It was cold and drizzling outside the City Courthouse just after 6 a.m. on Wednesday, but no one seemed to mind among the same-sex couples waiting excitedly for the chance to apply for a marriage license.

“This is a dream come true,” said Sinjoyla Townsend, 41, as she smiled ear to ear and held up her ticket indicating she was first in line with her partner of 12 years, Angelisa Young, 47. “We wanted it so bad.”

Gay-rights advocates hailed the day as a milestone for equal rights and a symbolic victory as same-sex marriage became legal in the nation’s capital.

Washington is now the sixth place in the nation where same-sex marriages can take place. Connecticut, Iowa, Massachusetts, New Hampshire and Vermont also issue marriage licenses to same-sex couples.

Despite failing in court, opponents of the law vowed to fight another day.

The law survived Congressional attempts to block it, and on Tuesday Chief Justice John G. Roberts Jr. rejected a request from opponents of gay marriage to have the United States Supreme Court put the new law on hold.

Mayor Adrian M. Fenty signed the measure into law in December, but because Washington is not a state, the law had to undergo Congressional review, which ended Tuesday.

Catholic Charities of the Archdiocese of Washington on Tuesday limited employee health care benefits to avoid coverage of same-sex couples. It was the second time Catholic Charities changed its rules to protest same-sex marriage, having earlier ended its foster care program.

The city’s new law was already having regional implications.

Last Wednesday, Maryland’s attorney general, Douglas F. Gansler, issued a legal opinion concluding that his state should immediately begin recognizing same-sex marriages performed elsewhere.

Mr. Gansler’s move is expected to draw legal and legislative challenges, but for Terrance Heath it was the turning point that convinced him it was time to get married.

“We realized that we can finally get many of the benefits and protections that other couples take for granted,” said Mr. Heath, a 41-year-old blogger who lives with his partner, Rick Imirowicz, 43, and their two adopted sons in Montgomery County, Md.

“Before that attorney general decision we could have the legal documents, like wills and medical power of attorney,” Mr. Heath said. “But there was no guarantee that those documents would be recognized.”

He said that he and his partner had worried about what might happen to any inheritance meant for their adopted sons, Parker, 7, and Dylan, 2.

“Marriage gives us peace of mind,” Mr. Heath said. “It gives my family security that we deserve.”

At the city’s Marriage Bureau inside the Moultrie Courthouse, just blocks from the Capitol, the mood was giddy as couples hugged and talked about a day they never thought would arrive.

“I became a naturalized U.S. citizen in mid-’90s,” said Cuc Vu, a native of Vietnam who held the third position in line with her partner of 20 years, Gwen Migita. “But this is really the first time that I feel like I have the full rights and benefits of citizenship.”

Court officials explained that the Marriage Bureau changed its license applications in preparation for the new licenses. They now ask for the name of each “spouse” rather than the “bride” and “groom.” Officials who perform the weddings read: “I now pronounce you legally married” instead of “I now pronounce you man and wife.”

On a typical day the office processes 10 licenses, court officials said. On Wednesday, they expected more than 200 requests.

Because of a mandatory waiting period, couples will not be able to marry in the city until Tuesday.

City officials say the measure will also provide a much-needed financial boost to the local economy. A study by the Williams Institute at the University of California, Los Angeles, predicted that more than 14,000 same-sex marriages would occur in the city over the next three years, which would bring in $5 million in new tax revenue and create 700 jobs

U.S. Circulates New Draft Proposal for Iran Sanctions

2010-03-03T13:03:00.000-08:00

U.S. Circulates New Draft Proposal for Iran Sanctions
By NEIL MacFARQUHAR
Copyright by The New York Times
Published: March 3, 2010
http://www.nytimes.com/2010/03/04/world/04sanctions.html?ref=global-home

UNITED NATIONS — The United States is circulating a draft of new, tougher sanctions against Iran that concentrate on the banking, shipping and insurance sectors of its economy, and is now waiting for China and Russia to signal that they are willing to start negotiating over the measures, Security Council diplomats said Wednesday.

The diplomats said the proposed new sanctions call for an outright ban on certain transactions with Iran, whereas the existing sanctions call on United Nations members to exercise “vigilance” or “restraint” in interacting with Iran in some areas of weapons trade, shipping and banking. The focus is on the Iran Revolutionary Guards Corps, which runs a vast array of Iranian businesses, while the oil industry is not included, diplomats said.

The proposed new sanctions seek to expand other aspects of those already in place, including the list of banks singled out previously, adding at least the country’s central bank to Bank Melli and Bank Saderat targeted before. The proposed new sanctions would also expand the list of individuals facing a travel ban and assets freeze for their work in the nuclear program. Sanctions to date, which run to some six pages, have singled out companies and individuals involved in the nuclear and missile development programs or help to finance them. They include a ban on arms exports

There has been no reaction to the draft from China, which has publicly opposed sanctions, but the United States and its Security Council allies are hoping that James B. Steinberg, the deputy U.S. secretary of state, would elicit one Wednesday in talks in Beijing. He is the first American official to be able to reach senior members of the government with the draft, diplomats said.

At the United Nations, the previous Chinese permanent representative, Zhang Yesui, has left to take up his new post as ambassador to Washington. The new ambassador, Li Baodong, who previously represented China at the United Nations in Geneva, will only present his credentials to begin work on Thursday.

The proposed measures, already negotiated between the United States, Britain, France and Germany, will likely be diluted in further talks. The initial reaction from Russia was negative, saying the measures are too strong, diplomats involved in the talks said, with one noting “There is quite a bit that they didn’t like.” Yet Moscow continues to endorse the idea of new sanctions in tandem with negotiations.

“When we sought and continue to seek to keep the negotiation window open, Iran has not followed up with the appropriate responses that we expected,” Vitaly Churkin, the Russian ambassador to the United Nations, told a news conference late Tuesday.

He said Russia was increasingly concerned about the latest conclusions from the International Atomic Energy Agency indicating that Iran may be seeking to develop a nuclear weapon despite its claims that all its research is for a peaceful nuclear program.

“When they are not satisfied with what they see in their cooperation with Tehran, we are obviously also very concerned,” Mr. Churkin said. “This raises worries about the nature of their nuclear program.”

Mr. Churkin said he had still not received instructions from Moscow to begin negotiations over the new round of sanctions. Still, that puts Beijing in the position of being the lone standout among the six countries that have been trying to negotiate with Iran.

The main leverage the four countries have in support of sanctions is that Moscow and Beijing still want the forum of six to continue to be the main arena for such talks, even though the others are expected to implement their own sanctions no matter what the outcome of the Security Council negotiations.

Mr. Churkin said as much. “The value of the six is obvious,” he said. “I see no reason why the six cannot continue to work effectively in hammering out joint positions in our dealing with Iran.”

The Western nations want a Security Council resolution finished before May, when the world powers will be engaged in reviewing the global Non-Proliferation Treaty and when Lebanon, home to the Hezbollah militant group closely allied with Iran, will be president of the Security Council. President Obama in holding a nuclear summit meeting in Washington on April 12-13, so diplomats anticipate if the sanctions are not negotiated by then the leaders themselves might be able to work out any differences.

In previous rounds of sanctions negotiations, the opening position of both Russia and China has been that the sanctions are much too strong, and that there is insufficient proof to link all the suggested entities or individuals to nuclear proliferation activities. So intelligence experts from the United States, France, Britain and Germany are amassing as much evidence as possible to expand the list of specific entities, which is usually included in an annex of the sanctions resolution.

One diplomat, expressing frustration with the level of proof demanded by China and Russia, said their negotiators go down the list as if they are expecting to get “a picture of each guy building the bomb.” But that degree of detail rarely exists, and that it how the pursuit of tougher sanctions begins unraveling, said the diplomat, who was not authorized to speak publicly on the matter.

Rove blames himself for administration's response to lack of weapons of mass destruction in Iraq

2010-03-03T10:51:00.000-08:00

Rove blames himself for administration's response to lack of weapons of mass destruction in Iraq
By Michael D. Shear
Copyright by The Washington Post
Wednesday, March 3, 2010; 12:30 PM
http://www.washingtonpost.com/wp-dyn/content/article/2010/03/02/AR2010030202960.html?wpisrc=nl_pmpolitics

Former president George W. Bush did not mislead the nation about weapons of mass destruction as a way to "lie us" into war, his former top political aide, Karl Rove, asserts in a new memoir, "Courage and Consequence."

"The charge that Bush lied was itself a lie," Rove wrote in a chapter titled "Bush Was Right on Iraq." "Some who leveled the charge -- Al Gore, Senators Harry Reid, John Kerry and Ted Kennedy -- were hypocrites who had earlier said much the same as, or more than, what they later criticized Bush for."

While defending the administration's handling of Iraq, Rove concedes that the failure to find weapons of mass destruction damaged "the administration's credibility." And he blamed himself for failing to "set the record" straight.

"When the pattern of the Democratic attacks became apparent in July 2003, we should have countered in a forceful and overwhelming way," he writes. "We should have seen this for what it was: a poison-tipped dagger aimed at the heart of the Bush presidency."

He continued: "So who was responsible for the failure to respond? I was. I should have stepped forward, rung the warning bell, and pressed for full-scale response. I didn't."

Rove's full-throated defense of his former boss comes as little surprise. The strategist who engineered Bush's two victories and served as a senior adviser in the White House has publicly offered similar defenses in a Wall Street Journal column and as a Fox News contributor.

But the book, which has been much anticipated, takes Rove's defense of the Bush legacy to a new and more detailed level.

Rove admits in the book that during the early days of Hurricane Katrina, the White House failed to "seize control of the situation in Louisiana sooner. . . . We were too passive for too long. Louisiana's failures became our failures anyway."

But he also blames much of those failures on the Democratic leadership in Louisiana and New Orleans, not on the administration or the president. He writes that questions about who would take control and how to cooperate with the federal government were problematic.

"Behind the scenes, the White House staff engaged in a complicated, high-stakes legal and constitutional battle with Louisiana's governor -- which had huge ramifications for New Orleans and the administration," Rove writes.

Rove's memoir covers the sweep of his life, from growing up in the west to his days as a college Republican to the Bush campaigns that forever solidified his position as one of the nation's top political strategists.

He describes the first hours after the 9/11 attacks and the rapid departure on Air Force One with Bush. "The 747 shot down the runway with a force I had never experienced," he writes. "Once in the air, Air Force One then stood on its tail to get as high as possible, as rapidly as possible. I had not been in a jet at such a steep incline."

Rove praises Bush for a singular focus on terrorism after that day.

"He locked in on the struggle against terrorism with resolute focus," he writes. "He never looked away from it. The immediacy of that day never left him as he occupied the Oval Office."

As he has frequently done in his columns, Rove takes aim at President Obama, describing him as a person who frequently "plays fast and loose with the facts and his accusations."

"Another thing that has badly hurt President Obama is that his claims -- especially on health care -- are simply at odds with reality," Rove writes.

But most of the book is focused squarely on offering a comprehensive -- sometimes moment-by-moment -- defense of the campaigns he helped to direct and the conservative agenda he was part of implementing in the White House.

Rove describes being alone, watching news reports of the U.S. Supreme Court decision that gave Bush the presidency.

"It wasn't the moment I had envisioned for Election Night, with Bush in front of the Texas Capitol with tens of thousands of cheering supporters," he wrote. "Instead, I was standing in my pajamas, looking out a hotel window into a dark, deserted office park, having been hung up on by the man who would now be president."

And he lashes out at the Democrats on Capitol Hill, whom he accuses of not wanting to work with the new president. In a chapter titled "What Bipartisanship," Rove wrote as examples that "the way Democrats approached trade was unprincipled, but their treatment of judicial nominees was appalling."

Some Republicans did not escape his attention, either. In one passage, Rove accuses former Virginia Rep. Tom Davis of repeatedly trying to get Jeannemarie Devolites, a former state senator in Virginia, appointed to the board of Sallie Mae.

Rove writes that he finally gave in and recommended her appointment, only to discover through news reports that the pair were romantically involved -- even though Davis was married at the time.

"I decided I needed to ask Davis about it directly. Davis' answer was blunt, angry and dismissive about the allegations," Rove writes. "I told him I took him at his word. To this day, I have no idea whether Davis and Devolites were romantically involved at the time he proposed her for appointment. . . . From then on, my relationship with Davis was frosty and difficult."

What's wrong with America

2010-03-03T00:43:00.000-08:00

What's wrong with America
By Carlos T Mock, MD
March 4, 2010
From Paris, France

Nothing like being out of the country, see how other nations solve their problems, and reflect what's ailing our country.

President Obama has been our commander in chief for slightly more than a year. We have been in Paris for two weeks. As we return to Chicago/Michigan tomorrow we are facing the same problems that we face when we boarded a plane to Europe February 15, 2010.

According to the right, "All of our problems are because Obama--who is not an American citizen--is a radical left wing ultra liberal Socialist/Communist who is surrounded by Hitler styled Chicago mafia czars hell bent on destroying the Constitution and our way of life."

According to the left, "All of our problems were caused by the brainless George W. Bush--a cocaine addict and an alcoholic--who allowed Dick Cheney, Carl Rove, and their neo-con mafia to abuse every power in our Constitution and got us into two wars and the biggest financial mess since the 1929 depression.

But perhaps our problems stem from the fact that the American political landscape has become a conspiracy of ignorance and invective, in which no problems get solved because everyone is too busy calling each other names. They are too busy passing the blame to the other, side that nothing gets done. The arguments presented by both political parties--for every important issue--has become ever more infantile. Our citizenry has been alienated--they've developed eyes that don’t see, ears that don’t hear and brains that don’t work. We are too tired and defeated to care.
The truth is:

It was Republicans, led by Phil Gramm, who started de-regulating the banks and investment houses.

It was Democrats who insisted we provide mortgages to folks who couldn’t really afford them. The result was adjustable rate mortgages provided to people who could not pay, and then their mortgages were bundled into securities--known as derivatives--that were sold as investments, which became worthless.

This was a bipartisan effort that crashed the housing market and collapsed the banks and investment houses.

It was Republicans who used the Big Lie of weapons of mass destruction (WMD) to conjure up an illegal war and Democrat lemmings who voted for both the war in Iraq and the abhorrent destruction of our Constitutional protections.

What no one wishes to hear, why we keep playing a blaming game is the fact that:
There have been two wars with a death toll exceeding 6,000 Americans, with nearly 35,000 wounded -- many grievously.

There was a bipartisan effort that led to both Wars that neither party knows how to end.

We have caused the death of over several hundred thousand innocent Iraqi people--and score of Afghans--and have displaced over two million of them--and when they helped us fight our war we abandoned them to a certain death. The USA has granted asylum to less than 1000 of the affected individuals in the region, leaving the surrounding countries--Jordan, Syria, and Iran--to deal with the three million refugees created by the two wars.

And in the meantime, The Bill of Rights is in shambles. We have a Constitution that no longer protects its citizens from an intrusive government. Elections are for sale to the highest bidder--thanks to the recent Supreme Court election finance decision--soon Congress will be controlled by corporations and not their constituents.

It may have been Republicans who were gung ho to outsource American jobs overseas to help their big business friends. But it was Democrats who supported unsustainable contracts in several industries to help their big labor friends. Both parties have caused manufacturing jobs to disappear by the millions and harmed the labor unions they tried to protect in the process.

It was a bipartisan effort that has turned us into a nation that exports waste and imports foreign-made goods we can’t afford because our economy is crippled.
And to make matters worse, intransigent incompetence is now the rule. You’ve likely heard of the U.S. Senate needing 60 votes to pass legislation. There is no law that requires 60 votes--a simple majority of 51 is sufficient. Not anymore. Sen. Richard Shelby (R-AL) has placed a "blanket hold" on at least 70 of President Obama's nominations until he receives over $40 billion worth of earmarks for his state, and it takes 60 votes to end a filibuster so a vote can be taken. In a scene that would have made Hollywood director Frank Capra proud. Republican Sen. Jim Bunning stood up courageously to stop Congress from committing a very popular move: sending unemployment checks to hundreds of thousands of jobless Americans. Democrats could hardly believe their good fortune.

It was one of those congressional moments that tell you everything you need to know about why Washington doesn't seem to work these days: Neither side sounded like they were listening to themselves, let alone to anybody else.

The Republicans needed 60 votes when they were in power because the Democrats wanted to stop everything in its tracks and the Democrats now need 60 votes because the Republicans are engaged in the same shameless cause.

To me, what is most discouraging is that we know the root cause of our problems. It isn’t Rush Limbaugh and it isn’t Sarah Palin. It isn’t the Liberal pundits or the Liberal media.

We elect these folks and then re-elect them over and over. Instead of demanding they listen to us, we keep listening to them. Instead of demanding solutions, we keep accepting their excuses. We form Tea Parties and listen to eloquent speeches from our President searching for bipartisanship solutions. However neither of these actions will solve our problems.

We look at the source of this farce every morning in the mirror. The Truth is that we have met the "problem"; and it is us. There is no one else to blame.

We'll be back home on March 4th, 2010; nothing has changed since we left. What the hell is wrong with our country? I'll tell you what is wrong with America; get rid of the two party system and change our government to the Parlamentary system. You'll see how soon politicians learn to work with each other and get the country back to work. That's change you can believe in!

Dr. Carlos T Mock is a native Puerto Rican who resides in Chicago, IL and Three Oaks, MI. He has published four books and is the GLBT Editor for Floricanto Press in Berkley, CA. He contributes columns regularly to Windy City Times in Chicago, Ambiente Magazine in Miami, Camp Newspaper in Kansas City. He's had several OP-Ed published at the Chicago Tribune. Inducted in the Chicago Gay & Lesbian Hall of Fame October 18th, 2007

GOP’s gift to Dems - Max Baucus Jim Bunning turns his back on the jobless

2010-03-03T00:34:00.000-08:00

GOP’s gift to Dems - Max Baucus Jim Bunning turns his back on the jobless
Clarence Page
Copyright © 2010, Chicago Tribune
March 3, 2010
http://www.chicagotribune.com/news/columnists/ct-oped-0303-page-20100303,0,6460448,full.column

It was a scene that would have made Hollywood director Frank Capra proud. Republican Sen. Jim Bunning stood up courageously to stop Congress from committing a very popular move: sending unemployment checks to hundreds of thousands of jobless Americans. Democrats could hardly believe their good fortune.

It was one of those congressional moments that tell you everything you need to know about why Washington doesn't seem to work these days: Neither side sounded like they were listening to themselves, let alone to anybody else.

Bunning, a former baseball star from Kentucky, objected to a request from fellow Republican, Sen. Susan Collins of Maine, to pass a 30-day extension of jobless benefits and other expired measures included in a $10 billion spending bill.

By blocking the measure, which also would extend health insurance benefits, highway funding and Medicare payments to doctors, Bunning vividly illustrated a point Democrats have been trying to make: That Republicans are "the party of ‘No'" and the real reason for congressional gridlock on other issues like health care.

Bunning, who finally relented Tuesday, said he was fed up with Congress' Wall Street bailouts and other big-spending ways, without finding ways to pay for it. That's a laudable principle. It's just too bad that he decided to take out his anger at Congress by holding up help to jobless Americans.

Although Bunning immediately became a hero to fiscal conservatives and certain mad-as-hell talk-show hosts, when reporters sought reactions from Republican senators, most ran for the tall grass. It's not great politics to hold up aid to jobless workers during an election-year recession.

When Senate Minority Whip Jon Kyl of Arizona tried to offer a silver lining of sorts on the floor of Congress, he sounded a bit like Ebenezer Scrooge decrying the "surplus population" and praising Victorian workhouses.

Unemployment insurance "doesn't create new jobs," he said. "In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work."

In fairness, Kyl said he was not calling the laid-off a bunch of slackers. "I'm sure most of them would like work and probably have tried to seek it, but you can't argue that it's a job enhancer. If anything, as I said, it's a disincentive." Same thing for the bill's extension of COBRA health insurance and other benefits, he said.

Kyl's reasoning is sound, I am sure, in the supply-side economists' universe, but his rhetoric showed little connection to the reality inhabited by today's unemployed.

For one thing, whatever you may think of government assistance, unemployment benefits are not a welfare check. Limited to those who have lost their jobs, unemployment payments pay too little to discourage very many of the laid-off or let-go from seeking new work, especially if they're trying to keep a family afloat.

That common-sense observation is supported by the nonpartisan Congressional Budget Office. A February CBO analysis of policy options to increase economic growth and employment concluded that extending unemployment benefits would spur economic activity and employment in a timely way. As CBO Director Douglas Elmendorf reported to Congress, households receiving those benefits "tend to spend the additional benefits quickly."

Although extending pay and health benefits "could dampen people's efforts to look for work," the CBO report said, "that concern is less of a factor when employment opportunities are expected to be limited for some time." With the jobless currently outnumbering available jobs about five-to-one, according to Sen. Max Baucus, the Montana Democrat who chairs the Finance Committee, those opportunities are likely to be limited for some time to come.

Bottom line: The CBO estimates those policies would raise employment and productivity over the next five years by as much at $1.90 per dollar of cost to the federal budget. As much as Bunning might think of unemployment benefits as a budget-buster, it actually could be a budget enhancer.

No question that it will enhance the household budgets of those who receive the benefits, however modest they may be. Congress talks a lot about subsidizing big businesses to create jobs, even as many of those businesses cut jobs to enhance their profits. Think of unemployment benefits as a way to stimulate the economy by giving the money to consumers first.

Clarence Page is a member of the Tribune's editorial board and blogs at chicagotribune.com/pagespage

cpage@tribune.com

Saturday mail delivery on chopping block

2010-03-03T00:28:00.000-08:00

Saturday mail delivery on chopping block
By Kim Geiger
Copyright © 2010, Chicago Tribune
7:00 p.m. CST, March 2, 2010
http://www.chicagotribune.com/business/sc-biz-0303-mail--20100302,0,4188261.story

WASHINGTON - — Neither snow nor rain nor heat nor gloom of night prevents mail couriers from the swift completion of their appointed rounds.

Saturdays might be tough, however.

Facing a projected $238 billion loss over the next decade, due in part to the rise of the Internet, the U.S. Postal Service on Tuesday proposed a 10-year plan to bring it into financial health, including putting an end to Saturday mail delivery.

The Postal Service, which is regulated by Congress and the administration but operates without federal assistance, faces "a severe income gap that we absolutely have to close," said Postmaster General John Potter.

Such cost-cutting measures have been proposed, and largely ignored, in the past. Last year, post office representatives pushed multiple times at hearings on Capitol Hill for the authority to end Saturday delivery, change the way the service pays out retiree health benefits and raise prices, all actions that require congressional approval.

The Postal Service predicted that first-class mail volume will drop 37 percent by 2020. Bob Bernstock, the agency's president of mailing and shipping services, said that "creates an urgency that was not there before." The post office generates about half its revenue from first-class mail.

The service has identified measures within its authority to close the shortfall by about $123 billion over 10 years. It cannot eliminate the remaining $115 billion without being granted the authority to implement additional measures, including ending Saturday delivery, estimated to save $40 billion, Bernstock said.

Other savings would come from personnel changes and price hikes, though the price for a first-class stamp will remain at 44 cents through 2010. Post offices would remain open on Saturdays.

U.S. Rep. Danny Davis, D-Ill., a member of the subcommittee that oversees the Postal Service in the House, said that the proposal was "heading in the right direction," but that it is by no means a done deal.

"I think there's going to be a great deal of negotiation, a lot of haggling, if you will, before plans are actually set in stone," Davis said.

Sen. Tom Carper, D-Del., who heads the Senate subcommittee with jurisdiction over the Postal Service, said the service "must be allowed to make the business decisions they need to stay competitive and viable in the years to come."

Some businesses that rely on mail delivery said they worried about how an end to Saturday service would hurt time-sensitive deliveries.

"The persons it really impacts are my customers, the people who are looking forward to receiving their packages," said Laura Lombardi, who runs an online jewelry store.

But reaction overall appeared mixed, reflecting the growing preference for e-mail and social networking.

Muriel Rogers, a retired bookseller, said she doesn't care about the possible Saturday elimination.

She receives personal mail and bills online and most of her mail isn't worth keeping.

The unions that represent mail carriers and post office workers oppose ending Saturday delivery.

"I do not believe that weakening our commitment of six-day service to the public will enhance the long-term position of the Postal Service as a critical element in our nation's economic infrastructure," said Fredric Rolando, president of the National Association of Letter Carriers.

Rolando pointed to a recent report that found the Postal Service had overpaid $75 billion for postal pension costs. Fixing that would provide the service with the "financial breathing room needed to develop a more successful plan."

Davis said those savings would "last a certain period of time," but that more would need to be done.

Tribune Newspapers reporter Kiah Haslett contributed to this report.

xcxkgeiger@tribune.com

Financial Times Editorial Comment: Moral hazard, Chinese style

2010-03-03T00:24:00.000-08:00

Financial Times Editorial Comment: Moral hazard, Chinese style
Copyright The Financial Times Limited 2010.
Published: March 2 2010 20:14 | Last updated: March 2 2010 20:14
http://www.ft.com/cms/s/0/93016f96-262c-11df-aff3-00144feabdc0.html

The world has watched in awe as China has sailed, seemingly without effort, through the worst global financial crisis in decades. In 2009, the economy barely paused for breath, racking up 8.7 per cent growth. This year, Beijing’s challenge is to prevent overheating without slamming on the brakes too hard.

But China’s never-ending-growth story is not magic. It has been achieved through a huge public-sector stimulus, most tellingly a massive expansion of credit by the state-controlled banking system.

Indeed, problems have begun to bubble to the surface. Last week, banks rushed to raise Rmb76bn ($11bn) from public markets to shore up their balance sheets. They will need a whole lot more. Their need for cash has been triggered by state moves to raise banks’ capital requirements, an implicit acknowledgement that much of last year’s unprecedented Rmb9,600bn in lending will turn sour.

An overheated property market and vast overcapacity in industries such as steel have not deterred new lending. Far from it: until the state warned them off, banks were falling over themselves to lend in the first weeks of January. Since the bulk of profits comes from the spread between state-decreed lending and borrowing rates, they have a perverse incentive to lend as much they can, safe in the knowledge that the state stands ready to catch them. Moral hazard is not a solely western phenomenon.

None of this means China’s banking system is about to implode. If fast growth and urbanisation continue, some overcapacity will melt away. A decade ago, the state proved it had the resolve and resources to clean up the financial system. If needed, it will do so again.

But, one way or another, the cost must be met. In the west, the strains of keeping the economy afloat are visible in soaring deficits and sovereign debt crises. In China they will show up on the balance sheets of banks. Just as there is no free lunch, there is no such thing as a free stimulus package.

Financial Times Editorial Comment: Sterling’s slide is not just about polls

2010-03-03T00:19:00.000-08:00

Financial Times Editorial Comment: Sterling’s slide is not just about polls
Copyright The Financial Times Limited 2010
Published: March 2 2010 20:11 | Last updated: March 2 2010 20:11
http://www.ft.com/cms/s/0/9752731a-262c-11df-aff3-00144feabdc0.html

Britons never miss an opportunity to be gloomy about their country. This week the media have turned their attention to the currency markets. The pound is 1.7 per cent down after a poll released at the weekend suggested that no political party would win a working majority in this year’s general election. Some investors, fearing the UK might be unable to close its yawning fiscal deficit without a strong government, sold sterling.

British commentators have made much of the humiliation of having the Zimbabwean dollar rise against the pound. But sterling’s latest depreciation should not be a trigger for panic about Britain’s fiscal sustainability. Worry about political gridlock was a reason to sell sterling this week, but it was only one of several.

The foreign exchange market movements do not seem to reflect market fundamentals. If there were fresh reasons for concern about fiscal policy, UK bond yields would have risen. But they fell. If there were new causes to fear for the government’s ability to fund itself, market expectations for inflation would have risen substantially. But they have not.

The brotherhood of currency traders may have become materially more nervous about the political risks of a hung parliament, but they are catching up with concerns that investors in other markets had already priced in. This fear may weigh on the pound in the coming months, but it will not break sterling.

Britain’s political problems are simple compared with those of the US, with its structurally hung parliament, or the split decision-making processes of the eurozone. Nick Clegg, leader of the Liberal Democrats, has made clear in Tuesday’s FT that if there is a hung parliament, he is determined to protect the “sustainability of the public finances”.

In truth, a bigger source of uncertainty than the prospect of a hung parliament is the fact that – months before an election is required by law – neither of the main parties has set out a credible deficit reduction plan. Investors do not yet know whether either main party has the political stomach to take the necessary action, and voters do not yet know what their options are.

Hedge funds raise bets against euro

2010-03-03T00:11:00.000-08:00

Hedge funds raise bets against euro
By Sam Jones and Brooke Masters
Copyright The Financial Times Limited 2010
Published: March 2 2010 23:32 | Last updated: March 2 2010 23:49
http://www.ft.com/cms/s/0/ebec7004-262e-11df-aff3-00144feabdc0.html

Hedge funds are raising their bets against the euro amid growing fears of a regulatory backlash against their trading positions on the specific sovereign debt of Greece and other weak eurozone economies.

Many of the world’s biggest hedge funds have become increasingly concerned about fierce criticism by European politicians that their country bets have heightened the crisis of confidence in some markets.

Hedge funds such as Brevan Howard and Moore Capital, have concluded that the political and regulatory risks associated with positions against individual countries in the currency bloc were now too unpalatable.

In its most recent letter to investors, Brevan Howard – Europe’s largest hedge fund with around $27bn of assets under management – said that the short trade in eurozone government bonds was “extended, crowded, fully prices the fundamentals”.

The letter added that the trade was “exposed to a regulatory squeeze as occurred on short positions on financial stocks in 2008”. It said the fund has closed out all of its positions on European sovereign debt.

In a recent letter to investors, Moore Capital, which manages just under $15bn of assets, accused EU authorities of “uninformed blamecasting” and said that it currently had no net short position against Greek debt.

Paulson & Co, the $32bn US fund that shot to prominence shorting the US mortgage market last year, has also closed out its positions against Greece, according to people familiar with the situation.

However, market positions against the euro, which on Tuesday hit a fresh nine-month low against the dollar, as a whole are up sharply.

The manager of one multi-billion London-based fund said: “Hedge funds are now expressing the same view on the weaknesses of individual eurozone countries via the euro”.

An estimated $12.1bn of short positions are outstanding against the currency, according to the Commodity Futures Trading Commission. At the beginning of February, there was just over $7bn of short positions it.

Speaking to a parliamentary select committee on Tuesday, Lord Turner said that regulators should seriously consider preventing investors from buying so-called credit default swaps on both corporate and sovereign debt unless they are using it to hedge an existing investment. CDS provide insurance against default of a debt instrument.

While playing down the effect of so-called “naked” purchases of CDS – buying credit default protection without ownership of the underlying bond - Lord Turner said that a ban on speculative purchases “is something that should be discussed”.

He said: “It may be that even if you banned it, it wouldn’t make a big difference [but] there are questions as to whether you should be allowed to take out an insurance contract where you don’t have an insurable interest”.

TiVo to Offer Boxes That Go Beyond the Recorder

2010-03-03T00:04:00.000-08:00

TiVo to Offer Boxes That Go Beyond the Recorder
By BRAD STONE
Copyright by The New York Times
Published: March 2, 2010
http://www.nytimes.com/2010/03/03/technology/03tivo.html?hpw

SAN FRANCISCO — TiVo, the Silicon Valley pioneer of digital video recorders, is once again trying to get consumers to pay for another set-top box that combines traditional television programming with a vast array of content from the Web.

At an event in New York on Tuesday night, TiVo said it would soon begin selling a new set-top box, called TiVo Premiere. The new device, more slender than previous hardware from TiVo, will put regular program listings from cable and satellite on the same page as related material from the Web.

For example, a prominent search box on the service allows users to look for, say, “The Office,” and quickly find the regular TV listings of forthcoming episodes as well as older episodes for rent on Netflix and Blockbuster, outtakes and deleted scenes from YouTube, and merchandise related to the show for sale at Amazon.com.

“This takes broadband and broadcast and puts them all together as a single experience,” said Tom Rogers, TiVo’s chief executive.

“You have your cable box, your movie box, your music box, your Web box and your DVR all in one.”

TiVo, based in Alviso, Calif., has been struggling for years as cable and satellite companies offer set-top boxes with their own digital video recorders that allow people to pause and digitally record live television.

In November, TiVo said its subscriber base fell by 21 percent, to 2.7 million, from 3.5 million the year before.

The new TiVo Premiere, which will go on sale in April, is aimed at reversing that trend. The basic version of the box can store 45 hours of high-definition programming and costs $300. A premium version called TiVo Premiere XL can store 150 hours and will cost $500.

The company charges additional monthly fees for the service, starting at $12.95.

TiVo will sell the new devices on its Web site and through retailers, including Best Buy. RCN, a cable provider on the East Coast, will make TiVo Premiere boxes available to customers in New York City, Boston, Philadelphia and Washington.

With the Premiere, TiVo is also presenting new opportunities to advertisers — while taking some away.

Companies can promote themselves prominently from TiVo menus, which include a bar of suggested programs that appear prominently at the top of each screen.

But the TiVo Premiere remote control also has a new scan button that allows a user to easily zoom through a 30-second ad in just one second — which will give viewers a quick “impression” of the ad, but not much more.

The challenge for TiVo, as always, is to persuade consumers to spend the extra money for a premium service, when they can get a free, if inferior, set-top box from their cable or satellite company instead.

The new device “is of course elegant and wonderful in all the ways TiVo has historically been able to deliver,” said James L. McQuivey, an analyst at Forrester Research.

“The question is, do people need that well designed of a product? That’s got to be very painful for TiVo.”

Apple Sues Nexus One Maker HTC

2010-03-03T00:01:00.000-08:00

Apple Sues Nexus One Maker HTC
By BRAD STONE
Copyright by The New York Times
Published: March 2, 2010
http://www.nytimes.com/2010/03/03/technology/03patent.html?hpw

SAN FRANCISCO — Apple has relied on slick applications, and even slicker advertisements, to promote the iPhone and maintain its advantage over rivals like Google in the battle to rule the next generation of smartphones.

But the fight may come down to something more provincial: who has the best lawyers.

On Tuesday, Apple sued HTC, the Taiwanese company that is the largest maker of smartphones running Google’s Android operating system, including the Nexus One, designed and sold by Google.

In the lawsuit, filed with the office of the United States International Trade Commission and the United States District Court in Delaware, Apple said that HTC phones running Android violated 20 of its patents, including those relating to the iPhone’s ability to recognize the touch of multiple fingers on its screen at once.

Since last fall, Google has been gradually adding multitouch capabilities to phones running Android through software updates.

Though the lawsuit singles out HTC, many patent lawyers and analysts say they believe Apple’s target is Google and the Android operating system, which the company gives away to cellphone manufacturers.

“We can sit by and watch competitors steal our patented inventions, or we can do something about it. We’ve decided to do something about it,” said Steven P. Jobs, Apple’s chief executive, in a statement. “We think competition is healthy, but competitors should create their own original technology, not steal ours.”

Apple and Google, once close allies, are now fighting for control of the market for smartphones, seen as the most important computing platform of the next decade. The battle has become emotional since last year, when HTC, Motorola and other phone makers began selling Android-based phones that offered a credible alternative to the iPhone.

In that time, the two companies have competed to acquire several start-ups, and Eric E. Schmidt, Google’s chief executive, left Apple’s board.

The lawsuit “is the opening shot in a war,” said Kevin Rivette, a patent lawyer and former vice president for intellectual property strategy at I.B.M. “Apple is island-hopping, attacking first the Asian companies. Then it can go after Motorola, gradually whittling away at Google’s base. They want to break the Android tsunami.”

In a statement, HTC said that it “values patent rights and their enforcement but is also committed to defending its own technology innovations.” The company said it had not yet had an opportunity to review Apple’s claims.

HTC said Wednesday in Taipai that it did not believe the lawsuit posed a short-term material impact to its business or that it would affect its forecast for the first quarter of this year.

Google said in a statement: “We are not a party to this lawsuit. However, we stand behind our Android operating system and the partners who have helped us to develop it.”

The iPhone, introduced in 2007, was the first cellphone that largely did away with physical controls, turning the entire device into a finger-activated screen. Apple had to invent new visual cues and software tricks so users could operate such a device, and the result was a product that wowed customers and seemed unique in the marketplace.

Now the iPhone looks less special. Other companies have sought to duplicate the technology, and similar touch-screen phones are available from Samsung, the BlackBerry maker Research In Motion and Google’s various partners, including HTC.

In the high-tech world, with start-ups and individual inventors claiming innovations, patents can be easily invalidated by courts, and many companies have tried to avoid expensive and time-consuming legal battles.

The wireless communications business has defied that trend somewhat. Broadcom and Qualcomm, two mobile component makers, sued each other for years over rights to wireless technology before settling last year. In October, Nokia sued Apple, claiming the iPhone infringed on 10 of its patents, and Apple countersued.

Now Apple, with its patent portfolio relating to multitouch controls and other ways these complex phones operate, apparently believes it has the legal leverage to slow down Google and the spread of Android.

Aside from multitouch, Apple says HTC also violated patents relating to how iPhone users can wake up their phones by swiping a finger over the image of a lock, and how users scroll through a list or document by dragging a finger down the screen.

As with all patent cases, a decision or settlement could hinge on whether lawyers for HTC — and perhaps Google, if they decide to help — can find “prior art” that demonstrates Apple’s innovations were not all that novel.

Such a task may not be that difficult. Palm sold touch-based mobile phones for years before the introduction of the iPhone, and is believed to have a large portfolio of patents. Synaptics, based in Santa Clara, Calif., is also a major owner of intellectual property related to touch screens.

These companies, and others, may now become valuable acquisition targets as the big players look to improve their position in the coming legal battles and the inevitable countersuits.

“Companies have been working on this for some time,” said Mark A. Lemley, a law professor at Stanford who also represents Google in some unrelated matters. “Now, it’s fair to say the Apple technology works better than prior generations of technology, so there may well be inventions there.”

Greg Aharonian, who runs the Internet Patent News Service, a site devoted to intellectual property news, said he believed that at least some of Apple’s patents would be found to be invalid. But he said the company’s goal might be to buy itself some time in the marketplace.

Nick Bilton contributed reporting from New York.

Britain Grapples With Debt of Greek Proportions

2010-03-02T23:46:00.000-08:00

Britain Grapples With Debt of Greek Proportions
By LANDON THOMAS Jr.
Copyright by Bloombeg News
Published: March 2, 2010
http://www.nytimes.com/2010/03/03/business/global/03pound.html?ref=global-home

LONDON — As Greece’s debt troubles batter the euro, Britain has done its utmost to stay above the fray.

Shaun Curry/Agence France-Presse — Getty Images
The pound fell to $1.4954 on Tuesday, its lowest level against the dollar in months.
Until now, that is. Suddenly, investors are asking if Britain may soon face its own sovereign debt crisis if the government fails to slash its growing budget deficits quickly enough to escape the contagious fears of financial markets.

The pound fell to $1.4954 on Tuesday, its lowest level against the dollar in nearly 10 months. The yield on 10-year government bonds, known as gilts, slid as investors fretted that Parliament would be too fragmented after a crucial election in May to whip Britain’s messy finances back into shape.

The slide in the pound followed a sharper decline on Monday after polls released over the weekend indicated that the opposition Conservatives had lost their clear lead in the election race.

Without a strong political majority to tackle Britain’s lumbering fiscal problems, investors could start to make it greatly more expensive for the government to raise funds, setting the stage for a potential double-dip recession, if not worse.

“If you really want a fiscal problem, look at the U.K.,” said Mark Schofield, a fixed-income strategist at Citigroup. “In Europe, the average deficit is about 6 percent of G.D.P. and in the U.K. it’s 12 percent. It is only just beginning.”

Since the Labour government’s intense fiscal intervention in 2008 and 2009, yields on British government debt have soared to among the highest in Europe. And on a broader scale, which includes the borrowing of households and companies, the overall level of debt in Britain is the second-largest in the world, after Japan’s, at 380 percent of the country’s gross domestic product, according to a recent report by the consulting company McKinsey.

In recent weeks, the focus has been on debt scofflaws in Europe like Greece, Portugal and Spain, countries where borrowing costs have shot up in line with their growing deficits as investors demanded higher rates to compensate them for the added risk of lending the governments money.

But the recent plunge in the value of the pound below $1.50 and the gradual move upward of Britain’s benchmark 10-year borrowing rate on gilts to above 4 percent suggest that investors are now getting ready to reassess the country’s fiscal condition.

Britain is not in the 16-nation euro zone and, unlike Greece and other struggling countries that use the currency, it retains control over its monetary policy. As a result, it has benefited so far from a huge bond-buying program undertaken by the Bank of England — proportionally, the largest in the world — that has kept mortgage rates and gilt yields at unusually low levels.

That means the government and its citizens have been able to continue to borrow at interest rates that do not reflect their true financial situation.

Indeed, the increase in private and government debt here contrasts sharply with the deleveraging that has been going on in the United States.

British household debt is now 170 percent of overall annual income, compared with 130 percent in the United States. In an echo of the United States’ rush into subprime mortgages with low teaser rates, millions of homeowners in Britain have piled into variable-rate mortgages that are linked to the rock-bottom base rate.

As for the British government, it has been able to finance a budget deficit of 12.5 percent of G.D.P. — equal to Greece’s — at an interest rate more than two full percentage points lower only because the Bank of England bought the majority of the bonds it issued last year.

“It’s not just ‘basket cases’ like Greece that can be considered candidates for sovereign crises,” said Simon White of Variant Perception, a research house in London that caters to hedge funds and wealthy individuals. “Gilts and sterling will continue to come under pressure as scrutiny of the U.K. fiscal situation intensifies.”

Adding to this concern is the precarious condition of the British consumer. As interest rates have hit new lows, the popularity of variable-rate loans has grown. At the end of December, 40 percent of new mortgages were tracking the government’s base rate.

Despite comments from Mervyn King, the governor of the Bank of England, that he might restart his quantitative easing program in light of current economic weakness, the view among investors is growing that interest rates here will rise further, along with higher inflation and Britain’s increased risk profile.

In a speech this year, Andrew Haldane, the executive director of financial stability at the Bank of England, warned about how vulnerable Britain was to a rate increase, pointing out that an increase of one percentage point would cause debt service costs relative to income to double, to 13 percent.

“This is a ticking time bomb,” said Nick Hopkinson of Property Portfolio Rescue, a company that assists overleveraged homeowners. “There are over 400,000 people who are in arrears with their mortgage rates the cheapest they have ever been. When rates increase, a lot of people will be tipped over the edge.”

As a result, those counting on the British consumer to take up the slack from any scaling back of government borrowing could be in for a shock. Consider Sheridan King, a sales manager who is struggling to pay off his £32,000 ($47,075) in nonmortgage debt. Far from thinking about going shopping, his first priority is keeping clear of his creditors.

And even though his variable mortgage of about £100,000 carries a very low rate, interest costs are already chewing up a substantial portion of his pay, and he is deeply worried about the future.

“If rates go up, it will be a very dangerous situation for me,” Mr. King said. “It might lead me to consider bankruptcy.”

For the time being, at least, the British government faces no such threat.

Despite its borrowing and spending excesses, Britain still maintains a triple-A credit rating and much of its debt is long term. But with 29 percent of British bonds held by foreigners, Britain, like Greece, remains highly vulnerable to the vicissitudes of outside investors.

Since early this year, foreign holdings of British bonds have fallen from 35 percent, a trend that has tracked the pound’s decline and contributed to the increase in the yield on its 10-year gilts.

As to which political party he thinks is best placed to handle these challenges, Mr. King takes a skeptical view. “We are just struggling to get by with all this debt,” he said. “It’s time the government got its house in order.”

This Isn't A Tea Party, It's A Political Movement.

2010-03-02T09:31:00.000-08:00

This Isn't A Tea Party, It's A Political Movement.
By David Mixner
Copyright by David Mixner
Mar 1 2010
http://www.davidmixner.com/2010/03/this-isnt-a-tea-party-its-a-political-movement.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DavidMixnerCom+%28DavidMixner.com%29

Something is occurring at the grassroots level in America and it is far from a tea party. A deep populist anger and mistrust of government. A mounting frustration over the gridlock and lack of leadership in Washington, DC. The belief that our institutions no longer work. Fear about jobs, schools, safety and being able to provide the basics to your family. America is not working right now and the people know it isn't working. We better pay attention or we will pay a deep price down the road.

Those of us old enough remember 1964. The Democrats were riding high in an historic landslide that was fueled in part by the death of our beloved President Kennedy. Also the Democrats were able to make people terrified by the possible election of conservative Senator Barry Goldwater of Arizona. For many that scenario will be confusing since Goldwater today in the Republican Party would almost be a moderate. However in 1964 he was viewed as extreme and dangerous. The Arizona senator first got noticed when he delivered a nationwide address for Ronald Reagan. His book "Conscience of a Conservative" was selling millions of copies.

Goldwater's nomination was viewed as the end of the Republican party and the beginning of years of Democratic rule. At the Republican Convention in 1964 in San Francisco, Goldwater delegates shook their fists at the media booths and booed New York Governor Nelson Rockefeller. They no longer had faith in the Eastern establishment of Republicans that had ruled the party to represent their needs and views. Goldwater's vote against the Civil Rights Bill of 1964 almost guaranteed his nomination and brought the long Democratic domination in the South to an end. Far from a 'hater', Goldwater was a man of deep principle and beliefs and in fact was one of President Kennedy's favorite senators. In the current political climate, he most likely would fall closer to Ron Paul than Sarah Palin.

There are lessons for us from the 1964 election.

All over America thousands and thousands of citizens who have not been active before are coming out of the woodwork to express their discontent. The media loves to highlight the divisions and the extremists among the Tea Party movement. The inside the Beltway crowd has already dismissed them as a factor in the 2012 election and have almost given the nomination to Romney. Democrats dismissed them and hope they stay active. They believe the Tea Party crowd will divide the Republican party and make it more extreme and thus unacceptable to mainstream America. In this upcoming congressional election, instead of standing for our ideals once again we are just blindly insisting that we must elect Democrats or "look who will be in charge."

Fear alone can't single-handedly carry a party to victory. As an incumbent party with control of both Houses of Congress and the Presidency, the American people actually expect an impressive list of accomplishments on our watch. The constituency of the party who have for years placed their hopes, dreams and aspirations in the hands of the party must feel motivated and believe they made a wise choice. A simple "we are better than them" is not going to put out this massive grassroots fire of discontent. The people will not go away and in the end they will be heard one way or another.

Unless America believes we have gotten back on the right track, this "Tea Party Movement" will continue to have life. They are the ones who will give $10 a month on the Internet this time around. They are the ones who will fill Republican caucuses in 2012. They are the ones who will work day and night to turn out their vote. They are the ones who this time can honestly talk about the need for change.

All is far from lost. However, the leadership of the Democratic party, the President and Congress better get their acts together soon or we will be reliving 1964 all over again. We have about six months to get health care, civil rights, climate control, job creation, infrastructure and deficit reducing program on the fast track or all will be lost. We will never have a better political opportunity than we do right now. Let's hope the people inside the Beltway don't blow it.

Is one of Chicago's great Beaux-Arts buildings, old Cook County Hospital, about to get new life?

2010-03-02T02:54:00.000-08:00

Is one of Chicago's great Beaux-Arts buildings, old Cook County Hospital, about to get new life?
By Blair Kamin
Copyright © 2010, Chicago Tribune
March 1, 2010
http://featuresblogs.chicagotribune.com/theskyline/2010/03/is-one-of-chicagos-great-beauxarts-buildings-old-cook-county-hospital-about-to-get-new-life.html

There are medical miracles and there are architectural miracles. Seven years ago, one of Chicago’s great historic buildings, the old Cook County Hospital, had a near-death experience. On Tuesday, the Cook County Board is expected to vote on a carefully considered, economically sensible plan to resuscitate it.

Mothballed since 2002, when the blandly institutional John H. Stroger Jr. Hospital replaced it, old Cook County Hospital is one of Chicago’s finest Beaux-Arts building—a palace of healing whose classical flourishes powerfully communicate the idea that the building represented a source of strength and succor to the poor and sick. The hospital later embedded itself in the public consciousness as the model for the popular television series “ER.”

Located at 1835 W. Harrison St., old Cook County Hospital has occupied a kind of architectural purgatory—neither dead nor fully alive—since 2003 when Cook County board members beat back a push by the late John Stroger, then County Board president, to demolish it after the opening of the new hospital that bore his name. The old building was subsequently listed in the National Register of Historic Places and portions of it were wrapped in ungainly metal straps meant to keep its deteriorating stone and brick facade from falling on passerby. But those bandages cannot hide the structure’s extraordinary beauty—or the worthiness of the plan to adapt it to a new use.

At issue Tuesday will be a recommendation from the real estate analysts Jones Lang LaSalle that the county spend nearly $108 million to transform the old hospital building into medical offices. Their report, ironically, was ordered up by the administration of John Stroger’s son, Todd, now the lame-duck County Board president.

Under the plan, the county would serve as the developer while the Cook County Health and Hospitals System, which administers health care facilities in Chicago and suburban Cook County, would occupy new offices in the revamped hospital. All that’s needed is a thumbs up from the County Board’s Construction Committee and the full board. A design team would shape plans for the gut-rehab this year and construction, the consultants say, would be completed by 2012.

Still, there are difficult questions: Why, for example, restore the old hospital when even the consultants’ study acknowledges that it would cost $23 million less—about $85 million—to demolish the old building and erect a new administrative building? Repairing and restoring the facade alone will cost $18.1 million, the consultants estimate. That is serious money, especially in these lousy economic times.

But historic preservationists have a ready answer: City tax-increment financing (TIF) funds will likely back the project and can be expected to make up the difference between a tear-down and a gut rehab. In addition, as the consultants state in their report, Chicago typically provides a higher share of TIF funds to potential city landmarks, a distinction the old hospital should have received long ago.

It is no insult to today’s architects to assert that contemporary construction cannot equal this nearly century-old monument, which was completed in 1914 to a design led by Cook County architect Paul Gerhardt. The two-block-long building is at once powerful and graceful, its pairs of three-story, fluted Ionic columns anchoring a composition that features all the hallmarks of the Beaux-Arts style, from mansard roofs and dormers to sculpted faces of lions and cherubs. Put a small museum in the building, conduct tours and you’d have an attraction for archi-tourists on their way to Oak Park to see the wonders of Frank Lloyd Wright.

Other factors bolster the case for re-use. Experts have deemed the hospital’s steel and concrete structure to be sound. The building’s long, thin layout should work well for offices, admitting abundant natural light and allowing (if necessary) for phased-in construction. As the Chicago-based advocacy group Landmarks Illinois points out, historic hospitals nationwide have been converted to new uses, among them an Art Deco hospital in Seattle that now houses the headquarters of Amazon.com. There’s even a green streak to the proposed rehab: Advocates claim it would prevent roughly 900 semi-truck loads of demolition waste from being dumped into landfill.

There is one downside: the likely demolition of a handsome classical revival high-rise at 1900 W. Polk St. The Cook County Health & Hospitals System currently occupies the building, a converted nurses’ dormitory, which is said to be unsuitable for new uses and therefore expendable. It’s still a civilized building, clad in brick and limestone, and it would be hard to see it go. But on balance, saving old Cook County Hospital is more far important, not least because it will send the message that a city’s greatest landmarks are often found beyond the high-profile glitz of downtown.

Same-sex marriage leads Catholic Charities to adjust benefits

2010-03-02T02:40:00.000-08:00

Same-sex marriage leads Catholic Charities to adjust benefits
By William Wan
Copyright by The Washington Post
Tuesday, March 2, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/03/01/AR2010030103345.html?hpid=topnews

Employees at Catholic Charities were told Monday that the social services organization is changing its health coverage to avoid offering benefits to same-sex partners of its workers -- the latest fallout from a bitter debate between District officials trying to legalize same-sex marriage and the Catholic Archdiocese of Washington.

Starting Tuesday, Catholic Charities will not offer benefits to spouses of new employees or to spouses of current employees who are not already enrolled in the plan. A letter describing the change in health benefits was e-mailed to employees Monday, two days before same-sex marriage will become legal in the District.

"We looked at all the options and implications," said the charity's president, Edward J. Orzechowski. "This allows us to continue providing services, comply with the city's new requirements and remain faithful to the church's teaching."

Catholic Charities, which receives $22 million from the city for social service programs, protested in the run-up to the council's December vote to allow same-sex marriage, saying that it might not be able to continue its contracts with the city, including operating homeless shelters and facilitating city-sponsored adoptions. Being forced to recognize same-sex marriage, church officials said, could make it impossible for the church to be a city contractor because Catholic teaching opposes such unions.

After the council voted to legalize gay marriage, Catholic Charities last month transferred its foster-care program -- 43 children, 35 families and seven staff members -- to another provider, the National Center for Children and Families.

Orzechowski said Monday that the change in health benefits will be the last move necessary in response to the legislation.

"We do not anticipate any further changes whatsoever," he said. "Taking the action we have on foster care and spousal we feel has addressed everything the new law requires of us."

D.C. Council member Tommy Wells (D-Ward 6), who voted to legalize same-sex marriage, said the charity had the right to change its health insurance plan.

"Catholic Charities is a private, nonprofit corporation. They can choose to provide benefits to families and spouses or not," he said. "I hope that it's not just a runaround to keep from doing things they should do, but it's within their purview to decide what to offer their employees."

The church faced two options with the approval of the new law, said Robert Tuttle, a George Washington University professor who studies the relationship between church and state. One choice was to expand the definition of domestic partner, as the Archdiocese in San Francisco did years ago, to include a parent, sibling or someone else in the household.

The second choice was to do what the Washington Archdiocese has done: eliminate benefits for all spouses.

"For decades, the church has been at the forefront of worker benefits, so this move cuts against their understanding of social justice and health benefits to all possible," Tuttle said. "But obviously, you can see they felt there was a real conflict between those values. They feel they weren't left with much of a choice."

Staff members at the charity were not given advance notice of the new policy and will not be able to add a spouse now because the most recent open enrollment period ended in November.

Those who use their health benefits to cover spouses will be grandfathered into the new policy.

Catholic Charities, which operates in the District and five counties in Maryland, employs 850 people. Fewer than 100 use the spousal benefit option, charity officials said.

Staff writer Michelle Boorstein contributed to this report.

Australia Raises Interest Rates as Economy Rebounds

2010-03-02T02:29:00.000-08:00

Australia Raises Interest Rates as Economy Rebounds
By BETTINA WASSENER
Copyright by the New York Times
Published: March 1, 2010
http://www.nytimes.com/2010/03/03/business/global/03ozecon.html?ref=global-home

HONG KONG — Australia raised interest rates on Tuesday for the fourth time since October, in a widely anticipated move that showed that the central bank remains confident in the country’s rebound despite still-difficult international credit conditions and lingering concerns about the debt levels of several European countries.

The Reserve Bank of Australia raised its key cash rate by a quarter of a percentage point to 4 percent, taking the total amount of rate increases since Oct. 7 to 1 percentage point.

“In Australia, economic conditions in 2009 were stronger than expected, after a mild downturn a year ago,” said Glenn Stevens, the governor of the central bank, in a statement accompanying the rate decision. “Labor market data and a range of business surveys suggest growth in the economy may have already been at or close to trend for a few months.”

The Australian dollar rallied briefly against the U.S. dollar right after the central bank’s decision Tuesday but then slipped back to just below 90 U.S. cents.

Australia’s higher rates and growth prospects have fueled a massive rally in the country’s currency: one year ago, the Australian dollar stood at only 63 U.S. cents.

The central bank had surprised analysts last month when it held off raising rates, citing global jitters over a potential default in countries like Greece and saying it wanted to await evidence of how the previous rate increases had affected the economy.

On Tuesday, the Reserve Bank of Australia said the sovereign debt worries remain “elevated,” but with growth in Australia now approaching normal levels, it is now “appropriate” for rates in Australia to be “closer to average.”

Analysts say that this means the key rate will rise by at least another half a percentage point this year, though the pace of further increases is likely to slow.

“The R.B.A.’s balancing act is becoming more precarious,” said Fred Neumann, an economist at HSBC in Hong Kong, in a note on Tuesday, referring to the Reserve Bank of Australia.

The central bank, he added, now has to steer an increasingly cautious course: it needs to temper a red-hot minerals sector and surging jobs growth, but do so without seriously damaging household debt, which has been soaring as the economy picked up.

“In essence, this requires careful tightening at a measured pace, and we consequently expect a 25 basis point hike in the second quarter, a pause in the third quarter, and a final 25 basis point push in the final three months of the year,” Mr. Neumann wrote.

Either way, Australia’s process of normalizing the cost of borrowing again is in stark contrast to other developed nations, including the United States and Europe, whose recovery began later and remains more feeble.

Neither the European Central Bank nor the U.S. Federal Reserve is expected to start nudging up interest rates again until much later this year.

Australia, by contrast, has benefited from fast-growing China’s voracious appetite for its natural resources, and statistics due out on Wednesday are expected to show Australia’s gross domestic product grew 0.9 percent in the fourth quarter from the previous three months, according economists surveyed by Bloomberg News.

Many other nations in the Asia-Pacific region are also now under pressure to start raising rates again or implement other measures to cool down their rapid growth and damp nascent inflation.

Among the next to start nudging up rates may be Malaysia, whose economy grew a greater-than-forecast 4.5 percent last quarter from a year earlier. Wai Ho Leong, an economist at Barclays Capital in Singapore wrote in a note Tuesday that he now expected the Malaysian central bank to state its first rate increase as soon as May.

South Korea, he added in a separate note, is likely to hold off a little longer and start normalizing rates with a quarter-point rise in the second quarter of this year at the earliest.

Data Shows Camrys Not Recalled Also Had Problems

2010-03-02T01:28:00.000-08:00

Data Shows Camrys Not Recalled Also Had Problems
By BILL VLASIC, HIROKO TABUCHI and JO CRAVEN McGINTY
Copyright by The Associated Press
Published: March 1, 2010
http://www.nytimes.com/2010/03/02/business/02toyota.html?ref=global-home

This article was reported by Bill Vlasic, Hiroko Tabuchi and Jo Craven McGinty and written by Mr. Vlasic.

Toyota has recalled six million cars in the United States over concerns about sudden acceleration. But an analysis of government documents shows that many Toyota Camrys built before 2007, which were not subject to recalls, have been linked to a comparable number of speed-control problems as recalled Camrys.

While owners of all makes of vehicles have filed complaints with the government about speed control problems, the analysis — based on a review of 12,700 complaint records in the United States over the last decade by The New York Times — reveals that Toyota had more complaints involving crashes than any other carmaker.

Many of the complaints were about vehicles not covered by recalls. The 2002 Camry, for example, had about 175 speed-control complaints. Roughly half of those involved crashes.

By comparison, the 2007 Camry, which was recalled, was the subject of about 200 speed-control complaints, with fewer than a quarter of those resulting in acci-dents.

In all, federal safety regulators said they had received complaints alleging that unintended acceleration in Toyota vehicles caused 34 deaths.

In his Congressional testimony last week, James E. Lentz III, the president of Toyota Motor Sales U.S.A., noted that other auto manufacturers had had complaints of sudden acceleration.

Of the 12,700 National Highway Traffic Safety Administration consumer complaints analyzed by The Times, the Ford Motor Company had the most, about 3,500.

Toyota ranked second, with about 3,000 complaints, but those were linked to far more accidents — 1,000 — compared to 450 crashes for Ford.

All told, from 2000 through 2009, Toyota had one speed-control crash complaint per 20,454 vehicles sold in the United States. Ford had one complaint per 64,679 vehicles. Honda had one per 70,112 and G.M. one per 179,821.

Asked about The Times’s findings, a Toyota spokesman said on Monday that pre-2007 Camrys had been investigated and cleared of defects in three previous inquiries by the safety agency. “At the conclusion of these investigations, no specific evidence of a trend regarding safety issues was found,” said Brian Lyons, the spokesman.

Mr. Lyons said that the 2002 and 2003 Camrys with six-cylinder engines had also been subject to two corporate service actions aimed at addressing momentary surges in acceleration. He said the changes were “not issued to resolve any computer software or electronic throttle control concerns.”

A separate examination by The Times of transport ministry records in Japan revealed a similar finding. In reports since 2001, Toyota vehicles have been cited with a greater frequency in complaints of sudden acceleration than those of other major carmakers.

Toyota has blamed gas pedals that can stick and bulky floor mats for unexplained acceleration in its recalled vehicles.

Camrys sold before 2007 in the United States, and almost all Toyotas sold in Japan, use a different pedal design and different floor mats. So Toyota has said that there is no need to recall those cars.

Records suggesting that these Camrys and Japanese Toyotas have sudden acceleration problems have raised questions about whether there might be another explanation, including the possibility that the cars’ electronic systems malfunction, resulting in unexpected acceleration.

Toyota’s chief executive, Akio Toyoda, testified before a Congressional panel last week that he was “absolutely confident” there was no problem with Toyota’s electronics.

“Tests have been repeated,” he said. “However, no malfunction or problems were identified.”

But transportation officials in the United States said in interviews that they were reviewing whether to expand their investigations of Toyota to include pre-2007 Camrys.

A spokeswoman for the Transportation Department, Olivia Alair, said these same models would now be part of an inquiry into the role that electronic throttle control systems may have played in Toyota’s speed-control problems.

“If N.H.T.S.A. can find evidence of a possible defect trend with Toyota or other products during this review, they will open a defect investigation,” Ms. Alair said. Announcing new and rare investigations in Japan, the Seiji Maehara, the transport minister, said last week of Toyota’s executives, “There’s a high possibility that Toyota has not provided the state with adequate information.”

Last Wednesday, the transport ministry said it would examine 38 complaints of sudden acceleration in Toyotas reported from 2007 through 2009, as well as 134 cases in cars produced by all other automakers that sell in Japan. No deaths or injuries have been reported as a result of those incidents, the ministry said.

The Times’s analysis of complaints in the United States covered those filed since 2000 involving all makes and models of cars manufactured this decade. A complaint about speed control may indicate that the vehicle accelerated excessively or inadequately.

The single largest source of these complaints was the 2007 model Camry.

That model, along with Camrys made since, has been recalled twice, beginning last fall, in connection with unintended acceleration — first for unsecured floor mats, and then for faulty accelerator pedals that could stick when depressed.

A high incidence of crashes linked to speed control has occurred in earlier model Camrys.

During 2004, 125 crashes reported to the highway safety agency were linked to speed control. About 80 of those involved Camrys.

In Japan, The Times examined all the reports of Toyota malfunctions brought to the transport ministry since 2001, about 3,700 in all, and, for comparison, all comparable reports on Honda over the same period, about 2,400.

The examination found 99 cases of sudden acceleration or engine surge in Toyotas, compared with 18 reports of similar problems in Hondas.

The transport ministry received a sudden acceleration report for every 150,000 Toyotas sold. This compares with one report for about every 300,000 Hondas sold.

Although Toyota sold 1.35 million cars and trucks in Japan last year, that many reports “is not a small number,” said Tetsuo Taniguchi, a chief researcher at the Japanese government-affiliated National Traffic Safety and Environment Laboratory. “If pedals or floor mats are not the problem in Japan, it’s time for Toyota to investigate what is.”

Ministry officials note that a small fraction of incidents make their way to the ministry because most drivers report auto malfunctions to their dealers. And in Japan dealers and manufacturers are under no obligation to give that information to the government, unless the company believes it failed to comply with national safety standards.

For the government to order a recall, it must have proof of a potentially dangerous defect, which is difficult to find without cooperation from the automaker.

On Monday, Mr. Toyoda also continued his campaign to shore up Toyota’s reputation, apologizing at a news conference in China to consumers there for quality concerns.

This article was reported by Bill Vlasic, Hiroko Tabuchi and Jo Craven McGinty and written by Mr. Vlasic.

For Google, provoking ISPs is the only way to build the Internet

2010-03-01T11:00:00.000-08:00

For Google, provoking ISPs is the only way to build the Internet
By Paul Smalera, contributor
Copyright by CNN Money
March 1, 2010 9:51 AM
http://brainstormtech.blogs.fortune.cnn.com/2010/03/01/for-google-provoking-isps-is-the-only-way-to-build-the-internet/?source=yahoo_quote

Google's recent push to provide ultra-high-speed Internet is more about injecting competition in the dysfunctional Internet business than about creating a new revenue stream.

It's the 21st century equivalent of the Oklahoma land rush: Just days after Google announced it was seeking some trial areas in which to deploy its new ultra-high-speed fiber network, cities and towns began throwing themselves at the Internet giant. And why shouldn't they? The digital divide is wider than ever. A recent FCC report, concluded that 93 million Americans lack access to high-speed Internet service, with affordability being the primary barrier. Harvard's Berkman Center just rated America's broadband network 16th best among developed nations in the world — just beating out Luxembourg.

For CEO Eric Schmidt, the middling rank isn't just a reason to hide his face when visiting Sweden (1st) or the U.K. (11th) — it's a serious obstacle to Google's continued growth. The same goes for Facebook, eBay (EBAY), Twitter, Amazon.com (AMZN), Apple's (AAPL) iTunes Music Store and every other U.S.-based website or online service you can think of. But it's Google (GOOG) that has the pocketbook and the self-regard to attempt to do something about it: by forcing ISPs to evolve or face extinction.

Right now, high-speed Internet access in the United States is divided among geographic, regulatory, and economic lines that make little sense in a digital world. English serfs had more choice over their fates than Americans have over the set-top boxes in their living rooms. Cable companies like Comcast (CMCS.A), Cox, and Time Warner Cable (TWC) carve up swaths of "bundled" video, voice, and data customers by signing region-wide local-franchise agreements designed for the era of one-way communications: coaxial cable to the back of the TV set. Deregulated phone companies, namely Verizon (VZ), are trying to horn in the business, spending thousands per customer to swap out copper-wire for fiber. And satellite companies like DirecTV (DTV) try to fill some of the gaps.

Google executives seemed to have looked upon the broadband landscape — expensive, competition-free, and scarce — and spotted something like the spam-laden, limited, and brutally slow Hotmail service that they set out to demolish six years ago. And as with that destroyer, Gmail, they've set their sights incredibly high.

Where the FCC wants speeds of 100 megabits per second to be widely available by 2020, Google plans to beat that by a factor of 10, aiming to supply 1 Gigabit/second access to the lucky communities that win entry into its pilot project. Compared with today's high-speed access, the leap will be like going from riding a skateboard to riding a rocket ship.

But in Google's view, the extra bandwidth isn't wasted or frivolous. As one digital media professor noted in her university's newspaper: "When my daughter started college six years ago, every single dorm room had a television. Two years later, my son started college, and barely anybody had TVs in their room." The rate at which teenagers have taken to Internet video is startling, with many consuming nearly all of their video content online. Much of the content they crave is there legally. And the demand for what isn't is getting to be too great for content owners to ignore.

Nearly all searches for that content are initiated through Google or YouTube. And even if they're not, they're likely to evenutally lead the user to a site with Google ads. Google has, for now, won the battle of Internet dominance, and still launches new products (like Buzz) to protect that dominance. But what's really left for the company to do is not to grow market share, but to grow the marketplace itself. All things equal, that's going to mean stealing eyeballs from competing video screens — like cable television. Which is probably why cable executives aren't really in a rush to bring consumers the high speeds they already can.

They know that if millenials' online addiction is going to stick post-dorm room, then buffered, stuttering splotchy video will have to be eliminated. So what's a cable company to do? Promote high-speed, high-margin ISP service, or continue to prop-up their flagship television offerings, despite deteriorating economics? Well, why choose, when they can do both? In 2008, Comcast CEO Brian Roberts, delivering the keynote speech at the Consumer Electronics Show, practically guaranteed 100 megabits-per-second Internet speeds by 2010. Then he bought NBC Universal for $13 billion. And we're still sitting here, buffering.

Cultural and market forces may be pointing towards the size of the pipe becoming more important than the number of pre-programmed HD channels it carries, but there's very little pressure on ISPs to change anything today, even though they have the technology to more than triple their bandwidth. Forget about them voluntarily lowering prices, despite 95% profit margins on Internet service last year. Cable channels and content producers are pushing cable companies for ever-greater carriage fees, to the point where what consumers pay for broadband will soon be used by the cable company to subsidize the fees it pays to cable channels. Rising prices for Internet access aren't coming from eBay — they're coming from ESPN.

Google wants its ultra-high-speed Internet service to apply pressure on the other side of that equation, forcing ISPs to boost bandwidth and lower prices. Using its savvy investment in cheap bandwidth, Google will show what high-speed Internet access, devoid of cable payments and scandalous profit margins, can be. And, as it hoped, it's already causing a stir. Soon after Google made its announcement, Cisco (CSCO) — the hardware provider to AT&T (T), Comcast, and others — said it will be unveiling major news (we're assuming gear here) that will speed up the Net. On March 9, says Cisco,"'what's next' arrives."

To some, Cisco's move seems like an act of war (or, at least, arming for war). But Google has been explicit that its pilot project is just that — a limited trial for a few thousand lucky American homes. Google wants to avoid getting into the business of being an ISP, beyond a limited scope. Already beset by privacy concerns, it's not interested in adding the ire customers direct at their cable company to the outcry over privacy concerns it's facing from cloud computing, Buzz, and its cooperation with the NSA. After all, "Don't be evil," doesn't mean "be a punching bag."

The whole point of Google's ultra-high-speed 'land-grant' is to prod Cisco and its ISP customers into making the necessary upgrades to provide better service for not just a few thousand people, but 300 million of them. Two years ago, Google's failed wireless spectrum auction bid was actually a successful gambit to force a sort of wireless net-neutrality onto the winners. Likewise, this is Google's attempt to change an entire industry by jamming its brainiac lever under just the right spot on the ossified ISP cabal. With any luck, there'll be a rocket ship waiting underneath.

Come Together

2010-03-01T10:56:00.000-08:00

Come Together
by Hendrik Hertzberg
Copyright by The New Yorker
March 8, 2010
http://www.newyorker.com/talk/comment/2010/03/08/100308taco_talk_hertzberg#ixzz0gwkwBXEQ

Newt Gingrich, the former Speaker of the House, is a reader—and something of a postmodern interpreter—of the works of Albert Camus and George Orwell. A few days before President Obama’s big health-care “summit,” Gingrich addressed the Conservative Political Action Conference. He cited Camus’s “The Plague,” summarizing its message with Jack Nicholsonian authoritativeness: “The authorities can’t stand the truth.” His discussion of Orwell was more narrowly targeted. The message of “1984,” he explained, is that centralized planning inherently leads to dictatorship, which is why having a secular socialist machine try to impose government-run health care in this country is such a significant step away from freedom and away from liberty, and towards a government-dominated society.

Orwell’s position on the House and Senate health-care bills is unknown, but, like Camus, he was a lifelong democratic socialist (he was a member of the Independent Labour Party, which regarded regular Labourites as wishy-washy) and, as such, a big fan of government-run health care. Confusion about who is and who is not a socialist and what is and what is not socialism was endemic at C-PAC, as the conference’s participants affectionately call it. “The hope and change the Democrats had in mind was nothing more than a retread of the failed and discredited socialist policies that have been the enemy of freedom for centuries all over the world,” Senator Jim DeMint, of South Carolina, said, adding, in a reference to the President, “Just because you are good on TV doesn’t mean you can sell socialism to freedom-loving Americans.” Representative Steve King, of Iowa, listed the enemy within: “They are liberals, they are progressives, they are Che Guevarians, they are Castroites, they are socialists.” Then he mentioned a few more key segments of the Democratic coalition, including, besides Trotskyites, Maoists, Stalinists, and Leninists, “Gramsci-ites—ring anybody’s bell?” Strictly speaking, that should be Gramscians, followers of Antonio Gramsci, the Italian Communist Party leader of the nineteen-twenties. Ding-dong!

To be fair, C-PAC is a gathering of the tribe—“our Woodstock,” one speaker called it—so a certain amount of nude dancing in the rhetorical mud is mandatory. Outside the conservative confab’s comfy confines, the Party’s pols were more restrained during the days leading up to the marathon conversation that Obama convened last Thursday. But they made it fairly clear that they were in no mood to be “bipartisan” or in any way make themselves complicit in something that could be construed as an accomplishment (let alone a victory) for Obama and the Democrats. “You know,” John Boehner, the House Republican leader, said on Wednesday, “we’ve asked the President all year to scrap this big government-takeover bill and let’s start with a clean sheet of paper.” On Thursday, any lingering doubts were removed. By way of describing their demand, Republican speakers used the words “scrap,” “start over,” and “clean sheet of paper” twenty times. In other words: unconditional surrender.

from the issuecartoon banke-mail this.The summit consisted of seven and a half hours of jabber divided among thirty-eight members of Congress and three Administration officials, every one of whom had to have at least one turn. Therefore, as anyone who watched it all (or as much of it as attending to bodily needs and psychic balance allowed) can attest, it was stupefying—as stupefying, perhaps, as the twenty-seven-hundred-page health-care bill itself, a foot-high copy of which the Republicans brought along as a prop. Yet, like that bill, its individual components were frequently worth the trouble. The discussion produced no compromises—it was a debate, not a negotiation—but it was clarifying.

The Democrats made it clear that they intend to cover the uninsured before another lifetime or two elapses; the Republicans made it equally clear that they do not. “We just can’t afford this,” Eric Cantor, the House Republican whip, said, adding dismissively, “In a perfect world, everyone would have everything they want.” But, even when the two sides seemed to agree on a particular goal, the similarities were irreconcilable, so to speak. For example, both sides say that they favor making it impossible for people with “preëexisting conditions” to be refused insurance. Obviously, this can’t be done by simply ordering insurance companies to accept such people. Too many of the young and healthy, knowing that they couldn’t be refused, would wait to buy insurance until they got sick; the ranks of the insured would grow thinner and sicker, and premiums would balloon. Without the universal or near-universal coverage that Democrats support, just telling insurance companies that they must accept everyone becomes another way of distributing health care by ability to pay. We have enough of that already. Segregating the sick into “high-risk pools”—the oxymoronic Republican solution—has generally flopped in states where it has been tried. A similar logic holds for allowing the purchase of insurance across state lines, another point of nominal bipartisan agreement. Without the sort of standards that Democrats want and Republicans don’t, those among the young, the healthy, and the poor who bought insurance at all would choose the cheapest, skimpiest policies from companies in the least regulated states, leaving people who need the kind of insurance many of us are lucky enough to have in shrinking pools with increasingly unaffordable premiums—the “race to the bottom” that the Democrats kept talking about.

In his opening remarks at the summit, Senator Lamar Alexander, of Tennessee, borrowing a favorite gibe from Mitch McConnell, the Senate Minority Leader, said that if the Democrats decline to abandon their attempt at comprehensive reform “the only thing bipartisan will be the opposition to the bill.” In one sense, Alexander was right: all the supporters of health-care reform in Congress are Democrats, while the opposition consists of both Republicans and Democrats. The Republicans have become—monolithically, on this issue and many others—the party of the right. The Democrats are the party of the center-left. The congressional center, in other words, consists entirely of Democrats, many of whom hold seats that once belonged to liberal Republicans, a breed that conservatives of both parties have hunted to extinction. But in another sense Alexander was wrong: the Democrats’ bill more closely resembles Richard Nixon’s health-care proposal—the one that Ted Kennedy went to his grave regretting he hadn’t embraced—than it does Bill Clinton’s, to say nothing of Harry Truman’s. Nor are all its Republican features archeological. “Our bill contains over a hundred and forty-seven distinct Republican amendments,” Senator Tom Harkin, of Iowa, reminded his summit colleagues. The health-care reform bill—which, despite everything, is still alive—is an ambitious piece of legislation, however modest it may be by the measure of the rest of the developed world. Ideologically and substantively, it is centrist. It has Republicans, and Republicanism, in its family tree. For better or for worse, it’s already bipartisan. Gramsci would not be pleased.

Doctors Without Morals

2010-03-01T07:46:00.000-08:00

Doctors Without Morals
By LEONARD S. RUBENSTEIN and STEPHEN N. XENAKIS
Copyright by The New York Times
Published: February 28, 2010
http://www.nytimes.com/2010/03/01/opinion/01xenakis.html?th&emc=th

AFTER five years of investigation, the Justice Department has released its findings regarding the government lawyers who authorized waterboarding and other forms of torture during the interrogation of suspected terrorists at Guantánamo Bay and elsewhere. The report’s conclusion, that the lawyers exercised poor judgment but were not guilty of professional misconduct, is questionable at best. Still, the review reflects a commitment to a transparent investigation of professional behavior.

In contrast, the government doctors and psychologists who participated in and authorized the torture of detainees have escaped discipline, accountability or even internal investigation.

It is hardly news that medical staff at the C.I.A. and the Pentagon played a critical role in developing and carrying out torture procedures. Psychologists and at least one doctor designed or recommended coercive interrogation methods including sleep deprivation, stress positions, isolation and waterboarding. The military’s Behavioral Science Consultation Teams evaluated detainees, consulted their medical records to ascertain vulnerabilities and advised interrogators when to push harder for intelligence information.

Psychologists designed a program for new arrivals at Guantánamo that kept them in isolation to “enhance and exploit” their “disorientation and disorganization.” Medical officials monitored interrogations and ordered medical interventions so they could continue even when the detainee was in obvious distress. In one case, an interrogation log obtained by Time magazine shows, a medical corpsman ordered intravenous fluids to be administered to a dehydrated detainee even as loud music was played to deprive him of sleep.

When the C.I.A.’s inspector general challenged these “enhanced interrogation” methods, the agency’s Office of Medical Services was brought in to determine, in consultation with the Justice Department, whether the techniques inflicted severe mental pain or suffering, the legal definition of torture. Once again, doctors played a critical role, providing professional opinions that no severe pain or suffering was being inflicted.

According to Justice Department memos released last year, the medical service opined that sleep deprivation up to 180 hours didn’t qualify as torture. It determined that confinement in a dark, small space for 18 hours a day was acceptable. It said detainees could be exposed to cold air or hosed down with cold water for up to two-thirds of the time it takes for hypothermia to set in. And it advised that placing a detainee in handcuffs attached by a chain to a ceiling, then forcing him to stand with his feet shackled to a bolt in the floor, “does not result in significant pain for the subject.”

The service did allow that waterboarding could be dangerous, and that the experience of feeling unable to breathe is extremely frightening. But it noted that the C.I.A. had limited its use to 12 applications over two sessions within 24 hours, and to five days in any 30-day period. As a result, the lawyers noted the office’s “professional judgment that the use of the waterboard on a healthy individual subject to these limitations would be ‘medically acceptable.’”

The medical basis for these opinions was nonexistent. The Office of Medical Services cited no studies of individuals who had been subjected to these techniques. Its sources included a wilderness medical manual, the National Institute of Mental Health Web site and guidelines from the World Health Organization.

The only medical source cited by the service was a book by Dr. James Horne, a sleep expert at Loughborough University in Britain; when Dr. Horne learned that his book had been used as a reference, he said the C.I.A. had distorted his findings and misrepresented his research, and that its conclusions on sleep deprivation were nonsense.

Dr. Horne had used healthy volunteers who were subject to no other stresses and could withdraw at any time, while C.I.A. and Pentagon interrogators used a broad array of stresses in combination on the detainees. Sleep deprivation, he said, mixed with pain-inducing positioning, intimidation and a host of other stresses, would probably exhaust the body’s defense mechanisms, cause physical collapse and worsen existing illness. And that doesn’t begin to acknowledge the dire psychological consequences.

The shabbiness of the medical judgments, though, pales in comparison to the ethical breaches by the doctors and psychologists involved. Health professionals have a responsibility extending well beyond nonparticipation in torture; the historic maxim is, after all, “First do no harm.” These health professionals did the polar opposite.

Nevertheless, no agency — not the Pentagon, the C.I.A., state licensing boards or professional medical societies — has initiated any action to investigate, much less discipline, these individuals. They have ignored the gross and appalling violations by medical personnel. This is an unconscionable disservice to the thousands of ethical doctors and psychologists in the country’s service. It is not too late to begin investigations. They should start now.

Leonard S. Rubenstein is a visiting scholar at the Johns Hopkins Bloomberg School of Public Health. Stephen N. Xenakis is a psychiatrist and a retired Army brigadier general.

Range of services at risk due to city, state budgets

2010-02-28T23:33:00.000-08:00

Range of services at risk due to city, state budgets
MAXED OUT | A wide range of services are at risk because the city and state -- and to a lesser extent Cook County -- are in deep financial trouble and headed for worse
Comments
BY MARY WISNIEWSKI, LISA DONOVAN, DAVE McKINNEY AND FRAN SPIELMAN
Copyright by The Chicago Sun-Times
February 28, 2010
http://www.suntimes.com/news/maxedout/2073759,CST-NWS-maxed28.article

It's a gray winter morning in Chicago 2012. You're a single mom, waiting in the snow for a bus.

You lost your job last year as a teaching assistant in the public schools. You'd go back to college to learn new skills, but tuition's high, and financial aid programs are gone.

MAXED OUT

A SUN-TIMES SERIES Facing up to our local and state budget crisis Today, you're heading downtown to fill out job applications. The bus ride costs $3.50 -- and service is half what it was.

You hope you get back in time to get the kids -- after-school programs are gone, and the streets are scary. Maybe you can take them to the library later -- no, wait, the library's closed on Mondays.

This could be the future -- if the state, city and county budgets continue on their current path. Life for all of us could be poorer, harder, more dangerous, more polluted.

"If these trends continue, what you'll see is the speeding-up of the deterioration of the state," said Ralph Martire, executive director of the Center for Tax and Budget Accountability, a Chicago think tank.

Like a frog in a gradually warming pot of water, not everyone notices the trouble brewing. But budget problems have already hurt the Chicago area's way of life -- public transit is shrinking, library hours have been cut, and public schools are laying off employees by the hundreds. And it looks like things can only get worse.

The city shrinks

Take Chicago. In better days, Mayor Daley enjoyed a booming housing market that saw real estate sales taxes growing by double digits every year.

The mayor indulged his beautification fix by putting up median planters and wrought-iron fences. He built the $475 million Millennium Park.

Then the revenue balloon burst. Daley ended up balancing his 2009 budget by laying off 929 city workers and slowing police hiring to a crawl.

To get some cash, the mayor pressured the City Council to approve a 75-year, $1.15 billion deal to privatize Chicago parking meters tied to a steep schedule of rate hikes. To erase a $520 million 2010 budget shortfall without raising taxes, he had to use nearly all of the reserves from the parking-meter deal -- money he once called untouchable. An attempt to squeeze money out of a privatization of Midway Airport fell through.

With some exceptions, city employees were forced to take 24 unpaid furlough days. Library hours were cut by 20 percent. The city's popular Venetian Night celebration and the Grant Park July 3 fireworks extravaganza are gone, and another day will be shaved off the already-reduced Chicago Jazz Fest. The citywide switch to blue-cart recycling is stalled. The Chicago Police Department is more than 2,000 officers a day short of its authorized strength, and Supt. Jody Weis fears this will get worse because as many as 1,000 more officers are expected to retire in 2011.

The worst problem is the city's pension burden. And if pension funds run out of money, Chicago taxpayers will get stuck with the tab.

Mass transit dwindles

While the city struggles with staff and program cuts, the CTA, which carries Chicagoans to jobs and entertainment, has had to shrink. The state borrowed money to avoid fare increases until 2012, but the transit agency still cut bus service by 18 percent and L service by 9 percent, while laying off 1,057 workers. Pace, the suburban bus service, cut back its routes.

And the cuts might not be over. The CTA, Metra and Pace are owed $250 million in state funds and might have to cut service this summer if they don't get the money. The CTA also needs $7 billion in capital money to bring the system into a state of good repair -- or it will get more expensive to run.

"If the state falls further behind, and I expect it will if there is no solution, we're going to be stealing from our capital program, and we're probably going to be looking into service cuts and two years from now a fare increase," said RTA executive director Stephen Schlickman.

"The magnitude of it -- I can't fathom."

The state disaster
As bad as things are for mass transit, the amount that transit agencies are owed by the state is trifling compared with what's due the public schools and health-care systems. Universities alone are owed $735 million. The state's deficit has ballooned to $12.8 billion. That includes unpaid bills, pension-repayment costs and a reduction in federal stimulus dollars.

Dealing with it has ignited partisan warfare in Springfield, where Republicans generally favor cutting their way out of the budget mess, while Democrats are pushing for a mix of cuts and raising revenues.

A tax increase seems unlikely this spring, if only because of election-year fears, though most expect Gov. Quinn to again propose boosting the state's 3 percent income tax. Anti-incumbency fervor among voters had emboldened Statehouse Republicans pushing a no-new-taxes platform.

"Last year would have been a better opportunity to pass it than this year," House Speaker Michael Madigan said.

Madigan blames Republicans, whom he has taken to calling "non-participating dropouts," for failing to put partisanship aside and find more funding for vital state services.

Sen. Bill Brady (R-Bloomington), the likely Republican nominee for governor, has vowed not to raise taxes if elected -- and promises $1 billion in tax cuts. Brady said Democrats have run up record deficits, pushing private investment out of the state and costing jobs.

"We'll stand lockstep against tax increases because that's not the solution," Brady said.

Martire warns that, without new revenue, programs for the developmentally disabled, homebound seniors and those with mental-health issues will be scrapped, and public school students will lose programs. He also worries about fewer safety inspectors for bridges, food, railway crossings and water systems.

"I could see a significant rail accident happening -- the train wreck everyone talks about," Martire said.

County tax backlash

For all the calls for new taxes, one need look no further than Cook County to see how unpopular, and problematic, a tax hike can be.

In 2007, Cook County cut 1,700 jobs -- including nurses and prosecutors. A year later, Cook County Board President Todd Stroger pushed the overall sales tax to 10.25 percent, the highest in the country. He was voted out of office largely over that.

While Stroger said the tax hike kept the hospital system healthy, others argued that it merely dodged the hard job of cutting patronage and bloat, while sending shoppers across the county line. Barrington Hills, just inside Cook County's border, saw a 34.3 percent drop in sales tax receipts in the second quarter of 2009, according to a DePaul University study.

"This just allowed us to fill our coffers with $350 million to $400 million in revenues when all we had to do is make the necessary cuts to remove the waste," said Cook County Commissioner Tim Schneider, a northwest suburban Republican.

Laurence Msall of the Civic Federation, a tax watchdog group, said that while Cook County does not face the same immediate crisis as Illinois, it has long-term problems because of wasteful spending. Though Msall favors an Illinois personal income-tax hike, he said he thinks the last half penny of the county increase should be repealed. "That was never tied to a justified plan for how the money would be spent," Msall said.

It doesn't seem like there's an easy way out for the City of Chicago, or Cook County or the State of Illinois. Every choice looks painful, whether it's raising taxes, cutting programs or a mix of both. Neither new federal stimulus money nor an uptick in the economy alone can save us, said Joseph Schwieterman, director of DePaul University's Chaddick Institute for Metropolitan Development.

"If we can't make some really hard choices now, we're clearly incapable of fixing the problem," said Schwieterman. "I've never felt such a gloomy time."

New York Times Editorial: The Second Amendment’s Reach/Gun case presents quandary for Supreme Court justices

2010-02-28T23:18:00.000-08:00

New York Times Editorial: The Second Amendment’s Reach
Copyright by the New York Times
March 1, 2010
http://www.nytimes.com/2010/03/02/opinion/02tue1.html?ref=global

Two years ago, the Supreme Court struck down parts of the District of Columbia’s gun-control law. On Tuesday, the court will consider whether that decision should apply everywhere in the country, not just in the federal territory of the nation’s capital.

We disagreed strongly with the 2008 decision, which took an expansive and aggressive view of the right to bear arms. But there is an even broader issue at stake in the new case: The Supreme Court’s muddled history in applying the Constitution to states and cities. It should make clear that all of the protections of the Bill of Rights apply everywhere.

McDonald v. Chicago is a challenge to a law that makes it extremely difficult to own a handgun within Chicago’s city limits. The challengers rely on the court’s 5-to-4 ruling in 2008, which recognized an individual right under the Second Amendment to carry guns for self-defense. But that decision left open an important question. The Bill of Rights once was largely thought to be a set of limitations on the federal government. Does the right to bear arms apply against city and state governments as well?

Since states and localities do far more gun regulation than the federal government, the court’s answer will have a powerful impact. The United States Court of Appeals for the Seventh Circuit, in Chicago, relying on 19th-century precedents, ruled that the Second Amendment does not apply to states and cities.

Under the doctrine of “selective incorporation,” the Supreme Court has ruled on a case-by-case basis that most, but so far not quite all, of the Bill of Rights applies to states and cities. The court should dispense with the selectivity and make clear that states and cities must respect the Bill of Rights.

To justify incorporation, the court has relied on the 14th Amendment, which was enacted after the Civil War to ensure equality for newly freed slaves. The amendment has two relevant clauses: the due process clause that requires government to act with proper respect for the law, and the privileges or immunities clause, which is more focused on protecting substantive individual rights.

The logical part of the amendment to base incorporation on is the privileges or immunities clause, but a terrible 1873 Supreme Court ruling blocked that path and the court has relied since then on the due process clause.

A group of respected constitutional scholars and advocates is asking the court to switch to the privileges or immunities clause as the basis for applying the Bill of Rights to states and cities. That would be truer to the intent of the founders, and it could open the door to a more robust constitutional jurisprudence that would be more protective of individual rights.

It is unlikely that the court will delve directly into the gun issues. If it decides to apply the Second Amendment to cities, it would probably send the case back to a lower court to evaluate the Chicago law. If that happens, the justices should guide the court in a way that makes clear that reasonable gun restrictions will still be upheld.

The Supreme Court’s conservative majority has made clear that it is very concerned about the right to bear arms. There is another right, however, that should not get lost: the right of people, through their elected representatives, to adopt carefully drawn laws that protect them against other people’s guns.

Gun case presents quandary for Supreme Court justices
By Robert Barnes
Copyright by The Washington Post
Monday, March 1, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/02/28/AR2010022803985.html?hpid=topnews

As a member of the Junior ROTC, teenager Antonin Scalia toted his rifle on the subway ride back and forth to Queens. As a hunter, he speaks lyrically of stalking wild turkeys. And as a justice, he may have reached the pinnacle of his more than two decades on the Supreme Court when he wrote the majority opinion that said the Second Amendment protects an individual's right to own a firearm.

But when the justices on Tuesday confront the question of whether the amendment applies to state and local governments -- not just the federal government and its enclaves, such as the District of Columbia -- the court's most prominent gun enthusiast faces something of a constitutional quandary.

The most likely path to recognizing gun ownership as a fundamental right is one that has been heavily criticized by Scalia and other conservative scholars, and it seems inconsistent with his belief that the Constitution should be interpreted in terms of its framers' "original meaning."

The alternative, one embraced by an unlikely coalition of libertarian, liberal and some conservative scholars and activists, would apply the Bill of Rights to the states in a way they say is more grounded in the Constitution. But it is also a route that could open what is invariably described as a Pandora's box of additional rights of citizenship -- health care, for instance, or housing.

The debate comes in McDonald v. Chicago, a case with great significance just on the gun-control front. A decision that states and cities may not infringe upon the right to own a firearm for self-defense could eventually call into question all manner of restrictions on gun ownership and registration, limits on who is eligible to own a gun and whether the carrying of weapons can be regulated.

On the surface, the issue would seem "easy as pie," as Scalia sometimes breezily dismisses constitutional decisions that cause other justices deep consternation. It is a challenge of handgun bans in Chicago and the suburb of Oak Park, Ill., that are nearly identical to Washington's restrictions struck by the court in 2008 in the landmark ruling District of Columbia v. Heller.

Most lawyers and scholars who follow the court think the cities have a losing hand; they say it is unlikely the five justices who made up the majority in Heller will decide that the right to own a firearm for self-protection exists only in a federal enclave. But the question of whether the Second Amendment applies to the states was specifically left unanswered in that case.

To most, it might seem illogical that the Bill of Rights would apply only to actions of the federal government, but that was its intent. Over the years, the court has said most of it applies -- or in the court's language is "incorporated" -- through the 14th Amendment.

That post-Civil War amendment was meant to protect rights and outlaw discrimination. It forbade states to pass laws that abridged "the privileges or immunities of citizens of the United States." It said states may not "deprive any person of life, liberty, or property, without due process of law" and guaranteed "equal protection of the laws."

Mostly, the justices have used the "due process" clause to incorporate the majority of the Bill of Rights. The National Rifle Association and others have urged the court to continue to use it to incorporate the Second Amendment.

Reviving another clause

But others, notably scholars from the liberal Constitutional Accountability Center and the libertarian Cato Institute, have urged the court to revive another clause from the 14th Amendment, the one that protects the "privileges or immunities of citizens of the United States" -- 19th-century-speak for "rights." An 1873 Supreme Court decision has buried the "privileges or immunities clause" by saying it covered only a narrow range of national rights, such as traveling to the capital.

The justices said in taking the McDonald case they would decide whether either clause incorporated the Second Amendment. And the exercise will provide interesting revelations.

The liberal dissenters in Heller will decide whether to continue their protest that the Second Amendment does not convey an individual right, or endorse Chicago's position that federalism requires gun control decisions to be left to the states.

Justice Clarence Thomas, Scalia's fellow originalist and another opponent of substantive due process, has signaled he is open to revisiting the privileges or immunities clause. And Justice Sonia Sotomayor, deemed by gun rights organizations as an enemy during her confirmation hearings despite a scant record on the subject, will be casting the first of what could be many votes on gun restrictions.

But Scalia's situation is particularly interesting.

He is unquestionably the court's most outspoken proponent of gun rights. He has lamented in speeches that gun ownership is too often linked with criminal behavior and his hunting trip with then-Vice President Cheney caused a national controversy. His love of the sport goes back to childhood, and he recently waxed about the challenge and allure of turkey hunting to journalist Joan Biskupic for her Scalia biography, "American Original."

"Turkeys are very wily creatures. They have superb eyesight and they're very cautious," Scalia said. "You get one shot. If you miss, the whole day's ruined."

Scalia has been equally lethal on the subject of the due-process clause, which the court has invoked to protect substantive liberties, such as abortion rights and private relations between homosexuals. He protested as recently as last spring, when the court ruled that large campaign contributions to a judge could violate the due process rights of someone who had a case before that court.

"Divinely inspired text may contain the answers to all earthly questions," Scalia wrote in dissent, "but the due process clause most assuredly does not."

Such statements give heart to Doug Kendall of the Constitutional Accountability Center. "Justice Scalia has made a career out of promoting originalism and attacking substantive due process," Kendall said. "How can he possibly embrace the due-process clause when originalism points so overwhelmingly to the privileges-or-immunities clause?"

Kendall's group has submitted a brief that brings together constitutional theorists across the board, such as liberal Jack Balkin of Yale Law School and conservative Steven Calabresi of Northwestern, one of the founders of the Federalist Society. Alan Gura, the Alexandria lawyer who won the Heller case and represents the city residents and gun rights challengers in the current case, stresses the privileges or immunities clause as the proper place to locate Second Amendment rights.

'Rooted in history'

But even Calabresi notes that Scalia can justify recognizing the right under the due-process clause as one "deeply rooted in history and tradition." Scalia has described himself at times as a "faint-hearted originalist," and has said even mistaken doctrines of the court should be left in place when they are widely accepted and relied upon.

The NRA's brief notes that relying on the due process clause in this case would allow the court to avoid overruling several previous decisions. And it references Scalia's dissent from 1993 that says he is "willing to accept the proposition that the Due Process Clause of the Fourteenth Amendment, despite its textual limitation to procedure, incorporates certain substantive guarantees specified in the Bill of Rights."

In a speech to Yale law students in 1996, Scalia was apparently more colorful, but no more conclusive. The idea of substantive due process was "babble," Scalia said, according to one report. On the other hand, the privileges-or-immunities clause was "flotsam," he said.

Officials puzzle over billions of dollars (CASH) leaving Afghanistan by plane for Dubai

2010-02-28T12:18:00.000-08:00

Officials puzzle over billions of dollars (CASH) leaving Afghanistan by plane for Dubai
By Andrew Higgins
copyright by The Washington Post
Thursday, February 25, 2010; A10
http://www.washingtonpost.com/wp-dyn/content/article/2010/02/24/AR2010022404914.html

KABUL -- A blizzard of bank notes is flying out of Afghanistan -- often in full view of customs officers at the Kabul airport -- as part of a cash exodus that is confounding U.S. officials and raising concerns about the money's origin.

The cash, estimated to total well over $1 billion a year, flows mostly to the Persian Gulf emirate of Dubai, where many wealthy Afghans now park their families and funds, according to U.S. and Afghan officials. So long as departing cash is declared at the airport here, its transfer is legal.

But at a time when the United States and its allies are spending billions of dollars to prop up the fragile government of President Hamid Karzai, the volume of the outflow has stirred concerns that funds have been diverted from aid. The U.S. Drug Enforcement Administration, for its part, is trying to figure out whether some of the money comes from Afghanistan's thriving opium trade. And officials in neighboring Pakistan think that at least some of the cash leaving Kabul has been smuggled overland from Pakistan.

"All this money magically appears from nowhere," said a U.S. official who monitors Afghanistan's growing role as a hub for cash transfers to Dubai, which has six flights a day to and from Kabul.

Meanwhile, the United States is stepping up efforts to stop money flow in the other direction -- into Afghanistan and Pakistan in support of al-Qaeda and the Taliban. Senior Treasury Department officials visited Kabul this month to discuss the cash flows and other issues relating to this country's infant, often chaotic financial sector.

Tracking Afghan exchanges has long been made difficult by the widespread use of traditional money-moving outfits, known as "hawalas," which keep few records. The Afghan central bank, supported by U.S. Treasury advisers, is trying to get a grip on them by licensing their operations.

In the meantime, the money continues to flow. Cash declaration forms filed at Kabul International Airport and reviewed by The Washington Post show that Afghan passengers took more than $180 million to Dubai during a two-month period starting in July. If that rate held for the entire year, the amount of cash that left Afghanistan in 2009 would have far exceeded the country's annual tax and other domestic revenue of about $875 million.

The declaration forms highlight the prominent and often opaque role played by hawalas. Asked to identify the "source of funds" in forms issued by the Afghan central bank, cash couriers frequently put down the name of the same Kabul hawala, an outfit called New Ansari Exchange.

Early last month, Afghan police and intelligence officers raided New Ansari's office in Kabul's bazaar district, carting away documents and computers, said Afghan bankers familiar with the operation. U.S. officials declined to comment on what prompted the raid. New Ansari Exchange, which is affiliated with a licensed Afghan bank, closed for a day or so but was soon up and running again.

The total volume of departing cash is almost certainly much higher than the declared amount. A Chinese man, for instance, was arrested recently at the Kabul airport carrying 800,000 undeclared euros (about $1.1 million).

Cash also can be moved easily through a VIP section at the airport, from which Afghan officials generally leave without being searched. American officials said that they have repeatedly raised the issue of special treatment for VIPs at the Kabul airport with the Afghan government but that they have made no headway.

One U.S. official said he had been told by a senior Dubai police officer that an Afghan diplomat flew into the emirate's airport last year with more than $2 million worth of euros in undeclared cash. The Afghan consul general in Dubai, Haji Rashoudin Mohammadi, said in a telephone interview that he was not aware of any such incident.

The high volume of cash passing through Kabul's airport first came to light last summer when British company Global Strategies Group, which has an airport security contract, started filing reports on the money transfers at the request of Afghanistan's National Directorate of Security, the domestic intelligence agency. The country's notoriously corrupt police force, however, complained about this arrangement, and Global stopped its reporting in September, according to someone familiar with the matter.

Afghan bankers interviewed in Kabul said that much of the money that does get declared belongs to traders who want to buy goods in Dubai but want to avoid the fees, delays and paperwork that result from conventional wire transfers.

The cash flown out of Kabul includes a wide range of foreign currencies. Most is in U.S. dollars, euros and -- to the bafflement of officials -- Saudi Arabian riyals, a currency not widely used in Afghanistan.

Last month, a well-dressed Afghan man en route to Dubai was found carrying three briefcases stuffed with $3 million in U.S. currency and $2 million in Saudi currency, according to an American official who was present when the notes were counted. A few days later, the same man was back at the Kabul airport, en route to Dubai again, with about $5 million in U.S. and Saudi bank notes.

One theory is that some of the Arab nation's cash might come from Saudi donations that were supposed to go to mosques and other projects in Afghanistan and Pakistan. But, the American official said, "we don't really know what is going on."

Efforts to figure out just how much money is leaving Afghanistan and why have been hampered by a lack of cooperation from Dubai, complained Afghan and U.S. officials, who spoke on the condition of anonymity. Dubai's financial problems, said a U.S. official, had left the emirate eager for foreign cash, and "they don't seem to care where it comes from." Dubai authorities declined to comment.

New and improved in France for 2010

2010-02-28T03:52:00.000-08:00

New and improved in France for 2010
France is spiffing up its sights and museums from the Rhine to the Pyrenees. Of course, the biggest news is in Paris, where 2010 brings important changes.
By Rick Steves
Copyright © 2010, Chicago Tribune
February 28, 2010
http://www.chicagotribune.com/travel/sc-trav-0223-steves-20100224,0,6323447.story

Many Parisian museums are renovating and tweaking offerings. Paris' wonderful Picasso Museum has closed for a 30-month (some think longer) expansion. The Musee d'Orsay also is doing major renovations. At the Louvre, construction is under way on an Islamic Art wing, due to open in 2011. The pre-Classical Greek section is closed, and the Classical Greek pieces likely will be reorganized. The Army Museum's recently renovated Arms and Uniforms section covers French military history from Louis XIV to Napoleon III. And for those who enjoy city vistas, you can now get a cheap escalator-only ticket at the Pompidou Center, skip the higher-priced museum, and ride the escalator directly to the top for the view.

Long lines are the norm at the Catacombs, where millions of skeletons unearthed from former Paris cemeteries have been neatly and eerily stacked, filling miles of tunnels from a medieval plaster of Paris quarry. Waits of 60 to 90 minutes are common. If you arrive later than 2:30 p.m., you may not get in. The Catacombs recently reopened after a spate of vandalism caused it to shut down. Security has been improved, and the loose skulls have been wired into place.

Versailles is wrapping up its multiyear renovation project, and all parts should be open. Though Europe's greatest palace is the big draw, the vast royal park with the Domaine de Marie-Antoinette (the queen's frilly rural escape) is attracting crowds too. Most of the palace is covered by the Paris Museum Pass (parismuseumpass.com), which for most travelers is a better deal than the LePasseport sold at the chateau and online (chateauversailles.fr).

Also outside Paris, Chartres' cathedral is undergoing routine restoration. So, while the interior still will be divinely lit, mostly it will be scaffolding that is illuminated. At Giverny, Monet's famous gardens now are open seven days a week April through October. Adjacent to his studio, what was the Museum of American Art has become the Museum of the Impressionists, showing temporary exhibits. Appropriately, the featured artist in 2010 is Monet.

The abbey island of Mont St. Michel has been a huge pilgrim attraction for centuries. A modern causeway made it easier to reach the island but also changed the flow of the tidal waters, causing the bay to slowly become marshland.

These days, plans to restore the abbey's island status are moving ahead. Scheduled for completion in early 2010, the Couesnon River dam at the start of the causeway retains water upriver during high tide and releases it at low tide, in effect flushing the bay and keeping its famed mudflats muddy. In the future, the causeway will be realigned to meet a sleek foot bridge, and visitors will be shuttled from mainland parking lots to the bridge to walk the remaining 300 yards (over the water at high tide) to the island. The entire project is to be completed by 2014.

In the Loire, taking a bus or minivan excursion to see the valley's beaucoup chateaux can save time (in line) and money (on admissions) when you buy your chateau ticket at a discounted group rate from the driver. Amboise's tourist office now sells "le Pass," which is tickets bundled in groups of three to save on entry fees. (Most Loire area tourist information offices offer some sort of pass promoting their sights.)

To avoid the lines at the popular Chateau de Chenonceau, purchase advance tickets at local tourist offices or from ticket machines. In the great castle town of Chinon, a free panoramic elevator now zips visitors up to the newly renovated fortress that crowns the city.

Along Provence's Cotes du Rhone wine road, a trendy new winery called Domaine de Mourchon has become the buzz of the region, blending state-of-the-art technology and traditional winemaking methods — a dazzling ring of stainless-steel vats holds wines grown on land plowed by horses. The wines are winning international praise, and the owners are Scottish, eliminating the language barrier.

All these improvements to an already exciting tourist destination are a reminder that, more than ever, France is enthusiastic about sharing its heritage and welcoming visitors.

Rick Steves (ricksteves.com) writes European travel guidebooks and hosts travel shows on public television and public radio. E-mail him at rick@ricksteves.com, or write to Box 2009, Edmonds, WA 98020.

Americans top medal performance in any Winter Games? Vancouver

2010-02-28T03:45:00.000-08:00

Americans top medal performance in any Winter Games? Vancouver
By Philip Hersh
Copyright © 2010, Chicago Tribune
8:11 p.m. CST, February 27, 2010
http://www.chicagotribune.com/sports/olympics/ct-oly-0228-olympics-united-states-succes20100227,0,7543466.story

VANCOUVER — When speedskaters Brian Hansen, Jonathan Kuck and Chad Hedrick finished the team pursuit final early Saturday afternoon, they could pat themselves on the back for winning a silver medal and officially start the U.S. chest-thumping for making history.

Theirs was the 35th medal for Team USA in the 2010 Winter Olympics, one more than the U.S. record 34 at Salt Lake City in 2002. Steve Holcomb's four-man bobsled team added another later Saturday, first U.S. gold in the sport since 1948.

"As an athlete, with everyone focusing on the medal count, you obviously pay attention," said Apolo Anton Ohno, the four-time Olympian whose three short-track speedskating medals here gave him a career eight, most for a U.S. winter athlete. "To know this is the biggest medal haul ever is pretty amazing."

The United States will top the medal count for the first time since 1932, and it will finish with 37 medals, breaking the single-country record of 36 set by Germany in 2002. Canada also has made history, leading the gold-medal count for the first time.

Even the International Olympic Committee is celebrating the U.S. success, which also is amazing given the fractious IOC relations with the United States in the past decade.

"If the U.S. comes first by whatever count, they will claim a victory, and that would be good for them and the Olympic movement," IOC president Jacques Rogge said.

As noteworthy as the U.S. achievement is in its simplest mathematical terms, it is even more impressive when a number of other factors are added to this Olympic differential equation.

And the results prove how far the United States has come since its dismal showing, with just six medals, the last time the Winter Games took place in Canada, thanks to what became a two-phase plan to improve U.S. performance.

Phase one was the equivalent of putting a brace on a badly injured knee. Phase two was reconstructive surgery and rehabilitation.

From winning a worst-ever 4.3 percent of the available medals at the 1988 Calgary Olympics, the U.S. has won 14.2 percent of the Vancouver medals with just five remaining for Sunday's competition.

That defuses any argument that the U.S. medal total is inflated by the number of new events since 1988. So does this: 17 U.S. medals have come in events also on the Calgary program. And only one medal has come in an event added since 2002.

"Thus says our athletes were well-prepared, and we had a fantastic games," said Scott Blackmun, the U.S. Olympic Committee's chief chief executive.

That preparation began even before the U.S. team had left Calgary with merely two gold, one bronze and three silver medals, all in figure skating and speedskating.

The 1988 Winter Games still had five days to run when New York Yankees' owner George Steinbrenner, then a USOC board member, blustered into town to head up a commission that changed the USOC's previously vague mission into one that made medals the bottom line.

The 1989 Steinbrenner Commission report would start phase one of an athlete performance plan that began with short-term support and long-term ideas: more money in the year before an Olympics and health insurance, part-time jobs and tuition grants that would allow athletes to compete longer.

Within four years, the U.S. had upped its medal-winning percentage by 150 percent, then improved a bit more at the 1994 Lillehammer, Norway, Olympics before backsliding slightly at Nagano, Japan, in 1998.

Billy Demong competed at his first of four Olympics in Nagano, finishing 34th in the Nordic combined individual event. Last week, he became the first U.S. gold medalist in the sport.

"In Nagano, we felt like a small country." Demong said. "As a whole team, we felt like one of the outsiders. And now we're here to win."

Olympic kayak champion Norm Bellingham, the USOC's chief operating officer, has been involved in the development programs since 1988. He said a desire to have a "respectable medal total" at the Salt Lake City Games led to a change in philosophy that is a major factor in the Vancouver results.

"I don't think anyone ever perceived one-year programs would be sufficient," Bellingham said. "They needed to be 7- or 10-year programs, because the time it takes for an athlete identified as podium potential to reach the podium typically is 8-to-10 years."

Demong, who will carry the U.S. flag in the Closing Ceremony, and his sport are the prime examples, benefitting from increased USOC funding and the long-term plan the U.S. Ski & Snowboard Association was asked to develop in the mid-90s for Nordic combined.

"The way we got to where we are is by taking it every step of the way," Demong said. "We kind of earned it before we got here."

The USOC gave $40 million in winter athlete support over the four years leading to Salt Lake City, including $18 million designated just to help win 2002 medals. The support was $55 million in the four years leading to Vancouver.

That will be a challenge for the USOC after 2012, given the recession and questions over how much money it will get from as-yet undetermined U.S. television rights for 2014 and 2016.

"The USOC has a saying: ‘It's not every four years, it's every day,' " Ohno said. "I'd like to think that future generations, Sochi (host of 2014 Winter Olympics in Russia) and beyond, will receive whatever they need to be their absolute best at the games."

The bar for absolute best now is very high.

phersh@tribune.com

Washington Post Editorial; Fighting foreclosure

2010-02-28T03:37:00.000-08:00

Washington Post Editorial; Fighting foreclosure
Copyright by The Washington Post
Sunday, February 28, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/02/27/AR2010022702803.html

THE OPTIMUM policy for the home foreclosure crisis is to modify the loans of as many distressed homeowners as possible. Making mortgage terms more affordable by mutual agreement enables families to stay in their houses, props up neighborhood home values and saves banks the huge costs of seizing and selling property at a loss. Turns out there is just one problem. It's not feasible to modify nearly enough loans to keep pace with foreclosures.

The Obama administration launched its Home Affordable Modification Program (HAMP) about a year ago. Funded with up to $75 billion from the Troubled Asset Relief Program (TARP), HAMP was aimed at cutting monthly mortgage payments to no more than 31 percent of eligible homeowners' income. To address the twin threats of lender resistance and borrower incapacity, the program offered cash to participating mortgage lenders but targeted only "families who have played by the rules and acted responsibly," in President Obama's words.

Yet after its first 11 months, HAMP is lagging. Of 1.7 million cases thought to be eligible in the first year, only 116,000 have received permanent loan modifications through January -- well below half what the administration had anticipated. The modifications are far outstripped by foreclosure starts, which totaled 316,000 in January alone, according to RealtyTrac. Lender resistance or incapacity explains only part of the shortfall; many borrowers failed to supply required documentation because it might show they had overstated their income to get a loan -- i.e., that they had not, indeed, "played by the rules."

Meanwhile, because of stubbornly high unemployment, the rate of redefault on modified loans is likely to be high -- 70 percent based on recent experience, according to a recent report by Standard & Poor's. The upshot is the buildup of a huge "shadow inventory" of perhaps 1.75 million properties that HAMP and other modification efforts spared from foreclosure for the last year or so but which are about to foreclose and come on the market, further depressing prices. Loan modifications "may simply have delayed the inevitable," the S&P report observes.

HAMP's problems have prompted calls for even more drastic modifications, including mandatory write-downs of loan principal. Bad idea. Slashing principal, presumably at taxpayer expense, might help some borrowers but comes with no guarantee that they won't end up defaulting anyway. What it would guarantee is moral hazard -- other homeowners would demand the same break -- and a stampede of private capital out of mortgage finance.

The silver lining is that HAMP and other loan modification efforts at least prevented a cascade of foreclosures at the height of the recession. Things are more stable now, so the economy can probably handle the "shadow inventory" better than it would have a year ago. To be sure, this relatively benign outcome depends on two big ifs: continued moderate interest rates and stable or declining unemployment rates.

HAMP has saved fewer homeowners than hoped, but to the extent it helped the housing market make a soft landing, it might even go down in history as a net plus. You could almost call it a successful failure.

March elections are another step toward normality in Iraq

2010-02-28T03:34:00.000-08:00

March elections are another step toward normality in Iraq
By Ad Melkert
Copyright by The Washington Post
Sunday, February 28, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/02/26/AR2010022604653.html

BAGHDAD

This city with many faces jostling to define its future is my new home. From my desk at the head of the U.N. Assistance Mission in Iraq, it is striking how unreservedly foreign politicians, diplomats, think tanks and journalists offer their opinions or prescriptions on the future of this country. Yet Iraqis have a vivid sense of international interference over their long history. I am acutely aware that despite all the talk on how to "normalize" Iraq, our international prescriptions of "normalization" might not be what Iraqis are seeking.

The U.N. presence in Iraq represents a paradox. One the one hand, we reflect the global community's direct interest in Iraq's future. Yet to break with the past, we must transform international involvement from interference into engagement. Our engagement should facilitate and support Iraq to return to the community of nations on its own terms. This effort could be accelerated in three ways in particular.

-- First, by recognizing the political process. The efforts leading to parliamentary elections on March 7 deserve more credit. A big majority of Iraqi citizens and lawmakers has shown serious commitment to organize elections with an outcome acceptable to the people and the constitution. Hurdles have been overcome, including voting in Kirkuk, and Iraqis abroad having gotten their say. The constitutional requirement that allegiance to the Baath spirit precludes holding public office has been a more difficult hurdle. Yes, this stipulation could be used to settle political scores, but foreign observers should be cautious about trying to understand the new balance of forces in strictly black-and-white terms. The bottom line is that about 6,000 candidates and a considerable number of serious alternative coalitions and parties are likely to compete for the votes of the people -- people who until five years ago were unable to decide their governance.

-- Second, by figuring out to share oil revenue to ensure stability. This cannot and should not be driven by foreign agendas, no matter the lure of oil. Since 1922, exactly that temptation is what has shaped Iraq, to the detriment of stable coexistence arrangements among Iraqis that will last only if they are not externally imposed. International engagement should take the form of facilitating common agendas and agreements, including supporting security arrangements. It is important to make this happen in conjunction with the withdrawal of U.S. forces without seeing that drawdown as the only yardstick of progress. It is vital for Arabs and Kurds to agree on the future of their relations within the federal state of Iraq, including the sharing of oil revenue and the delineation of territorial and administrative responsibilities. The objective of international engagement should be to back up Iraqi actions, not prescribe outcomes on this front.

-- Third, by garnering international commitment to support Iraq's return to normal business. Various Security Council resolutions dating to the Persian Gulf War keep Iraq under U.N. supervision, and there are diplomatic obstacles to be overcome. Understandably, Iraqis do not consider this fair or relevant. It is also understandable that neighboring Kuwait seeks reaffirmation by Baghdad of the existing borders. But economic agreements betweeen the two are critical, and acceleration of international engagement is possible.

Will this be the year of normalization for Iraq? After three decades of wars, sanctions and dictatorship, the shape of a new era is visible from where I sit. With ups and downs, pluralism is becoming embedded in daily political life. Serious efforts are underway in Baghdad and Irbil to improve governance. Oil production contracts provide solid potential for revenue management and state building. Iraqi forces, despite disturbing lapses, are making progress in taking control of domestic security. Political debate is vibrant, the media landscape quite diverse, and an election law was agreed upon after a process that, while protracted, provided evidence of the ability to bridge differences.

Security threats are real, including the targeting of political candidates and election organizers. But it is unlikely that such risks could derail the process. The back and forth on the exclusion of candidates with ties to Saddam Hussein or the Baathists is of concern but also inevitable in this nation's transition from dictatorship to a new politics -- not unlike that of post-communist Eastern Europe. And despite setbacks, a sense of normalization is in the air.

Formidable obstacles, including social disparities and the reconciliation "gap," remain sources of instability. But these cannot be good reasons to continue to perceive Iraq as if it would still need some form of "supervision." Letting the people of Iraq make their own decisions requires a change of mind and habit of many regional and international stakeholders. All stand to gain if we take the right course.

The writer is the special representative of the U.N. secretary general to Iraq and head of the U.N. mission in Baghdad.

There's a new Red Scare. But is China really so scary?

2010-02-28T03:28:00.000-08:00

There's a new Red Scare. But is China really so scary?
By Steven Mufson and John Pomfret
Copyright by The Washington Post
Sunday, February 28, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/02/26/AR2010022602601.html#

With the American economy struggling and the political system in gridlock, there is one thing everyone in Washington seems to agree on: The Chinese do it better.

Cyberspace? China has an army of hackers ready to read your most intimate e-mails and spy on corporations and super-secret government agencies. (Just ask Google.) Education? China is churning out engineers almost as fast as it's making toys. Military prowess? China is catching up, so quickly that it is about to deploy an anti-ship ballistic missile that could make life on a U.S. aircraft carrier a perilous affair. The economy? China has gone from cheap-clothing-maker to America's banker. Governance? At least they can build a high-speed train. And energy? Look out, Red China is going green!

This new Red Scare says a lot about America's collective psyche at this moment. A nation with a per capita income of $6,546 -- ensconced above Ukraine and below Namibia, according to the International Monetary Fund -- is putting the fear of God, or Mao, into our hearts.

Here's our commander in chief, President Obama, talking about clean energy this month: "Countries like China are moving even faster. . . . I'm not going to settle for a situation where the United States comes in second place or third place or fourth place in what will be the most important economic engine in the future."

And the nation's pundit in chief, Thomas Friedman of the New York Times, even sees some virtue in the Chinese Communist Party's monopoly on political power: "One-party autocracy certainly has its drawbacks. But when it is led by a reasonably enlightened group of people, as China is today, it can also have great advantages."

In the past, when Washington worried about China, it was mainly in terms of a military threat: Would we go to war? Would China replace the Soviet Union as our rival in a post-Cold War world? Or we fretted about it as a global workshop: China would suck manufacturing jobs out of our economy with a cheap currency and cheaper labor. But today, the threat China poses -- real or imagined -- has flooded into every arena in which our two nations can possibly compete.

And it's not just in Washington. Asked in a Washington Post-ABC News poll this month whether this century would be more of an "American century" or more of a "Chinese century," many Americans across the country chose China. Respondents divided evenly between the United States and China on who would dominate the global economy and tilted toward Beijing on who would most influence world affairs overall.

"We have completely lost perspective on what constitutes reality in China today," said Elizabeth Economy, the director for Asia studies at the Council on Foreign Relations. "There is a lot that is incredible about China's economic story, but there is as much that is not working well on both the political and economic fronts. We need to understand the nuances of this story -- on China's innovation, renewables, economic growth, etc. -- to ensure that all the hype from Beijing, and from our own media and politicians, doesn't lead us to skew our own policy."

Having lived in China during the past two decades, we have witnessed and chronicled its remarkable economic and social transformation. But the notion that China poses an imminent threat to all aspects of American life reveals more about us than it does about China and its capabilities. The enthusiasm with which our politicians and pundits manufacture Chinese straw men points more to unease at home than to success inside the Great Wall.

This is not to say that China isn't doing many things right or that we couldn't learn a thing or two from our Chinese friends. But in large part, politicians, activists and commentators push the new Red Scare to advance particular agendas in Washington. If you want to promote clean energy and get the government to invest in this sector, what better way to frame the issue than as a contest against the Chinese and call it the "new Sputnik"? Want to resuscitate the F-22 fighter jet? No better country than China to invoke as the menace of the future.

Take green technology. China does make huge numbers of solar devices, but the most common are low-tech rooftop water-heaters or cheap, low-efficiency photovoltaic panels. For its new showcase of high-tech renewable energy in the western town of Ordos, China is planning to import photovoltaic panels made by U.S.-based First Solar and is hoping the company will set up manufacturing in China. Even if government subsidies allow China to more than triple its photovoltaic installations this year, it will still trail Germany, Italy, the United States and Japan, according to iSuppli, a market research firm.

China does have dozens of wind-turbine manufacturers, but their quality lags far behind that of General Electric, not to mention Europe's Vestas and Siemens. And although a Chinese power company has some technology that might be useful for carbon capture and storage, which many companies see as the key to cutting greenhouse gas emissions from coal plants, it has built only a tiny version to capture carbon dioxide for making soda, rather than exploring needed innovations in storage.

If not for our economic distress, we might be applauding China's clean-energy advances; after all, one first-place position we have ceded to China is in greenhouse gas emissions. Limiting those emissions is a job big enough for both of our economies to tackle.

But domestic anxieties have morphed into anxiety about China. "Every day we wait in this nation, China is going to eat our lunch," Sen. Lindsey Graham (R-S.C.) said this month. Arguing for nuclear power, as well as renewable energy sources and cleaner ways to use coal, Graham said: "The Chinese don't need 60 votes. I guess they just need one guy's vote over there -- and that guy's voted. . . . And we're stuck in neutral here."

Like others, Graham emphasizes the China threat to propel his fellow lawmakers into action. "Six months ago, my biggest worry was that an emissions deal would make American business less competitive compared to China," he said on a different day. "Now my concern is that every day that we delay trying to find a price for carbon is a day that China uses to dominate the green economy."

In other areas, politicians and pundits also have a tendency to overestimate China's strengths -- in ways that leave China looking more ominous than it really is. Recent reports about how China is threatening to take the lead in scientific research seem to ignore the serious problems it is facing with plagiarism and faked results. Projections of China's economic growth seem to shortchange the country's looming demographic crisis: It is going to be the first nation in the world to grow old before it gets rich. By the middle of this century the percentage of its population above age 60 will be higher than in the United States, and more than 100 million Chinese will be older than 80. China also faces serious water shortages that could hurt enterprises from wheat farms to power plants to microchip manufacturers.

And about all those engineers? In 2006, the New York Times reported that China graduates 600,000 a year compared with 70,000 in the United States. The Times report was quoted on the House floor. Just one problem: China's statisticians count car mechanics and refrigerator repairmen as "engineers."

We've seen this movie before, and it didn't end in disaster for the United States. Some decades ago, Americans were obsessed with another emerging Asian giant: Japan. People were so overwrought about the "threat" that autoworkers smashed imported Japanese cars. On June 19, 1982, a Chrysler supervisor and his stepson, who had been laid off from a Michigan auto plant, killed a Chinese American man they apparently thought was Japanese. Author Michael Crichton's 1992 potboiler "Rising Sun" summed up the nation's fears. In 1991, 60 percent of Americans in an ABC News/NHK poll said they viewed Japan's economic strength as a threat to the United States.

But then something happened. Japan's economy lost its game. The 1990s became a "lost decade," so much so that during the toughest days of the recent financial crisis, Japan was invoked as a cautionary tale, lest we not do enough to jump-start our economy.

Now, some experts, such as Kenneth Lieberthal, a former senior director for Asia at the National Security Council and a man who has taught us a lot about China, say using China's green-tech rise as an excuse to whip America into shape isn't such a bad idea, because the result -- a cleaner environment or a more high-tech workforce -- makes a lot of sense. And certainly it's better to compete on that than on the size of our respective militaries.

But there is a certain irony to the new Red Scare. When we reported from China in the 1990s, some Chinese neoconservatives achieved rock-star popularity there for promoting the notion that the United States was conspiring to contain China, militarily and economically. They argued that global economic growth was a zero-sum game and that China's gain would be America's loss; as a result, Beijing had to be more assertive in its dealings with the United States.

Legions of U.S. diplomats and business leaders said no, no, no. They assured China that the two nations could grow together. Americans tried to teach Chinese the meaning of the expression "win-win."

And that is the way introductory economics courses teach it. As N. Gregory Mankiw, a former chairman of President George W. Bush's Council of Economic Advisers, writes in his popular textbook: Trade "is not like a sports contest, where one side wins and the other side loses. In fact, the opposite is true. Trade between two countries can make each country better off."

And yet a sports contest -- or worse -- is exactly what the U.S.-Chinese relationship sounds like these days. In discussing energy at the Feb. 3 meeting with governors, Obama warned: "We can't afford to spin our wheels while the rest of the world speeds ahead."

Speeding ahead is a worthy goal, but the United States does not need a bogeyman on its tail to get moving. What may seem like a throwaway line here could damage U.S. relations there, and there are enough reasons for tension with China without manufacturing new ones. As the Chinese strategist Sun Tzu said: "If ignorant both of your enemy and yourself, you are certain to be in peril."

China is no enemy, but inflating the challenge from China could be just as dangerous as underestimating it.

Steven Mufson and John Pomfret are reporters on the national staff of The Washington Post and former Post Beijing bureau chiefs. They will be online to chat with readers on Monday, March 1, at 12 p.m. Submit your questions and comments before or during the discussion.

IOC failing in its responsibility to the Olympics

2010-02-28T03:13:00.000-08:00

IOC failing in its responsibility to the Olympics
By Sally Jenkins
Copyright by The Washington Post
Sunday, February 28, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/02/27/AR2010022703315.html?hpid=topnews

As the Vancouver Games come to a close, International Olympic Committee President Jacques Rogge will call them a success. But it's the IOC -- so incubated in blue blazers, five-star accommodations, and shellfish buffets -- that requires real assessment. Exactly what should the purpose of the IOC be? Rogge seems hard-pressed to define his job -- what exactly are the duties of royalty?

It's been almost a decade since Rogge took over the IOC, and the hope that he would provide some integrity and leadership to the organization is gone. Instead, the primary achievements of his millennial Olympic movement are unwieldy growth, a breathtaking collaboration with regimes that commit human rights abuses, and a shucking of responsibility for Olympic-sized ills. The IOC, confronted in Vancouver with a couple of lethal issues and fresh human rights concerns at the next Winter Games in Sochi, Russia, instead reserved some of its toughest words for this late-breaking scandal: the drinking of champagne by women in public.

The IOC's treatment of the Canadian women's hockey team as scandalous for being photographed swilling from bottles of bubbly after winning a gold medal was typical of the organization's recent fecklessness. Gilbert Felli, the IOC's executive director for the Olympic Games, a man apparently devoid of humor except for the jokes he perpetrates unwittingly, said, it was "not what we want to see." He intoned, presumably between bites of scallops, "I don't think it's a good promotion of sport values," and promised, "We will investigate what happened."

It was another bold stroke in the emerging portrait of IOC leadership. The pattern is clear. We can count on the IOC to firmly tackle superficial issues. As for accountability on the meaningful ones, such as the death of Georgian luger Nodar Kumaritashvili, killed on a training run on an unsafe track at nearly 90 mph, the IOC did not have "a responsibility in judicial terms," Rogge said, ever so carefully. Asked who was ultimately responsible for the fatal crash, Rogge said: "Everyone is responsible."

No. No, we're not. You are. Kumaritashvili's death requires a serious investigation, and it should include deep internal soul-searching by the IOC about its leadership. Are the Winter Games pushing athletes too far? How did the track get 20 mph faster between its design and construction? It was designed by the International Luge Federation and built to specifications by Vancouver organizers, neither of which has incentive to investigate itself, or to admit that athletes voiced serious fears and complaints about the course for a year. Oversight is surely the role of the IOC, especially when something goes wrong.

"The question is, at what point is it the responsibility of the IOC to check the work of the sports federations?" Olympic historian David Wallechinsky said. "I guess it's like any corporation that has subsidiaries. You trust them to do their job, but if they screw up, you're also responsible."

Clearly, the role of the IOC is increasingly complicated, given the enormous commercial growth of the Olympic movement. Since the last Olympics on Canadian soil at Calgary in 1988, the Winter Olympics have grown from 46 events to 86 -- and the IOC's obvious emphasis in the new events is on speed, and peril, in order to woo a younger audience that focus group surveys showed they were losing. Should they be icing alpine courses?

Troubling questions also plague the Summer Games, which have exploded to some 300 events involving 200 countries. With this growth come perils ranging from bribery to terrorism, some of them seemingly intractable. How to reconcile the musty old Olympic charter, with its emphasis on amateurism and so-called purity, with modern reality that hosting the Games can help break the bank of Greece? These aren't easy questions, and no one could blame Rogge and his colleagues if they have difficulty grappling with them.

But they don't even try. They abdicate, and that abdication has been a huge moral failure. It's a cold hard fact that the Olympics have become vehicles for evil, partly thanks to their scale. In 2007 and 2008, Human Rights Watch documented scores of human rights abuses directly linked to the Beijing Games. From forced evictions to the arrest of dissidents, the Olympics led to "an overall deterioration of human rights in China." The Olympics are leaving huge debts -- of all sorts -- in their wake. In some cases, they left men and women broken and in jail. For the moment, this is the IOC's real legacy.

A familiar refrain from Rogge and other IOC officials is that they cannot affect larger problems. This is dissembling. The IOC has shown that when it wants to, it can be proactive. For better or worse, it has been in the vanguard on sports doping, banning shot putters when Mark McGwire was still on the front of Wheaties boxes. It's surely not beyond the scope of the IOC to adopt, as Human Rights Watch suggests, a mechanism integrating human rights into the Olympic process. It would seem especially important to do so with problems likely to arise in preparation for the 2014 Sochi Games in the Caucasus, where journalists have been killed, and the Summer Games in Rio.

It shouldn't be to much for the IOC to demand that host countries sign contracts guaranteeing they won't perpetrate naked evils in the name of the Olympics, the charter of which insists on "human dignity."

If the Olympics aren't ruined yet, it's only because they are indestructible. Each quadrennial, the athletes deliver competitive masterpieces, spectacles so dazzling that we forget the problems that went into making them. In the end, that's what the Olympics are really about, and why "we can still feel good about them," observes Wallechinsky. But the danger is that under this IOC, they are turning into the ultimate political cover.

Buffett’s Bargain Shopping Spree

2010-02-28T03:03:00.000-08:00

Buffett’s Bargain Shopping Spree
By GRAHAM BOWLEY
Copyright by The New York Times
Published: February 27, 2010
http://www.nytimes.com/2010/02/28/business/economy/28buffett.html?th&emc=th

America’s most famous investor, Warren E. Buffett, struck a confident note in his annual letter to the shareholders of his holding company on Saturday, as he described in characteristically colorful terms how his businesses had largely ridden out the calamity of the financial crisis.

The tone of the letter contrasted sharply with Mr. Buffett’s report last year, in which he took himself to task for the company’s decline in book value, only the second such decline since he took control in 1965. This time he described how he had used the last 18 months to scoop up a string of assets — a buying spree that culminated at the end of last year with the agreement to buy the Burlington Northern Santa Fe Railway, his biggest bet yet.

Mr. Buffett wrote that his company, Berkshire Hathaway, had net income of $8.1 billion last year, or about $5,200 a share, 61 percent higher than in 2008. The company also reported a 19.8 percent rise in book value.

The crisis of 2007-8 led to the company’s first operating loss in the first quarter of last year, raising questions about Mr. Buffett’s exposure to consumer spending and the housing market. The company recovered strongly later in the year, however, helped by the rebound in the stock market, which strengthened his derivatives holdings.

In his letter, which accompanied the company’s annual report, Mr. Buffett laid out in detail how many of his holdings still depended on the vagaries of housing demand and consumer spending. But shares of the company, which peaked late in 2007 around $148,220 and fell to lows of around $73,195, have since rallied to close at $119,800 on Friday.

“We’ve put a lot of money to work during the chaos of the last two years,” he wrote. “It’s been an ideal period for investors: A climate of fear is their best friend.”

Mr. Buffett used his letter to crack jokes and issue more of his trademark aphorisms. The so-called Sage of Omaha, he is America’s most listened-to investor, and his annual letter is watched closely by investors for his assessment of his businesses and of the economy.

It has, however, taken on somewhat less importance in recent years as Mr. Buffett, 79, has raised his profile with more public speaking and interviews.

In characteristically blunt terms, he had harsh words for unnamed chief executives and directors who oversaw disasters at their companies during the crisis but “still live in a grand style.”

He said, “They should pay a heavy price,” and that there must be a reform of the way executives are rewarded for their performance. “C.E.O.’s, and in many cases, directors, have long benefited from oversized financial carrots; some meaningful sticks now need to be part of their employment picture as well.”

He also admitted mistakes of his own, saying he had closed a troubled credit card business, which had been his idea, and had given too much time to turn around the NetJets business, long a burden.

But he dwelt also on the lucrative positions he took in a string of companies over the last year and a half, pouring $15.5 billion into shares of companies like Goldman Sachs, General Electric and Wm. Wrigley Jr. Wishing he had taken greater advantage of the opportunities offered, he said, “When it’s raining gold, reach for a bucket, not a thimble.”

Burlington Northern Santa Fe was Mr. Buffett’s biggest purchase to date. Addressing that company’s 65,000 shareholders, he offered them a primer in his investment rules. But he warned all shareholders that the bigger size of Berkshire Hathaway would probably mean slower growth in the future.

“Huge sums forge their own anchor and our future advantage, if any, will be a small fraction of our historical edge,” he said.

Justin Fuller, the author of a blog about Mr. Buffett and a principal at Midway Capital Research in Chicago, said this company size was an important theme of the letter: “There was a lot of talk about size and maintaining a business and how size and bureaucracy can really hurt a business over time.”

Mr. Fuller said Mr. Buffett had also given insights into his investing strategy — many of his businesses are now in monopoly or near-monopoly industries like railroads and utilities.

Mr. Buffett told a long story about the wisdom of using a company’s own shares to buy another company — which was a veiled criticism of Kraft’s takeover of Cadbury, Mr. Fuller said, but also a justification of Mr. Buffett’s decision to issue shares to buy Burlington Northern Santa Fe. Mr. Buffett is a major investor in Kraft but has opposed its pending acquisition of Cadbury.

Mr. Buffett’s letter is watched closely for hints about when he may retire, but this year’s offered none. Talking of a time when he would be long gone, he said he was still tap-dancing to work at the end of his eighth decade.

He said he had sold shares in ConocoPhillips, Moody’s, Procter & Gamble and Johnson & Johnson, mainly to finance his railroad purchase. The shares of these companies were still likely to trade higher, he said.

Closing the letter, Mr. Buffett, ever the cheeky salesman, invited shareholders to his company’s annual meeting on May 1 in Omaha — promising to play table tennis for spectators and urging them to buy goods and services from his companies, and ending, “P.S. Come by rail.”

Caring for Pets Left Behind by the Rapture - For a fee, this service will place your dog or cat in the home of a caring atheist on Judgment Day

2010-02-28T02:07:00.000-08:00

Caring for Pets Left Behind by the Rapture - For a fee, this service will place your dog or cat in the home of a caring atheist on Judgment Day
By Mike Di Paola
copyright by Business Week Magazine
February 22, 2010
https://mail.google.com/mail/?hl=en&shva=1#inbox/12710c0711b9c779

Many people in the U.S.—perhaps 20 million to 40 million—believe there will be a Second Coming in their lifetimes, followed by the Rapture . In this event, they say, the righteous will be spirited away to a better place while the godless remain on Earth. But what will become of all the pets?

Bart Centre, 61, a retired retail executive in New Hampshire, says many people are troubled by this question, and he wants to help. He started a service called Eternal Earth-Bound Pets that promises to rescue and care for animals left behind by the saved.

Promoted on the Web as "the next best thing to pet salvation in a Post Rapture World," the service has attracted more than 100 clients, who pay $110 for a 10-year contract ($15 for each additional pet.) If the Rapture happens in that time, the pets left behind will have homes—with atheists. Centre has set up a national network of godless humans to carry out the mission. "If you love your pets, I can't understand how you could not consider this," he says.

Centre came up with the idea while working on his book, The Atheist Camel Chronicles, written under the pseudonym Dromedary Hump. In it, he says many unkind things about the devout and confesses that "I'm trying to figure out how to cash in on this hysteria to supplement my income."

Whatever motivates Centre, he has tapped into a source of genuine unease. Todd Strandberg, who founded a biblical prophecy Web site called raptureready.com that draws 250,000 unique visitors a month, agrees that Fido and Mittens are doomed. "Pets don't have souls, so they'll remain on Earth. I don't see how they can be taken with you," he says. "A lot of persons are concerned about their pets, but I don't know if they should necessarily trust atheists to take care of them."

This paradox poses a challenge for Centre. He must reassure the Rapture crowd that his pet rescuers are wicked enough to be left behind but good enough to take proper care of the abandoned pets. Rescuers must sign an affidavit to affirm their disbelief in God—and they must also clear a criminal background check. "We want people who have pets and are animal lovers," Centre says. They also must have the means to rescue and transport the animals in their charge. His network consists of 26 rescuers covering 22 states. "They take this very seriously," Centre says.

One of Centre's atheist recruits is Laura, a woman in her 30s who lives near the buckle of the Bible Belt in Oklahoma, and who prefers not to give her last name. She has two dogs of her own and has made a commitment to rescue four dogs and two cats when—if—the time comes. "If it happens, my first thought will be, 'I've got work to do,'" Laura says. "The first thing I'll do is find out where I need to go exactly."

The rescuers won't know the precise location of the animals until the Rapture arrives, at which time they will contact Centre for instructions. "I've got to get to [the pets] within a maximum of 18 to 24 hours. We really don't want them to wait more than a day." A day she believes will never come.

Centre doesn't think he will ever have to follow through on the service he offers. But he believes in virtuous acts. His Web site directs about $200 a month in proceeds from Google ads to food banks in Minnesota and New Hampshire. And to pet owners, he has already delivered something of great value: peace of mind, for just 92 cents a month. "If we thought the Rapture was really going to happen," Centre says, "obviously our rate structure would be much higher."

Di Paola is a reporter for Bloomberg News .

Pawlenty: Let ER's turn away patients to cut costs

2010-02-27T09:31:00.000-08:00

Pawlenty: Let ER's turn away patients to cut costs
By Eric Zimmermann
© 2010 Capitol Hill Publishing Corp., subsisiary of News Communications, Inc.
02/23/10 10:57 AM ET
http://thehill.com/blogs/blog-briefing-room/news/83113-pawlenty-let-ers-turn-away-patients-to-cut-costs?sms_ss=facebook

Emergency rooms should be able to turn patients away to cut costs, Minnesota Gov. Tim Pawlenty (R-Minn.) said last night

Appearing on Fox News's "On the Record with Greta Van Sustren" last night, Pawlenty said the federal law that mandates ER treatment should be repealed.

"Well, for one thing you could do is change the federal law so that not every ER is required to treat everybody who comes in the door, even if they have a minor condition," Pawlenty said. "They should be -- if you have a minor condition, instead of being at the really expensive ER, you should be at the primary care clinic."

Supporters of the federal law would content that many people go to ERs precisely because they do not have the insurance to pay for a primary care physician.

Van Susteren was also skeptical about Pawlenty's proposal, pointing out that it's difficult to tell what's a minor condition without treating it.

VAN SUSTEREN: OK. OK. But you come in with chest pains, and like, you get horrible chest pains. Now, it could be indigestion, which is minor, or it could be heart, which isn't minor. So then...

PAWLENTY: You have to do a little triage. That's for sure.

VAN SUSTEREN: Right. I mean, so the problem is, it's got -- I mean, there really is sort of -- it's not that easy.

Comments (23)

Grump Knock off your silly a$$ fear mongering tactics.. It didn't work BEFORE a black man named Barak Obama was elected president (and cleared with the fec).. why would it work NOW? Typical republican.. nothing new to add to ta conversation but lobbyist talking points and fear mongering. That's part of the problem with america. Not enough leading.. on both sides of the isle!

BY Lloyd C on 02/23/2010 at 12:53

It's actually not a terrible idea. It may sound heartless but the reality is that if the ER is owned or operated by a private company or organization then the Government should not have any right to force them to treat people.An no I don't have a gold plated health plan, so don't start with the "Oh sure you but what about your care"In fact I have no health insurance at all. By my own choice. There are time where I could seek treatment for a minor ailment and decide not to due to costs. But I could just as easily abuse the system and stroll into any ER and demand treatment for anything on your dime. Then when the bills start pouring in I could simply ignore them.The point is you do not have a right to care. You do not have a right to be healthy. And most importantly you have no right to make me pay for it.If we could get people back to taking care of themselves and paying their own damned bills then the costs of health care would drop a lot. I wonder how many poor people return home from the ER to watch their 52" TV's with cable?
BY Malagent on 02/23/2010 at 12:55

This is what happens when you ask Republicans for a healthcare idea. These right wing freaks are as stupid as they come…
BY Michmike on 02/23/2010 at 12:55

@Gloria Hanefeld: News flash Gloria, this is an irrelevant post. ER wait times and clinic times are more than 15 minutes in America. The people who went to the ER with a runny nose in 2010 would be turned away and told to go to a clinic. Who cares if they have a job or not? as long as they have the ca$h in America, the clinic will see them and you know that! Your shot at the unemployed was also irrelevant. Please come up with a new post and "DIE QUICKLY" thanks.
BY Lloyd C on 02/23/2010 at 12:57

MALAGENT, I'm sure you'll love it when the ER refuses to treat you after you just were injured in a horrific car accident because you failed a credit check.But yeah, sure, it's obviously your fault because you decided to get in a car and drive safely, only to be mowed down by that drunk driver. There never, EVER is a such thing as an innocent victim.
BY Compassionate on 02/24/2010 at 21:12

Wow, ignorance is bliss. The law requires that all ER's open to the public must accept all comers and treat those with emergent conditions. Let's suppose that Grump or Malagent get mugged and beaten up in the process. In their world, they have no ID or Insurance Card. They would be turned away from the ER because they cannot show ability to pay even though they can. That's why the law exists.
BY Texas Ken on 02/24/2010 at 21:19

There's a reason we now call him "Governor Gutshot". It's because he intends to leave the state of Minnesota just like he left the deer he shot in the woods, bleeding from a gut wound and in dire straits: http://seminal.firedoglake.com/diary/16657
BY Phoenix Woman on 02/24/2010 at 22:15

Compassionate is right on the money. If the law was repealed, what's to stop emergency personnel from refusing to treat you because they don't like who you are or what you do for a living? I'm sure Malegent wouldn't like it if a "liberal" doctor had the right to refuse treatment to the overweight teabagger Limbaugh when he has another heart attack after the three Big Macs he eats for breakfast.
BY Amazed on 02/25/2010 at 00:38

@MALAGENT: Glad to hear a teabagger with the courage of your convictions. Statistically, if you are a male over 30, you are likely to have a life threatening episode in the next 10 years. I hope you are able to take this courageous stand when you get refused treatment.
BY Gopherit on 02/25/2010 at 14:54

Would Grump please share the results of his scientifically-accurate research regarding the political persuasion and voting habits of "the folks who go to th ER every time they have a runny nose"? Funny thing - I work for county government, in an extremely red county. We were having issues with our insurance providers because too many employees were overusing emergency rooms. Probably for a lot of runny noses. Republican noses.
BY Gertrude on 02/25/2010 at 19:57

"American citizens should at least be triaged (BTW go look up triage - you won't like it) by licensed physicians. if I'm going to be turned out in the cold to find alternative care, I don't want to be turned out by some high school drop-out, I want to be turned out by a licensed MD."Wouldn't that require the MD to examine you first?
BY Jeff on 02/26/2010 at 16:44

Yeah I can see it now. You have chest pain? Where's your insurance card? You forgot it? I think you have a cold, here's some aspirin go home and rest.
BY NONSENSE on 02/26/2010 at 21:17

Study: Removing healthy breast affects cancer odds

2010-02-27T04:43:00.000-08:00

Study: Removing healthy breast affects cancer odds - A new study shows that only a small group of women who are diagnosed with breast cancer in one breast benefit from elective surgery to have the other, healthy breast removed.
BY MONIFA THOMAS
Copyright by The Chicago Sun-Times
February 27, 2010
http://www.suntimes.com/lifestyles/health/2073396,CST-NWS-breast27.article

A growing number of women with cancer in one breast choose to have their other, healthy breast removed in hopes it will prevent a second cancer. But new research finds that elective surgery improved survival in only a small group of women -- those who are under 50 and are in the early stages of a type of breast cancer known as estrogen receptor-negative cancer.

That group accounts for about 6 percent of women with breast cancer.

Based on these findings, the majority of breast cancer patients should "feel more assured that they are not hurting their odds of survival from breast cancer by keeping the opposite breast," wrote the study's lead author, Dr. Isabelle Bedrosian, of the University of Texas M.D. Anderson Cancer Center.

But, Bedrosian added, the decision to have elective surgery is still one that needs to be individualized for each patient.

Using a National Cancer Institute database, researchers identified 107,000 women with breast cancer who'd undergone a mastectomy between 1998 and 2003. Of those, 8,900 women also had their healthy breast removed.

Nearly 89 percent of the women with ER-negative cancer in its early stages were alive after five years if they underwent a preventive double mastectomy, compared with 84 percent of women who did not, the M.D. Anderson researchers report in this week's Journal of the National Cancer Institute.

No other group had such a clear survival benefit.

That could be because older women with late-stage cancers are more likely to die before they develop a second cancer, diminishing the potential benefit of preventive surgery, Bedrosian said

Chicago-area home sales post year-over-year gain - But sales are lower than December, and prices have dropped

2010-02-27T04:37:00.000-08:00

Chicago-area home sales post year-over-year gain - But sales are lower than December, and prices have dropped
By Mary Ellen Podmolik
Copyright © 2010, Chicago Tribune
12:04 a.m. CST, February 27, 2010
http://www.chicagotribune.com/business/ct-biz-0227-home-prices--20100226,0,3115805,full.story

Chicago-area sales of existing homes posted a seventh consecutive month of year-over-year gains in January, but fell far short of December's sales pace.

While there were 3,922 sales of area single-family homes and condominiums last month, a 29.2 percent increase from January 2009, the sales volume dropped 32.1 percent from December. Within the city of Chicago, January sales were up 31.1 percent from a year ago but down 32 percent from December, and the median sales price dropped 7.1 percent in a month's time, the Illinois Association of Realtors said Friday.

That same pattern, sales better than a year ago but worse since last month, is occurring elsewhere in the nation and is raising concerns over whether a housing recovery — one subsidized by the federal government — is taking hold. Many economists worry that buyers rushed to take advantage of tax credits, bargain prices and low interest rates late last year, in effect borrowing from future demand.

"The latest monthly sales decline is not encouraging, and raises concern about the strength of a recovery," said Lawrence Yun, chief economist at the National Association of Realtors.

Compared with a year ago, the local housing market is much-improved. Sales are up, the number of homes on the market is down and real estate agents say consumers remain interested in taking advantage of federal homebuyer tax incentives. In order to receive tax credits of up to $6,500 for repeat buyers and $8,000 for first-time buyers, eligible consumers must have a sales contract signed by April 30 and the purchase closed by June 30.

"You're seeing year-over-year [sales] gains in many markets at the expense of pricing," said Mike Larson, an economist at Weiss Research. "That's the dynamic you're going to see for the rest of 2010."

Compared with a year ago, local prices are declining but at a slower rate. The median price of a single-family home or condo in the Chicago area fell 5.4 percent between January 2009 and January 2010, to $175,000, while the median price within the city fell 4.9 percent to $195,000. The median price means half the homes were sold for more and half for less.

In January 2009, median prices for the Chicago area and for the city itself had fallen 22.8 percent and 28.9 percent, respectively, from January 2008 levels.

Industry watchers worry that incentives used to spark consumer demand are losing their appeal and momentum is fading. "I'm getting a lot of showings," said Genie Birch, president of the Chicago Association of Realtors. "I still have people on the fence. People are still taking their time."

Since January 2009, the Federal Reserve has purchased mortgage-backed securities but has said it will end its $1.25 trillion of purchases March 31. That has prompted fears that without the government's financial support of the mortgage market, interest rates will rise sharply.

Freddie Mac reported Thursday that the rate for a 30-year, fixed-rate mortgage averaged 5.05 percent with 0.7 points for the week ended Thursday, up from 4.93 percent last week.

"At the end of last year, interest rates weren't even a factor," said Jim Merrion, regional director of Re/Max Northern Illinois. "Now what we're seeing is more questions about interest rates."

Earlier this month, Fannie Mae and Freddie Mac said they would boost their purchase of delinquent home mortgages by acquiring loans that are behind at least 120 days. As a result, economists expect the rate on a 30-year, fixed-rate mortgage to remain under 6 percent.

"Rates may bump a bit but not enough to disturb many buyers' plans," said Keith Gumbinger, vice president of HSH Associates, a publisher of consumer loan data. "I don't think we're going to make 6 percent in the next few months."

In recent weeks, there have been increasing calls to extend the credit once again to carry it through the traditional home-buying season. Experts say if the home-buying marketplace remains fragile, that may happen, particularly given that it's an election year.

mepodmolik@tribune.com

US consumers lag behind economy

2010-02-27T04:28:00.001-08:00

US consumers lag behind economy
By Alan Rappeport in Washington
Copyright The Financial Times Limited 2010
Published: February 26 2010 14:20 | Last updated: February 26 2010 17:21
http://www.ft.com/cms/s/0/4ebcc9b6-22df-11df-8942-00144feab49a.html

US economic output grew at a faster rate than previously thought at the end of last year, as a resurgence in business investment fuelled the economy’s strongest quarter since 2003, but consumers and the housing market remain points of concern.

However, other data on Friday showed the US housing market was still shaky. The National Association of Realtors said that home resales fell by 7.2 per cent from December to January but they are still higher than the depressed levels of a year ago.

The upgrade of GDP revealed slower inventory liquidation, stronger exports and greater non-residential fixed investment than previously. The downshift in the pace of de-stocking accounted for 4 percentage points of the rise in GDP, but “real final sales” increased more slowly than thought.

Businesses cut inventories by $16.9bn (£11bn, €12.5bn) in the fourth quarter after slashing them by $139.2bn in the prior three months. Investment by businesses was also up, jumping by 6.2 per cent after falling 1.3 per cent in the third quarter.

Economists have welcomed the surge in fourth-quarter growth but say that a rise in output led by inventories is not sustainable because it is a cyclical phenomenon that occurs after a deep downturn. To date, the recovery has been led by a rebound in the manufacturing sector, while consumer spending and confidence remain shaky.

“About two-thirds of fourth-quarter real GDP growth was due to a slowing in the pace of inventory liquidation, and we expect the growth rate of GDP to slow substantially in the first quarter,” said John Ryding and Conrad DeQuadros, economists at RDQ Economics. Most analysts predict a growth rate of 2.2 per cent in the first quarter of this year.

Consumer spending rose by 1.7 per cent in the fourth quarter and was weaker than previously assumed. A separate report on Friday from Thomson Reuters and the University of Michigan revealed that consumers had begun to feel gloomier in February on fears about incomes and job prospects.

Richard Curtin, chief economist of the sentiment survey, said that with the labour market so uncertain consumers are now most focused on building savings and reducing debt. He predicted consumer spending, which accounts for about 70 per cent of economic output in the US, would rise by 1.8 per cent this year.

Despite the recent upturn in growth, the US economy continues to face headwinds and policymakers are debating the best way to unwind government support.

On Thursday Ben Bernanke, chairman of the Federal Reserve, reminded senators in his semiannual testimony that the economy was still “very weak” and that persistent slack in the labour market poses long- term risks. The Fed has also been working to unwind its support of the housing market without destabilising that sector.

The housing market showed promising signs of recovery last year, but more recent data show that residential real estate remains fragile and dependent on stimulus. Distressed and foreclosure sales are weighing on prices, which sit at 2002 levels, and analysts say the market has a “hangover” from the first-time homebuyer tax credit.

Germans consider bank rescue for Greece

2010-02-27T04:24:00.000-08:00

Germans consider bank rescue for Greece
By James Wilson in Frankfurt and Dimitris Kontogiannis in Athens
Copyright The Financial Times Limited 2010
Published: February 26 2010 19:57 | Last updated: February 26 2010 19:57
http://www.ft.com/cms/s/0/a7a677d8-230d-11df-a25f-00144feab49a.html

Germany’s biggest banks are looking at a rescue plan for Greece under which they would buy Greek debt backed by financial guarantees from Berlin, the Financial Times has learnt.

As Josef Ackermann, chief executive of Deutsche Bank, held talks in Athens on Friday with George Papandreou, Greek prime minister, the structure of a possible eurozone bail-out should the country’s debt crisis worsen began to emerge.

Several such banks, including Hypo Real Estate, Eurohypo and Deutsche Postbank, which hold billions of euros of Greek debt, all said they would not increase their holdings. However, guarantees from Berlin for what could be high-yielding debt might soften their stance.

The official said: “This could be one of the outcomes but it would not be a purely private solution – there has to be government involvement. If it were something on a eurozone level, I don’t think my bank would say: ‘We would not take part.’”

At the end of a week in which a general strike brought much of the country to a standstill, Mr Papandreou prepared the way for more radical measures to cut the spiralling deficit. He urged the rest of Europe to show “solidarity”. “We must do whatever we can now to address the immediate dangers today. Tomorrow it will be too late, and the consequences will be much more dire,” he told parliament.

Mr Papandreou said Greece did not want other countries to pay its public debt but he expected a strong show of support from its European Union partners. Angela Merkel, Germany’s chancellor, is due to meet him next week.

The price of Greek bonds gyrated amid uncertainty over whether Athens would be able to borrow from the capital markets next week. Yields on government bonds rose sharply but slipped back on rising hopes for a deal to help Athens issue a five-year bond next week.

Berlin and German banks would be keen to involve other eurozone countries in such a plan, but officials in Berlin have said each country could find its own way to contribute.

Additional reporting by Gerrit Wiesmann in Frankfurt, Joshua Chaffin in Brussels and David Oakley in London

Turkish Leader Defends Inquiry Into Possible Plot

2010-02-27T04:16:00.000-08:00

Turkish Leader Defends Inquiry Into Possible Plot
By SABRINA TAVERNISE and SEBNEM ARSU
Copyright by The New York Times
Published: February 26, 2010
http://www.nytimes.com/2010/02/27/world/europe/27turkey.html?ref=global-home

ISTANBUL — Prime Minister Recep Tayyip Erdogan weighed in on Turkey’s worsening political crisis on Friday, declaring that an investigation into alleged coup preparations was “for the benefit of the people,” while the Turkish police detained 18 more current and retired military officers and arrested two others.

Lt. Gen. Cetin Dogan of the Turkish Land Forces and retired Gen. Engin Alan, former head of special forces, according to Turkey’s Anatolian news agency — were among the highest ranking ever to have been arrested in Turkey.

The latest actions capped a week of high political drama in Turkey, where the Islamic-inspired political party that runs the government is locked in a power struggle with the country’s secular establishment, led by the military.

The detentions and arrests came just one day after three former high-ranking generals were released in a move that some hoped would ease the situation.

A majority of the officers taken into custody on Friday are active duty, the Anatolian news agency reported. They bring the number of detentions of military officers this week to more than 60.

Mr. Erdogan, speaking to lawmakers in Ankara, the capital, used strong language to defend the investigation, which is tied to a broader legal case that critics say has become a witch hunt against Mr. Erdogan’s enemies.

“Those who plot to crush people’s will behind closed doors should realize that from now on they will face the law,” Mr. Erdogan said. “The process under way is painstaking, but it is for the benefit of the people. Today’s developments are setting free the consciousness of the people.”

The detentions are part of an investigation into what prosecutors say was a 2003 plot by the military to foment civil unrest, like attacks in mosques, to provide a pretext for a coup to unseat the elected government. The military, for its part, has vigorously denied the allegations. It has not responded to the detentions.

Turkey’s military has long been immensely powerful, and has carried out four coups against elected governments in Turkey’s short history. With separate, military courts, it has long been considered untouchable, far above civilian control.

But its image has been badly dented in the struggle with Mr. Erdogan, with allegations of military misdeeds leaked to the news media, a development that would have been unheard of a decade ago.

The three generals who were released Thursday were the most senior military officers ever to be called for questioning in a civilian court. It remains unclear if the men, who had been detained for three days, will still be charged despite their release.

About 200 people are already in detention in a related case, known as Ergenekon, which also centers on coup plot allegations.

Toyota Accused of Withholding Data

2010-02-27T04:14:00.000-08:00

Toyota Accused of Withholding Data
By NICK BUNKLEY
Copyright by The Associated Press
Published: February 26, 2010
http://www.nytimes.com/2010/02/27/business/27toyota.html?ref=global-home

DETROIT — The chairman of a House committee that questioned Toyota executives this week about the carmaker’s recall accused the company on Friday of withholding documents while fighting lawsuits filed by crash victims.

Representative Edolphus Towns, Democrat of New York, said that Toyota’s actions amounted to “a systematic disregard for the law and routine violation of court discovery orders,” based on files obtained by the Committee on Oversight and Government Reform from a former Toyota lawyer. Mr. Towns asked the chief of Toyota’s United States operations, Yoshimi Inaba, who testified before the panel, to explain why the documents had not been released to plaintiffs’ lawyers.

“People injured in crashes involving Toyota vehicles may have been injured a second time when Toyota failed to produce relevant evidence in court,” Mr. Towns wrote in a letter to Mr. Inaba.

“Moreover, this also raises very serious questions as to whether Toyota has also withheld substantial, relevant information from N.H.T.S.A,” Mr. Towns wrote, referring to the National Highway Traffic Safety Administration.

The safety agency is investigating whether Toyota acted quickly enough in recalling about 8.5 million vehicles — six million in the United States — after discovering problems with the accelerator pedals.

The committee said documents that it subpoenaed from Dimitrios Biller, who was Toyota’s national general counsel in the United States from 2003 to 2007, indicated that Toyota kept electronic files known as the books of knowledge, which contained testing data and information on design problems. The documents noted that the records had never been made public and that the carmaker entered into multimillion-dollar settlements on several occasions to keep them secret, the committee said.

Mr. Towns cited a 2006 e-mail message in which Mr. Biller explained that he agreed to a $1.5 million settlement with a woman who was paralyzed in a rollover accident largely to avoid disclosing the database.

A Toyota spokeswoman, Cindy Knight, said the company would respond to Mr. Towns’s questions.

“We are confident that we have acted appropriately with respect to product liability litigation and our discovery practices,” Ms. Knight said in a statement. “It is not uncommon, however, for companies to object to certain demands for documents made in litigation. Consistent with that philosophy, we take appropriate steps to maintain the confidentiality of competitive business information and trade secrets.”

Toyota has previously called Mr. Biller’s claims “inaccurate and misleading,” noting that he was suing for wrongful termination and emotional distress.

Meanwhile, the federal safety agency said that it had bought and planned to conduct tests on the Lexus ES350 sedan that was formerly owned by a woman who testified at another House committee hearing this week. The woman, Rhonda Smith, described the car speeding out of control at 100 miles an hour in October 2006 as she frantically tried to bring it to a halt. She eventually succeeded, after six miles, but a Toyota dealership told Mrs. Smith that it could not find any problems.

Also on Friday, Toyota said it was expanding nationwide a program to ease the repair process for owners of recalled vehicles. Dealers can offer free services like a rental car or taxi fare reimbursement during the time in which a customer “is unable or unwilling to use his or her car,” Toyota said in a statement.

8.8-Magnitude Earthquake Hits Central Chile/Chile Calls for Outside Aid as Devastation Sinks In

2010-02-27T04:10:00.000-08:00

8.8-Magnitude Earthquake Hits Central Chile
By ALEXEI BARRIONUEVO
Copyright by The New York Times
Published: February 27, 2010
http://www.nytimes.com/2010/02/28/world/americas/28chile.html?ref=global-home

RIO DE JANEIRO — A massive 8.8-magnitude earthquake struck Chile early Saturday, shaking the capital of Santiago for 90 seconds and sending tsunami warnings from Chile to Ecuador.

At least 47 people were killed, Reuters reported, with the toll expected to rise.

The quake downed buildings and houses in Santiago and knocked out a major bridge connecting the northern and southern sections of the country.

It struck at 3:34 a.m. local time and was centered about 200 miles southwest of Santiago, at a depth of 22 miles, the U.S. Geological Survey reported. The epicenter was some 70 miles from Concepcion, Chile’s second-largest city, where more than 200,000 people live.

Phone lines were down in Concepcion as of 7:30 a.m. and no reports were coming out of that area. The quake in Chile was 1,000 times more powerful than the magnitude 7.0 earthquake that caused widespread damage in Haiti on Jan 12, killing at least 230,000, earthquake experts reported on CNN International.

The U.S. Geological Survey and eyewitnesses reported more than a dozen aftershocks, including two measuring magnitude 6.2 and 6.9.

“We have had a huge earthquake,” said Michelle Bachelet, Chile’s president, speaking from an emergency response center in an appeal for Chileans to remain calm. “We’re doing everything we can with all the resources we have.”

Mrs. Bachelet said that the government had dispatched three emergency response teams to coastal areas. She confirmed an initial death total of six people, five of them in the Maule region and one in the Araucanía region.

“Without a doubt, with a quake of this kind, of this size, of this magnitude, we can’t rule out that there are other deaths and probably injuries,” Mrs. Bachelet told reporters.

Eyewitnesses on Facebook and Twitter reported that the quake was felt from Japan to Argentina. The quake struck at the end of the Chilean summer vacation, with hundreds of thousands of people expected to be traveling back home this weekend.

The Pacific Tsunami Warning Center issued a warning for Chile and Peru, and a less-urgent tsunami watch for Ecuador, Colombia, Panama, Costa Rica and Antarctica. It said a tsunami could also hit Hawaii later in the day, the Associated Press reported.

Lying along the mountainous Andean coast, Chile is accustomed to earthquakes. The largest earthquake ever recorded struck the same area as Saturday’s quake on May 22, 1960. That quake, which registered a magnitude 9.5, killed 1,655 people and left 2 million homeless. The tsunami that it caused killed people in Hawaii, Japan and the Philippines and caused damage to the West Coast of the United States.

Charles Newbery contributed reporting from Buenos Aires, Argentina

Chile Calls for Outside Aid as Devastation Sinks In
By ALEXEI BARRIONUEVO and MARC LACEY
Copyright by The New York Times
Published: March 1, 2010
http://www.nytimes.com/2010/03/02/world/americas/02chile.html?ref=global-home

Chile — Chile’s government, after initially waving off outside aid, changed course Monday as the devastation from the powerful earthquake sank in and the nation’s pressing needs became clear.

With the desperation of many Chileans mounting, the United Nations said that the government had asked for generators, water filtration equipment and field hospitals, as well as experts to assess just how much damage was caused by Saturday’s magnitude 8.8 quake, one of the largest ever measured.

“Everything is now moving,” said Elisabeth Byrs, a spokeswoman for the United Nations Office for the Coordination of Humanitarian Affairs. “We are looking immediately to match the needs.”

Chile has always been considered Latin America’s most earthquake-ready country. Its children learn to run for cover during quake drills before learning to read. Its building codes are robust. Its disaster manual is thick, laying out all the scenarios for the temblors that are a regular part of life.

But despite all that, the powerful quake that jolted Chileans awake has left the country reeling. Collapsed bridges and damaged roadways have made it difficult to even get to some areas. Downed phone lines and cellular towers have made it impossible to communicate. And many residents in the most damaged areas have not only taken food from supermarkets, but also robbed banks, set fires and engaged in other forms of lawlessness.

“The looters are more organized,” said the mayor of Concepción, Jacqueline Van Rysselberghe, asking for more troops, Reuters reported.

The quake has also exposed the fact, experts say, that although Chile is one of the most developed countries in the region, it is also one of the most unequal, with huge pockets of urban and rural poor, who suffered most in the quake.

“It’s the poorest Chileans who live near the epicenter,” said Carolina Bank, a Chilean-born sociology professor at Brooklyn College.

It was not just the violent shaking that tore Chile apart, but also the surge of waves that swept in along the coast, damaging homes like that of Edmundo Muñoz, 44, and his family, in Constitución. “Everything was destroyed,” he said.

A growing perception has begun to set in among many residents that the country was not as well prepared as it had thought.

In Santiago, the capital, those left homeless after their brand-new and supposedly earthquake-resistant apartments suffered severe structural damage were furious. Chileans are wondering aloud why food is not getting to the hungry faster and why the politicians and soldiers seem to have been caught flatfooted.

“The government has been very slow to respond,” complained Victor Pérez, 48, who was sleeping in a tent with his girlfriend outside their ruined Santiago apartment building. “We have no water or lights, and most of the stores nearby are out of food.”

The frustration could be heard on Chilean radio, where residents called in to complain that government provisions had been slow to arrive and that almost all markets and stores had been stripped bare of food, water and other supplies.

Here in Angol, an inland town where the streets were strewn with the rubble of collapsed businesses, some basic services were beginning to come back on line, if only slowly.

Electricity was being restored in patches, though many streets and windows remained dark. The main hospital, built to withstand earthquakes, had been rendered unusable, and the closest alternative was almost 90 miles away. Gasoline had started pumping again, and at least 40 cars lined up at a local station. Thirty more people waited on foot in a tense line for gas, holding empty plastic bottles normally used for milk or water. Scuffles broke out, and nerves were frayed.

“Everyone’s on edge,” Ana Bizama, 42, said as she stood in line. The threat of aftershocks was on everyone’s mind.

The government, which declared a state of emergency Sunday and deployed the military to the hardest-hit areas, said it never dismissed outside assistance but wanted to see how bad things were first.

“Experience over the years and in prior earthquakes, as well as from international cooperation efforts like in Haiti, have left us lessons,” Foreign Minister Mariano Fernández told reporters. “We have to be very precise about what our needs are in order for the assistance to be of any use.”

As each day passes, it becomes clearer in Chile that those needs are huge.

While the effects of the earthquake appear worst in outlying areas, the capital itself received a significant jolt, as Mirko Boskovic, 43, a postal worker, could attest. “It looks like the Tower of Pisa,” Mr. Boskovic said, gazing at his teetering apartment building, supposedly seismically secure, which leaned precariously at a 45-degree angle and was ringed by police tape.

The numbers of damaged buildings is increasing, not just from aftershocks but from troublemakers who have set fire to businesses in the damage zone, including one building in Concepción that collapsed on Monday.

President Michelle Bachelet has just 10 days left in office, leaving her successor, Sebastián Piñera, little time to get up to speed on governing. One official in the current administration, who did not have authorization to speak on the record, suggested that the looming transition was already complicating the response.

Residents also feared that the transition would make the aid effort bumpy. “Soon, people are going to start organizing and demanding that they fulfill the many promises they have made on television and the radio,” said Jesse Salazar, 49, who watched over his sister-in-law’s belongings as she packed up boxes to move from her damaged home.

Secretary of State Hillary Rodham Clinton, beginning a tour of Latin America on Monday, told reporters that the Bachelet government had asked the United States for dozens of satellite phones to help overcome the damaged telephone networks and that she would bring some when she stopped in Santiago on Tuesday for a previously scheduled visit. More American aid would probably follow as Chilean officials better survey the damage, Mrs. Clinton said.

The United States had search-and-rescue teams at the ready Monday, and Washington had also offered the Chileans a list of other emergency supplies it could provide if requested. Already, American officials passed to the Chileans satellite imagery so they could better assess the damage in outlying areas.

Just weeks ago, it was Chile that was giving aid, not getting it.

Chilean rescue personnel, soldiers and aid workers played a significant role in Haiti. In fact, some officials said that had left the government short of the plastic sheeting and tents it needed for the nearly 2 million Chileans displaced or otherwise affected by the quake this week.

Still, Chile’s earthquake preparedness clearly saved lives. Laura Torres, 62, and her husband, Víctor Campos, 66, live in Constitución, a city flanked by the ocean and a river. When they quake struck, the earth shook so violently they could not stand.

They crawled to assist their son, who is severely brain damaged; Mr. Campos picked him up, trying to walk as the earth heaved. They ran up into the hills, amid wails from others around.

In the tsunami-prone region, earthquake training had taught them that they had about 20 minutes to make it to high ground, Ms. Torres said, but the roaring of the water, a strange sound like a plane’s motor, suggested that it was barreling in much sooner.

Still, they made it to the hills and are now staying with one of their daughters and about 30 other people, rationing what little food they have. Other survivors are camping in the hills, making fires and sharing food. Naked or partially naked people have streamed by the house, Ms. Torres said, asking for clothes.

Some homes not far from hers have vanished. The water left fishing boats in the plaza, Ms. Torres said, carrying away train cars and replacing businesses with “mud, debris, destruction.”

“It’s a ghost town,” she said.

Alexei Barrionuevo reported from Angol, Chile, and Marc Lacey from Lima, Peru. Reporting was contributed by Ginger Thompson and Charles Newbery from Buenos Aires; Aaron Nelsen and Pascale Bonnefoy from Santiago, Chile; Tomás Munita from Constitución, Chile; and Catrin Einhorn and Jack Healy from New York.

Inquiry sought into disappearance of e-mails in interrogations case

2010-02-27T03:00:00.000-08:00

Inquiry sought into disappearance of e-mails in interrogations case
By Carrie Johnson
Cpyright by The Washington Post
Saturday, February 27, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/02/26/AR2010022603765.html?wpisrc=nl_pmpolitics

Senior Democratic lawmakers and watchdog groups demanded Friday that the Justice Department investigate the disappearance of e-mail messages written by Bush administration lawyers who drafted memos blessing harsh interrogation tactics, saying their absence cast doubt on an ethics report that cleared the lawyers of professional misconduct.

The lost e-mails cover a critical period in 2002 when Justice Department attorneys labored under heavy pressure on a memo that gave the CIA a green light to use simulated drowning, sleep deprivation and other interrogation techniques against al-Qaeda suspects.

"Why were these critical records deleted? Why were they kept from investigators?" Senate Judiciary Committee Chairman Patrick J. Leahy (D-Vt.) said at a hearing Friday.

The dispute is being closely followed by rights advocates and legal experts because the e-mails could shed light on communications among Justice, the CIA and the White House about the development of policy on detainee interrogations, one of the Bush administration's most fraught legacies. A federal prosecutor has opened a criminal inquiry into alleged mistreatment of al-Qaeda suspects and the destruction of videotapes depicting some of the interrogations.

The focus on missing e-mails revives a controversy that for years dogged the Bush administration, which had fought a lawsuit seeking electronic messages from government officials. Only after President George W. Bush returned to Texas did his officials turn over the 22 million documents.

Citizens for Responsibility and Ethics in Washington, a government watchdog group, called on the Justice Department to launch a criminal inquiry into the recently disclosed disappearance of the e-mail messages, which could violate the Federal Records Act. The National Archives also asked why it had not been notified about the missing messages before the ethics report's release late last week.

Acting Deputy Attorney General Gary G. Grindler told lawmakers at the hearing that the ethics report "does not suggest there is anything nefarious" about the missing documents. Under questioning from Leahy, Grindler said he had directed a department administrator "to determine exactly what was going on with respect to the archiving of these e-mails."

"If they are retrievable, I will direct him to retrieve them," Grindler said.

Former Justice Department lawyer William Yeomans told an audience this week at a legal conference sponsored by the left-leaning Alliance for Justice that the missing e-mails represent "a gaping hole in the ethics investigation."

The department's Office of Professional Responsibility, an internal affairs unit, concluded that former department lawyers John C. Yoo and Jay S. Bybee had committed misconduct in preparation of the memos. But the OPR was overruled by Associate Deputy Attorney General David Margolis, a 40-year department veteran, who downgraded the recommendation and found that Yoo and Bybee had displayed poor judgment.

At the Senate hearing, Grindler told lawmakers that the Margolis ruling was made "without interference" by senior Justice Department officials and that no attorney general or deputy has ever overturned the conclusion of a senior career attorney in an ethics case.

Grindler said the department has "confidence in OPR's ability to investigate allegations of professional misconduct against department attorneys."

But analysts have criticized the ethics unit's pace of investigation, its reasoning and its conclusions. Michael Frisch, a former official at the D.C. Office of Bar Counsel, which polices ethics violations by lawyers, asserted that the OPR and Margolis did not take into account a relevant legal rule: whether lawyers who drafted the memos had counseled or assisted their client in criminal or fraudulent conduct.

Defense attorneys portrayed Yoo and Bybee as "vindicated" by the ethics process last week. Miguel Estrada, an attorney for Yoo, said in an e-mail that his client "was long gone when OPR commenced its investigation and has no basis for knowing whether emails are gone or why."

At Friday's hearing, Sen. Jeff Sessions (R-Ala.), said that "second-guessing good people who made decisions in tough times" could send a dangerous message to those considering government service.

House Judiciary Committee spokesman Jonathan Godfrey said the panel plans to schedule a hearing and "expects to hear directly" from Bybee and Yoo.

New York Gov. David Paterson won't run this fall

2010-02-26T09:35:00.000-08:00

Under Fire, Paterson Ends His Campaign for Governor
By DANNY HAKIM and JEREMY W. PETERS
Copyright by The New York Times
Published: February 26, 2010
http://www.nytimes.com/2010/02/27/nyregion/27paterson.html

Gov. David A. Paterson ended his campaign for election on Friday amid crumbling support from his party and an uproar over his administration’s intervention in a domestic violence case involving a close aide.

The announcement came less than a week after Mr. Paterson formally announced his candidacy.

The governor acknowledged that the episode involving his longtime aide David W. Johnson had become a distraction, but he vowed to serve out the remaining 308 days of his term and remain focused on his work.

“There are times in politics when you have to know not to strive for service, but to step back, and that moment has come for me,” Mr. Paterson told a room full of reporters in an afternoon news conference.

In the most dramatic moment, the governor raised his right hand and offered what he called a “personal oath,” stressing that he had not abused his power in his response to the domestic violence case.

“I have never abused my office, not now, not ever,” said Mr. Paterson, his wife, Michelle Paige Paterson, by his side.

“I believe that when the facts are reviewed, the truth will prevail,” he added.

Even as the governor was speaking, however, new calls emerged for him to resign, amid a criminal investigation by the office of Attorney General Andrew M. Cuomo. Moments after the governor’s news conference ended, the New York City comptroller, John C. Liu, became the latest fellow Democrat to call for the governor to step down.

And some Democrats expressed skepticism that the politically wounded Mr. Paterson could effectively lead a state facing a deficit of more than $8 billion.

The White House, which had tried to nudge Mr. Paterson out of the race, said he was right to end his candidacy. The reports of his administration’s intervention in the domestic abuse case were “disturbing,” said Robert Gibbs, the White House press secretary.

“Anybody that read these articles believes at a minimum he made the right decision about his re-election,” Mr. Gibbs said.

State Democrats were moving to anoint Mr. Cuomo, who has been quietly preparing his own campaign for governor, as their candidate.

The governor’s withdrawal came less than two days after The New York Times reported that his administration had intervened in the episode involving Mr. Johnson, 37, who was accused by a longtime companion of assaulting her on Halloween.

The woman was twice granted a temporary order of protection against Mr. Johnson, but she complained in court that the State Police had been harassing her to drop the matter. In addition, the governor talked to the woman himself only a day before she was scheduled to appear in court to seek a final order of protection. She failed to show up for that appearance, and the case was dropped. The woman, saying she fears retaliation, has requested that her identity be withheld.

The governor initially seemed to believe that his campaign could survive the revelations and was seemingly undisturbed for most of Thursday, even as prominent Democrats publicly questioned his political prospects.

He attended two private lunches with donors in Manhattan, at the Four Seasons and the Bryant Park Grill.

But after he returned to his campaign office about 3:30 p.m., his political advisers gave him bad news: they had been canvassing Democrats about whether the campaign should continue, and they found that support for the governor was evaporating.

Some elected officials who had agreed to attend a big homecoming rally, planned for Saturday in Harlem, expressed wariness about appearing.

“It made no political sense to move forward with that kind of announcement in light of the allegations,” said Assemblyman Daniel J. O’Donnell, a Democrat who represents the Upper West Side.

“It really would be unfair to people who have been loyal to the governor to put them in a position like that,” he said, adding, “It was over.”

The governor and his advisers had also become unnerved because the Rev. Al Sharpton, who had been gradually moving away from his embrace of Mr. Paterson’s candidacy, was organizing a major meeting of black political leaders at Sylvia’s in Harlem on Saturday to discuss the governor’s situation.

On Thursday afternoon, the governor and his campaign manager, Richard Fife, began a conversation about his options. About 90 minutes later, they were joined by Jay Jacobs, the state party chairman and a key Paterson ally. Sitting around a conference table in the campaign office, which overlooks Park Avenue, as a snowstorm whirled outside, the governor listened to Mr. Jacobs explain why the race was unwinnable. Perhaps most significant, Mr. Jacobs said it would be extremely difficult for Mr. Paterson to win the 25 percent of delegates needed at the state party convention in May to secure a place on the primary ballot.

After Mr. Jacobs finished speaking, about 5:20, the governor agreed and said he would quit the race.

“It was becoming much bigger and more complicated than could be overcome,” Mr. Jacobs said later. “He said that he agreed. It didn’t require any great lift on my part. He didn’t seem resigned, dejected. He seemed resolute and confident.”
The governor thanked Mr. Jacobs and said he needed a day to call supporters and friends to let them know he would be ending his campaign.

He spent the evening and the next morning calling key personal and political supporters, including his father, Basil A. Paterson, former New York secretary of state; Representative Charles B. Rangel of Manhattan; and George Gresham, the leader of the powerful union of hospital workers, 1199 S.E.I.U.

Some old friends told him that he should consider going further. Minutes after his announcement on Friday, the governor called Edward I. Koch, the former mayor of New York City.

“I said I think you should resign,” Mr. Koch recalled of the conversation.

“They’re going to play with you like a dog with a bone, and it won’t be any fun,” he told the governor. “There won’t be any satisfaction, you won’t have any clout and it’ll be agonizing.”

“He said thank you, and that was all,” Mr. Koch said.

Later in the day, the governor called Kathryn S. Wylde, president and chief executive of the Partnership for New York City, a nonprofit group of business executives.

“I asked him if he felt that he had been railroaded out or if he got tired of it, and he said, ‘I just got tired of it,’ “ she recalled. “Then he said, ‘It’s like I’m standing in front of the mirror thinking is there a reason for why I take all this abuse, and that it’s mostly coming from the Democrats.’ “

Mr. Paterson, who is 55, came to office in March 2008 after his predecessor, Eliot Spitzer, resigned amid a prostitution scandal. Before becoming lieutenant governor in January 2007, he served for two decades as a state senator from Harlem, rising to become the leader of the Democratic caucus when it was still the minority.

Mr. Paterson had about $3 million on hand for his campaign, according to a finance report filed last month. Mr. Fife, his campaign manager, said Friday that no decision had been made about whether the money would be returned to donors.

Some Democrats are urging Mr. Paterson to turn over many or all of his duties to Richard Ravitch, the lieutenant governor, a seasoned public servant who once led the Metropolitan Transportation Authority. Mr. Ravitch has been working for months on a multiyear fiscal plan that is likely to be released in the next couple of weeks.

“Obviously, I want to be as helpful as I possibly can,” said Mr. Ravitch, who was working on his fiscal plan on Friday afternoon as Mr. Paterson was preparing to announce his withdrawal from the governor’s race. “People have been waiting for me to come up with my ideas, and I’ve been trying to finish that. I’ll be working all weekend on that.”

Asked about the governor’s predicament, he said, “At some level you have to feel sad.” But, he added, the administration needed to focus on “problems with the government and the budget that have to be addressed.”

Mr. Paterson’s advisers, meanwhile, privately pressed legislative leaders to agree to a public meeting with him on Tuesday to send a message to New Yorkers that he was back at work, and serious about fixing the budget.

“There are 308 days left in my term,” he said. “I will serve every one of them fighting for the people of the State of New York.”

Peter Baker contributed reporting.

Hate crime charges upheld for 3 accused of beating gay man

2010-02-26T02:15:00.000-08:00

Hate crime charges upheld for 3 accused of beating gay man
BY RUMMANA HUSSAIN rhussain@suntimes.com
Copyright by The Chicago Sun Times
February 26, 2010
http://www.suntimes.com/news/24-7/2069373,CST-NWS-hate25.article

BY RUMMANA HUSSAIN Criminal Courts Reporter rhussain@suntimes.com
If someone makes gay slurs in the middle of a fight -- is it a hate crime? Even if the victim wasn't targeted because of his sexual orientation?

Those were the questions posed to Cook County Judge Ramon Ocasio III on Wednesday during a hearing involving three Evanston men charged with a hate crime for beating up a gay man on the CTA in January.

Attorneys for the three said the man -- Daniel Hauff, 33, of Rogers Park -- intervened in a fight the men were involved in. They said state law says that for an incident to constitute a hate crime, a person has to be attacked because of his sexual orientation or race.

For at least a few minutes, Ocasio agreed that the men -- Sean Little, Kevin McAndrew and Benjamin Eder -- weren't guilty of a hate crime for that reason.

But after an exasperated Assistant State's Attorney Erin Antonietti repeated how the men allegedly taunted Hauff as a "faggot" and asked him whether they'd get AIDS from him after he suffered a bloody nose and cuts, Ocasio reversed his decision and upheld the hate crime charges.

The men were originally charged with misdemeanor battery. But Tuesday, prosecutors upgraded the charges to a felony hate crime and aggravated battery. Ocasio issued a $10,000 personal recognizance bond for the trio.

At Wednesday's hearing, Antonietti said Hauff confronted the men on the Red Line when he heard McAndrew, 23, bullying another gay rider.

Little, a 21-year-old Loyola student, turned to Hauff, called him a "faggot" and accused "the victim of being the other person's boyfriend," Antonietti said. After the other man got off the L, the three men started shoving Hauff and repeatedly called him "faggot," Antonietti said. Little allegedly punched Hauff. The fight eventually spilled from the train to the Argyle platform, where Eder, 23, was seen punching Hauff, Antonietti said.

Little's attorney, Robert Givertz, denied the men used slurs and denied the case constituted a hate crime.

Chicago Tribune Editorial: Smoldering reform

2010-02-26T02:10:00.000-08:00

Chicago Tribune Editorial: Smoldering reform
Copyright by The Chicago Tribune
Copyright © 2010, Chicago Tribune
6:22 p.m. CST, February 25, 2010
http://www.chicagotribune.com/news/opinion/editorials/ct-edit-reform-20100225,0,4348580,full.story

This time last year, the state Capitol was on fire with talk of government reform.

Gov. Pat Quinn, the Boy Scout who replaced bad boy Rod Blagojevich, had commissioned a blue-ribbon ethics panel to draw up an agenda for reform. House Speaker Mike Madigan and Senate President John Cullerton had formed a joint committee to propose and pass improved ethics laws. Republicans were complaining about being underrepresented in the effort. It was a five-alarm call.

What did we have to show for it when the smoke cleared? Not much. Most of the roadblocks to good government were left standing. Some were so well protected that they suffered no damage at all. Here and there, the embers of reform were left smoldering for the next session. And now we think it's best to abandon this metaphor, before we get to the part about the hose.

Instead we'll just point out that it's February — late February — and lawmakers have shown little interest in finishing what they barely started last year. Let's review the "Six Steps to Clean Up State Government" that made up the Tribune's reform agenda:

•Unravel government secrecy. We cheered a rewrite of the state's Freedom of Information Act, even though it left in place some vexing exemptions, notably the ones that protect the General Assembly from operating in the sunlight. Lawmakers started dismantling the improved law almost as soon as the ink was dry. One of the first bills to pass in the new session was a measure shielding teacher performance evaluations from the prying eyes of the parents who pay their salaries. Half a dozen other bills have been filed this year, meant to restore the obstacles that allow governments to hide from their citizens. This one's moving backward.

•Expand anti-corruption powers. More than a dozen bills designed to provide prosecutors with enhanced tools to ferret out public corruption were held "for further study." They're still going nowhere.

Regulate campaign finance. Democratic leaders probably chuckle under their breaths when they think about how they scammed the public by passing the state's "first-ever" limits on campaign contributions. Those limits don't apply to contributions from political parties. So they've bestowed a huge advantage on themselves and chalked it up as a landmark reform. It's a big win for incumbents, but a travesty for voters. The government watchdogs who clawed their way to this compromise promised to fight for the rest of the package this year, but they've already hit the wall. Cullerton is personally guarding the door to the Senate subcommittee where two follow-up bills are stuck, and Madigan has planted his heel on House Republican leader Tom Cross' version.

•Reform the pension system. All talk, no walk. With the state teetering on bankruptcy, fixing the pension system is perhaps the single most important challenge facing lawmakers this session. It's also the one that will require the most backbone. Let's see if they duck it again.

•Give citizens power to recall. A plan to let voters fire state executive officers or legislators was buried in committee. As a token gesture, lawmakers substituted a constitutional amendment — it's on the November ballot — that would allow the recall of the governor only.

•Encourage competitive elections. More than anything, this means creating fair and representative districts instead of meandering blobs designed to corral a carefully selected group of incumbent-friendly voters. Why in the world would the powers-that-be want to make that change? Reformers are lobbying hard to revamp the once-a-decade remapping process that will follow the 2010 U.S. Census headcount. Quinn's ethics commission recommended the computer-driven model that works like a charm in Iowa, but it fell on deaf ears.

Now government watchdog groups are pushing the Illinois Fair Map amendment, under which the new districts would be drawn by a commission instead of by lawmakers. Cross and Senate Republican leader Christine Radogno want to get that proposal onto the ballot via the General Assembly, but the reformers aren't holding their breaths. They're collecting signatures to put it on the ballot by citizen petition, bypassing the lawmakers who have a vested interest in killing it. You can find information on their plan at ilfairmap.com.

Senate Democrats have a proposal that still would allow lawmakers to draw the maps. A "special master" chosen by two Supreme Court justices from opposing parties would take over if the lawmakers couldn't agree.

We'll have more to say soon about these competing proposals. But they could all be hosed: Madigan says changing the redistricting process is a low priority in the House.

•••

A year ago, nearly two-thirds of those responding to a Tribune poll said Illinois was among the most corrupt states in the nation. We don't think the smattering of half-measures passed so far would change that impression, even if Blagojevich isn't around to throw gasoline on the fire.

Voters demanded reform, and lawmakers promised it. We're still waiting for them to deliver.

Many Dead in Suicide Attack on Hotel in Afghan Capital

2010-02-26T01:40:00.000-08:00

Many Dead in Suicide Attack on Hotel in Afghan Capital
By ALISSA J. RUBIN
Copyright by The New York Times
Published: February 26, 2010
http://www.nytimes.com/2010/02/27/world/asia/27kabul.html?th&emc=th

KABUL, Afghanistan — At least 17 people were killed and 32 wounded early Friday when several suicide bombers attacked a hotel popular with foreigners and the surrounding area in the center of Kabul, police officials said.

News reports said the Taliban took responsibility for the attack, which came despite a major offensive by American-led coalition forces against militants in the southern province of Helmand, a central element in President Obama’s strategy in rural Afghanistan.

One of the bombers detonated his vest, according to the police, who were still engaged in a firefight with the attackers 90 minutes later.

The attack was the fourth assault on the capital since October.

“A few suicide bombers attacked the Safi Landmark hotel, and there is still a firefight between them and our security forces going on,” said Gen. Sayed Ghafar, the chief of the Criminal Investigations Department of the Kabul police.

He put the death toll at 17 — a relatively high figure for attacks in central Kabul — and said the dead included several foreigners, mainly Indians. News reports said four Indians died in the attack. The hotel is used mainly by foreigners, including Britons and Americans.

The wounded included some police officers, General Ghafar said.

The attack began with a large explosion that shook the city center, damaging the high-rise hotel, shortly after 6:30 a.m. That was followed by gunfire and two smaller explosions. It was not clear if the later explosions were from the attackers or from the police launching grenades.

“I looked out at the gate, but there was no gate,” said Manuwar Shah, 20, who was standing at the reception desk when the attack started. “It had been blown off.” Then, he said, he ran into a room before taking shelter in the hotel basement and was trapped there during the fighting.

This was the second major attack in Kabul this year. The first one took place Jan. 18, when seven gunmen attacked a popular shopping center and several surrounding buildings near the presidential palace and a hotel favored by westerners.

Reuters quoted a Taliban spokesman, Zabiullah Mujahid, as saying “holy warriors” had “managed to attack in the heart of Kabul city once again.” He was speaking by telephone from an undisclosed location.

The spokesman said at least five Taliban fighters launched the attack, including two suicide bombers who detonated explosives-packed vests near the hotel and a shopping mall, Reuters reported.

The attack reflected an accelerating trend over the past year for the Taliban to spill out of rural areas, where the overwhelming majority of United States troops are deployed in small outposts in the countryside. On most days, the capital is calm.

But a series of attacks has demoralized Afghans as militants seek to spread the impression that virtually no part of the country is immune from the conflict.

One year ago, militants attacked the Ministry of Justice, killing guards and stalking the halls for victims. Apart from insurgents, at least 10 people died

In October, militants wearing suicide belts attacked a United Nations guesthouse in Kabul and killed eight people, including five of the organization’s workers. In December, a suicide car bomber struck the Heetal Hotel, killing eight people and wounding 48. That was followed by the Jan. 18 attack in which seven people were killed.

As Fighting Subsides, Afghans Plant a Flag in Marja

Israel’s perceived lawlessness hurts its cause

2010-02-26T01:19:00.000-08:00

Israel’s perceived lawlessness hurts its cause
By David Gardner
Copyright The Financial Times Limited 2010
Published: February 25 2010 22:40 | Last updated: February 25 2010 22:40
http://www.ft.com/cms/s/0/43c961e4-224a-11df-9a72-00144feab49a.html

There was a shocking murder, in 2008, of the Lebanese starlet, Suzanne Tamim. It was quickly solved. The culprit was caught on security camera. In Beirut or Cairo he would probably have got away with it. Dubai is an open city, but it has its eyes open too.

Mossad, the Israeli spy agency, would certainly have known that before it sent (as it almost certainly did) a 26-strong hit squad to Dubai to kill Mahmoud al-Mabhouh, an arms smuggler for the Palestinian Islamist group Hamas, on January 19.

The agency’s team, using purloined identities and passports from allies including Britain, Ireland, France and Germany, got away but was captured on closed circuit television, as it surely knew it would be. While Israel almost never confirms such covert operations, it was almost as though it wanted the world to know.

On the day the Israeli ambassador in London was called in by the Foreign Office to explain his country’s conduct, his embassy was wittily tweeting about an Israeli tennis player carrying out “a hit in Dubai” (a reference to Israeli tennis star Shahar Pe’er’s reaching the semi-finals in the Dubai championship, as well as a sly reminder that some of the assassins were disguised as tennis players).

Yet, if Israeli officials can restrain their smirks for a moment, they might consider how much their militarist extroversion has really contributed to the security of the country. First of all, despite its reputation for daring, flamboyance and cold-blooded efficiency, Mossad’s record is mixed, to say the least. More importantly, even Israel’s operational successes increasingly backfire, politically and sometimes strategically – and now at a time when the country’s reputation is under the international microscope.

Israel has had its fair share of botched operations, going all the way back to the Lavon Affair of 1954, when an Israeli spy-ring was caught bombing Egyptian libraries and cinemas.

Mossad was lionised for hunting down the Black September terrorists who killed 11 Israeli athletes at the 1972 Munich Olympics. But that too ended in fiasco when the hit squad killed a Moroccan waiter it mistook for Ali Hassan Salameh, a top aide to Yassir Arafat, in Lillehammer in July 1973; several of its members were jailed by Norway, causing huge damage to the agency’s networks across Europe. While all this was going on, Mossad signally failed to detect any sign of the looming Yom Kippur war.

Mossad did eventually get Salameh, with a car-bomb in Beirut in 1979, but by then he had become US and British intelligence’s main conduit into the Palestine Liberation Organisation.

Most famously, Mossad agents (using Canadian passports) got captured in Amman in September 1997 after failing to kill Khaled Meshal of Hamas. The bungler in that case was Benjamin Netanyahu, then, as now, Israel’s prime minister, to whom the late King Hussein – Israel’s one friend in the Arab world – had just passed a Hamas offer of a 30-year truce. The king, his biographer, Avi Shlaim records, felt as though someone “had spat in his face”. The relationship never quite recovered. Not only that, but Israel had to release Sheikh Ahmad Yassin, the founder of Hamas.

Israel would later assassinate Sheikh Yassin (and 21 other Palestinian leaders in the three years from June 2001). Clearly, this Israeli preference for instantly satisfying, executive solutions to complex political and geopolitical problems continues apace. But does the balance sheet from this sort of activity redound to Israel’s credit or rebound against it?

Well, Mr Meshal survived to become the most powerful man in Hamas, and more radical than most of his slain peers. Arguably, Israel achieved a similar result by assassinating PLO leader Khalil al-Wazir (Abu Jihad) in Tunis in 1988, removing a weighty restraint on Yassir Arafat. A lot less arguably, Israel scored an own-goal by killing Hizbollah chief Abbas Mussawi in 1992; his successor, the wily and charismatic Hassan Nasrallah, has become Israel’s deadliest enemy. Israel even managed to network its enemies shortly afterwards, summarily expelling 400 Hamas and intifada activists and depositing them on the Lebanese border. As an aide to the late Yitzhak Rabin would ruefully observe, “we might as well have sent them to Hizbollah’s university”.

Lebanon figures prominently in Israel’s balance sheet in other ways. The 1982 invasion of Lebanon is acknowledged even inside Israel as the country’s first war of choice. True, Ariel Sharon drove Arafat and the PLO out of Lebanon, albeit at permanent cost to Israel’s reputation after a siege of west Beirut that killed nearly twice as many people as the siege of Sarajevo in one-twentieth of the time.

But that invasion created Hizbollah. “When we entered Lebanon,” said former prime minister and current defence minister Ehud Barak, “there was no Hizbollah.” Rabin, the slain former soldier-premier, lamented how the invasion “let the genie out of the bottle”. Israeli officials now portray Hamas and Hizbollah as creatures in an Iranian grand design. But if Iran did not exist these two Islamist groups would exist – and Israel knows why. And, as backfires go, they do not come much bigger than Hizbollah.

The Shia Islamist group not only bombed the US out of Beirut in 1983 but also fought the Israeli army back to its border, forcing it out altogether by 2000, reliant, paradoxically, on superior intelligence. In their last test of arms, the 34-day summer war of 2006, Hizbollah stood its ground and mercilessly exposed the limits of Israel’s military power. Israel’s damning report from the Winograd Commission confirmed this – as did the pinnacle to which Hizbollah and its leader were raised across the Arab world.

Israel hit back. Almost certainly, and with inside help, it was behind the murder two years ago in Damascus of Imad Mughniyeh, Hizbollah’s deadliest operative. But that will, as in the past, widen the international battle-space for tit-for-tat attacks.

Yet, beyond this or that particular incident, it does Israel’s cause no good to encourage the perception that it is a rogue state – especially after it stands accused of war crimes in Gaza by the Goldstone report commissioned by the United Nations. Even though Israel came into existence as a result of the international system built around the UN, its leaders have tended to take the view that international law does not really exist or, if it does, it simply does not apply to them. They have got away with it because they have been able to rely on the US veto in the Security Council, exercised 29 times to shield Israel’s behaviour in the occupied Palestinian territories and 11 times to protect its actions in Lebanon.

Levi Eshkol, prime minister when Israel won a crushing victory in the 1967 six day war, got it right. If Israel wanted to insist simultaneously on its unparalleled strength and unique vulnerability, it would have to give up the David versus Goliath script and portray itself as “poor little Samson”. That role no longer convinces.

david.gardner@ft.com

US jobless claims show surprise rise

2010-02-26T01:15:00.000-08:00

US jobless claims show surprise rise
By Alan Rappeport in Washington
Copyright The Financial Times Limited 2010.
Published: February 25 2010 14:10 | Last updated: February 25 2010 14:10
http://www.ft.com/cms/s/0/85763cb4-2215-11df-98dd-00144feab49a.html

The number of US workers making new claims for jobless benefits recorded a surprising increase last week, offering more evidence that the labour market’s recovery will be rocky.

Initial jobless claims rose by 22,000 to 496,000, the labour department said on Thursday. Economists were expecting jobless claims to fall during the week.

The less volatile, four-week average of claims rose, climbing by 6,000 to 473,750 while those continuing to claim unemployment benefits also rose by 6,000 to 4.61m.

The disappointing jobless figures follow a sharp drop in consumer confidence earlier this week, which was pulled back by growing anxiety about the labour market.

Some relief could be in sight, however, as the US senate on Wednesday passed a $15bn jobs bill that will provide tax incentives to businesses that hire new workers. The legislation is expected to create about 250,000 jobs.

Meanwhile, the commerce department said on Thursday that new orders for durable goods jumped last month thanks to greater demand for aircraft. The rise is another sign that the manufacturing sector will show continued strength.

Durable goods orders rose by 3 per cent to $175.7bn. That was the biggest increase since last July and was fuelled by a 126 per cent surge in new orders for civilian aircraft.

Excluding transportation orders, which tend to be volatile, demand for long-lasting goods was down by 0.6 per cent.

Financial crisis panel to call back bank chiefs

2010-02-26T01:12:00.001-08:00

Financial crisis panel to call back bank chiefs
By Tom Braithwaite in Washington
Copyright The Financial Times Limited 2010
Published: February 25 2010 23:00 | Last updated: February 25 2010 23:00
http://www.ft.com/cms/s/0/cc66ba98-2253-11df-9a72-00144feab49a.html

Hands up: (from left) Goldman’s Lloyd Blankfein, Jamie Dimon of JPMorgan Chase, John Mack of Morgan Stanley and Bank of America’s Brian Moynihan face the FCIC

Phil Angelides, chairman of the Financial Crisis Inquiry Commission, a latter-day version of the Pecora commission that examined the Great Depression, said he planned to question overseas regulators to understand similarities and differences with US oversight in the run-up to the crisis.

In an interview before the second public hearing of the FCIC that begins on Friday, Mr Angelides, a former California state treasurer, said he was most struck so far in his inquiry by the way in which Goldman Sachs had been “creating and selling securities and then fully betting against them”.

In a reference to the Greek crisis and the alleged role of securities sold by the bank, Mr Angelides said: “It appears that this action was not confined to creating and selling mortgage securities. It also extended to the creation and selling of foreign debt instruments. I find the practice troubling and it raises questions about fair dealing and trust and transparency in the marketplace.”

Bill Thomas, vice-chairman of the FCIC and the former Republican chairman of the House ways and means committee, said the hearing last month that questioned Lloyd Blankfein of Goldman, John Mack of Morgan Stanley, Jamie Dimon of JPMorgan Chase and Brian Moynihan of Bank of America was not the end of the process for the bankers and “doesn’t mean we won’t get to them again”.

In the dramatic hearing, the four men were sworn in under oath and questioned about their behaviour before the crisis. Mr Blankfein was forced to field more than his share of the questions, with Mr Angelides accusing him of a conflict of interest in creating mortgage-backed securities at the same time as taking a trading position against them.

Mr Blankfein noted that Goldman traded with informed institutional investors in securitised assets who were responsible for their own action but he appears not to have convinced his inquisitor.

Mr Angelides said that the FCIC wielded subpoena power and could demand witnesses and documents from banks and regulators. “Remember this: we do have the ability to get information that other folks do not,” he said.

“So far, knock on fake wood,” said Mr Angelides, drumming the table, “people are in compliance.”

Mr Thomas said: “The corporate world has been pretty co-operative.”

Asked whether his inquiry could extend to issues such as the Greek debt crisis, Mr Angelides, himself of Greek heritage, said: “Our view generally is that the crisis is not a past-tense phenomenon.”

However, he noted that the FCIC had a hard deadline in December to deliver a report to Congress and that would govern the way the commission went about its business. “That’s what’s driving us crazy: the time we have to get a report,” said Mr Thomas.

The report is not supposed to be the “definitive word”, said Mr Angelides. He said it “behooves the country” to pay attention to the product but that “does not mean that the president and the Congress should hold up” on regulatory reform.

“I will say that for the long term, a better common understanding of this calamity is important.” He added that a lot of people had told him the regulatory reform – now bogged down in the Senate – would be completed before his work started. “As it turns out, that didn’t happen,” he noted wryly.

The FCIC session at the American University in Washington, which continues on Saturday, will hear from academics including Randall Kroszner of the University of Chicago and Markus Brunnermeier of Yale University.

At health-care summit, Obama tells Republicans he's eager to move ahead/Afflicting the Afflicted Sign in to Recommend

2010-02-26T01:04:00.000-08:00

At health-care summit, Obama tells Republicans he's eager to move ahead
By Shailagh Murray and Anne E. Kornblut
Copyright by The Washington Post
Friday, February 26, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/02/25/AR2010022502369.html?hpid=topnews

President Obama declared Thursday that the time for debate over health-care reform has come to an end, closing an unusual seven-hour summit with congressional leaders by sending a clear message that Democrats will move forward to pass major legislation with or without Republican support.

Democratic leaders face a heavy lift in reviving their stalled bill, a process that would involve intricate parliamentary maneuvering and carries no guarantee of success. But Obama signaled that if meaningful GOP cooperation does not materialize in the weeks ahead, he is ready to proceed without bipartisan support and risk the political consequences.

"The question that I'm going to ask myself and I ask of all of you is, is there enough serious effort that in a month's time or a few weeks' time or six weeks' time we could actually resolve something?" Obama said. "And if we can't, then I think we've got to go ahead and make some decisions, and then that's what elections are for."

The remarkable session at Blair House ranged from dull to pointed as it revealed the deep divide between the two parties over health care. It was the same philosophical gulf that led to the collapse of bipartisan Senate negotiations last summer, and the primary reason Congress has resorted to changing the health-care system piecemeal, rather than in broad strokes, over the years.

Republicans said that they share Democrats' assessment that the health-care system is broken, but that they view the pending legislation assembled by Democrats as deeply flawed. They questioned fundamental elements of the Democrats' approach, including whether it is appropriate for the government to set standards for coverage or require individuals to buy insurance.

Obama played the role of active moderator for much of the event, calling on participants to speak and interjecting when he disagreed on specific points. He chided members of both parties for lapsing into campaign rhetoric, but he saved some of his most pointed jabs for Republicans, his voice heavy with sarcasm when he accused GOP speakers of using "good poll-tested language" to describe the Democratic plan as "government-run health care."

Some Republicans were more pleased with the session than others. Sen. Jon Kyl (R-Ariz.) complained as the GOP delegation left the White House that Democrats and Obama had consumed the vast majority of the airtime. But Senate Minority Leader Mitch McConnell (R-Ky.) described it as "a good discussion," telling reporters, "I wouldn't call it a waste of time."

GOP lawmakers arrived at the table with two primary goals: to demonstrate that the party has its own health-care solutions, and to criticize the Democrats' proposal as big-government overreach.

"We Republicans care just as much about health care as the Democrats in this room," said Rep. Eric Cantor (Va.), the No. 2 House Republican. But he added: "There is a reason why we all voted no. And it does have to do with the philosophical difference that you point out."

During a break in the session, Senate Majority Whip Richard J. Durbin (Ill.) deemed a bipartisan deal "a long-shot" prospect, but he told reporters that Democrats are undaunted in their quest to deliver a bill to Obama's desk.

"If nothing comes of this, we're going to press forward," he said. "We just can't quit. This is a once-in-a-political-lifetime opportunity to deal with a health-care system that is really unsustainable."

Democrats are attempting a historic feat in seeking passage of a huge bill that aims to expand coverage to an additional 30 million people, reform insurance industry practices and curb rising health-care costs.

But polls show that voters are skeptical of the ambitious proposal, which carries a 10-year cost of roughly $900 billion and would institute the most far-reaching changes to the system since Medicare and Medicaid were created in 1965.

During Thursday's session, both sides expressed regret about the way the debate has unfolded. What started nearly a year ago as a good-faith effort to find broad agreement quickly devolved into a partisan grudge match, marred by favors to secure votes and deals cut by the White House and Democratic leaders on Capitol Hill with special-interest groups. As several Republicans noted, most key decisions were reached behind closed doors, a breach of Obama's campaign pledge to make health-care negotiations transparent.

"Both of us during the campaign promised change in Washington," Sen. John McCain (Ariz.), the 2008 GOP presidential nominee, said to Obama. "In fact, eight times you said that negotiations on health-care reform would be conducted with the C-SPAN cameras. I'm glad more than a year later that they are here."

If nothing else, the session was an attempt to bring an air of civility and openness to the debate. "Unfortunately, over the course of the year, despite all the hearings that took place and all the negotiations that took place, and people on both sides of the aisle worked long and hard on this issue, and you know, this became a very ideological battle," Obama said.

But he suggested that his hopes for bipartisan agreement are fading. "I don't know that those gaps can be bridged," he said. "It may be that at the end of the day, we come out here and everybody says, 'Well, you know, we have some honest disagreements.' "

The session allowed the parties to draw sharp contrasts that are likely to be echoed throughout the midterm election season. Republicans criticized Democrats for attempting to levy new fees and taxes on businesses to pay for their legislation. They depicted the Democratic proposal as a vast expansion of government authority, and they warned that consumers would have higher insurance premiums and fewer choices.

Democrats countered that health-care problems -- whether related to rising costs or barriers to coverage -- have grown so egregious that the government has no choice but to intervene.

The two parties did find accord in several limited realms. People should be allowed to buy insurance across state lines, lawmakers agreed, although Democrats want to set minimum standards that policies in all states would have to meet. They agreed that forming pools for uninsured people is a good way to lower premium costs. And they conceded that unless costs are contained, Medicare will be bankrupted and employers will stop offering coverage.

As the session concluded, Obama challenged Republicans to offer alternatives to the tax incentives and Medicaid expansion that Democrats have proposed for reducing the number of uninsured, and to the individual mandate they would establish to require people to buy coverage.

Although Obama opposed the mandate as a candidate, he said he concluded it is necessary to achieve another major goal: preventing insurers from denying coverage to people with preexisting conditions.

"I'd like the Republicans to do a little soul searching and find out are there some things that you'd be willing to embrace that get to this core problem of 30 million people without health insurance, and dealing seriously with the preexisting-condition issue," Obama told lawmakers.

Few Democrats expect the request to yield any breakthroughs. Senior congressional aides said Democratic leaders will assess the mood next week, after House and Senate lawmakers spend the weekend at home hearing from constituents. But rank-and-file Democratic lawmakers appeared to be warming to the idea of moving ahead on their own legislation, senior party officials said.

To pass their bill, Democrats must rely on a special budget process known as reconciliation. Under a plan being discussed by senior Democratic lawmakers, the House would approve the bill the Senate passed on Christmas Eve, along with compromise provisions that address their objections to the Senate legislation. The fixes would be written under reconciliation rules to prevent a GOP filibuster, allowing it to clear the Senate by a simple majority.

Republicans often used reconciliation in recent years when they controlled the Senate, but GOP leaders now cite the procedure as evidence that Democrats are prepared to manipulate Senate rules to muscle their bill through despite public opinion.

Sen. Lamar Alexander (R-Tenn.) implored Obama to "renounce this idea." But he received no assurance from the president.

"I don't need a poll to know that most of Republican voters are opposed to this bill and might be opposed to the kind of compromise we could craft," Obama said. "It would be very hard for you politically to do this."

Afflicting the Afflicted Sign in to Recommend
By PAUL KRUGMAN
Copyright by The New York Times
Published: February 25, 2010
http://www.nytimes.com/2010/02/26/opinion/26krugman.html?th&emc=th

If we’re lucky, Thursday’s summit will turn out to have been the last act in the great health reform debate, the prologue to passage of an imperfect but nonetheless history-making bill. If so, the debate will have ended as it began: with Democrats offering moderate plans that draw heavily on past Republican ideas, and Republicans responding with slander and misdirection.

Nobody really expected anything different. But what was nonetheless revealing about the meeting was the fact that Republicans — who had weeks to prepare for this particular event, and have been campaigning against reform for a year — didn’t bother making a case that could withstand even minimal fact-checking.

It was obvious how things would go as soon as the first Republican speaker, Senator Lamar Alexander, delivered his remarks. He was presumably chosen because he’s folksy and likable and could make his party’s position sound reasonable. But right off the bat he delivered a whopper, asserting that under the Democratic plan, “for millions of Americans, premiums will go up.”

Wow. I guess you could say that he wasn’t technically lying, since the Congressional Budget Office analysis of the Senate Democrats’ plan does say that average payments for insurance would go up. But it also makes it clear that this would happen only because people would buy more and better coverage. The “price of a given amount of insurance coverage” would fall, not rise — and the actual cost to many Americans would fall sharply thanks to federal aid.

His fib on premiums was quickly followed by a fib on process. Democrats, having already passed a health bill with 60 votes in the Senate, now plan to use a simple majority vote to modify some of the numbers, a process known as reconciliation. Mr. Alexander declared that reconciliation has “never been used for something like this.” Well, I don’t know what “like this” means, but reconciliation has, in fact, been used for previous health reforms — and was used to push through both of the Bush tax cuts at a budget cost of $1.8 trillion, twice the bill for health reform.

What really struck me about the meeting, however, was the inability of Republicans to explain how they propose dealing with the issue that, rightly, is at the emotional center of much health care debate: the plight of Americans who suffer from pre-existing medical conditions. In other advanced countries, everyone gets essential care whatever their medical history. But in America, a bout of cancer, an inherited genetic disorder, or even, in some states, having been a victim of domestic violence can make you uninsurable, and thus make adequate health care unaffordable.

One of the great virtues of the Democratic plan is that it would finally put an end to this unacceptable case of American exceptionalism. But what’s the Republican answer? Mr. Alexander was strangely inarticulate on the matter, saying only that “House Republicans have some ideas about how my friend in Tullahoma can continue to afford insurance for his wife who has had breast cancer.” He offered no clue about what those ideas might be.

In reality, House Republicans don’t have anything to offer to Americans with troubled medical histories. On the contrary, their big idea — allowing unrestricted competition across state lines — would lead to a race to the bottom. The states with the weakest regulations — for example, those that allow insurance companies to deny coverage to victims of domestic violence — would set the standards for the nation as a whole. The result would be to afflict the afflicted, to make the lives of Americans with pre-existing conditions even harder.

Don’t take my word for it. Look at the Congressional Budget Office analysis of the House G.O.P. plan. That analysis is discreetly worded, with the budget office declaring somewhat obscurely that while the number of uninsured Americans wouldn’t change much, “the pool of people without health insurance would end up being less healthy, on average, than under current law.” But here’s the translation: While some people would gain insurance, the people losing insurance would be those who need it most. Under the Republican plan, the American health care system would become even more brutal than it is now.

So what did we learn from the summit? What I took away was the arrogance that the success of things like the death-panel smear has obviously engendered in Republican politicians. At this point they obviously believe that they can blandly make utterly misleading assertions, saying things that can be easily refuted, and pay no price. And they may well be right.

But Democrats can have the last laugh. All they have to do — and they have the power to do it — is finish the job, and enact health reform.

Labour shortage hits China export recovery

2010-02-26T01:00:00.000-08:00

Labour shortage hits China export recovery
By Tom Mitchell in Shaoguan
Copyright The Financial Times Limited 2010
Published: February 25 2010 18:50 | Last updated: February 25 2010 18:50
http://www.ft.com/cms/s/0/d813512a-223b-11df-9a72-00144feab49a.html

An export recovery in the world’s most populous country is running up against an unexpected constraint – manpower.

With Chinese exports back to their early 2008 levels, factory owners are worried about their ability to service a surge in orders now that a new manufacturing cycle has begun after the lunar new year holidays.

Guangdong accounts for a third of China’s exports and would rank as one of the world’s 10 largest exporters if it were a country in its own right. But the province’s ability to attract and retain migrant labour from China’s vast interior is slipping.

“Labour availability is tight right now in Guangdong compared to other regions,” said Paul Hussey, chief executive of Strix. The Isle of Man company, which dominates the global market for thermostatic controls on electric kettles, maintains most of its manufacturing operations in the provincial capital, Guangzhou.

Quantifying labour shortages is extremely difficult given large variances by region, industry and skill level. Recruiters for Galanz, the world’s largest manufacturer of microwave ovens, were this week offering production line workers a relatively robust monthly base wage of Rmb1,700 ($250). Skilled technicians in much greater demand were commanding 65 per cent more.

In Dongguan, a manufacturing centre near Guangzhou, the local government estimates that there is now just one worker for every two jobs. At the height of the crisis, which for Chinese manufacturers came last spring, local officials calculated there were four workers competing for every three jobs.

Beijing’s successful economic stimulus programme has contributed to a coastal scramble for labour, by increasing investment and employment opportunities elsewhere.

“Fiscal stimulus has spurred jobs growth in the interior provinces,” Ben Simpfendorfer, Royal Bank of Scotland economist in Hong Kong, said.

In December, China unveiled the world’s fastest passenger train service between Guangzhou and the central city of Wuhan, covering 1,100km in just three hours. The Harmony Express line has reduced travel time between Guangzhou and Shaoguan, an industrial backwater in Guangdong’s remote mountain region, to just 40 minutes, anchoring local workers closer to home.

In Greece’s Crisis, Fed Studies Wall St.’s Activities

2010-02-26T00:56:00.000-08:00

In Greece’s Crisis, Fed Studies Wall St.’s Activities
By NELSON D. SCHWARTZ and SEWELL CHAN
Copyright by The New York Times
Published: February 25, 2010
http://www.nytimes.com/2010/02/26/business/global/26greece.html?th&emc=th

Greece’s problems deepened on both sides of the Atlantic as the Federal Reserve disclosed it was investigating Goldman Sachs and other banks that helped the country mask its debts, and investors grew increasingly leery of lending any more money to a nation flirting with default.

Wall Street’s role in the run-up to the debt crisis has generated criticism and calls for an inquiry from European leaders. The Fed examination is the first time American regulators will examine the highly profitable if little-known business of supplying custom-made financial instruments to strapped countries on the Continent.

While Greece’s economic troubles have transfixed world markets for weeks, its problems have snowballed in recent days as workers went to the picket lines to protest budget cuts and the government struggled to raise cash to cover what is Europe’s largest budget deficit. Last year, Greece’s deficit equaled 12.7 percent of gross domestic product.

On Thursday, the Moody’s ratings agency joined Standard & Poor’s in warning that it might downgrade Greek government bonds, a move that would increase the premium Athens must pay to borrow. The move comes at a precarious time for Greece, which must raise 25 billion euros ($34 billion) over the next few months to avoid a sovereign default that officials fear could cause the finances of other weak European economies to collapse.

In a sign of the challenges their nation faces, Greek officials also called off a planned trip to the United States and Asia aimed at interesting new investors in its bonds because of a lack of demand, according to an investment banker who was briefed on the government’s fund-raising strategy.

The European Union has said it would come to Greece’s aid only if it develops a plan to reduce its deficit by March 16, further ratcheting up the pressure.

“Even if they bring the deficit to zero, with interest rates at 6.5 percent and a growth rate of zero at best, Greece’s debt ratio remains on an explosive path,” said Miranda Xafa, a former executive board member at the International Monetary Fund. “I just don’t think they can raise funds from the market now.”

Greece has suffered from large deficits for years, and until now it seemed as if big banks would always be there to bail it out. As far back as 2000 and 2001, Goldman helped Athens quietly borrow billions to mask its poor finances by creating derivatives that essentially transformed loans into currency trades that Greece did not have to disclose under European rules.

Ben S. Bernanke, the Federal Reserve chairman, told Congress Thursday that the Fed was “looking into a number of questions relating to Goldman Sachs and other companies and their derivatives arrangements with Greece.”

Mr. Bernanke said the Securities and Exchange Commission was also concerned about how derivatives — financial instruments that are largely unregulated and do not trade on public exchanges — have contributed to Greece’s problems. “Obviously, using these instruments in a way that intentionally destabilizes a company or a country is counterproductive,” he said.

The S.E.C., in a statement, said that it could “neither confirm nor deny the existence of an investigation,” but added that it was cooperating with United States and international regulators in examining “potential abuses and destabilizing effects related to the use of credit-default swaps and other opaque financial products and practices.”

Goldman declined to comment, citing its policy of not addressing legal or regulatory matters. But in a Feb. 21 presentation, Goldman said, “The Greek government has stated (and we agree) that these transactions were consistent with the Eurostat principles governing their use and application at the time.” Eurostat is the European Union’s statistics agency.

Goldman is not the only bank that supplied derivatives designed to lower deficits. In the late 1990s, JPMorgan Chase helped Italy reduce its budget gap by swapping currency at a favorable exchange rate. In return, Italy committed to future payments that were not booked as liabilities.

A spokeswoman for JPMorgan said that Italy disclosed all of the deals to Eurostat.

Senator Christopher J. Dodd, Democrat of Connecticut and the chairman of the Senate Banking Committee, also took aim at credit-default swaps, which allow banks and hedge funds to wager on whether a company or country might default.

Critics say the swaps have contributed to Greece’s problems and increased the odds of a financial collapse.

“We have a situation in which major financial institutions are amplifying a public crisis for private gain,” he said.

The Fed inquiry was begun about three weeks ago, according to an official involved in the investigation who was not authorized to comment publicly. Fed examiners are focusing on whether Goldman and other banks complied with guidance the Fed issued in 2007 outlining how to manage the risk of complex financial vehicles. The investigation is still in its early stages, he added, as officials sift through records detailing how the derivatives were created, what compliance procedures were followed and what internal analysis was performed. The Fed is also looking at whether Wall Street made additional financial arrangements for Greece that have not been disclosed.

Growing concern over these transactions have made investors more doubtful than ever about the government’s ability to quickly secure tens of billions of euros in new financing it needs to avert default. Greece faces a critical test next week, when it will try to raise about 3 billion euros ($4 billion), through an issue of 10-year bonds.

But with threats of a downgrade to its sovereign debt looming, investors say Greece would need to pay a whopping 7 percent interest rate just to get people to buy. That is almost a percentage point more than the rate investors received in the previous Greek bond sale, in January, and a full 3 percentage points more than Greece’s borrowing cost before the current crisis.

A spokeswoman for the Greek Finance Ministry did not respond to a request for a comment.

The rise in investor skepticism has led Greece to adopt a new financing strategy. Instead of selling debt through public auctions, where the danger of a failed offering could further unnerve markets, it has gone directly to institutional investors, sounding them out in one-on-one meetings, mostly in London.

Bankers and analysts in Athens say there is a debate within the Finance Ministry as to whether the government should go to the market now, or wait until a new menu of changes — like more taxes and further public sector wage cuts — is announced, in the hope that such measures will result in lower financing costs.

But a more dire view is already taking hold, according to some bankers, as investors fret that Greece may simply not be able to cover 20 billion euros of debt coming due in April and May, and 53 billion euros for all of the year. It seems unlikely that such a quantity can be raised from investors — many of them conservative pension funds and insurance companies that are already nursing losses from the 8-billion-euro Greek bond issue in January that was hit by the recent market downturn.

Landon Thomas Jr. contributed reporting.

New York Times Editorial: After the Summit

2010-02-26T00:50:00.000-08:00

New York Times Editorial: After the Summit
Copyright by New York Times
February 25, 2010
http://www.nytimes.com/2010/02/26/opinion/26fri1.html?ref=global

The main lesson to draw from Thursday’s health care forum is that differences between Democrats and Republicans are too profound to be bridged. That means that it is up to the Democrats to fix the country’s dysfunctional and hugely costly health care system.

At the meeting, President Obama laid out his case for sweeping reform that would provide coverage to 30 million uninsured Americans and begin to wrestle down the rising cost of medical care and future deficits. The Republicans insisted that the country cannot afford that — and doesn’t need it. The House Republican leader, John Boehner, trotted out the old chestnut that the United States has the “best health care system in the world.”

This isn’t a question of boosterism or patriotism. If there’s any doubt about whether to stick with the status quo, Americans just need to look at their relentlessly rising premiums or think about where — or even whether — they can get coverage if they lose their jobs.

Thursday’s meeting — more than seven hours broadcast for the hardy — was billed as a last-ditch effort to try to find common ground. There was plenty of wonkish discussion. Each party put its best face forward in a mostly civil exchange of ideas, and both professed to see some areas of potential agreement.

Mr. Obama seemed ready to take stronger steps toward malpractice reform, a top issue for Republicans. And he agreed with Senator John McCain that a special deal to protect Florida residents enrolled in private Medicare plans was hard to defend.

Republicans stuck to their script and argued for small solutions, such as letting people buy insurance in other states that might allow skimpier — and thus cheaper — coverage. That is a formula for helping healthy people cut costs while driving up premiums for sick people unable to get similar coverage.

Republicans balked at any big expansion of Medicaid or any big subsidies to help middle-class Americans buy insurance on new exchanges. As a result, their plans would cover only three million uninsured over the next decade, a tenth of what the Democrats are proposing. That is not enough.

Mr. Obama should jettison any illusions that he can win Republican support by making a few more changes in bills that already include many Republican ideas. Republican speakers made clear that the only thing they would accept is starting over from scratch. That would be the end of sweeping reform.

The Republicans tried to wring a pledge from Mr. Obama that he would not resort to “budget reconciliation,” a parliamentary maneuver to sidestep a filibuster in the Senate and pass legislation by a simple majority. Reconciliation is a last resort. But Republicans and Democrats have both used it for major bills in the past. The president wisely refused to tie his hands.

Here is a basic fact: If the House Democrats voted tomorrow to approve the Senate bill, health care reform would become the law of the land.

The president and Speaker Nancy Pelosi should push the House to accept the fundamentally sound Senate bill. If they still cannot garner enough votes from their own caucus, they should alter the Senate bill slightly with parallel legislation that could be passed with budget reconciliation.

Mr. Obama needs to keep explaining to Americans that this health care reform is critical — to give them security, to hold down costs and ease the strain on federal budgets. His main challenge, and his best chance, for passing it is to get his own party in line

36 Hours in Telluride, Colo.

2010-02-26T00:41:00.000-08:00

36 Hours in Telluride, Colo.
By LIONEL BEEHNER
Copyright by The New York Times
Published: February 28, 2010
http://travel.nytimes.com/2010/02/28/travel/28hours.html?hpw

TELLURIDE almost begs comparisons with Aspen. A Colorado mining town affixed to a world-class ski resort; rugged locals brushing elbows with the occasional celebrity; white tablecloth restaurants serving up foie gras next to taco dives. “It’s like Aspen was back in the ’70s, but less pretentious,” said Bo Bedford, a self-described Aspen refugee who is a manager at the New Sheridan Hotel. “It hasn’t gone Hollywood yet.” There is, of course, a certain star-studded film festival. And Telluride does count Jerry Seinfeld and Tom Cruise among its regulars. Yet, the town stays true to its hardscrabble roots. Dogs roam off-leash, folks rummage for freebies at a so-called Free Box, and residents zip up in flannel instead of fur coats.

Friday
4 p.m.

1) DAS BOOT
Ski shops are often staffed by workers straight out of “Bill and Ted’s Excellent Adventure.” Not Boot Doctors (650 Mountain Village Boulevard; 970-728-8954; bootdoctors.com), where Bob Gleason and his team of “surgeons” run a kind of operating room for your ill-fitting equipment. But don’t expect a sterile ward — it looks more like a torture chamber, with pinchers and clawlike tools to stretch, squeeze and custom-shape any size boots (prices range from $20 for a boot stretch to $175 for a custom-molded sole).

6 p.m.
2) BROADWAY MEETS OPRY
Film and theater buffs will take comfort in Telluride’s abundance of preserved art-house theaters. Take the intricately stenciled balcony and the maple floors of the Sheridan Opera House (110 North Oak Street; 970-728-6363; sheridanoperahouse.com), which dates from 1913. Part ’30s vaudeville, part Grand Ole Opry, the stage has been graced with everything from Broadway musicals to bluegrass bands, and is the hub of the Telluride Film Festival, in its 37th year (held Sept. 3 to 6 this year).

8:30 p.m.
3) HIGH STEAKS
If the New Sheridan feels like the kind of joint with a secret poker game going on in a smoky backroom, well, that’s because it is (H. Norman Schwarzkopf is said to be among the regulars). But the real draw of this Victorian hotel is its newly refurbished Chop House Restaurant (233 West Colorado Avenue; 970-728-9100; newsheridan.com), which serves large platters of prime steaks (starting at $26). Like the hotel, which was reopened in 2008 after extensive renovations, the musty dining room has been spiffed up with plush booths and crystal chandeliers. After dinner, sneak away next door (there’s a secret passage in the back) to the New Sheridan bar, which looks much as it did in 1895 — with its crackling fire and carved mahogany bar — but has added a billiard room in back and, yup, a poker table.

Saturday
7:30 a.m.
4) BISCUITS AND GRAVY
With its red-checkered tablecloths and folksy service, Maggie’s Bakery (300 West Colorado Avenue; 970-728-3334) holds its own against any ski town greasy spoon. A healthy-size biscuit and gravy goes for $7.45. Another popular spot, Baked in Telluride, burned down in early February, though its big, red barn is expected to be rebuilt.

9 a.m.
5) GOLD RUSH
Telluride feels as though it belongs in the Alps — with its 2,000-plus acres of backcountrylike terrain and above-the-tree-line chutes, European-style chalets and snowy peaks framed by boxy canyons and craggy rock formations. Throw in thin crowds and short lift lines, and what’s not to like? To warm up, take the Prospect Bowl Express over to Madison or Magnolia — gentle runs that weave through trees below the gaze of Bald Mountain. Or hop on the Gold Hill Express lift to find the mountain’s newest expert terrain: Revelation Bowl. Hang a left off the top of the Revelation Lift to the Gold Hill Chutes (Nos. 2 to 5), recently opened to skiers and said to be some of the steepest terrain in North America.

Noon
6) WINE AND CHEESE
Telluride does not believe in summit cafeterias, at least not the traditional kind with long tables and with deep fryers in the kitchen. Its hilltop restaurants come the size of tree forts. Case in point is Alpino Vino (970-708-1120), a new spot just off the Gold Hill Express Lift that resembles a chalet airlifted from the Italian Alps. Diners in ski helmets huddle around cherry-wood tables and a roaring fireplace, sipping Tuscan reds ($15), while neatly groomed waiters bring plates of cured meats and fine cheeses ($15). Arrive by noon, as this place fills up fast. For more casual grub, swing by Giuseppe’s (970-728-7503) at the top of Lift 9, which stacks two shelves of Tabasco sauce and a refrigerator full of Fat Tire beer ($5) to go with home-style dishes like chicken and chorizo gumbo ($8.99). After lunch, glide down See Forever, a long, winding trail that snakes all the way back to the village. Detour to Lift 9 if you want to burn off a few more calories.

5:30 p.m.
7) FULL PINT OR HALFPIPE?
A free gondola links the historic town of Telluride with the faux-European base area known as Mountain Village. Just before sunset, hop off at the gondola’s midstation, situated atop a ridge. For a civilized drink without cover bands, you’ll find Allred’s (970-728-7474; allredsrestaurant.com), a rustic-chic lodge with craft beers on tap ($7). Grab a window seat for sunset views of the San Juan Mountains, or relax by the stone fireplace to the soothing sounds of Bob Israel on his piano. Shaun White wannabes, however, will want to continue down to a new terrain park with an 18-foot-high halfpipe. Illuminated by klieg lights until 8 p.m., it is one of Colorado’s few halfpipes where you can flip a McTwist under the stars ($25 entrance fee).

8 p.m.
8) NO VEGANS
Carnivores should feel at home in Telluride. At some spots, steak knives look like machetes and the beef is said to come from Ralph Lauren’s nearby ranch. For tasty Colorado lamb chops ($28), try the new Palmyra Restaurant (136 Country Club Drive; 970-728-6800; thepeaksresort.com). Opened last December at the Peaks Resort & Spa in Mountain Village, the glass-walled restaurant has dazzling fire features and romantic valley views. Or, for hearty grub you might find at a firehouse, head into town and loosen your belt at Fat Alley BBQ (122 South Oak Street; 970-728-3985), a no-frills joint with old, wooden tables and a counter where you can order Texas-style barbecued spareribs and breaded-to-order fried chicken. Most items run $10 to $15, except the Schlitz beer, which is $1.

10 p.m.
9) GETTING HIGH
If the high altitude and lack of oxygen leave you winded — and they probably will — pull up a bar stool at the Bubble Lounge (200 West Colorado Avenue; 970-728-9653; telluridebubblelounge.com), a grungy bar that serves craft beers, Champagne and, yes, oxygen. Choose from a two dozen scents (cherry and lemon grass, among others) served in bubbling beakers that light up like DayGlo bulbs and look like a mad scientist’s lab ($10 for 12 minutes).

Sunday
10 a.m.
10) STOMPING GROUNDS
The snow-carpeted trails that roll past wide meadows and frozen waterfalls in this pocket of southwest Colorado are ideal for snowshoeing. Stock up on snacks and water before riding to the top of Lift 10, where you’ll find a warming teepee run by Eco Adventures (565 Mountain Village Boulevard; 970-728-7300). Eco offers guided snowshoe tours, with ecological lessons thrown in, for $45, including equipment.

2 p.m.
11) OUTLAW TOUR
Did you know that Butch Cassidy robbed his first bank on Main Street in 1889? Or that the town’s red-light district once had 29 bordellos? These and other historical tidbits give Telluride an added sense of place that’s missing from newer, corporate-run resorts. For an entertaining tour, call up Ashley Boling (970-728-6639), a D.J., actor and self-appointed guide who offers 90-minute tours that are encyclopedic and long on stories ($20 a person). He’s hard to miss: he’s the one walking around with cascading blond hair under a cowboy hat, stopping every few minutes to say hello to friends — unless it’s a powder day, in which case Telluride turns into a ghost town.

IF YOU GO

The closest commercial airport is Telluride Regional Airport, about seven miles from town. There are daily (turboprop) connections from Phoenix and Denver, but the airport closes often because of bad weather. It can be easier and more reliable to fly into Montrose Regional Airport, a larger airport about 90 minutes away by car. Continental flies nonstop from Newark to Montrose (from $347 in March, according to a recent search), but only on Saturdays. A car is not needed to get around. A free gondola connects the town of Telluride to the Mountain Village till midnight.

In Telluride, the New Sheridan Hotel (231 West Colorado Avenue; 970-728-4351; newsheridan.com) reopened in 2008 with 26 renovated rooms that kept the Victorian touches, like the old-style light switches. Doubles start at $199.

In Mountain Village, lumière (970-369-0400; www.lumierehotels.com), a modern boutique hotel, opened in 2008. Each of the 29 chocolate-carpeted units offers a steam shower, and a few come with balconies with breathtaking mountain views. Doubles start at $349.

Obama's health plan excludes LGBTs

2010-02-25T00:37:00.000-08:00

Obama's health plan excludes LGBTs
by Lisa Keen
©2010 Keen News Service
2010-02-24
http://www.windycitymediagroup.com/gay/lesbian/news/ARTICLE.php?AID=25630

President Obama released a new health care reform bill Monday that he says incorporates work done in the House and Senate and adds ideas from Republican members of Congress. But there's no inclusion in this new proposed measure of any of the gay-related provisions in the original House bill.

But it's not all bad news. The president's proposal calls for $11 billion for "the operation, expansion, and construction of community health centers" around the country. And that money could help at least some LGBT and HIV centers around the country.

Rep. Tammy Baldwin, D-Wis., the openly gay member of Congress who was a leader in adding pro-gay provisions to the House health reform bill, says she hasn't given up hope. She called President Obama's proposal Monday "an important step forward" that "helps to regain our momentum" on health care reform efforts.

But, she added, "it is not the final word."

In fact, it's not even a bill, yet. The president's proposal is a "new starting point," as White House Press Secretary Robert Gibbs put it during a routine press briefing Monday. Gibbs and other White House spokespersons have been cautious in laying out what they believe will happen next on the proposal. A key turning point, they say, will be a much-publicized summit Thursday between the President, Democratic leaders, and key Republicans.

But prospects for the leaders to agree on at least a draft bill for the Senate and House to take up anew has already been dimmed by statements from Republican leaders who are supposed to be heading into that crucial Feb. 25 meeting.

"The president has crippled the credibility of this week's summit by proposing the same massive government takeover of health care based on a partisan bill the American people have already rejected," said House Minority Leader John Boehner. Senate Minority Leader Mitch McConnell echoed Boehner, calling the president's proposal "another partisan, back-room bill."

Prospects for adding back in the pro-gay House provisions are, of course, even worse and have clearly not improved since last December when they failed to make it into the Senate bill. And the Senate bill is where the president's proposal starts.

"The president's proposal assumes the base Senate bill," said Shin Inouye, a spokesman for the White House with LGBT media. But Inouye pointed out that the president's proposal does include "data collection."

The "data collection" mentioned in the House bill called for the establishment of an office of Assistant Secretary for Health Information to promote the collection of data about "sexual orientation" and "gender identity" ( along with a great many other categories ) to help identify health issues and the need for programs. The proposal posted by the White House Monday calls for improved "data collection and analysis, facilitates better data sharing, and requires the development of standards for the collection of data regarding the nation's health and the performance of the nation's health care, including health disparities."

Ronald Johnson, deputy director of the AIDS Action Council, said he is concerned that some aspects of the House bill that were favorable to the LGBT communities will be left out but that the proposal is still "a moving ball."

Johnson and Darrel Cummings, chief of staff for the L.A. Gay & Lesbian Center, said the $11 billion designated for community health center money is a definite plus.

Cummings noted that the Los Angeles center has earned designation as a "Federally Qualified Health Center-Look Alike"—a designation that means it is eligible to receive funding under the Public Health Service Act money for underserved populations but has not yet received any.

"We have been awaiting notice of funding availability for some time now and are very hopeful that this legislation would create the funding necessary for that to happen," explained Cummings.

Most LGBT and HIV activists had supported the House bill because it included key LGBT specific provisions, including provisions. In addition to the data collection, it prohibited discrimination based on sexual orientation and gender identity in the provision of health care; enabled people with HIV and low incomes to obtain Medicare coverage earlier in the course of their illness; and eliminated the tax that gay employees must pay if their same-sex partners or spouses receive health coverage from their employers' plan. Straight employees don't pay that tax but, for gay couples, the coverage is characterized by the federal government as additional income for the gay employee.

Baldwin said Feb. 22 she would "continue to fight for all of my priorities in the final healthcare-reform bill, including those related to LGBT health."

Baldwin warned last September that there were "many reasons why people in the LGBT community ought to be following the health care reform very closely."

"Our lives are very much going to be affected by this legislation," said Baldwin at the time, in a videotaped message, "and certainly our health is."

Paulson challenged on execution of bailouts

2010-02-25T00:29:00.000-08:00

Paulson challenged on execution of bailouts
By Greg Burns
Copyright © 2010, Chicago Tribune
February 25, 2010
http://www.chicagotribune.com/business/columnists/ct-biz-0225-burns--20100225,0,7524021,full.column

It's an article of faith among the business and government elite that bailing out Wall Street prevented another Great Depression.

America had to do it, the thinking goes, to avoid a much worse fate.

How much worse? Try unemployment at 25 percent, not 10 percent. Try millions cast out of their homes, not hundreds of thousands. Try years of depression and pain for everyone, rather than recession and pain for many.

Few deliver this message with more conviction than Henry Paulson, the former Goldman Sachs Group Inc. chief who did as much as anyone to engineer the bailouts while serving as Treasury secretary under George W. Bush.

Touting his new memoir, "On the Brink," at the University of Chicago this week, Paulson said that by propping up the financial system, the government bailouts averted catastrophe.

Without the government bailing out mortgage giants Fannie Mae and Freddie Mac, disaster would have followed, he said.

Without a bailout for insurer-turned-hedge-fund American International Group Inc.? Disaster.

Without a Troubled Asset Relief Program for the banks? Disaster.

In 2008, America stood only "hours away from an absolute collapse," Paulson said. "If a bank fails, the ultimate victims are going to be the citizens. This was done for the American people."

Yet the message never got through to the American people, Paulson said. Had he been a better public speaker, he said, more Americans would see the bailout his way: It was unpleasant but necessary, and maybe even heroic.

"So much of this is communication," he said.

In other words, many Americans just don't get it.

Funny, but the guy who shared the dais with him thinks Paulson doesn't get it.

Miscommunication has nothing to do with public rage over the bailouts, said Raghuram Rajan, finance professor at the University of Chicago's Booth School of Business.

Main Street, Rajan said, sees all too clearly how Paulson and the rest went easy on their fellow bankers while preserving a status quo that had made them rich.

Remember when the Goldmans and Citigroups were desperate for help in the midst of the panic, and government responded by guaranteeing their debt and raising deposit-insurance limits? That was the moment when Paulson and his fellow policymakers failed to make their peers on Wall Street share the pain, Rajan said.

"They could have used that to get much better practices. Throughout the crisis, they treated the banks with kid gloves," Rajan said. "The public anticipated what we see now: Tons of money being made by the banks again."

In fact, Wall Street bonuses for 2009 topped $20 billion, New York state's comptroller reports.

What could have been done instead? Letting all the chips fall would have been a mistake, worsening the panic, Rajan said.

But when the banks had nowhere else to turn, government should have insisted on cutting cash compensation, shutting off dividends, imposing losses on certain debt contracts and making bailed-out institutions pay for their recapitalization over time, Rajan said, adding that taxpayers should have received a bigger share of the upside as well.

Taking those steps would have discouraged Wall Street from relying on another bailout for the next time everything goes wrong. They also would have helped Uncle Sam extract commitments from the industry for improved regulation down the line.

But of course it didn't happen. And now Paulson is pushing belatedly for Congress to create a single systemic-risk regulator and approve "resolution authority" to wind down failed institutions in an orderly manner.

At the same time, as Paulson observed, Congress tends to act only in a crisis.

Considering that the latest crisis has passed, it stands to reason that anyone serious about financial reform might have to wait for the next one.

gburns@tribune.com

New York Times Editorial: The Torture Lawyers

2010-02-25T00:24:00.000-08:00

New York Times Editorial: The Torture Lawyers
Copyright by New York Times
February 24, 2010
http://www.nytimes.com/2010/02/25/opinion/25thur1.html?ref=opinion

Is this really the state of ethics in the American legal profession? Government lawyers who abused their offices to give the president license to get away with torture did nothing that merits a review by the bar?

A five-year inquiry by the Justice Department’s ethics watchdogs recommended a disciplinary review for the two lawyers who produced the infamous torture memos for former President George W. Bush, but they were overruled by a more senior Justice Department official.

The original investigation found that the lawyers, John Yoo and Jay Bybee, had committed “professional misconduct” in a series of memos starting in August 2002. First, they defined torture so narrowly as to make it almost impossible to accuse a jailer of torturing a prisoner, and they finally concluded that President Bush was free to ignore any law on the conduct of war.

The Justice Department’s Office of Professional Responsibility said appropriate bar associations should be asked to look at the actions of Mr. Yoo, who teaches at the University of California, Berkeley, and Mr. Bybee, who was rewarded for his political loyalty with a lifetime appointment to the federal bench. It was a credible accounting, especially since some former officials, like Attorney General John Ashcroft, refused to cooperate and e-mails from Mr. Yoo were mysteriously missing.

But the more senior official, David Margolis, decided that Mr. Yoo and Mr. Bybee only had shown “poor judgment” and should not be disciplined. Mr. Margolis did not dispute that Mr. Yoo and Mr. Bybee mangled legal reasoning and produced work that ultimately was repudiated by the Bush administration itself. He criticized the professional responsibility office’s investigation on procedural grounds and excused Mr. Yoo and Mr. Bybee by noting that everyone was frightened after Sept. 11, 2001, and that they were in a hurry.

Americans were indeed frightened after Sept. 11, and the Bush administration was in a great rush to torture prisoners. Responsible lawyers would have responded with extra vigilance, especially if, like Mr. Yoo and Mr. Bybee, they worked in the Justice Department’s Office of Legal Counsel. When that office renders an opinion, it has the force of law within the executive branch. Poor judgment is an absurdly dismissive way to describe giving the green light to policies that have badly soiled America’s reputation and made it less safe.

As the dealings outlined in the original report underscore, the lawyers did not offer what most people think of as “legal advice.” Mr. Yoo and Mr. Bybee were not acting as fair-minded analysts of the law but as facilitators of a scheme to evade it. The White House decision to brutalize detainees already had been made. Mr. Yoo and Mr. Bybee provided legal cover.

We were glad that the leaders of the House and Senate Judiciary Committees, Representative John Conyers Jr. and Senator Patrick Leahy, committed to holding hearings after the release of the Justice Department documents.

The attorney general, Eric Holder Jr., should expand the investigation into “rogue” interrogators he initiated last year to include officials responsible for facilitating torture. While he is at it, Mr. Holder should assign someone to look into the disappearance of Mr. Yoo’s e-mails.

The American Bar Association should decide whether its rules are adequate for deterring and punishing ethical failures by government lawyers.

The quest for real accountability must continue. The alternative is to leave torture open as a policy option for future administrations.

Larger Threat Is Seen in Google Case

2010-02-25T00:19:00.000-08:00

Larger Threat Is Seen in Google Case
By RACHEL DONADIO
Copyright by Reuters
Published: February 24, 2010
http://www.nytimes.com/2010/02/25/technology/companies/25google.html?hpw

ROME — Three Google executives were convicted of violating Italian privacy laws on Wednesday, the first case to hold the company’s executives criminally responsible for the content posted on its system.

Bill Echikson, a spokesman for Google, called a judge's ruling against executives “astonishing.”

The verdict, though subject to appeal, could have sweeping implications worldwide for Internet freedom: It suggests that Google is not simply a tool for its users, as it contends, but is effectively no different from any other media company, like newspapers or television, that provides content and could be regulated.

The ruling further complicates the business environment for Google in Europe, where it faces a wave of antitrust complaints. And it comes shortly after Google threatened to withdraw from China, citing sophisticated attacks by hackers there and Chinese demands that it restrict information available to local users.

Google’s enormous search and advertising business depends heavily on its reach into every corner of the global Internet and on providing users access to as much digital content as possible, regardless of its origins or ownership.

The Italian move to hold the company or its executives responsible for text, photographs or videos made available by third parties through Google and its online services, like YouTube, poses a significant challenge to the company’s business model, along with those of other Internet companies like Facebook and Twitter.

In Italy, where Prime Minister Silvio Berlusconi owns most private media and indirectly controls public media, there is a strong push to regulate the Internet more assertively than it is controlled elsewhere in Europe. Several measures are pending in Parliament here that seek to impose various controls on the Internet. Critics of Mr. Berlusconi say the measures go beyond routine copyright questions and are a way to stave off competition from the Web to public television stations and his own private channels — and to keep a tighter grip on public debate.

“It’s a deliberate effort to control the means of communication,” said Juan Carlos de Martin, the founder of the Nexa Center at Turin’s Polytechnic University, which studies Internet use in Italy.

Italy has one of the lowest rates of Internet use and e-commerce in Europe, and experts warned that the ruling on Wednesday could erode the nation’s position further and limit information to young people, who watch television less than their parents.

In Milan, Judge Oscar Magi sentenced the Google executives in absentia to six-month suspended sentences for violation of privacy. Prosecutors said Google did not act fast enough to remove from the site a widely viewed video posted in 2006 showing a group of teenage boys harassing an autistic boy.

But Judge Magi, who has 90 days to issue his reasoning, cleared the Google executives of defamation charges. The three were Peter Fleischer, chief privacy counsel; David Drummond, senior vice president and chief legal officer; and George Reyes, a former chief financial officer. A fourth defendant, Arvind Desikan, charged only with defamation, was acquitted.

Internet activists and the American ambassador to Italy cried foul about the ruling, which some likened to punishing the mailman for delivering a nasty letter.

A spokesman for Google, Bill Echikson, called the ruling “astonishing” and said the company would appeal. In its blog, Google added that the ruling “attacks the very principles of freedom on which the Internet is built.”

Prosecutors said Google waited to remove the video until after complaints to the police by Vivi Down, an Italian group representing people with Down syndrome, whose name was mentioned by the boys in the video.

Google said it removed the video within two hours of receiving a formal complaint from the Italian police, two months after the video was first posted.

The boys, all minors, were not charged by prosecutors, but were sentenced by a different judge to community service. Prosecutors named the Google executives because Italian law holds corporate executives responsible for a company’s actions.

Google maintains that the ruling contradicted a European Union directive on electronic commerce that gives service providers safe harbor from liability for the content they host.

But prosecutors argued that because Google handled user data — and used content to generate advertising revenue — it was a content provider, not a service provider, and therefore broke Italian privacy law. It prohibits the use of someone’s personal data with the intent of harming him or making a profit.

“To say this is about censorship has a big media effect, but is false,” said Alfredo Robledo, one of the prosecutors. “This is about finding a balance between free enterprise and the protection of human dignity.”

Still, the upshot of the ruling, if it prevails on appeal, is that Google will be expected in Italy to monitor the content it hosts. Mr. Echikson, the Google spokesman, said that would be impossible considering that 20 hours of video are uploaded to its site every hour.

The American ambassador to Italy, David Thorne, said he was “disappointed” by the ruling.

“We disagree that Internet service providers are responsible prior to posting for the content uploaded by users,” he said in a statement, adding that Secretary of State Hillary Rodham Clinton had said that “free Internet is an integral human right that must be protected in free societies.”

Mr. Robledo said that a company like Google could easily find ways to monitor its content, and that it should not profit from advertising revenue generated from content that violated privacy laws. He said if Google had found a way to create filters in China, it could do the same in Italy, not to monitor political content “but to protect human dignity.”

“If company employees like me can be held criminally liable for any video on a hosting platform, when they had absolutely nothing to do with the video in question, then our liability is unlimited,” said one of the three executives, Mr. Fleischer.

The Google ruling comes amid other proposed legislation that would seek to bureaucratize the Internet in Italy, including the highly contested Italian version of a European directive that would compel online broadcasters to seek the same licensing agreements as broadcast television. Google lobbied for changes to the proposal.

Paolo Romani, a deputy communications minister who sponsored the measure, said the issue was copyright protection. “It has nothing to do with the fact that our prime minister also owns television stations,” he said. “It’s in Berlusconi’s interest not to be accused of conflict of interest.”

Another proposal pending in Italy, tucked into a bill on wiretapping, would require blogs to publish corrections within 48 hours, as newspapers are required to do, while a third would make sites responsible for anonymous comments posted on them.

Paolo Gentiloni, a leading opposition member and a former communications minister, said Internet regulation was inevitably political. Today in Italy, he said, “political power is in the hands of people who do TV, not the Internet.”

“The slower broadband is, the better it is for a broadcasting-oriented government,” he added.

Others warned that Italy’s red tape — including the Google ruling — could stifle free expression. Mr. de Martin, of the Nexa Center, said that universities and companies might not want to run the risk of opening Web forums if they would be criminally liable for their contents.

“If you bureaucratize it even a little, you eliminate thousands or millions of people who don’t feel like making the effort,” he said.

Eric Sylvers contributed reporting from Milan, and Eric Pfanner from Paris