Coalition of the Unwilling By Carlos T Mock, MD September 15, 2007.
After failing to get consensus with neither NATO nor the UN, the Bush administration briefly used the term "Coalition of the Willing" to refer to the countries who supported, militarily or verbally, the pre-emptied 2003 invasion of Iraq and subsequent occupation since 2003. The original list prepared in March 2003 included 49 members, only four besides the U.S. contributed troops to the invasion force. Thirty three provided some number of troops to support the occupation after the invasion was complete. At least six members have no military. Four countries participated with troops during the initial invasion (termed the Major Combat Operations phase), which lasted from March 19 to May 1. These were the United States (250,000), United Kingdom (45,000), Australia (2,000), and Poland (194).
The war was deeply unpopular amongst the citizens of all the coalition countries except the United States[4] and at least one, Costa Rica (which has no armed forces), requested in September 2004 to no longer be considered a member.
Today, the Bush administration is isolated. Tony Blair, the Prime minister of the UK—Bush’ poodle—was forced to resign for its participation. The British have already left Iraq. Recently Japan and South Korean troops promised to leave Iraq after kidnappings of their citizens. Finally, John Howard, Australia’s Prime Ministers has called an end to his political career.
To quote the Boston Glob: “The Bush administration made a virtual religion of the belief that if you act boldly, others will follow in your wake. That certainly proved to be the case with Karl Rove, for a time. But for all the fascination with what Rove was doing and thinking, little attention was given to whether it was working and why. This neglect encompasses many people, though one person with far greater consequences than all the others. In the end, the verdict on George W. Bush may be as simple as this: He never questioned the big, booming voice of Oz, so he never saw the little man behind the curtain.”
Saturday, September 15, 2007
11th Hour for Women-Owned Business?
11th Hour for Women-Owned Business?
By Patricia Nell Warren
Copyright © 2007 by Patricia Nell Warren. All rights reserved.
Originally posted at the Bilerico Project, www.bilericoproject.com 9/6/07
On August 22, PRNewswire put out this bulletin: "Earlier this month the Women's Business Enterprise National Council
Having owned my own business since 1974, I think this is a great idea. In fact, given the current economic climate in the U.S., it's a desperately needed idea. Women-owned business isn't talked about as much as it once was, and as much as it should be.
A little history on my own area of women's business: publishing. In 1972, shortly after The Front Runner appeared, I incorporated in New York State under the name Holly Tree Inc. The corporation sheltered my author business through two national bestsellers and the next 15 years or so. For a few years, Holly Tree also had a sideline of a show-horse business. After moving to California in 1982, I eventually moved my business there. In 1994, a business partner, Tyler St. Mark, and I established a California LLC called Wildcat International, which includes our publishing imprint, Wildcat Press, as well as some film-development projects.
We American women who have done business for the last four decades can tell our war stories of those early years. Like the battles to get a credit card. For those who don't remember, single or divorced females had a hard time getting a credit card in the early '70s! In 1974, a year after I divorced and came out, American Express was the first company to give me one.
The early 1970s saw the first passionate political interest in, and support for, women-owned business. I vividly remember the thrill around 1977, when my local bank in Pawling, N. Y. (which held my mortgage), gave me a loan for property improvement relating to my animal business. The bank thought I was a good bet. I felt like I was finally sitting at the grown-ups' table. When I moved to California, I sold the business and property, paid off the mortgage and left town with a nice profit.
Meanwhile, across the publishing and media world, scores of women's presses and magazines and bookstores had popped up everywhere. Some were owned by lesbian and bi woman, some by straight women. Publishing ventures by transgendered women would come later. But all of us were driven by a passion for information and storytelling on what it means to struggle for identity and power in the late 1900s. I spent the 1980s writing a historical novel about tribal and mixed-blood women of color. My story was set in the mid-1800s, but the theme of commerce and female self-reliance was still there.
Today, as for everything else in the world -- global politics and climate change -- things have gotten more complicated for women-owned business. Today American ultraconservatism is bent on rolling back the red carpet where women have walked for the last four decades - and that will include women's business. It's funny -- and not funny -- that Pat Robertson would make his infamous statement about feminists being evil people who turn into lesbians and destroy capitalism. Robertson was referring to a whole generation of powerful females who made capitalism a real thing for women, from sports millionaire Martina Navratilova to TV financial guru Suze Orman.
In the book trade, I'm watching some scary trends that are hurting women-owned business. Waning public concern over women's issues, and growing internal problems in the trade are driving the gradual erosion of female diversity from publishing. "Women's books" are vanishing from chain stores as a major niche. In the last decade, many women's presses and women's bookstores closed their doors. So did Feminist Bookstore News. In the LGBT publishing world, pioneers like Naiad Press and Firebrand are gone, as are most of the lesbian-owned bookstores like A Different Drummer in Laguna Beach. It's true that a few new women-owned publishers have appeared. But rising costs and an unfriendly cultural climate make it a hard marketplace in which to make a profit now, let alone get a toe-hold if you're new. Publishing businesswomen mostly tell me that they get short shrift from banking and lending institutions - even the "gay friendly" variety.
For around 10 years now, I've been one of the observers warning about negative trends in the LGBT publishing world. There are certain things that the "community" and its media should be doing - like reviewing more books and patronizing community bookstores -- to support the books that are supposedly such an important part of LGBT culture. Unfortunately some people in our business and literary establishments have been slow to act - or even to see how far down the slippery slope things have slid.
The current meltdown in the lending and credit market is surely making things worse for any woman-owned business going for a business loan or re-fi right now.
So let's see if this "historic memorandum" between the WBENC and the NGLCC will be a real help for women-owned businesses - a lifeboat for those of us who are starting to wonder if the U.S. economy is becoming a postmillennial Titanic.
By Patricia Nell Warren
Copyright © 2007 by Patricia Nell Warren. All rights reserved.
Originally posted at the Bilerico Project, www.bilericoproject.com
On August 22, PRNewswire put out this bulletin: "Earlier this month the Women's Business Enterprise National Council
Having owned my own business since 1974, I think this is a great idea. In fact, given the current economic climate in the U.S., it's a desperately needed idea. Women-owned business isn't talked about as much as it once was, and as much as it should be.
A little history on my own area of women's business: publishing. In 1972, shortly after The Front Runner appeared, I incorporated in New York State under the name Holly Tree Inc. The corporation sheltered my author business through two national bestsellers and the next 15 years or so. For a few years, Holly Tree also had a sideline of a show-horse business. After moving to California in 1982, I eventually moved my business there. In 1994, a business partner, Tyler St. Mark, and I established a California LLC called Wildcat International, which includes our publishing imprint, Wildcat Press, as well as some film-development projects.
We American women who have done business for the last four decades can tell our war stories of those early years. Like the battles to get a credit card. For those who don't remember, single or divorced females had a hard time getting a credit card in the early '70s! In 1974, a year after I divorced and came out, American Express was the first company to give me one.
The early 1970s saw the first passionate political interest in, and support for, women-owned business. I vividly remember the thrill around 1977, when my local bank in Pawling, N. Y. (which held my mortgage), gave me a loan for property improvement relating to my animal business. The bank thought I was a good bet. I felt like I was finally sitting at the grown-ups' table. When I moved to California, I sold the business and property, paid off the mortgage and left town with a nice profit.
Meanwhile, across the publishing and media world, scores of women's presses and magazines and bookstores had popped up everywhere. Some were owned by lesbian and bi woman, some by straight women. Publishing ventures by transgendered women would come later. But all of us were driven by a passion for information and storytelling on what it means to struggle for identity and power in the late 1900s. I spent the 1980s writing a historical novel about tribal and mixed-blood women of color. My story was set in the mid-1800s, but the theme of commerce and female self-reliance was still there.
Today, as for everything else in the world -- global politics and climate change -- things have gotten more complicated for women-owned business. Today American ultraconservatism is bent on rolling back the red carpet where women have walked for the last four decades - and that will include women's business. It's funny -- and not funny -- that Pat Robertson would make his infamous statement about feminists being evil people who turn into lesbians and destroy capitalism. Robertson was referring to a whole generation of powerful females who made capitalism a real thing for women, from sports millionaire Martina Navratilova to TV financial guru Suze Orman.
In the book trade, I'm watching some scary trends that are hurting women-owned business. Waning public concern over women's issues, and growing internal problems in the trade are driving the gradual erosion of female diversity from publishing. "Women's books" are vanishing from chain stores as a major niche. In the last decade, many women's presses and women's bookstores closed their doors. So did Feminist Bookstore News. In the LGBT publishing world, pioneers like Naiad Press and Firebrand are gone, as are most of the lesbian-owned bookstores like A Different Drummer in Laguna Beach. It's true that a few new women-owned publishers have appeared. But rising costs and an unfriendly cultural climate make it a hard marketplace in which to make a profit now, let alone get a toe-hold if you're new. Publishing businesswomen mostly tell me that they get short shrift from banking and lending institutions - even the "gay friendly" variety.
For around 10 years now, I've been one of the observers warning about negative trends in the LGBT publishing world. There are certain things that the "community" and its media should be doing - like reviewing more books and patronizing community bookstores -- to support the books that are supposedly such an important part of LGBT culture. Unfortunately some people in our business and literary establishments have been slow to act - or even to see how far down the slippery slope things have slid.
The current meltdown in the lending and credit market is surely making things worse for any woman-owned business going for a business loan or re-fi right now.
So let's see if this "historic memorandum" between the WBENC and the NGLCC will be a real help for women-owned businesses - a lifeboat for those of us who are starting to wonder if the U.S. economy is becoming a postmillennial Titanic.
America’s rich paradox
America’s rich paradox
Copyright The Financial Times Limited 2007
Published: September 14 2007 15:05 | Last updated: September 14 2007 15:05
Yesterday was Tony Snow’s official last day as White House spokesman. The stated reason for his departure: “I ran out of money.” When he announced his resignation last month, Snow explained that his $168,000 salary wasn’t enough to support his family and that the money the Snows borrowed to supplement that income when their paterfamilias went to work for the government had all been spent.
Now, this is America, so talking about dosh isn’t the social taboo I found it to be when I lived in London. Nonetheless, I was astonished by Snow’s comments. Talking about your loot is all well and good if you are a hard-working genius entrepreneur whose capitalist success is part of what makes America great. But it is another thing altogether if you are a public servant and your point is that $168,000 – about 3.5 times the median household income of $48,201, according to a report from the Census Bureau last month – isn’t enough for you.
Even if that’s true, it seemed disrespectful and, what may be worse for a professional flack, like a PR gaffe to admit it. And it sounded an unnecessary one to boot, since Snow, who has cancer, could have trotted out the old workhorse about spending more time with his family and been pretty certain of a compassionate response.
So I went online, expecting to hear an electronic chorus of outrage. There were a few howls. Slate columnist Daniel Gross argued that Snow’s own life symbolised many of the problems with the Bush policies it was his job to advocate, from the high costs of healthcare to the dangers of privatising retirement benefits. A blogger on the Washington Post website delivered a more personal rant: “Tony Snow’s claim of needing more money ... is emblematic of just how tone-deaf and out of touch people in the White House are.”
By and large, though, the reaction was much more sympathetic, as captured by this Silver Spring, Maryland, blogger’s response to the above charge that Snow was “tone-deaf”: “Man, people should go easy on Tony Snow. I don’t even like the guy, as far that type of stuff goes, but jeez ... Let’s be realistic – if you have a big house and a couple of kids in private school (easy $20,000 a year around here) and medical bills from cancer, $168,000 after taxes is not really a ton of money.”
I suspect that one reason the blogosphere has been gentler on Snow than I would have predicted is his illness. That’s great: it’s good to know that even in this wired and partisan age, the crowd can be humane.
Mostly, though, I think Snow’s openness about his family finances has found a relatively sympathetic audience because a lot of its members, like the Silver Spring correspondent, don’t think it is at all absurd that someone with cancer, three kids, upper-middle-class aspirations and living in an expensive city like Washington, DC, might run out of money on $168,000 a year.
This is the paradox of life in affluent America today: in an era of unprecedented global prosperity, a lot of Americans, even those earning more than triple the median household income, aren’t feeling very rich. That is a sentiment that can tempt the finger-wagger in all of us, especially when faced with the lushness of so much of American life. After all, more than a million people have bought an iPhone, $4 has become an ordinary price to pay for a cup of coffee and otherwise normal women, if magazines from Vogue to the New Yorker are to be believed, apparently don’t blink at spending more than $1,000 for a handbag.
This conspicuous consumption has been cast in its most unappealing light by the summer’s credit crunch. But, as economist Robert Frank argues in his new book, Falling Behind, middle-class America’s perception that it needs more money to maintain its social rank is about more than unwise purchases of optional luxury goods. Prof Frank believes that rising income inequality has made it harder for middle-income families to live what they think of as a middle-class lifestyle.
Part of the dilemma is the old problem of coveting your neighbour’s ox – in many circumstances, the sad fact of human nature is that we care more about having more than the Joneses, than about what it is we actually have.
But Prof Frank also thinks that some of the things most of us see as necessities, particularly an excellent education for our children, are becoming harder for the middle- class to afford. As evidence, Prof Frank cites research by Elizabeth Warren and Amelia Tyungi showing that “most of the extra income earned by families as a result of the move to two-earner couples was consumed by higher housing prices as these families sought to buy homes in safer neighbourhoods with better schools.”
A few contrarian commentators have welcomed the new tougher lending standards and house-price declines in the hope they might slow down what Prof Frank describes as this “arms race” in middle-class America. But many of the economists who study income distribution aren’t betting on it. “There might be a slight blip from the credit crunch, but I don’t think that will be long-lasting,” NYU’s Edward Wolff told me. “The winner-take-all effect, where if you are at the top of your profession, your income just skyrockets, is unlikely to stop.”
Chrystia Freeland is the FT’s US managing editor
chrystia.freeland@ft.com
Copyright The Financial Times Limited 2007
Published: September 14 2007 15:05 | Last updated: September 14 2007 15:05
Yesterday was Tony Snow’s official last day as White House spokesman. The stated reason for his departure: “I ran out of money.” When he announced his resignation last month, Snow explained that his $168,000 salary wasn’t enough to support his family and that the money the Snows borrowed to supplement that income when their paterfamilias went to work for the government had all been spent.
Now, this is America, so talking about dosh isn’t the social taboo I found it to be when I lived in London. Nonetheless, I was astonished by Snow’s comments. Talking about your loot is all well and good if you are a hard-working genius entrepreneur whose capitalist success is part of what makes America great. But it is another thing altogether if you are a public servant and your point is that $168,000 – about 3.5 times the median household income of $48,201, according to a report from the Census Bureau last month – isn’t enough for you.
Even if that’s true, it seemed disrespectful and, what may be worse for a professional flack, like a PR gaffe to admit it. And it sounded an unnecessary one to boot, since Snow, who has cancer, could have trotted out the old workhorse about spending more time with his family and been pretty certain of a compassionate response.
So I went online, expecting to hear an electronic chorus of outrage. There were a few howls. Slate columnist Daniel Gross argued that Snow’s own life symbolised many of the problems with the Bush policies it was his job to advocate, from the high costs of healthcare to the dangers of privatising retirement benefits. A blogger on the Washington Post website delivered a more personal rant: “Tony Snow’s claim of needing more money ... is emblematic of just how tone-deaf and out of touch people in the White House are.”
By and large, though, the reaction was much more sympathetic, as captured by this Silver Spring, Maryland, blogger’s response to the above charge that Snow was “tone-deaf”: “Man, people should go easy on Tony Snow. I don’t even like the guy, as far that type of stuff goes, but jeez ... Let’s be realistic – if you have a big house and a couple of kids in private school (easy $20,000 a year around here) and medical bills from cancer, $168,000 after taxes is not really a ton of money.”
I suspect that one reason the blogosphere has been gentler on Snow than I would have predicted is his illness. That’s great: it’s good to know that even in this wired and partisan age, the crowd can be humane.
Mostly, though, I think Snow’s openness about his family finances has found a relatively sympathetic audience because a lot of its members, like the Silver Spring correspondent, don’t think it is at all absurd that someone with cancer, three kids, upper-middle-class aspirations and living in an expensive city like Washington, DC, might run out of money on $168,000 a year.
This is the paradox of life in affluent America today: in an era of unprecedented global prosperity, a lot of Americans, even those earning more than triple the median household income, aren’t feeling very rich. That is a sentiment that can tempt the finger-wagger in all of us, especially when faced with the lushness of so much of American life. After all, more than a million people have bought an iPhone, $4 has become an ordinary price to pay for a cup of coffee and otherwise normal women, if magazines from Vogue to the New Yorker are to be believed, apparently don’t blink at spending more than $1,000 for a handbag.
This conspicuous consumption has been cast in its most unappealing light by the summer’s credit crunch. But, as economist Robert Frank argues in his new book, Falling Behind, middle-class America’s perception that it needs more money to maintain its social rank is about more than unwise purchases of optional luxury goods. Prof Frank believes that rising income inequality has made it harder for middle-income families to live what they think of as a middle-class lifestyle.
Part of the dilemma is the old problem of coveting your neighbour’s ox – in many circumstances, the sad fact of human nature is that we care more about having more than the Joneses, than about what it is we actually have.
But Prof Frank also thinks that some of the things most of us see as necessities, particularly an excellent education for our children, are becoming harder for the middle- class to afford. As evidence, Prof Frank cites research by Elizabeth Warren and Amelia Tyungi showing that “most of the extra income earned by families as a result of the move to two-earner couples was consumed by higher housing prices as these families sought to buy homes in safer neighbourhoods with better schools.”
A few contrarian commentators have welcomed the new tougher lending standards and house-price declines in the hope they might slow down what Prof Frank describes as this “arms race” in middle-class America. But many of the economists who study income distribution aren’t betting on it. “There might be a slight blip from the credit crunch, but I don’t think that will be long-lasting,” NYU’s Edward Wolff told me. “The winner-take-all effect, where if you are at the top of your profession, your income just skyrockets, is unlikely to stop.”
Chrystia Freeland is the FT’s US managing editor
chrystia.freeland@ft.com
Financial Times Editorial Comment: Iraq needs a diplomatic surge
Financial Times Editorial Comment: Iraq needs a diplomatic surge
Copyright The Financial Times Limited 2007
Published: September 14 2007 19:48 | Last updated: September 14 2007 19:48
This week’s long-anticipated testimony to Congress by General David Petraeus, the US commander in Iraq, and Ryan Crocker, Washington’s ambassador in Baghdad, was a tactical success for the Bush administration – as tactical and ephemeral as the advances of the “surge” upon which they were reporting.
President George W. Bush’s attempt to subcontract Iraq policy and to trade on Gen Petraeus’s credibility in Washington – while compromising the general, politicising the army and eroding the constitution – may have bought him a bit more time for a doomed strategy.
Neither the general nor the ambassador made excessive claims for the surge. They nevertheless suggested incremental improvements that might add up to success with time and persistence. That was unconvincing and, moreover, some of the evidence was tendentious.
The fall in Iraqi casualty figures, for example, is not what it seems. Comparing the situation now with the bloodiest period of last year – at the height of ethno-sectarian cleansing that in some areas is now complete – is misleading. The Iraqi interior ministry’s manipulation of the number of dead, reported by some US papers as three times the stated figures for August, is mendacious.
The most acclaimed achievement – the Sunni tribal war against al-Qaeda in west Iraq – began long before the surge. Its leader, who appeared alongside Mr Bush in his photo-op in the desert this month, died in a reprisal bombing on Thursday. On the Shia side, Moqtada al-Sadr’s decision to stand down his Mahdi army seems a response to his people’s hostility to intra-Shia feuding, not the surge.
The main point is that the gains of the surge require a permanent presence of US forces. But Mr Bush has gratefully accepted Gen Petraeus’s recommendations for scaled troop withdrawals. “The principle guiding my decisions on troop levels in Iraq is return on success – the more successful we are, the more American troops can return home,” Mr Bush said.
Yet, if the neat and linear diagram of force reductions the general presented to Congress has anything to do with reality, it is not the reality of Iraq. “Return on Success” is bumper-sticker politics, not policy.
The administration's discourse, to which Gen Petraeus is now inextricably linked, still revolves simplistically around good guys and bad guys – the latter increasingly an ominous and incredible conflation of al-Qaeda and Iran. But the reality of Iraq does not change and the imperatives remain the same.
Iraq’s elite and politico-military forces need to be given a reasonable but limited time to reach a modus vivendi before US troops withdraw. During that time, Americans, Europeans and Arabs need to forge a compact among all Iraq’s neighbours, including Iran, on stabilising Iraq and regional security. Time to unleash a politico-diplomatic surge.
Copyright The Financial Times Limited 2007
Published: September 14 2007 19:48 | Last updated: September 14 2007 19:48
This week’s long-anticipated testimony to Congress by General David Petraeus, the US commander in Iraq, and Ryan Crocker, Washington’s ambassador in Baghdad, was a tactical success for the Bush administration – as tactical and ephemeral as the advances of the “surge” upon which they were reporting.
President George W. Bush’s attempt to subcontract Iraq policy and to trade on Gen Petraeus’s credibility in Washington – while compromising the general, politicising the army and eroding the constitution – may have bought him a bit more time for a doomed strategy.
Neither the general nor the ambassador made excessive claims for the surge. They nevertheless suggested incremental improvements that might add up to success with time and persistence. That was unconvincing and, moreover, some of the evidence was tendentious.
The fall in Iraqi casualty figures, for example, is not what it seems. Comparing the situation now with the bloodiest period of last year – at the height of ethno-sectarian cleansing that in some areas is now complete – is misleading. The Iraqi interior ministry’s manipulation of the number of dead, reported by some US papers as three times the stated figures for August, is mendacious.
The most acclaimed achievement – the Sunni tribal war against al-Qaeda in west Iraq – began long before the surge. Its leader, who appeared alongside Mr Bush in his photo-op in the desert this month, died in a reprisal bombing on Thursday. On the Shia side, Moqtada al-Sadr’s decision to stand down his Mahdi army seems a response to his people’s hostility to intra-Shia feuding, not the surge.
The main point is that the gains of the surge require a permanent presence of US forces. But Mr Bush has gratefully accepted Gen Petraeus’s recommendations for scaled troop withdrawals. “The principle guiding my decisions on troop levels in Iraq is return on success – the more successful we are, the more American troops can return home,” Mr Bush said.
Yet, if the neat and linear diagram of force reductions the general presented to Congress has anything to do with reality, it is not the reality of Iraq. “Return on Success” is bumper-sticker politics, not policy.
The administration's discourse, to which Gen Petraeus is now inextricably linked, still revolves simplistically around good guys and bad guys – the latter increasingly an ominous and incredible conflation of al-Qaeda and Iran. But the reality of Iraq does not change and the imperatives remain the same.
Iraq’s elite and politico-military forces need to be given a reasonable but limited time to reach a modus vivendi before US troops withdraw. During that time, Americans, Europeans and Arabs need to forge a compact among all Iraq’s neighbours, including Iran, on stabilising Iraq and regional security. Time to unleash a politico-diplomatic surge.
International Herald Tribune Editorial - No exit, no strategy, no truth on Iraq
International Herald Tribune Editorial -No exit, no strategy, no truth on Iraq
Copyright by The International Herald Tribune
Published: September 14, 2007
This was the week in which Americans hoped they would get straight talk and clear thinking on Iraq. What they got was two exhausting days of congressional testimony by the American military commander, hours of news conferences and interviews, clouds of cut-to-order statistics and a speech from the Oval Office - and none of it either straight or clear.
The White House insisted that President George W. Bush had consulted intensively with his generals and adapted to changing circumstances.
But no amount of smoke could obscure the truth: Bush has no strategy to end his disastrous war and no strategy for containing the chaos that he unleashed.
The speech he gave on Thursday night could have been given any day in the last four years - and was delivered a half-dozen times already. Despite Bush's claim that he was offering a way for all Americans to "come together" on Iraq, he offered the same divisive policies - repackaged this time with the Orwellian slogan "return on success."
Bush's claim that things were going so well in Iraq that he could "accept" his generals' recommendation for a "drawdown" of forces was a carnival barker's come-on. The U.S. Army cannot sustain the 30,000 extra troops Bush sent to Iraq beyond mid-2008 without serious damage to its fighting ability. From the start, the president said that the increase would be temporary. That's why he called it a "surge."
Before he spoke, Iraq's brutal reality had debunked the claims of political and military success made by General David Petraeus, the top American commander in Iraq, and Ryan Crocker, the ambassador in Baghdad.
First, The New York Times reported that the only sliver of political progress - a tortuous compromise on sharing oil revenues - was evaporating. Then came news of the assassination of the Anbar tribal leader whose decision to fight alongside the Americans was cited by Bush as proof that the war's tide was turning - even though it had nothing to do with the increase in forces.
Bush's claims on Thursday night about how well the war is going are believable only if you use Pentagon numbers so obviously cooked that they call to mind the way Americans were duped into first supporting this war.
There will be a lot said in coming days about Bush's "new strategy," just as there was after each of his previous major addresses on the war. If there was a new strategy, it would be easy to recognize. Bush would drop the meaningless talk of victory and stop trying to sell Americans the fiction that the war keeps them safe from terrorism. (To his credit, Petraeus declined to adopt that bit of propaganda.) Instead, Bush would do what the vast majority of Americans want - plan an orderly withdrawal while doing what he can to mitigate the consequences of the war.
Bush was right when he said that the aftermath of withdrawal would be bloody and frightening, but that is a product of his invasion and his gross mismanagement of the aftermath. Bush's endless insistence on staying the course will only make Iraq more bloody and frightening.
If Bush had a new strategy, he would have talked to the American people about what he would do to draw Iraq's neighbors into a solution. Last January, when he announced the troop increase, Bush promised to "use America's full diplomatic resources to rally support for Iraq from nations throughout the Middle East." The world is still waiting.
A strategy for ending the war would include real efforts to hold Iraq's government to verifiable measures of political conciliation - and make clear to Iraq's leaders that they cannot count on America's indefinite and unquestioning protection.
A real shift in strategy would have included an effort to deal with the massive problem of refugees. Nine months after the surge began, ever more Iraqis are being driven from their homes - and Bush never even mentioned them on Thursday night.
If Bush were serious about ending the war, rather than threatening Iran and Syria, he would make a serious effort to persuade them that they too have a lot to lose from a disintegrating Iraq. And he would enlist the help of the leaders of Britain, France and Germany for serious negotiations. Then, perhaps, Bush's promise from January to stanch the flow of men and weapons into Iraq from Iran and Syria would not have sounded so hollow.
Once again, it is clear that Bush refuses to recognize the truth of his failure in Iraq and envisions a military commitment that has no end. Congress must use its powers to expose the truth and demand a real change in strategy. Democratic leaders, forever parsing polls, are backing away from proposals to impose a deadline for withdrawal and tinkering with small ideas that mostly sound like ways to enable the president's strategy of delay.
The presidential candidates, as well, have a duty to take Iraq head-on. Some Democrats have started to talk in some detail about how they would end the war, but the burden is not just on the war critics.
Republicans like Rudy Giuliani and John McCain, who love to proclaim their support for the president and hide behind the troops, need to explain their vision as well. What do they think would constitute victory in Iraq, and how, precisely, do they intend to achieve it?
After all, it seems the burden of ending the war will fall to the next president. Bush was clear on Thursday night - as he was when he addressed the nation in January, in September of last year, the December before that and in April 2004 - that his only real plan is to confuse enough Americans and cow enough members of Congress to let him muddle along and saddle his successor with this war that should never have been started.
Copyright by The International Herald Tribune
Published: September 14, 2007
This was the week in which Americans hoped they would get straight talk and clear thinking on Iraq. What they got was two exhausting days of congressional testimony by the American military commander, hours of news conferences and interviews, clouds of cut-to-order statistics and a speech from the Oval Office - and none of it either straight or clear.
The White House insisted that President George W. Bush had consulted intensively with his generals and adapted to changing circumstances.
But no amount of smoke could obscure the truth: Bush has no strategy to end his disastrous war and no strategy for containing the chaos that he unleashed.
The speech he gave on Thursday night could have been given any day in the last four years - and was delivered a half-dozen times already. Despite Bush's claim that he was offering a way for all Americans to "come together" on Iraq, he offered the same divisive policies - repackaged this time with the Orwellian slogan "return on success."
Bush's claim that things were going so well in Iraq that he could "accept" his generals' recommendation for a "drawdown" of forces was a carnival barker's come-on. The U.S. Army cannot sustain the 30,000 extra troops Bush sent to Iraq beyond mid-2008 without serious damage to its fighting ability. From the start, the president said that the increase would be temporary. That's why he called it a "surge."
Before he spoke, Iraq's brutal reality had debunked the claims of political and military success made by General David Petraeus, the top American commander in Iraq, and Ryan Crocker, the ambassador in Baghdad.
First, The New York Times reported that the only sliver of political progress - a tortuous compromise on sharing oil revenues - was evaporating. Then came news of the assassination of the Anbar tribal leader whose decision to fight alongside the Americans was cited by Bush as proof that the war's tide was turning - even though it had nothing to do with the increase in forces.
Bush's claims on Thursday night about how well the war is going are believable only if you use Pentagon numbers so obviously cooked that they call to mind the way Americans were duped into first supporting this war.
There will be a lot said in coming days about Bush's "new strategy," just as there was after each of his previous major addresses on the war. If there was a new strategy, it would be easy to recognize. Bush would drop the meaningless talk of victory and stop trying to sell Americans the fiction that the war keeps them safe from terrorism. (To his credit, Petraeus declined to adopt that bit of propaganda.) Instead, Bush would do what the vast majority of Americans want - plan an orderly withdrawal while doing what he can to mitigate the consequences of the war.
Bush was right when he said that the aftermath of withdrawal would be bloody and frightening, but that is a product of his invasion and his gross mismanagement of the aftermath. Bush's endless insistence on staying the course will only make Iraq more bloody and frightening.
If Bush had a new strategy, he would have talked to the American people about what he would do to draw Iraq's neighbors into a solution. Last January, when he announced the troop increase, Bush promised to "use America's full diplomatic resources to rally support for Iraq from nations throughout the Middle East." The world is still waiting.
A strategy for ending the war would include real efforts to hold Iraq's government to verifiable measures of political conciliation - and make clear to Iraq's leaders that they cannot count on America's indefinite and unquestioning protection.
A real shift in strategy would have included an effort to deal with the massive problem of refugees. Nine months after the surge began, ever more Iraqis are being driven from their homes - and Bush never even mentioned them on Thursday night.
If Bush were serious about ending the war, rather than threatening Iran and Syria, he would make a serious effort to persuade them that they too have a lot to lose from a disintegrating Iraq. And he would enlist the help of the leaders of Britain, France and Germany for serious negotiations. Then, perhaps, Bush's promise from January to stanch the flow of men and weapons into Iraq from Iran and Syria would not have sounded so hollow.
Once again, it is clear that Bush refuses to recognize the truth of his failure in Iraq and envisions a military commitment that has no end. Congress must use its powers to expose the truth and demand a real change in strategy. Democratic leaders, forever parsing polls, are backing away from proposals to impose a deadline for withdrawal and tinkering with small ideas that mostly sound like ways to enable the president's strategy of delay.
The presidential candidates, as well, have a duty to take Iraq head-on. Some Democrats have started to talk in some detail about how they would end the war, but the burden is not just on the war critics.
Republicans like Rudy Giuliani and John McCain, who love to proclaim their support for the president and hide behind the troops, need to explain their vision as well. What do they think would constitute victory in Iraq, and how, precisely, do they intend to achieve it?
After all, it seems the burden of ending the war will fall to the next president. Bush was clear on Thursday night - as he was when he addressed the nation in January, in September of last year, the December before that and in April 2004 - that his only real plan is to confuse enough Americans and cow enough members of Congress to let him muddle along and saddle his successor with this war that should never have been started.
Global credit crunch reaches new dimension/Scramble to quit UK mortgage lender, Northern Rock
Global credit crunch reaches new dimension
By Eric Pfanner
Copyright by The International Herald Tribune
Published: September 14, 2007
LONDON: A bailout of a big British mortgage bank caused shudders among account-holders and investors alike Friday, opening a new phase in the global financial turmoil that emanated from a shakeout in the U.S. home lending business, analysts said.
Depositors flocked to withdraw money after the bank, Northern Rock, unable to raise funds from its usual sources - capital markets - because of the global credit crunch, turned to the Bank of England for an emergency loan. Northern Rock shares plunged more than 30 percent, prompting a broader sell-off in European stock markets.
While other European banks have gotten burned by investments tied to shaky U.S. mortgages, known as subprime, Northern Rock said it had only a small subprime exposure in its portfolio. Instead, the bank ran into trouble because the credit squeeze undermined its business model. Northern Rock relies heavily on raising money in the capital markets, rather than consumer deposits, to finance its mortgage lending.
"The problems are potentially much wider now," said Jonathan Loynes, an economist at Capital Economics, a consultancy in London. "This means we have to worry about a wider range of institutions that aren't directly involved in this credit crisis but are in a way innocent bystanders."
The British government said it had authorized the Bank of England to provide a "liquidity support facility" of unspecified size to Northern Rock, based in Newcastle, England, which has expanded aggressively in recent years.
The news prompted a sell-off in the shares British banks as investors worried about the possibility of similar problems at other institutions - as well as threats to the broader economy. The FTSE 100 index was down more than 2 percent at midday but recovered to close down 1.17 percent. Shares elsewhere in Europe fell less sharply.
"I don't think the worst is behind us," Jean-Claude Juncker, who chaired a meeting of European finance ministers and central bankers Friday, said during a news conference in Porto, Portugal, Reuters reported.
The U.S. Federal Reserve and the European Central Bank have been under pressure to keep key interest rates low or even cut them as the market turmoil threatens to choke economic growth. The Bank of England has raised its rates several times in recent months to try to cool a frothy housing market, which while driving economic growth has also raised fears of a bubble.
The emergency loan to Northern Rock came only two days after Mervyn King, the governor of the Bank of England, warned that moves by other central banks, like the Fed and ECB, to pump extra cash into the financial system in recent weeks could encourage "excessive risk-taking" by rewarding bad behavior.
On Friday, the Bank of England emphasized that Northern Rock would have to pay a premium to market interest rates for its emergency credit line, offered under the central bank's role as "lender of last resort."
"Northern Rock is solvent, exceeds its regulatory capital requirement and has a good quality loan book," the Bank of England, the Financial Services Authority and the Treasury said in a joint statement.
But those words failed to soothe some Northern Rock customers. Account-holders rushed to branches throughout Britain, many of them reportedly withdrawing large amounts of money.
Outside a Northern Rock branch in central London, Constance Hackford, a manager at an interior design firm, weighed joining a line of about two dozen people.
"I can't imagine the Bank of England is going to let it fail - can they?" she said. "I've got rather a lot of money in there. Maybe I should spread my bets a bit."
A spokesman for Northern Rock said Friday afternoon that the bank did not have any estimates yet of the amount that had been withdrawn.
Because Northern Rock - and, perhaps, other British mortgage lenders - will now have to pay more to raise money for loans, they will have to pass along higher interest rates to consumers, analysts say. That will cause a slowdown in lending, they added, which could act as a drag on the housing market in Britain, which has soared over the last decade.
"Costs for first-time borrowers, already stretched in the affordability stakes, will rise substantially," said Paul Mortimer-Lee, an economist at BNP Paribas. "First-time buyer activity seems pretty certain to show a sharp fall, which, since the whole market rests on the shoulders of the first-time buyer, is like throwing a spanner in the works of the whole market."
There have been some signs of a slowdown lately. A survey released this week by the Royal Institute of Chartered Surveyors, a real estate group, showed that prices in August fell in more areas of Britain than they rose. And several British banks have already increased raised their lending rates in recent days.
Adam Applegarth, chief executive of Northern Rock, said the bank would cut back on issuing new loans, as well as cut costs through a hiring freeze and other steps. But the bank on Friday also downgraded its profit outlook for this year and next year.
"I don't expect us to move back to the volume of lending we were doing before," Applegarth said. "I think those volume days are in the past."
He said the bank, whose level of residential lending in the first eight months of the year was 55 percent higher than a year earlier, had been more aggressive than some of its rivals in using "wholesale funding" rather than deposits to back its loans.
Analysts said the bank's business model was based on issuing large numbers of loans, with thin margins between the rates it charged mortgage-holders and those that it paid for its funding. Northern Rock converted from a "building society," or member-owned lender, to a publicly traded bank a decade ago.
"With hindsight, if we had seen this coming, would we have run the same strategy? No," Applegarth said. "But hindsight is a great thing, and I don't think anybody else saw this coming either."
Northern Rock said it had only £75 million, or $150 million, in direct exposure to the U.S. subprime market, with £200 million in exposure to U.S. collateralized debt obligations, some of which was indirectly exposed to the subprime market. But together, that represents less than one-quarter of one-percent of the bank's total assets, it said.
That distinguishes Northern Rock from other European banks, like BNP Paribas in France and IKB Deutsche Industriebank in Germany, which were hurt by large direct exposure to the U.S. subprime market.
But with banks increasingly reluctant to issue anything other than short-term credit, Northern Rock faced the possibility of being unable to meet existing obligations.
Northern Rock approached the central bank, Applegarth said, because of the "astonishing" conditions in the markets that it had used to raise financing, and because "we could see no end to this in the short term."
Some analysts said Northern Rock could now become a takeover target.
Others said the bank could emerge intact from the current turmoil, assuming the credit crunch eases.
While repossessions of homes have been rising in Britain over the last year, Northern Rock has a generally sound portfolio, they said. Less than one-half of 1 percent of the bank's mortgage loans are more than three months in arrears, Northern Rock said. That is less than half the British industry average.
"We think there is a strong bank here, but with a vulnerability, which is its sources of funding," said Matthew Taylor, an analyst at Fitch Ratings, which downgraded some of the bank's credit ratings Friday.
At the EU finance ministers' meeting in Portugal, officials said the fallout of the recent market turbulence would be limited for the real economy.
"We're all aware the risks of lower growth have increased," European Economic and Monetary Affairs Commissioner Joaquin Almunia said, according to Reuters.
But he, Juncker and the ECB president, Jean-Claude Trichet, all stuck to forecasts of only marginally lower growth this year than the 2.7 percent rise in gross domestic product seen in 2006,
Scramble to quit UK mortgage lender
By Peter Thal Larsen in London
Copyright The Financial Times Limited 2007
Published: September 14 2007 20:40 | Last updated: September 14 2007 20:40
The turmoil in global banking hit the streets of Britain on Friday as thousands of Northern Rock customers queued up to withdraw their savings from the UK mortgage lender after it was rescued by the Bank of England.
As regulators and politicians called for calm, Northern Rock – Britain’s fifth-biggest mortgage lender – scrambled to contain the fallout after it became the first British bank in decades to be bailed out by regulators. One person close to the situation said customers had withdrawn about $2bn Friday but Northern Rock declined to comment on the figure, which would amount to 4 per cent of its deposit base.
The rescue demonstrates the risks from a decade of financial innovation in the capital markets, which allowed a small regional lender to wield financial clout far greater than its network of 76 branches would suggest.
It also shows how the turmoil in the financial system that resulted from excessive lending to Americans with patchy credit histories triggered the failure of a bank with no direct links to the US mortgage market.
Shares in Northern Rock plunged more than 30 per cent as analysts slashed their earnings forecasts for the bank. The news also dragged down share prices for other UK banks such as Alliance & Leicester, HBOS and Barclays.
The FTSE 100 saw sharp falls until US markets opened and helped soften the bearish tone. As the day wore on, sentiment soured again. The list of leading UK shares ended 74.6 points lower, almost 1.2 per cent down at 6,289.3. The FTSE Eurofirst 300 was 16.2 points lower at 1508.1, 1.1 per cent down.
In the US, equity markets pared early losses after economic data showed retail sales, excluding sales of vehicles, fell sharply in August. The data cemented investors’ expectations of at least a quarter-point interest rate cut from the Federal Reserve when policymakers meet on Tuesday.
The commerce department reported retail sales fell 0.4 per cent in August, excluding vehicle sales, compared with forecasts of a 0.1 per cent rise, and a 0.7 per cent increase in retail sales in July. The S&P500 was down 0.1 per cent to 1,482.45 by midday in New York. The Dow Jones Industrial Average of blue-chip stocks fell 0.01 per cent to 13,423.66.
Financials were among the worst performers, after Merrill Lynch, the world’s largest brokerage, warned that shaky credit markets had forced it to adjust the value of securities linked to risky subprime mortgages.
Concern over Northern Rock and the ability of UK banks to maintain new mortgage lending at attractive rates added to concerns about the housing market and the economy in general.
Under the terms of the bail-out, the Bank of England will provide an open-ended facility to Northern Rock, allowing it to access liquidity by posting mortgages or mortgage-backed securities as collateral. The rescue – finalised yesterday after days of negotiations involving the Financial Services Authority and the UK Treasury – came just two days after Mervyn King, governor of the Bank, insisted it would not intervene to bail out the markets.
According to people familiar with the matter, several banks considered buying Northern Rock. However, a deal was undermined by a shortage of liquidity and uncertainty about Northern Rock’s value. Adam Applegarth, Northern Rock’s chief executive, said the bank was not in talks with a buyer.
Additional reporting by Chris Giles, Lina Saigol, Paul J Davies and Saskia Scholtes in London
By Eric Pfanner
Copyright by The International Herald Tribune
Published: September 14, 2007
LONDON: A bailout of a big British mortgage bank caused shudders among account-holders and investors alike Friday, opening a new phase in the global financial turmoil that emanated from a shakeout in the U.S. home lending business, analysts said.
Depositors flocked to withdraw money after the bank, Northern Rock, unable to raise funds from its usual sources - capital markets - because of the global credit crunch, turned to the Bank of England for an emergency loan. Northern Rock shares plunged more than 30 percent, prompting a broader sell-off in European stock markets.
While other European banks have gotten burned by investments tied to shaky U.S. mortgages, known as subprime, Northern Rock said it had only a small subprime exposure in its portfolio. Instead, the bank ran into trouble because the credit squeeze undermined its business model. Northern Rock relies heavily on raising money in the capital markets, rather than consumer deposits, to finance its mortgage lending.
"The problems are potentially much wider now," said Jonathan Loynes, an economist at Capital Economics, a consultancy in London. "This means we have to worry about a wider range of institutions that aren't directly involved in this credit crisis but are in a way innocent bystanders."
The British government said it had authorized the Bank of England to provide a "liquidity support facility" of unspecified size to Northern Rock, based in Newcastle, England, which has expanded aggressively in recent years.
The news prompted a sell-off in the shares British banks as investors worried about the possibility of similar problems at other institutions - as well as threats to the broader economy. The FTSE 100 index was down more than 2 percent at midday but recovered to close down 1.17 percent. Shares elsewhere in Europe fell less sharply.
"I don't think the worst is behind us," Jean-Claude Juncker, who chaired a meeting of European finance ministers and central bankers Friday, said during a news conference in Porto, Portugal, Reuters reported.
The U.S. Federal Reserve and the European Central Bank have been under pressure to keep key interest rates low or even cut them as the market turmoil threatens to choke economic growth. The Bank of England has raised its rates several times in recent months to try to cool a frothy housing market, which while driving economic growth has also raised fears of a bubble.
The emergency loan to Northern Rock came only two days after Mervyn King, the governor of the Bank of England, warned that moves by other central banks, like the Fed and ECB, to pump extra cash into the financial system in recent weeks could encourage "excessive risk-taking" by rewarding bad behavior.
On Friday, the Bank of England emphasized that Northern Rock would have to pay a premium to market interest rates for its emergency credit line, offered under the central bank's role as "lender of last resort."
"Northern Rock is solvent, exceeds its regulatory capital requirement and has a good quality loan book," the Bank of England, the Financial Services Authority and the Treasury said in a joint statement.
But those words failed to soothe some Northern Rock customers. Account-holders rushed to branches throughout Britain, many of them reportedly withdrawing large amounts of money.
Outside a Northern Rock branch in central London, Constance Hackford, a manager at an interior design firm, weighed joining a line of about two dozen people.
"I can't imagine the Bank of England is going to let it fail - can they?" she said. "I've got rather a lot of money in there. Maybe I should spread my bets a bit."
A spokesman for Northern Rock said Friday afternoon that the bank did not have any estimates yet of the amount that had been withdrawn.
Because Northern Rock - and, perhaps, other British mortgage lenders - will now have to pay more to raise money for loans, they will have to pass along higher interest rates to consumers, analysts say. That will cause a slowdown in lending, they added, which could act as a drag on the housing market in Britain, which has soared over the last decade.
"Costs for first-time borrowers, already stretched in the affordability stakes, will rise substantially," said Paul Mortimer-Lee, an economist at BNP Paribas. "First-time buyer activity seems pretty certain to show a sharp fall, which, since the whole market rests on the shoulders of the first-time buyer, is like throwing a spanner in the works of the whole market."
There have been some signs of a slowdown lately. A survey released this week by the Royal Institute of Chartered Surveyors, a real estate group, showed that prices in August fell in more areas of Britain than they rose. And several British banks have already increased raised their lending rates in recent days.
Adam Applegarth, chief executive of Northern Rock, said the bank would cut back on issuing new loans, as well as cut costs through a hiring freeze and other steps. But the bank on Friday also downgraded its profit outlook for this year and next year.
"I don't expect us to move back to the volume of lending we were doing before," Applegarth said. "I think those volume days are in the past."
He said the bank, whose level of residential lending in the first eight months of the year was 55 percent higher than a year earlier, had been more aggressive than some of its rivals in using "wholesale funding" rather than deposits to back its loans.
Analysts said the bank's business model was based on issuing large numbers of loans, with thin margins between the rates it charged mortgage-holders and those that it paid for its funding. Northern Rock converted from a "building society," or member-owned lender, to a publicly traded bank a decade ago.
"With hindsight, if we had seen this coming, would we have run the same strategy? No," Applegarth said. "But hindsight is a great thing, and I don't think anybody else saw this coming either."
Northern Rock said it had only £75 million, or $150 million, in direct exposure to the U.S. subprime market, with £200 million in exposure to U.S. collateralized debt obligations, some of which was indirectly exposed to the subprime market. But together, that represents less than one-quarter of one-percent of the bank's total assets, it said.
That distinguishes Northern Rock from other European banks, like BNP Paribas in France and IKB Deutsche Industriebank in Germany, which were hurt by large direct exposure to the U.S. subprime market.
But with banks increasingly reluctant to issue anything other than short-term credit, Northern Rock faced the possibility of being unable to meet existing obligations.
Northern Rock approached the central bank, Applegarth said, because of the "astonishing" conditions in the markets that it had used to raise financing, and because "we could see no end to this in the short term."
Some analysts said Northern Rock could now become a takeover target.
Others said the bank could emerge intact from the current turmoil, assuming the credit crunch eases.
While repossessions of homes have been rising in Britain over the last year, Northern Rock has a generally sound portfolio, they said. Less than one-half of 1 percent of the bank's mortgage loans are more than three months in arrears, Northern Rock said. That is less than half the British industry average.
"We think there is a strong bank here, but with a vulnerability, which is its sources of funding," said Matthew Taylor, an analyst at Fitch Ratings, which downgraded some of the bank's credit ratings Friday.
At the EU finance ministers' meeting in Portugal, officials said the fallout of the recent market turbulence would be limited for the real economy.
"We're all aware the risks of lower growth have increased," European Economic and Monetary Affairs Commissioner Joaquin Almunia said, according to Reuters.
But he, Juncker and the ECB president, Jean-Claude Trichet, all stuck to forecasts of only marginally lower growth this year than the 2.7 percent rise in gross domestic product seen in 2006,
Scramble to quit UK mortgage lender
By Peter Thal Larsen in London
Copyright The Financial Times Limited 2007
Published: September 14 2007 20:40 | Last updated: September 14 2007 20:40
The turmoil in global banking hit the streets of Britain on Friday as thousands of Northern Rock customers queued up to withdraw their savings from the UK mortgage lender after it was rescued by the Bank of England.
As regulators and politicians called for calm, Northern Rock – Britain’s fifth-biggest mortgage lender – scrambled to contain the fallout after it became the first British bank in decades to be bailed out by regulators. One person close to the situation said customers had withdrawn about $2bn Friday but Northern Rock declined to comment on the figure, which would amount to 4 per cent of its deposit base.
The rescue demonstrates the risks from a decade of financial innovation in the capital markets, which allowed a small regional lender to wield financial clout far greater than its network of 76 branches would suggest.
It also shows how the turmoil in the financial system that resulted from excessive lending to Americans with patchy credit histories triggered the failure of a bank with no direct links to the US mortgage market.
Shares in Northern Rock plunged more than 30 per cent as analysts slashed their earnings forecasts for the bank. The news also dragged down share prices for other UK banks such as Alliance & Leicester, HBOS and Barclays.
The FTSE 100 saw sharp falls until US markets opened and helped soften the bearish tone. As the day wore on, sentiment soured again. The list of leading UK shares ended 74.6 points lower, almost 1.2 per cent down at 6,289.3. The FTSE Eurofirst 300 was 16.2 points lower at 1508.1, 1.1 per cent down.
In the US, equity markets pared early losses after economic data showed retail sales, excluding sales of vehicles, fell sharply in August. The data cemented investors’ expectations of at least a quarter-point interest rate cut from the Federal Reserve when policymakers meet on Tuesday.
The commerce department reported retail sales fell 0.4 per cent in August, excluding vehicle sales, compared with forecasts of a 0.1 per cent rise, and a 0.7 per cent increase in retail sales in July. The S&P500 was down 0.1 per cent to 1,482.45 by midday in New York. The Dow Jones Industrial Average of blue-chip stocks fell 0.01 per cent to 13,423.66.
Financials were among the worst performers, after Merrill Lynch, the world’s largest brokerage, warned that shaky credit markets had forced it to adjust the value of securities linked to risky subprime mortgages.
Concern over Northern Rock and the ability of UK banks to maintain new mortgage lending at attractive rates added to concerns about the housing market and the economy in general.
Under the terms of the bail-out, the Bank of England will provide an open-ended facility to Northern Rock, allowing it to access liquidity by posting mortgages or mortgage-backed securities as collateral. The rescue – finalised yesterday after days of negotiations involving the Financial Services Authority and the UK Treasury – came just two days after Mervyn King, governor of the Bank, insisted it would not intervene to bail out the markets.
According to people familiar with the matter, several banks considered buying Northern Rock. However, a deal was undermined by a shortage of liquidity and uncertainty about Northern Rock’s value. Adam Applegarth, Northern Rock’s chief executive, said the bank was not in talks with a buyer.
Additional reporting by Chris Giles, Lina Saigol, Paul J Davies and Saskia Scholtes in London
Friday, September 14, 2007
Howard to step down after poll
Howard to step down after poll
By Peter Smith in Sydney
Copyright The Financial Times Limited 2007
Published: September 14 2007 03:00 | Last updated: September 14 2007 03:00
John Howard has called an end to his political career after saying he would retire as Australia's second-longest serving prime minister part way through his next term if he wins an election due to be held by early December.
The decision comes after one of the most tumultuous periods of his 11-year premiership and as his personal standing and that of the ruling Liberal/National party coalition trails a resurgent opposition Labor party led by Kevin Rudd.
Mr Howard had hoped for a political boost from Australia's hosting of 21 world leaders from Pacific Rim economies at the weekend's Asia-Pacific Economic Co-operation meeting. He has instead been repeatedly forced to deny he planned to step aside after losing support from within party ranks, following damaging displays of disunity from senior cabinet ministers.
But after a meeting with his Liberal party colleagues this week when his leadership went unchallenged, Mr Howard announced he would step down before 2010 after his election agenda was in place and endorsed Peter Costello, treasurer, to succeed him.
He said it would not be easy to retire after being -re-elected.
"I won't find it the least bit easy because I am very committed to this job and I will not like leaving it. But everything comes to an end."
Labor seized on his comments, pointing out that Australians were being asked to vote for a leader who planned to retire. Mr Rudd said Mr Howard could no longer govern his own party let alone the country.
Andrew Macintosh, deputy director of Australia Institute, a Canberra-based think-tank, said Mr Howard had been "dragged kicking and screaming" to make the announcement against his own political judgment.
"It seems terminal," he said. "He is running out of time to call an election, the polling is terrible, there has been continued speculation over his leadership and now he says he wants to hand over to a disastrously unpopular Peter Costello.
"To say you plan to resign and anoint Peter Costello is a bad political strategy."
Wayne Errington, a political science lecturer at Australian National University who has written a biography of Howard, said that up until last week Mr Howard could have stared down insurrection from within his party but it was now clear senior ministers no longer wanted him in the job.
"He has had to change his form of words from what he's previously said, which was he will stay as long as the party wanted him."
In 2000, Mr Howard said he would contemplate retirement when he reached 64 (in 2003) but as that date drew nearer he said he would stay as long as he had the party's support, a phrase he has used ever since.
"He has come under more and more pressure from Costello and he has been forced to address issues that he would rather have left ambiguous," Mr Errington said.
Mr Howard is seeking a fifth term in office. He has a reputation as a political survivor having unexpectedly toppled Paul Keating's Labor government in 1996.
By Peter Smith in Sydney
Copyright The Financial Times Limited 2007
Published: September 14 2007 03:00 | Last updated: September 14 2007 03:00
John Howard has called an end to his political career after saying he would retire as Australia's second-longest serving prime minister part way through his next term if he wins an election due to be held by early December.
The decision comes after one of the most tumultuous periods of his 11-year premiership and as his personal standing and that of the ruling Liberal/National party coalition trails a resurgent opposition Labor party led by Kevin Rudd.
Mr Howard had hoped for a political boost from Australia's hosting of 21 world leaders from Pacific Rim economies at the weekend's Asia-Pacific Economic Co-operation meeting. He has instead been repeatedly forced to deny he planned to step aside after losing support from within party ranks, following damaging displays of disunity from senior cabinet ministers.
But after a meeting with his Liberal party colleagues this week when his leadership went unchallenged, Mr Howard announced he would step down before 2010 after his election agenda was in place and endorsed Peter Costello, treasurer, to succeed him.
He said it would not be easy to retire after being -re-elected.
"I won't find it the least bit easy because I am very committed to this job and I will not like leaving it. But everything comes to an end."
Labor seized on his comments, pointing out that Australians were being asked to vote for a leader who planned to retire. Mr Rudd said Mr Howard could no longer govern his own party let alone the country.
Andrew Macintosh, deputy director of Australia Institute, a Canberra-based think-tank, said Mr Howard had been "dragged kicking and screaming" to make the announcement against his own political judgment.
"It seems terminal," he said. "He is running out of time to call an election, the polling is terrible, there has been continued speculation over his leadership and now he says he wants to hand over to a disastrously unpopular Peter Costello.
"To say you plan to resign and anoint Peter Costello is a bad political strategy."
Wayne Errington, a political science lecturer at Australian National University who has written a biography of Howard, said that up until last week Mr Howard could have stared down insurrection from within his party but it was now clear senior ministers no longer wanted him in the job.
"He has had to change his form of words from what he's previously said, which was he will stay as long as the party wanted him."
In 2000, Mr Howard said he would contemplate retirement when he reached 64 (in 2003) but as that date drew nearer he said he would stay as long as he had the party's support, a phrase he has used ever since.
"He has come under more and more pressure from Costello and he has been forced to address issues that he would rather have left ambiguous," Mr Errington said.
Mr Howard is seeking a fifth term in office. He has a reputation as a political survivor having unexpectedly toppled Paul Keating's Labor government in 1996.
Slower US retail sales raise fears for economy/Surprise slowdown in US retail sales
Surprise slowdown in US retail sales
By Eoin Callan in Washington
Copyright The Financial Times Limited 2007
Published: September 14 2007 14:44 | Last updated: September 14 2007 23:08
US retail sales slowed last month as concerns mounted about the economic impact of the downturn in the housing sector and turbulence in financial markets.
Purchases were weaker than expected as sales growth slowed to 0.3 per cent from 0.5 per cent, the commerce department said.
The surprise slowdown in sales added to fears that US households will curtail spending as house prices weaken and borrowing conditions tighten.
Stocks fell and bond yields slid as investors priced in a greater likelihood of aggressive interest rate cuts by the Federal Reserve, starting next week. The yield on the benchmark 10-year Treasury bond fell to 4.42 per cent from 4.47 per cent.
“Recent financial distress and gradual slowing in the US economy are now limiting consumer resilience,” said Peter Kretzmer, an economist at Bank of America.
The slowdown in purchases was felt most by building supply stores, clothing retailers and service stations, the department said. But carmakers appeared to attract buyers amid a price war.
“The global economy appears to be at a turning point,” said Paul Sheard, an economist at Lehman Brothers, adding it had been hit by “two related shocks”.
“First, the US housing recession has turned out to be considerably worse than we envisaged...Secondly, the subprime mortgage meltdown has triggered a broad sell-off across capital markets, with incipient elements of financial contagion and panic.”
He added the “strong interactions between these spheres make for an extremely uncertain medium-term economic and financial outlook.”
“The key uncertainty revolves around how long and how severe the US housing recession turns out to be and whether it tips the US economy into, or close to, recession,” he said.
Slower US retail sales raise fears for economy
By Eoin Callan in Washington
Copyright The Financial Times Limited 2007
Published: September 14 2007 14:44 | Last updated: September 14 2007 14:44
US retail sales were weaker than expected last month, according to fresh figures that underlined concerns consumer spending would slow amid the housing downturn and market turmoil.
Sales growth slowed to 0.3 per cent from 0.5 per cent, the Commerce Department said, while purchases excluding automobiles unexpectedly fell 0.4 per cent.
The surprise slowdown will add to fears that the economy will slow as households restrain spending as the value of their homes decline and borrowing conditions tighten.
A sharp downturn in household spending - which accounts for more than two thirds of the economy - is likely to force the Federal Reserve to continue cutting interest rates after widely expected reductions next week.
Investors priced in a greater likelyhood of rate cuts as the yield on the benchmark 10-year Treasury bond fell to 4.42 per cent, from 4.47 per cent.
The slowdown in purchases was pronounced at building supply stores, clothing retailers and service stations, the Commerce Department said.
Retail sales, which account for almost half of all consumer spending, had been forecast to rise 0.5 per cent.
Some businesses that cater for household goods saw an improvement in sales, including furniture and electronics stores.
Much of rise in retail sales was due to a 2.8 per cent increase in auto sales, which economists attributed to new financial incentives being offered by manufacturers.
There were also separate signs of easing inflation, as the prices of goods imported into the US unexpectedly fell 0.3 per cent in August as oil and natural gas costs dropped, the Labor Department said.
Meanwhile, the current account deficit narrowed in the second quarter to $191bn, or 5.5 per cent of GDP, compared to $197bn the previous quarter.
By Eoin Callan in Washington
Copyright The Financial Times Limited 2007
Published: September 14 2007 14:44 | Last updated: September 14 2007 23:08
US retail sales slowed last month as concerns mounted about the economic impact of the downturn in the housing sector and turbulence in financial markets.
Purchases were weaker than expected as sales growth slowed to 0.3 per cent from 0.5 per cent, the commerce department said.
The surprise slowdown in sales added to fears that US households will curtail spending as house prices weaken and borrowing conditions tighten.
Stocks fell and bond yields slid as investors priced in a greater likelihood of aggressive interest rate cuts by the Federal Reserve, starting next week. The yield on the benchmark 10-year Treasury bond fell to 4.42 per cent from 4.47 per cent.
“Recent financial distress and gradual slowing in the US economy are now limiting consumer resilience,” said Peter Kretzmer, an economist at Bank of America.
The slowdown in purchases was felt most by building supply stores, clothing retailers and service stations, the department said. But carmakers appeared to attract buyers amid a price war.
“The global economy appears to be at a turning point,” said Paul Sheard, an economist at Lehman Brothers, adding it had been hit by “two related shocks”.
“First, the US housing recession has turned out to be considerably worse than we envisaged...Secondly, the subprime mortgage meltdown has triggered a broad sell-off across capital markets, with incipient elements of financial contagion and panic.”
He added the “strong interactions between these spheres make for an extremely uncertain medium-term economic and financial outlook.”
“The key uncertainty revolves around how long and how severe the US housing recession turns out to be and whether it tips the US economy into, or close to, recession,” he said.
Slower US retail sales raise fears for economy
By Eoin Callan in Washington
Copyright The Financial Times Limited 2007
Published: September 14 2007 14:44 | Last updated: September 14 2007 14:44
US retail sales were weaker than expected last month, according to fresh figures that underlined concerns consumer spending would slow amid the housing downturn and market turmoil.
Sales growth slowed to 0.3 per cent from 0.5 per cent, the Commerce Department said, while purchases excluding automobiles unexpectedly fell 0.4 per cent.
The surprise slowdown will add to fears that the economy will slow as households restrain spending as the value of their homes decline and borrowing conditions tighten.
A sharp downturn in household spending - which accounts for more than two thirds of the economy - is likely to force the Federal Reserve to continue cutting interest rates after widely expected reductions next week.
Investors priced in a greater likelyhood of rate cuts as the yield on the benchmark 10-year Treasury bond fell to 4.42 per cent, from 4.47 per cent.
The slowdown in purchases was pronounced at building supply stores, clothing retailers and service stations, the Commerce Department said.
Retail sales, which account for almost half of all consumer spending, had been forecast to rise 0.5 per cent.
Some businesses that cater for household goods saw an improvement in sales, including furniture and electronics stores.
Much of rise in retail sales was due to a 2.8 per cent increase in auto sales, which economists attributed to new financial incentives being offered by manufacturers.
There were also separate signs of easing inflation, as the prices of goods imported into the US unexpectedly fell 0.3 per cent in August as oil and natural gas costs dropped, the Labor Department said.
Meanwhile, the current account deficit narrowed in the second quarter to $191bn, or 5.5 per cent of GDP, compared to $197bn the previous quarter.
Washington Mutual to eliminate 1,000 jobs
Washington Mutual to eliminate 1,000 jobs
Copyright by The Associated Press
September 14, 2007
SEATTLE - Washington Mutual Inc. said Thursday it will cut 1,000 jobs, eliminating its sales force dedicated to mortgage borrowers with questionable credit and slashing some of its wholesale banking operations.
Washington Mutual, the largest U.S. savings and loan institution, will lay off 75 dedicated subprime mortgage sales people and account managers and integrate what is left of the subprime lending business into its regular mortgage business, said spokesman Alan Gulick. He said the company will consolidate three loan fulfillment centers and lay off 340 more workers in San Antonio, San Diego and Anaheim.
Washington Mutual will also cut 210 jobs and conduct an "orderly wind-down" of parts of its wholesale banking business, which includes trading mortgages and mortgage-backed securities and lending money to other banks, the spokesman said.
Interest among investors in mortgage-backed securities has cooled dramatically as the number of people facing foreclosure after defaulting on subprime loans has grown.
The remaining job cuts will be made across the company, Gulick said.
The company said it plans to add up to 1,000 new employees to sell both prime and subprime mortgages at its regular bank branches and special home loan centers.
"Washington Mutual has been anticipating and preparing for a challenging mortgage environment for over the past 18 months," said Gulick. "We've taken strategic actions that place WaMu in a strong position to weather this market and to take advantage of growth opportunities."
The company's stock rose 33 cents, to $35.56, Thursday.
Copyright by The Associated Press
September 14, 2007
SEATTLE - Washington Mutual Inc. said Thursday it will cut 1,000 jobs, eliminating its sales force dedicated to mortgage borrowers with questionable credit and slashing some of its wholesale banking operations.
Washington Mutual, the largest U.S. savings and loan institution, will lay off 75 dedicated subprime mortgage sales people and account managers and integrate what is left of the subprime lending business into its regular mortgage business, said spokesman Alan Gulick. He said the company will consolidate three loan fulfillment centers and lay off 340 more workers in San Antonio, San Diego and Anaheim.
Washington Mutual will also cut 210 jobs and conduct an "orderly wind-down" of parts of its wholesale banking business, which includes trading mortgages and mortgage-backed securities and lending money to other banks, the spokesman said.
Interest among investors in mortgage-backed securities has cooled dramatically as the number of people facing foreclosure after defaulting on subprime loans has grown.
The remaining job cuts will be made across the company, Gulick said.
The company said it plans to add up to 1,000 new employees to sell both prime and subprime mortgages at its regular bank branches and special home loan centers.
"Washington Mutual has been anticipating and preparing for a challenging mortgage environment for over the past 18 months," said Gulick. "We've taken strategic actions that place WaMu in a strong position to weather this market and to take advantage of growth opportunities."
The company's stock rose 33 cents, to $35.56, Thursday.
Safer toys won't be cheap - Buyers can expect to pay 10% more as soon as Januar
Safer toys won't be cheap - Buyers can expect to pay 10% more as soon as January
By Anne D'innocenzio
Copyright © 2007, Chicago Tribune and The Associated Press
September 14, 2007
NEW YORK - American consumers will be bearing the cost of safer toys, but not until after this year's Christmas season.
Shoppers can expect price increases up to 10 percent next year to pay for increased vigilance by toymakers and stores after more than 3 million lead-tainted toys from China were recalled worldwide since June. That means a $6.99 Barbie doll could go up to about $7.70, or a $70 child-friendly digital camera could retail next year for almost $80.
A 10 percent average increase would be the biggest one-time price hike in toys in several years, analysts say. And it's more than twice the government's measure of consumer inflation of 4.7 percent during the first seven months of this year.
Consumers could also see higher prices on other Chinese imports such as fish and children's apparel, but the big price gains in toys could be more jolting.
Shoppers have become accustomed to cheap playthings from China because Wal-Mart Stores Inc. and other discounters have waged cost-cutting campaigns. Critics say real safeguards were sacrificed to keep prices low, however.
Analysts said the price increases are unlikely to hit until at least January because manufacturers and sellers already ordered for Christmas. That's no consolation for parents, though.
"I will pay more [for toys] because I know it will ensure safety," said Lisa Sallese, a Wilton, Conn., mother of a 7-month-old boy and a 2-year-old daughter. "But it stinks. It should have been safe to begin with."
Most of the rising costs come from emergency third-party testing in the U.S. by both makers and sellers as they aim to root out any unsafe products, analysts say.
Mattel Inc.'s three high-profile recalls of lead-painted toys since the beginning of August have pushed product testing to a frenzied pace. Companies are removing playthings from shelves and sending them to independent laboratories to be examined. The price of labor, overtime and testing will drive up costs in the short term, analysts said, but increased regulation will likely keep them higher.
The U.S. Toy Industry Association supports a federal requirement to make safety testing and inspection mandatory and is working with the American National Standards Institute to develop industrywide safety procedures. But during Wednesday's congressional hearing on toy safety, senators urged even more stringent measures including stepping up fines for selling or failing to report dangerous items.
This week, Toys "R" Us Inc., the nation's second-largest toy seller, behind Wal-Mart, said it would be using an independent laboratory to test every branded product, according to Kathleen Waugh, a company spokeswoman. The retailer will be absorbing the extra costs this year, but Waugh said that she believes next year "pricing could increase."
The Walt Disney Co. -- hit by Mattel's recall of 436,000 cars based on "Sarge," a character in the Disney-Pixar movie "Cars," that were believed to contain lead paint -- will independently test toys featuring its characters. The tests will begin in the next two weeks and will include all categories of products from about 2,000 licensees, including Mattel, which is the largest maker of Disney-related toys.
Chris Byrne, a New York-based toy consultant, said shoppers can still expect price wars this holiday season, led by Wal-Mart.
Some shoppers say they are postponing toy buying until they are comfortable that the toys are safe.
By Anne D'innocenzio
Copyright © 2007, Chicago Tribune and The Associated Press
September 14, 2007
NEW YORK - American consumers will be bearing the cost of safer toys, but not until after this year's Christmas season.
Shoppers can expect price increases up to 10 percent next year to pay for increased vigilance by toymakers and stores after more than 3 million lead-tainted toys from China were recalled worldwide since June. That means a $6.99 Barbie doll could go up to about $7.70, or a $70 child-friendly digital camera could retail next year for almost $80.
A 10 percent average increase would be the biggest one-time price hike in toys in several years, analysts say. And it's more than twice the government's measure of consumer inflation of 4.7 percent during the first seven months of this year.
Consumers could also see higher prices on other Chinese imports such as fish and children's apparel, but the big price gains in toys could be more jolting.
Shoppers have become accustomed to cheap playthings from China because Wal-Mart Stores Inc. and other discounters have waged cost-cutting campaigns. Critics say real safeguards were sacrificed to keep prices low, however.
Analysts said the price increases are unlikely to hit until at least January because manufacturers and sellers already ordered for Christmas. That's no consolation for parents, though.
"I will pay more [for toys] because I know it will ensure safety," said Lisa Sallese, a Wilton, Conn., mother of a 7-month-old boy and a 2-year-old daughter. "But it stinks. It should have been safe to begin with."
Most of the rising costs come from emergency third-party testing in the U.S. by both makers and sellers as they aim to root out any unsafe products, analysts say.
Mattel Inc.'s three high-profile recalls of lead-painted toys since the beginning of August have pushed product testing to a frenzied pace. Companies are removing playthings from shelves and sending them to independent laboratories to be examined. The price of labor, overtime and testing will drive up costs in the short term, analysts said, but increased regulation will likely keep them higher.
The U.S. Toy Industry Association supports a federal requirement to make safety testing and inspection mandatory and is working with the American National Standards Institute to develop industrywide safety procedures. But during Wednesday's congressional hearing on toy safety, senators urged even more stringent measures including stepping up fines for selling or failing to report dangerous items.
This week, Toys "R" Us Inc., the nation's second-largest toy seller, behind Wal-Mart, said it would be using an independent laboratory to test every branded product, according to Kathleen Waugh, a company spokeswoman. The retailer will be absorbing the extra costs this year, but Waugh said that she believes next year "pricing could increase."
The Walt Disney Co. -- hit by Mattel's recall of 436,000 cars based on "Sarge," a character in the Disney-Pixar movie "Cars," that were believed to contain lead paint -- will independently test toys featuring its characters. The tests will begin in the next two weeks and will include all categories of products from about 2,000 licensees, including Mattel, which is the largest maker of Disney-related toys.
Chris Byrne, a New York-based toy consultant, said shoppers can still expect price wars this holiday season, led by Wal-Mart.
Some shoppers say they are postponing toy buying until they are comfortable that the toys are safe.
Boston Globe Editorial - Putin's new power play
Boston Globe Editorial - Putin's new power play
Copyright by The Boston Globe
Published: September 13, 2007
Russia's president, Vladimir Putin, has a propensity for springing surprises. His latest was the brusque removal of Prime Minister Mikhail Fradkov and his replacement by the hitherto obscure financial regulator Viktor Zubkov. Russians properly assume that the move is part of Putin's plan for selecting his own successor, someone who can be rubber-stamped in presidential elections next March and counted on to preserve the current political system.
But Putin's shuffling of premiers also reinforces a czar-like cult of power. It says: We can elevate anyone we please, dispense with whomever we like, and our subjects have no choice but to applaud our caprice. Each time this ritual of Putinesque fiat and popular obedience is repeated, the reflexes of command and submission are implanted more deeply in the Russian body politic.
With parliamentary elections coming in December and the presidential balloting scheduled for March, Putin appears intent on avoiding lame-duck status and preserving his unchallenged authority as long as possible. Ushering in a new government under Zubkov, a dependable 65-year-old loyalist, frees Putin to anoint someone else as his successor and to make that choice at the last possible moment.
In this way, Putin may not only prolong the succession contest between his two first deputy prime ministers, the former Defense Minister Sergei Ivanov and Gazprom's chairman, Dmitri Medvedev, but also prevent power flowing prematurely to either one - or to some dark horse candidate. If one of the obvious contenders had been placed in the premier's post - as Putin was by his predecessor Boris Yeltsin - the Kremlin courtiers would be drawn to that dauphin like iron filings to a magnet.
Above all, these palace intrigues highlight the opacity of the power system Putin has put in place since he succeeded Yeltsin in 2000. Putin remains popular with the Russian public because windfall oil and natural gas profits have filled Kremlin coffers, creating reserves of nearly a half trillion dollars, which trickle down as increased pensions, urban building booms, and job creation. After the economic collapse of the late-1990s and the disarray of Yeltsin's final years, the populace also appears to appreciate Putin's molding of a strong state.
But Putin has shaped an opaque, autocratic system, and perpetuating it is not healthy for Russia or the rest of the world. Under that system, Russia suffers from pervasive corruption, demographic decline, and a political culture of rank gangsterism. The proper therapy for these ills is the sunshine of transparent, accountable democracy. Russia needs another Gorbachev, a leader who grasps the need for a new perestroika.
Copyright by The Boston Globe
Published: September 13, 2007
Russia's president, Vladimir Putin, has a propensity for springing surprises. His latest was the brusque removal of Prime Minister Mikhail Fradkov and his replacement by the hitherto obscure financial regulator Viktor Zubkov. Russians properly assume that the move is part of Putin's plan for selecting his own successor, someone who can be rubber-stamped in presidential elections next March and counted on to preserve the current political system.
But Putin's shuffling of premiers also reinforces a czar-like cult of power. It says: We can elevate anyone we please, dispense with whomever we like, and our subjects have no choice but to applaud our caprice. Each time this ritual of Putinesque fiat and popular obedience is repeated, the reflexes of command and submission are implanted more deeply in the Russian body politic.
With parliamentary elections coming in December and the presidential balloting scheduled for March, Putin appears intent on avoiding lame-duck status and preserving his unchallenged authority as long as possible. Ushering in a new government under Zubkov, a dependable 65-year-old loyalist, frees Putin to anoint someone else as his successor and to make that choice at the last possible moment.
In this way, Putin may not only prolong the succession contest between his two first deputy prime ministers, the former Defense Minister Sergei Ivanov and Gazprom's chairman, Dmitri Medvedev, but also prevent power flowing prematurely to either one - or to some dark horse candidate. If one of the obvious contenders had been placed in the premier's post - as Putin was by his predecessor Boris Yeltsin - the Kremlin courtiers would be drawn to that dauphin like iron filings to a magnet.
Above all, these palace intrigues highlight the opacity of the power system Putin has put in place since he succeeded Yeltsin in 2000. Putin remains popular with the Russian public because windfall oil and natural gas profits have filled Kremlin coffers, creating reserves of nearly a half trillion dollars, which trickle down as increased pensions, urban building booms, and job creation. After the economic collapse of the late-1990s and the disarray of Yeltsin's final years, the populace also appears to appreciate Putin's molding of a strong state.
But Putin has shaped an opaque, autocratic system, and perpetuating it is not healthy for Russia or the rest of the world. Under that system, Russia suffers from pervasive corruption, demographic decline, and a political culture of rank gangsterism. The proper therapy for these ills is the sunshine of transparent, accountable democracy. Russia needs another Gorbachev, a leader who grasps the need for a new perestroika.
International Herald Tribune Editorial - Brazen bureaucracy
International Herald Tribune Editorial - Brazen bureaucracy
Copyright by The International Herald Tribune
Published: September 13, 2007
The Bush administration seems intent on flouting Congress' mandate to restore the primacy of the Federal Emergency Management Agency in dealing with disasters. At the core of the government's dreadful performance when Katrina crushed New Orleans two years ago was the confusion of responsibility in which the new and untested Department of Homeland Security superseded FEMA as the manager of disaster response.
To repair this problem, Congress passed a reform act last year specifying FEMA as the main coordinator for emergencies. Nevertheless, homeland security has issued its own disaster policy statement claiming the coordinator's role for its own department secretary.
The new homeland security policy amounts to a disaster on paper. It breezes past valuable proposals from state and local disaster managers and first responders. It threatens to compound bureaucratic inertia by creating 15 regional disaster areas with separate operational and strategic plans.
Homeland security officials defend their plan as merely a draft open to change. But they're throwing down the gauntlet before Congress. Some angry members are threatening to strip FEMA entirely from under the homeland umbrella. Far better that Congress defend its own primacy by firmly establishing that America is a nation of law, not runaway executives.
Copyright by The International Herald Tribune
Published: September 13, 2007
The Bush administration seems intent on flouting Congress' mandate to restore the primacy of the Federal Emergency Management Agency in dealing with disasters. At the core of the government's dreadful performance when Katrina crushed New Orleans two years ago was the confusion of responsibility in which the new and untested Department of Homeland Security superseded FEMA as the manager of disaster response.
To repair this problem, Congress passed a reform act last year specifying FEMA as the main coordinator for emergencies. Nevertheless, homeland security has issued its own disaster policy statement claiming the coordinator's role for its own department secretary.
The new homeland security policy amounts to a disaster on paper. It breezes past valuable proposals from state and local disaster managers and first responders. It threatens to compound bureaucratic inertia by creating 15 regional disaster areas with separate operational and strategic plans.
Homeland security officials defend their plan as merely a draft open to change. But they're throwing down the gauntlet before Congress. Some angry members are threatening to strip FEMA entirely from under the homeland umbrella. Far better that Congress defend its own primacy by firmly establishing that America is a nation of law, not runaway executives.
A hopeful end to optimism/Sunni sheik who backed U.S. in Iraq is killed
A hopeful end to optimism
By Christopher Caldwell
Copyright The Financial Times Limited 2007
Published: September 14 2007 19:18 | Last updated: September 14 2007 19:18
For six months, Americans assumed the testimony of General David Petraeus about the effectiveness of the US troop “surge” in Iraq would be a cathartic moment – either showing that new tactics for policing an insurgency were possible, or setting the stage for a painful retreat. It surprised most Americans this week when neither happened. It appears now that there will be no bold change of direction in Iraq. Barring the unforeseen, Iraq policy will continue as it has been going, with piecemeal successes here and there.
There is, however, a shift in American political sentiment and Iraq may be at the root of it. For almost a century – roughly since Franklin Delano Roosevelt called New York governor Al Smith “the happy warrior” when nominating him for the presidency at the 1924 Democratic convention – optimism has been the semi-official mood of presidential candidates. This has been as true in bad times as in good. Even in April 1968, weeks after Martin Luther King’s assassination and at the very trough of the Vietnam war, Hubert Humphrey, the vice-president, announced his candidacy by saying: “Here we are ... the way politics ought to be in America, the politics of happiness, the politics of purpose, the politics of joy.”
The people shooting for the highest office this time, whether they approve of the war in Iraq or not, are speaking in tones of gloom unprecedented in a presidential campaign. “The course we’re on,” said Illinois senator Barack Obama, an Iraq sceptic, on the Today show this week, “is unsustainable.” At his first campaign appearance in Iowa, the Republican Fred Thompson, a surge supporter, said: “If we show weakness and division, we will pay a heavy price for it in the future.”
That the sunniest candidate always wins is a dogma that has united campaign consultants of both parties: the two most successful presidents of the last century – FDR and Reagan – are also remembered as the most optimistic. “We have nothing to fear but fear itself,” said Roosevelt in 1933. “America’s best days, and democracy’s best days, lie ahead,” said Reagan in 1984. From Reagan’s time until a few months ago, the use of forward-looking rhetoric has been formulaic. Bill Clinton, with his “bridge to the 21st century”, excelled at it. In 2004, the journalist Michael Kinsley noted with amazement that the Bush campaign was running an anti-Kerry advert entitled “Pessimism” and John Kerry was countering it with one about his campaign called “Optimists”.
This year, the only candidate who has sought consistently to accentuate the positive is Mitt Romney, the Republican governor of Massachusetts. At a June debate in New Hampshire, Mr Romney said (drifting out of a discussion on abortion): “America is a land of opportunity. And our future is going to be far brighter than our past.” Then (drifting out of a discussion on immigration): “We are the party of the future, and we have to stop worrying about the problems and thinking we can’t deal with those. We have to focus on the future and our opportunity to make America a great place for our kids and grandkids.”
Once optimism becomes the dominant mood of oratory and policymaking, it is hard to shake. In a democratic society, optimism tends to be unfalsifiable. Who, after all, would doubt capabilities that the president has vouched for? No one but a bunch of naysayers. Pessimists are derided as people who underestimate either (depending on which president is trying to bully them) the ingenuity of the American businessman, the generosity of the American taxpayer or the valour of the American military. Pessimism carries with it a whiff of deficient patriotism.
In the case of Roosevelt and Reagan, optimism is the quality that their supporters focused on after the fact to recast a divisive partisan hero as a unifying national one. Their former opponents collude in this. Anti-Roosevelt Republicans prefer to think that Roosevelt’s great achievement in the face of the Depression was his happy talk, not his policies. (This was the view of Oliver Wendell Holmes, who said FDR had a “second-class intellect but a first-class temperament”.) Anti-Reagan Democrats prefer to believe that Reagan won because he bamboozled people with pie-in-the-sky promises, not because their own party had run out of ideas.
While voters have always seemed to like optimism, what they really like is something else. What they like is good judgment. Good judgment is looking at a situation where opportunities and risks exist and avoiding the risks. Bad judgment is looking at the same situation and ignoring the risks. Optimism can be the outward manifestation of either, but this is less obvious when opportunities are many and risks are few.
Optimism was bound to be revealed eventually as a faulty index of presidential mettle. But the Iraq war accelerated the process. Whatever one may think of the war, it is, of all policy initiatives in recent decades, the one that most bears the mark of presidential optimism. One could even say cock-eyed optimism, given the low amount of planning and manpower that were deemed necessary for its success.
In his 1991 masterwork The True and Only Heaven, the late historian Christopher Lasch drew a contrast between optimism and what he called hope. “Progressive optimism rests,” Lasch wrote, “on a denial of the natural limits on human power and freedom, and it cannot survive for very long in a world in which an awareness of those limits has become inescapable. The disposition properly described as hope, trust, or wonder, on the other hand ... asserts the goodness of life in the face of its limits. It cannot be defeated by adversity. In the troubled times to come, we will need it even more than we needed it in the past.”
The writer is a senior editor at The Weekly Standard
Sunni sheik who backed U.S. in Iraq is killed
By Alissa J. Rubin
Copyright by The International Herald Tribune
Published: September 13, 2007
BAGHDAD: A high-profile Sunni Arab sheik who collaborated with the American military in the fight against jihadist militants in western Iraq was killed in a bomb attack on Thursday near his desert compound. The attack appeared to be a precisely planned assassination meant to undermine one of the Bush administration's trumpeted achievements in the war.
Two guards were also killed in the attack on the sheik, Abdul Sattar Buzaigh al-Rishawi, who just last week shook hands with President George W. Bush during the president's surprise visit to Anbar to extol the Sunni cooperation that has made the province, once Iraq's most dangerous, relatively safe.
Iraqi and American officials were caught off guard by the assassination, which came just hours before Bush addressed the American people about his plans for Iraq. But they said it would not derail the collaboration of the alliance of Sunni clans, known as the Anbar Awakening Council, and groups in other provinces.
In his speech, Bush acknowledged the killing. "Earlier today, one of the brave tribal sheiks who helped lead the revolt against Al Qaeda was murdered," he said. "In response, a fellow Sunni leader declared: 'We are determined to strike back and continue our work.' And as they do, they can count on the continued support of the United States."
Sheik Sattar, 35, who was also known as Abu Risha, had become the public face of the Sunni Arab tribes in lawless Anbar Province that turned against the Sunni jihadists of Al Qaeda in Mesopotamia and began to fight on the side of the Shiite-led Iraqi government and the American military. His council was formed one day short of a year ago.
Local papers often featured photographs of the robed sheik talking with the American commander, General David Petraeus, with other American generals and with the Shiite prime minister, Nuri Kamal al-Maliki. But Sheik Sattar was not unequivocally supportive; he often complained about the government's failure to give his men the arms and support they needed.
He had credibility with the tribes because he and his family had suffered so much at the hands of jihadist extremists. In an interview earlier this year, he said that his father had been killed in an attack by Al Qaeda in Mesopotamia in 2004 and that two of his brothers had been abducted and never heard from again; a third was shot dead. He had survived three car bombs outside the Anbar home he shared with his wife and five children.
On Thursday, the American military said a bomb destroyed the vehicle he was in, but it was unclear whether it was a roadside bomb or a suicide bomber.
No group had claimed the assassination by late Thursday, but security officials in Iraq appeared convinced that responsibility lay with Al Qaeda in Mesopotamia, the home-grown extremist group that associated itself with Osama bin Laden's wider group and is believed to be foreign-led.
But many groups in Iraq carry out assassinations, and Sheik Sattar may have had other enemies. Some other tribal leaders felt he drew more of the spotlight than was his due. More recently, there were tensions between him and Sunni Arabs in Parliament, who worried that his alliance's growing influence might encroach on their power.
Several Iraqis said they doubted the assassination would have a lasting impact in Anbar, where the tribes have now fought the jihadists for a year, but that it would send tremors through those elsewhere just starting to collaborate. The sheik is at least the sixth tribal leader to be killed since May. "The terrorist group set out this day to assassinate Abu Risha because they are targeting the security and stability in Anbar and in every part of the country," said Sadiq al-Rikabi, a senior political adviser to Maliki.
"The timing was critical; the assassination came at this moment because of the report of Petraeus and Ambassador Crocker," he said, referring to Ryan Crocker, the United States ambassador to Iraq. He added that the killing appeared intended to undermine the Bush administration's effort to claim success in fighting Al Qaeda in Mesopotamia.
When the Anbar tribes first began cooperating, they told the Americans where the extremists were hiding weapons caches, burying bombs, and running safehouses. Then they set up checkpoints and began engaging in gunfights with Qaeda cells in the Ramadi area.
With attacks decreasing against both Americans and Iraqis in Anbar, and large numbers of tribesmen lining up to join local security forces, the American military has begun to try to replicate its success.
Sheik Ahmed Abu Risha, the brother of the assassinated sheik, described the killers as "criminals" and, speaking in a low, resigned voice in a telephone interview, said they were "trying to send a message to everybody that whoever tries to help the humanity and to bring life again to Iraqis and also to improve the image of Islam will get killed."
.
Many Iraqis expressed shock and grief when they learned of Sheik Sattar's death, and television channels had nonstop coverage when the news first broke.
While other tribal leaders had more experience and more influence, it was the media-savvy, charismatic Sheik Sattar who rallied popular support for the opposition to the jihadists. Most recently, he had sent his men into western neighborhoods of Baghdad that had been taken over by extremists.
"These Qaeda fighters started even to force some families to marry their young daughters to the fighters, otherwise they would kill the entire family," said Manal Imad, 27, a university student who lives in the far western Baghdad neighborhood of Amariya. "When Abu Risha sent his men to our neighborhood, everyone here welcomed them."
The extremists had required that women going outside their houses wear long robes and completely cover their hair, Imad said. Several months ago, she said, not wearing a head scarf "could be fatal to me and to my entire family."
"Now the neighborhood is very stable and most of the shops are open again. And even girls feel safer wearing what they used to wear during the normal day."
Especially sad were drivers who made their living bringing people and goods on the roads to Syria and Jordan that ran through Anbar. They said they owed their livelihoods to Sheik Sattar, because his men had forced jihadists off the roads.
"This change has really helped our business, because in 2006 we lost most of our customers because the families started to feel unsafe driving that road and mainly the Shia were getting stopped on that road and either kidnapped or sometimes killed immediately," said Haider Mohammed Ali, 35, who runs a travel company.
Sheik Sattar's brother said he would accept the job as leader of the Anbar Awakening Council if it was offered, and Adnan al-Dulaimi, a prominent Sunni Arab leader from the largest tribe in Anbar, said the sheiks had already agreed that the brother would be the successor.
"The martyrdom of Sattar will not affect this council because every member of this council has the same beliefs and the same motivations and this sad incident will not stop them from moving forward," said Sheik Risha. "Although they killed Sattar, there are a million Sattars in Anbar."
By Christopher Caldwell
Copyright The Financial Times Limited 2007
Published: September 14 2007 19:18 | Last updated: September 14 2007 19:18
For six months, Americans assumed the testimony of General David Petraeus about the effectiveness of the US troop “surge” in Iraq would be a cathartic moment – either showing that new tactics for policing an insurgency were possible, or setting the stage for a painful retreat. It surprised most Americans this week when neither happened. It appears now that there will be no bold change of direction in Iraq. Barring the unforeseen, Iraq policy will continue as it has been going, with piecemeal successes here and there.
There is, however, a shift in American political sentiment and Iraq may be at the root of it. For almost a century – roughly since Franklin Delano Roosevelt called New York governor Al Smith “the happy warrior” when nominating him for the presidency at the 1924 Democratic convention – optimism has been the semi-official mood of presidential candidates. This has been as true in bad times as in good. Even in April 1968, weeks after Martin Luther King’s assassination and at the very trough of the Vietnam war, Hubert Humphrey, the vice-president, announced his candidacy by saying: “Here we are ... the way politics ought to be in America, the politics of happiness, the politics of purpose, the politics of joy.”
The people shooting for the highest office this time, whether they approve of the war in Iraq or not, are speaking in tones of gloom unprecedented in a presidential campaign. “The course we’re on,” said Illinois senator Barack Obama, an Iraq sceptic, on the Today show this week, “is unsustainable.” At his first campaign appearance in Iowa, the Republican Fred Thompson, a surge supporter, said: “If we show weakness and division, we will pay a heavy price for it in the future.”
That the sunniest candidate always wins is a dogma that has united campaign consultants of both parties: the two most successful presidents of the last century – FDR and Reagan – are also remembered as the most optimistic. “We have nothing to fear but fear itself,” said Roosevelt in 1933. “America’s best days, and democracy’s best days, lie ahead,” said Reagan in 1984. From Reagan’s time until a few months ago, the use of forward-looking rhetoric has been formulaic. Bill Clinton, with his “bridge to the 21st century”, excelled at it. In 2004, the journalist Michael Kinsley noted with amazement that the Bush campaign was running an anti-Kerry advert entitled “Pessimism” and John Kerry was countering it with one about his campaign called “Optimists”.
This year, the only candidate who has sought consistently to accentuate the positive is Mitt Romney, the Republican governor of Massachusetts. At a June debate in New Hampshire, Mr Romney said (drifting out of a discussion on abortion): “America is a land of opportunity. And our future is going to be far brighter than our past.” Then (drifting out of a discussion on immigration): “We are the party of the future, and we have to stop worrying about the problems and thinking we can’t deal with those. We have to focus on the future and our opportunity to make America a great place for our kids and grandkids.”
Once optimism becomes the dominant mood of oratory and policymaking, it is hard to shake. In a democratic society, optimism tends to be unfalsifiable. Who, after all, would doubt capabilities that the president has vouched for? No one but a bunch of naysayers. Pessimists are derided as people who underestimate either (depending on which president is trying to bully them) the ingenuity of the American businessman, the generosity of the American taxpayer or the valour of the American military. Pessimism carries with it a whiff of deficient patriotism.
In the case of Roosevelt and Reagan, optimism is the quality that their supporters focused on after the fact to recast a divisive partisan hero as a unifying national one. Their former opponents collude in this. Anti-Roosevelt Republicans prefer to think that Roosevelt’s great achievement in the face of the Depression was his happy talk, not his policies. (This was the view of Oliver Wendell Holmes, who said FDR had a “second-class intellect but a first-class temperament”.) Anti-Reagan Democrats prefer to believe that Reagan won because he bamboozled people with pie-in-the-sky promises, not because their own party had run out of ideas.
While voters have always seemed to like optimism, what they really like is something else. What they like is good judgment. Good judgment is looking at a situation where opportunities and risks exist and avoiding the risks. Bad judgment is looking at the same situation and ignoring the risks. Optimism can be the outward manifestation of either, but this is less obvious when opportunities are many and risks are few.
Optimism was bound to be revealed eventually as a faulty index of presidential mettle. But the Iraq war accelerated the process. Whatever one may think of the war, it is, of all policy initiatives in recent decades, the one that most bears the mark of presidential optimism. One could even say cock-eyed optimism, given the low amount of planning and manpower that were deemed necessary for its success.
In his 1991 masterwork The True and Only Heaven, the late historian Christopher Lasch drew a contrast between optimism and what he called hope. “Progressive optimism rests,” Lasch wrote, “on a denial of the natural limits on human power and freedom, and it cannot survive for very long in a world in which an awareness of those limits has become inescapable. The disposition properly described as hope, trust, or wonder, on the other hand ... asserts the goodness of life in the face of its limits. It cannot be defeated by adversity. In the troubled times to come, we will need it even more than we needed it in the past.”
The writer is a senior editor at The Weekly Standard
Sunni sheik who backed U.S. in Iraq is killed
By Alissa J. Rubin
Copyright by The International Herald Tribune
Published: September 13, 2007
BAGHDAD: A high-profile Sunni Arab sheik who collaborated with the American military in the fight against jihadist militants in western Iraq was killed in a bomb attack on Thursday near his desert compound. The attack appeared to be a precisely planned assassination meant to undermine one of the Bush administration's trumpeted achievements in the war.
Two guards were also killed in the attack on the sheik, Abdul Sattar Buzaigh al-Rishawi, who just last week shook hands with President George W. Bush during the president's surprise visit to Anbar to extol the Sunni cooperation that has made the province, once Iraq's most dangerous, relatively safe.
Iraqi and American officials were caught off guard by the assassination, which came just hours before Bush addressed the American people about his plans for Iraq. But they said it would not derail the collaboration of the alliance of Sunni clans, known as the Anbar Awakening Council, and groups in other provinces.
In his speech, Bush acknowledged the killing. "Earlier today, one of the brave tribal sheiks who helped lead the revolt against Al Qaeda was murdered," he said. "In response, a fellow Sunni leader declared: 'We are determined to strike back and continue our work.' And as they do, they can count on the continued support of the United States."
Sheik Sattar, 35, who was also known as Abu Risha, had become the public face of the Sunni Arab tribes in lawless Anbar Province that turned against the Sunni jihadists of Al Qaeda in Mesopotamia and began to fight on the side of the Shiite-led Iraqi government and the American military. His council was formed one day short of a year ago.
Local papers often featured photographs of the robed sheik talking with the American commander, General David Petraeus, with other American generals and with the Shiite prime minister, Nuri Kamal al-Maliki. But Sheik Sattar was not unequivocally supportive; he often complained about the government's failure to give his men the arms and support they needed.
He had credibility with the tribes because he and his family had suffered so much at the hands of jihadist extremists. In an interview earlier this year, he said that his father had been killed in an attack by Al Qaeda in Mesopotamia in 2004 and that two of his brothers had been abducted and never heard from again; a third was shot dead. He had survived three car bombs outside the Anbar home he shared with his wife and five children.
On Thursday, the American military said a bomb destroyed the vehicle he was in, but it was unclear whether it was a roadside bomb or a suicide bomber.
No group had claimed the assassination by late Thursday, but security officials in Iraq appeared convinced that responsibility lay with Al Qaeda in Mesopotamia, the home-grown extremist group that associated itself with Osama bin Laden's wider group and is believed to be foreign-led.
But many groups in Iraq carry out assassinations, and Sheik Sattar may have had other enemies. Some other tribal leaders felt he drew more of the spotlight than was his due. More recently, there were tensions between him and Sunni Arabs in Parliament, who worried that his alliance's growing influence might encroach on their power.
Several Iraqis said they doubted the assassination would have a lasting impact in Anbar, where the tribes have now fought the jihadists for a year, but that it would send tremors through those elsewhere just starting to collaborate. The sheik is at least the sixth tribal leader to be killed since May. "The terrorist group set out this day to assassinate Abu Risha because they are targeting the security and stability in Anbar and in every part of the country," said Sadiq al-Rikabi, a senior political adviser to Maliki.
"The timing was critical; the assassination came at this moment because of the report of Petraeus and Ambassador Crocker," he said, referring to Ryan Crocker, the United States ambassador to Iraq. He added that the killing appeared intended to undermine the Bush administration's effort to claim success in fighting Al Qaeda in Mesopotamia.
When the Anbar tribes first began cooperating, they told the Americans where the extremists were hiding weapons caches, burying bombs, and running safehouses. Then they set up checkpoints and began engaging in gunfights with Qaeda cells in the Ramadi area.
With attacks decreasing against both Americans and Iraqis in Anbar, and large numbers of tribesmen lining up to join local security forces, the American military has begun to try to replicate its success.
Sheik Ahmed Abu Risha, the brother of the assassinated sheik, described the killers as "criminals" and, speaking in a low, resigned voice in a telephone interview, said they were "trying to send a message to everybody that whoever tries to help the humanity and to bring life again to Iraqis and also to improve the image of Islam will get killed."
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Many Iraqis expressed shock and grief when they learned of Sheik Sattar's death, and television channels had nonstop coverage when the news first broke.
While other tribal leaders had more experience and more influence, it was the media-savvy, charismatic Sheik Sattar who rallied popular support for the opposition to the jihadists. Most recently, he had sent his men into western neighborhoods of Baghdad that had been taken over by extremists.
"These Qaeda fighters started even to force some families to marry their young daughters to the fighters, otherwise they would kill the entire family," said Manal Imad, 27, a university student who lives in the far western Baghdad neighborhood of Amariya. "When Abu Risha sent his men to our neighborhood, everyone here welcomed them."
The extremists had required that women going outside their houses wear long robes and completely cover their hair, Imad said. Several months ago, she said, not wearing a head scarf "could be fatal to me and to my entire family."
"Now the neighborhood is very stable and most of the shops are open again. And even girls feel safer wearing what they used to wear during the normal day."
Especially sad were drivers who made their living bringing people and goods on the roads to Syria and Jordan that ran through Anbar. They said they owed their livelihoods to Sheik Sattar, because his men had forced jihadists off the roads.
"This change has really helped our business, because in 2006 we lost most of our customers because the families started to feel unsafe driving that road and mainly the Shia were getting stopped on that road and either kidnapped or sometimes killed immediately," said Haider Mohammed Ali, 35, who runs a travel company.
Sheik Sattar's brother said he would accept the job as leader of the Anbar Awakening Council if it was offered, and Adnan al-Dulaimi, a prominent Sunni Arab leader from the largest tribe in Anbar, said the sheiks had already agreed that the brother would be the successor.
"The martyrdom of Sattar will not affect this council because every member of this council has the same beliefs and the same motivations and this sad incident will not stop them from moving forward," said Sheik Risha. "Although they killed Sattar, there are a million Sattars in Anbar."
JESUITS: Priest’s ‘trail of tears’ - He’s been convicted twice, jailed twice — but his order lets him wear the collar, won’t say if he’ll be kicked ou
JESUITS: Priest’s ‘trail of tears’ - He’s been convicted twice, jailed twice — but his order lets him wear the collar, won’t say if he’ll be kicked out
By Susan Hogan/Albach Religion Reporter/shogan@suntimes.com
Copyright by The Chicago Sun-Times
September 14, 2007
The Rev. Donald McGuire has been convicted of molesting two boys in Wisconsin, faces a new accusation of sexual abuse, and his Jesuit religious order privately settled yet another complaint, the Chicago Sun-Times has learned.
Yet the Jesuits, known as the Chicago Province of the Society of Jesus, haven't stopped him from dressing as a priest and won't say whether they're seeking to have him laicized -- removed from the priesthood.
"When he wears that collar, he wears the authority of the church, which he used to abuse kids. It's time we took that away," said Kevin McGuire, the priest's nephew and a lawyer for "John Doe 116," who's suing the priest and the Jesuits.
Jesuits take vows of obedience, but the Rev. Edward Schmidt, head of Chicago Province, told the Sun-Times that he "can't find anything in the Jesuits' rules" permitting him to ask Donald McGuire to stop dressing as a priest.
Last year, McGuire was sentenced to seven years in prison, but he remains free pending appeal. He has been jailed twice for violating the terms of his release. And last week, he appeared in a Wisconsin courtroom in priest's clothes, though the Jesuits say he hasn't functioned publicly as a priest since 2003.
Nuns from Mother Teresa's religious order turned out to rally for him. For years, McGuire traveled the world leading retreats for her order and presented himself as Mother Teresa's spiritual adviser.
After her death in 1997, McGuire offered testimony in her cause for sainthood, Schmidt said.
"When Mother Teresa came to San Francisco in the 1990s, he not only led the mass, he got my family front-row seats and a private meeting with her," Kevin McGuire said.
John Doe 116 alleges that McGuire molested him on trips to 12 states and seven countries over a three-year period, beginning in 1993, when the boy was 13.
"We fear this predator priest has left a trail of tears far and wide," said David Clohessy of the Survivors Network of those Abused by Priests.
Despite McGuire's predator past, Schmidt said, the Jesuits "had no reason to suspect" that John Doe 116 was abused in his travels with McGuire.
Since the lawsuit was filed last month, Jesuits say they have hired outside auditors to review their files and reporting process.
The Jesuits say they settled a total of three complaints about McGuire and deny a Wisconsin prosecutor's claim of two others.
By Susan Hogan/Albach Religion Reporter/shogan@suntimes.com
Copyright by The Chicago Sun-Times
September 14, 2007
The Rev. Donald McGuire has been convicted of molesting two boys in Wisconsin, faces a new accusation of sexual abuse, and his Jesuit religious order privately settled yet another complaint, the Chicago Sun-Times has learned.
Yet the Jesuits, known as the Chicago Province of the Society of Jesus, haven't stopped him from dressing as a priest and won't say whether they're seeking to have him laicized -- removed from the priesthood.
"When he wears that collar, he wears the authority of the church, which he used to abuse kids. It's time we took that away," said Kevin McGuire, the priest's nephew and a lawyer for "John Doe 116," who's suing the priest and the Jesuits.
Jesuits take vows of obedience, but the Rev. Edward Schmidt, head of Chicago Province, told the Sun-Times that he "can't find anything in the Jesuits' rules" permitting him to ask Donald McGuire to stop dressing as a priest.
Last year, McGuire was sentenced to seven years in prison, but he remains free pending appeal. He has been jailed twice for violating the terms of his release. And last week, he appeared in a Wisconsin courtroom in priest's clothes, though the Jesuits say he hasn't functioned publicly as a priest since 2003.
Nuns from Mother Teresa's religious order turned out to rally for him. For years, McGuire traveled the world leading retreats for her order and presented himself as Mother Teresa's spiritual adviser.
After her death in 1997, McGuire offered testimony in her cause for sainthood, Schmidt said.
"When Mother Teresa came to San Francisco in the 1990s, he not only led the mass, he got my family front-row seats and a private meeting with her," Kevin McGuire said.
John Doe 116 alleges that McGuire molested him on trips to 12 states and seven countries over a three-year period, beginning in 1993, when the boy was 13.
"We fear this predator priest has left a trail of tears far and wide," said David Clohessy of the Survivors Network of those Abused by Priests.
Despite McGuire's predator past, Schmidt said, the Jesuits "had no reason to suspect" that John Doe 116 was abused in his travels with McGuire.
Since the lawsuit was filed last month, Jesuits say they have hired outside auditors to review their files and reporting process.
The Jesuits say they settled a total of three complaints about McGuire and deny a Wisconsin prosecutor's claim of two others.
Thursday, September 13, 2007
EQUALITY ILLNOIS APPOINTS AMY BLOOM AS EXECUTIVE DIRECTOR
September 12, 2007
For more information, contact: Arthur Johnston at 773-477-8048
or Daniel Dever at 773-878-2907
For Immediate Release
EQUALITY ILLNOIS APPOINTS AMY BLOOM AS EXECUTIVE DIRECTOR
Chicago – Equality Illinois announced the appointment of Amy Bloom as Executive Director of the statewide advocacy organization for lesbian, gay, bisexual and transgender (LGBT) rights.
Bloom brings nearly ten years of non-profit experience to her new position, including a successful tenure over the past three years as Senior Manager of Special Events at Howard Brown Health Center, the region’s leading LGBT health care institution.
At Equality Illinois, Bloom will direct fundraising and oversee organizational operations. Rick Garcia, the non-profit group’s longtime Director of Public Policy, will continue leading all advocacy, governmental policy and legislative activities.
“We are extremely excited to have someone with Amy’s experience and dedication to LGBT causes join our staff,” said Arthur Johnston, President of the organization’s Board of Directors.
“This is a crucial time in the history of LGBT rights in our state,” Johnston said. “We are confident that Amy will help Equality Illinois expand our base of support as we lead the fight for civil unions and equal relationship rights for same-sex couples,” he added.
A major focus of Bloom’s duties will be working with Board Members and other volunteers in coordinating the Equality Illinois “Justice for All” Gala, an annual fundraising event that attracts approximately 1,000 supporters. The 2008 event is scheduled for February 2.
Founded in 1992, Equality Illinois works toward achieving equal rights for lesbian, gay, bisexual and transgender citizens of Illinois by promoting legislative initiatives on the state, county and municipal levels. Through its Education Project, Equality Illinois strives to eliminate prejudice and discrimination against LGBT individuals and families via outreach, education, community organizing and coalition building.
The organization spearheaded a decade-long campaign that led to the historic January 2005 enactment of a statewide ban on discrimination in housing, employment and public accommodations based on sexual orientation or gender identity. Illinois is now one of only 17 states and the District of Columbia that protect gay men and lesbians in the workplace.
The group’s current and future priorities include promoting legislation to provide equal rights for same-sex couples and their families, as well as extending Equality Illinois’ outreach and education efforts throughout the state.
For more information, contact: Arthur Johnston at 773-477-8048
or Daniel Dever at 773-878-2907
For Immediate Release
EQUALITY ILLNOIS APPOINTS AMY BLOOM AS EXECUTIVE DIRECTOR
Chicago – Equality Illinois announced the appointment of Amy Bloom as Executive Director of the statewide advocacy organization for lesbian, gay, bisexual and transgender (LGBT) rights.
Bloom brings nearly ten years of non-profit experience to her new position, including a successful tenure over the past three years as Senior Manager of Special Events at Howard Brown Health Center, the region’s leading LGBT health care institution.
At Equality Illinois, Bloom will direct fundraising and oversee organizational operations. Rick Garcia, the non-profit group’s longtime Director of Public Policy, will continue leading all advocacy, governmental policy and legislative activities.
“We are extremely excited to have someone with Amy’s experience and dedication to LGBT causes join our staff,” said Arthur Johnston, President of the organization’s Board of Directors.
“This is a crucial time in the history of LGBT rights in our state,” Johnston said. “We are confident that Amy will help Equality Illinois expand our base of support as we lead the fight for civil unions and equal relationship rights for same-sex couples,” he added.
A major focus of Bloom’s duties will be working with Board Members and other volunteers in coordinating the Equality Illinois “Justice for All” Gala, an annual fundraising event that attracts approximately 1,000 supporters. The 2008 event is scheduled for February 2.
Founded in 1992, Equality Illinois works toward achieving equal rights for lesbian, gay, bisexual and transgender citizens of Illinois by promoting legislative initiatives on the state, county and municipal levels. Through its Education Project, Equality Illinois strives to eliminate prejudice and discrimination against LGBT individuals and families via outreach, education, community organizing and coalition building.
The organization spearheaded a decade-long campaign that led to the historic January 2005 enactment of a statewide ban on discrimination in housing, employment and public accommodations based on sexual orientation or gender identity. Illinois is now one of only 17 states and the District of Columbia that protect gay men and lesbians in the workplace.
The group’s current and future priorities include promoting legislation to provide equal rights for same-sex couples and their families, as well as extending Equality Illinois’ outreach and education efforts throughout the state.
Cuban Catholic leader approves protections for gay couples
Cuban Catholic leader approves protections for gay couples
Copyright by the Windy City Times
September 12, 2007
The Roman Catholic vicar general of Havana, Monsignor Carlos Manuel de Céspedes GarcÃa-Menocal, supports “stable same-sex relationships” being “protected by civil laws.”
He staked out his position in an article published in the July/August issue of the Archdiocese of Havana’s New Word magazine.
Céspedes said, “Contemporary Western society is no longer the same as that which arrived at present clarifications concerning marriage.”
Although the church “is not going to renounce criteria established by revelation and set by tradition,” he said, “neither can it ignore contemporary personal and family reality.”
“Today we know that human reality is much more complex than we believed and that the situation of Christianity in the world is not excessively appealing, not even in the so-called ‘Christian West,’” the vicar general said.
Copyright by the Windy City Times
September 12, 2007
The Roman Catholic vicar general of Havana, Monsignor Carlos Manuel de Céspedes GarcÃa-Menocal, supports “stable same-sex relationships” being “protected by civil laws.”
He staked out his position in an article published in the July/August issue of the Archdiocese of Havana’s New Word magazine.
Céspedes said, “Contemporary Western society is no longer the same as that which arrived at present clarifications concerning marriage.”
Although the church “is not going to renounce criteria established by revelation and set by tradition,” he said, “neither can it ignore contemporary personal and family reality.”
“Today we know that human reality is much more complex than we believed and that the situation of Christianity in the world is not excessively appealing, not even in the so-called ‘Christian West,’” the vicar general said.
Chicago Sun-Times Editorial - GA first-rate mess - Chicago can't be world class with a second-rate transit system
Chicago Sun-Times Editorial - GA first-rate mess - Chicago can't be world class with a second-rate transit system
Copyright bhy The Chicago Sun-Times
September 13, 2007
A world-class city such as Chicago shouldn't have a second-rate transportation system.
Other great cities have figured that out. They know it takes a wise investment and great service to get people out of their cars and into buses and trains. Our leaders still don't get it.
Mayor Daley seems strangely uninvolved on the issue. As the CTA counted down to doomsday cuts this week, he was in Paris riding a bike. Gov. Blagojevich offered a Band-aid fix Wednesday -- $24 million that will postpone those cuts until November, as long as the RTA goes along. But he still refuses to support the most realistic plan to address chronic funding problems.
The CTA has been heading toward financial disaster for several years, plagued by mismanagement and revenues that have not kept pace with costs. That's why the agency seems to be holding out its hat begging for money every year, and partly why the rail cars, tracks and buses have been falling into such a sorry state of disrepair.
There were high hopes that this would be the year for legislative help, especially after Daley replaced CTA President Frank Kruesi. He was not well-liked by lawmakers, and his replacement, Ron Huberman, has so far lived up to his reputation for management efficiency. But those high hopes were dashed on the rocks of this year's stormy legislative session.
Concerned lawmakers crafted a plan to boost transit funding with a quarter-cent increase in the regional transit sales tax and with a small increase in the real estate transfer tax in Chicago. Those increases would provide the CTA -- as well as Metra and Pace, which are also operating in the red -- with a stable funding source. The bill also would put more teeth in the RTA's oversight of the three transit agencies. That could help address some of the issues raised in a scathing federal report on last year's train derailment, such as the poor inspection of the Blue Line tracks.
The bill has so far failed, largely because the governor has threatened to veto any sales tax increase. And he has refused to offer an alternative, other than to trot out his tired and rejected plan to close what he calls "corporate loopholes."
On Wednesday, faced with the very real prospect that he would be blamed for CTA fare hikes and service cuts, he offered the agency his $24 million Band-Aid. He also repeated his opposition to the sales tax increase. He insists "real progress is being made" on a long-term solution, but there's little evidence of it, and little optimism.
A mayor with Olympic ambitions -- and a governor and state leaders who also are Democrats -- should be able to provide a world-class transit system to a world-class city.
Copyright bhy The Chicago Sun-Times
September 13, 2007
A world-class city such as Chicago shouldn't have a second-rate transportation system.
Other great cities have figured that out. They know it takes a wise investment and great service to get people out of their cars and into buses and trains. Our leaders still don't get it.
Mayor Daley seems strangely uninvolved on the issue. As the CTA counted down to doomsday cuts this week, he was in Paris riding a bike. Gov. Blagojevich offered a Band-aid fix Wednesday -- $24 million that will postpone those cuts until November, as long as the RTA goes along. But he still refuses to support the most realistic plan to address chronic funding problems.
The CTA has been heading toward financial disaster for several years, plagued by mismanagement and revenues that have not kept pace with costs. That's why the agency seems to be holding out its hat begging for money every year, and partly why the rail cars, tracks and buses have been falling into such a sorry state of disrepair.
There were high hopes that this would be the year for legislative help, especially after Daley replaced CTA President Frank Kruesi. He was not well-liked by lawmakers, and his replacement, Ron Huberman, has so far lived up to his reputation for management efficiency. But those high hopes were dashed on the rocks of this year's stormy legislative session.
Concerned lawmakers crafted a plan to boost transit funding with a quarter-cent increase in the regional transit sales tax and with a small increase in the real estate transfer tax in Chicago. Those increases would provide the CTA -- as well as Metra and Pace, which are also operating in the red -- with a stable funding source. The bill also would put more teeth in the RTA's oversight of the three transit agencies. That could help address some of the issues raised in a scathing federal report on last year's train derailment, such as the poor inspection of the Blue Line tracks.
The bill has so far failed, largely because the governor has threatened to veto any sales tax increase. And he has refused to offer an alternative, other than to trot out his tired and rejected plan to close what he calls "corporate loopholes."
On Wednesday, faced with the very real prospect that he would be blamed for CTA fare hikes and service cuts, he offered the agency his $24 million Band-Aid. He also repeated his opposition to the sales tax increase. He insists "real progress is being made" on a long-term solution, but there's little evidence of it, and little optimism.
A mayor with Olympic ambitions -- and a governor and state leaders who also are Democrats -- should be able to provide a world-class transit system to a world-class city.
International Herald Tribune Editorial - Blocking Mexican trucks
International Herald Tribune Editorial - Blocking Mexican trucks
Copyright bhy THe International Herald Tribune
Published: September 12, 2007
One way the 1994 North American Free Trade Agreement was supposed to encourage free trade was by allowing long-haul trucks from Canada, Mexico and the United States to deliver goods throughout the three countries. Unfortunately, the Teamsters union, the Sierra Club and their allies in Congress are still working to keep Mexican trucks out.
The Teamsters and their environmental allies claim that the trucks aren't safe and are dirty. A new pilot program, however, would require that any Mexican trucks approved for entry into the U.S. be inspected for safety every three months. Environmental regulations that apply to U.S. trucks would also apply to Mexican trucks.
That's not enough to satisfy the Teamsters, which, we suspect, are just trying to stave off the competition. And it's not been enough for the Sierra Club.
That stubbornness is counterproductive. Keeping Mexican trucks out only keeps transport costs higher. It sends Mexico the message that the U.S. doesn't stand by its commitments, and it reinforces suspicions that when it comes to free trade, the U.S. only likes it one way.
Congress seems determined to block progress. On Tuesday, the Senate approved an amendment that would deny financing for the pilot program next year. The House has already approved the cutoff.
It is of utmost importance to ensure the safety of Mexican trucks - or any trucks - driving on U.S. highways. But guaranteeing highway safety does not require undermining the nation's free trade agreements or its relationship with Mexico. It is time for Congress to let Mexican trucks through.
Copyright bhy THe International Herald Tribune
Published: September 12, 2007
One way the 1994 North American Free Trade Agreement was supposed to encourage free trade was by allowing long-haul trucks from Canada, Mexico and the United States to deliver goods throughout the three countries. Unfortunately, the Teamsters union, the Sierra Club and their allies in Congress are still working to keep Mexican trucks out.
The Teamsters and their environmental allies claim that the trucks aren't safe and are dirty. A new pilot program, however, would require that any Mexican trucks approved for entry into the U.S. be inspected for safety every three months. Environmental regulations that apply to U.S. trucks would also apply to Mexican trucks.
That's not enough to satisfy the Teamsters, which, we suspect, are just trying to stave off the competition. And it's not been enough for the Sierra Club.
That stubbornness is counterproductive. Keeping Mexican trucks out only keeps transport costs higher. It sends Mexico the message that the U.S. doesn't stand by its commitments, and it reinforces suspicions that when it comes to free trade, the U.S. only likes it one way.
Congress seems determined to block progress. On Tuesday, the Senate approved an amendment that would deny financing for the pilot program next year. The House has already approved the cutoff.
It is of utmost importance to ensure the safety of Mexican trucks - or any trucks - driving on U.S. highways. But guaranteeing highway safety does not require undermining the nation's free trade agreements or its relationship with Mexico. It is time for Congress to let Mexican trucks through.
International Herald Tribune Editorial - A virus among honeybees
International Herald Tribune Editorial - A virus among honeybees
Copyright by The International Herald Tribune
Published: September 12, 2007
Last week, scientists reported having found a possible cause of the collapse of honeybee populations in the Untied States reported in the past year. What is interesting isn't just the virus, called Israeli acute paralysis virus, but the use of new methods of genetic screening to determine what pathogens the bees in collapsed colonies had been exposed to. Researchers were able to quickly screen the DNA from all the organisms present in the bees and compare them with the DNA in genomic libraries, a catalog of known organisms. Bees from collapsed hives had the virus. Healthy bees did not.
Two other factors may also have played a role in this die-off. One is drought. The other - still unproved - may be the commercial trucking of bees from crop to crop for pollination, a potential source of stress. These may have made bees more vulnerable to the effects of this virus.
In some ways, this newly reported research seems all the more important given all the speculation about what has been killing off the honeybees. These hive losses have inspired a kind of myth-making or magical thinking about their possible environmental origins. The suspected culprits include genetically modified crops and cell phones, to name only two.
Causation is a rigorous concept in science. It is vastly simpler in the popular imagination. Blaming cell phones and genetically modified crops for the death of bees is a way, mainly of saying that we are worried - not only about the death of creatures both benign and beneficial to us, but also about technology's effect on our world.
Causation, in the nonscientific sense, is just a way of organizing our worries.
Copyright by The International Herald Tribune
Published: September 12, 2007
Last week, scientists reported having found a possible cause of the collapse of honeybee populations in the Untied States reported in the past year. What is interesting isn't just the virus, called Israeli acute paralysis virus, but the use of new methods of genetic screening to determine what pathogens the bees in collapsed colonies had been exposed to. Researchers were able to quickly screen the DNA from all the organisms present in the bees and compare them with the DNA in genomic libraries, a catalog of known organisms. Bees from collapsed hives had the virus. Healthy bees did not.
Two other factors may also have played a role in this die-off. One is drought. The other - still unproved - may be the commercial trucking of bees from crop to crop for pollination, a potential source of stress. These may have made bees more vulnerable to the effects of this virus.
In some ways, this newly reported research seems all the more important given all the speculation about what has been killing off the honeybees. These hive losses have inspired a kind of myth-making or magical thinking about their possible environmental origins. The suspected culprits include genetically modified crops and cell phones, to name only two.
Causation is a rigorous concept in science. It is vastly simpler in the popular imagination. Blaming cell phones and genetically modified crops for the death of bees is a way, mainly of saying that we are worried - not only about the death of creatures both benign and beneficial to us, but also about technology's effect on our world.
Causation, in the nonscientific sense, is just a way of organizing our worries.
US wheat prices soar to record
US wheat prices soar to record
By Chris Flood
Copyright The Financial Times Limited 2007
Published: September 12 2007 22:29 | Last updated: September 12 2007 22:29
US wheat prices soared to record levels after the US Department of Agriculture said global wheat stocks would shrink to their lowest levels for 30 years.
The Chicago Board of Trade December wheat contract reached a record $9.11¼ a bushel before easing back to trade 7 cents higher at $8.97½ a bushel.
Wheat harvests of big producers have come under severe stress this year and the USDA cut its forecast for global wheat production in the year to May 2008 to 606.24m tonnes from last month’s estimate of 610.4m tonnes. Weaker production and strong overseas demand are expected to reduce global stockpiles to 112.36 tonnes by May 2008 from last month’s estimate of 114.78m tonnes.
Greg Wagner, analyst at Horizon AG Strategies, said stocks as a proportion of daily usage were expected to be the lowest for 50 years and record prices would force a dramatic reallocation of acreage devoted to wheat production.
But US farmers will enjoy a record corn harvest of 13.3bn bushels this year as heavy rainfall in August provided much-needed moisture for the crop. Corn yields are expected to be the second highest on record at 155.8 bushels an acre, from last month’s estimate of 152.8 bushels an acre, compared with the high of 160.4 bushels an acre achieved in 2004.
Corn stocks at the end of August 2008 were expected to be about 1.675bn bushels, compared with last month’s estimate of 1.516bn bushels.
Ethanol makers are expected to use 100m fewer bushels of corn than previously expected, with demand forecast at 3.3bn bushels over the next 12 months.
CBOT December corn rose 15 cents to $3.56¼ a bushel. The drive to plant more corn is having an impact on US soyabean production, which is expected to fall to 2.619bn bushels from last year’s record 3.188bn bushels.
Gavin Maguire of Iowa Grain said the rapid decline in soyabean inventories meant the stage was set for a serious battle between soyabeans and corn for acreage next year.
The amount of land that US farmers devote to soyabean production is projected to fall from 75.5m acres in 2006-07 to 64.1m acres in 2007-08. Soyabean yields are projected to slip to 41.4 bushels an acre, down from an estimated 42.7m bushels an acre in 2006-07.
“The decline in soyabean yields reflects the fact that the best ground is going to corn production,” said Mr Wagner of Horizon. “This could prove to be a chronic problem for the soyabean market going forward.”
Soyabean prices rose, with the CBOT November contract up 28 cents to $9.48½ a bushel.
By Chris Flood
Copyright The Financial Times Limited 2007
Published: September 12 2007 22:29 | Last updated: September 12 2007 22:29
US wheat prices soared to record levels after the US Department of Agriculture said global wheat stocks would shrink to their lowest levels for 30 years.
The Chicago Board of Trade December wheat contract reached a record $9.11¼ a bushel before easing back to trade 7 cents higher at $8.97½ a bushel.
Wheat harvests of big producers have come under severe stress this year and the USDA cut its forecast for global wheat production in the year to May 2008 to 606.24m tonnes from last month’s estimate of 610.4m tonnes. Weaker production and strong overseas demand are expected to reduce global stockpiles to 112.36 tonnes by May 2008 from last month’s estimate of 114.78m tonnes.
Greg Wagner, analyst at Horizon AG Strategies, said stocks as a proportion of daily usage were expected to be the lowest for 50 years and record prices would force a dramatic reallocation of acreage devoted to wheat production.
But US farmers will enjoy a record corn harvest of 13.3bn bushels this year as heavy rainfall in August provided much-needed moisture for the crop. Corn yields are expected to be the second highest on record at 155.8 bushels an acre, from last month’s estimate of 152.8 bushels an acre, compared with the high of 160.4 bushels an acre achieved in 2004.
Corn stocks at the end of August 2008 were expected to be about 1.675bn bushels, compared with last month’s estimate of 1.516bn bushels.
Ethanol makers are expected to use 100m fewer bushels of corn than previously expected, with demand forecast at 3.3bn bushels over the next 12 months.
CBOT December corn rose 15 cents to $3.56¼ a bushel. The drive to plant more corn is having an impact on US soyabean production, which is expected to fall to 2.619bn bushels from last year’s record 3.188bn bushels.
Gavin Maguire of Iowa Grain said the rapid decline in soyabean inventories meant the stage was set for a serious battle between soyabeans and corn for acreage next year.
The amount of land that US farmers devote to soyabean production is projected to fall from 75.5m acres in 2006-07 to 64.1m acres in 2007-08. Soyabean yields are projected to slip to 41.4 bushels an acre, down from an estimated 42.7m bushels an acre in 2006-07.
“The decline in soyabean yields reflects the fact that the best ground is going to corn production,” said Mr Wagner of Horizon. “This could prove to be a chronic problem for the soyabean market going forward.”
Soyabean prices rose, with the CBOT November contract up 28 cents to $9.48½ a bushel.
So what is it worth?/Decomposition is agony in a moribund market
So what is it worth?
By Paul J Davies, Jennifer Hughes and Gillian Tett
Copyright The Financial Times Limited 2007
Published: September 13 2007 03:00 | Last updated: September 13 2007 03:00
When Synapse Investment Management, a London asset manager, revealed last week that it was closing a $300m (£148m, €216m) fund, its decision sent an ominous message for bankers and accountants around the world.
That was because the death knell came not as a result of huge tangible losses on the fund's investments; instead, the main trigger was that the fund had become embroiled in a bitter, secretive fight with Barclays Capital, its prime broker, about valuation issues - how to price the debt instruments the fund held.
"The fund was closed due to the severe illiquidity in the market, which led to an inability to properly value the assets," says Mark Holman, one of Synapse's founding partners, who notes that the fund held none of the subprime assets at all that have been at the centre of recent market upheavals.
The tale highlights a much bigger battle about valuation that has already brought down other funds and still rages behind the scenes in numerous offices at banks, hedge funds and accountancy firms on Wall Street and in the City of London. One of the biggest problems spooking the markets is the sheer uncertainty about just how large the losses on many financial instruments might be - and which institutions will be hit.
This uncertainty has in turn created a crisis in trust among banks worried about the creditworthiness of their peers and therefore wary of lending to each other - which increases concerns about the possibility of a bank failure. While central banks can inject liquidity, that will only cure part of the problem: what is really needed is for banks to trust one another - and that requires transparency.
Many investors are therefore hoping that the coming weeks will produce some welcome clarity. Big US banks will start reporting their third-quarter results next week. Less publicly, a host of hedge funds are also starting to tell investors how they performed during August, the month of worst turmoil.
"The crucial question in the next few days and weeks is, how do you mark the positions? I can only hope that we do not muddle through - that we mark them to market," Josef Ackermann, chief executive officer of Deutsche Bank, said recently. Marking to market means recording the value of assets at the prevailing market price.
"That gives the reassurance and the stability back to the system. Because people will say 'OK, we have seen that people have their positions marked properly' and . . . hopefully markets will recover and some of these price levels [will] come back."
But while this call for more transparency is something investors and policymakers alike would support, in practice it will be fiendishly hard to deliver. One of the most pernicious challenges that face the financial world today is that the industry does not have any common, uncontested standard for measuring the value of many of the instruments - such as leveraged loans or securities linked to subprime mortgages - that have been at the heart of this summer's storm.
Thus, the type of valuation battle that has erupted around the Synapse fund and others could be replayed in the coming weeks, as banks and hedge funds attempt to put the best possible gloss on their numbers but investors, lenders and shareholders keep wondering where the bodies might lie (see below).
Take the case of leveraged loans, which - like subprime consumer mortgages - are made to borrowers with low credit ratings, such as companies owned by private equity groups. Traditionally, these were booked at face value, because the banks intended to hold them until they matured. But with these loans becoming more often sold in the market, banks no longer intend to hold most of them to maturity, meaning that traded prices are usually available. These are considered more relevant for the investors who use financial statements to gauge the true position of a bank.
A typical, difficult example is the £5bn ($10.2bn, €7.3bn) worth of senior loans for the planned private equity purchase of Alliance Boots, the UK pharmacies group, by Kohlberg Kravis Roberts, the US buy-out group, and Stefano Pessina, a Boots executive. Eight European and US banks arranged this finance at the start of the summer and expected to sell it quickly to capital market investors. But when the credit turmoil struck, these planned sales fell through, leaving the loans stuck on banks' books. Investors in so-called distressed debt are now offering to buy these loans at 95 per cent of face value - but most banks are reluctant to record a loss since they think the loans will recover in value soon.
The worldwide volume of such leveraged loans that banks are stuck with is estimated at between $350bn and $380bn.
While commercial banks with investment banking arms can legitimately choose at the outset between holding these loans or classing them as for sale, investment banks (known as broker-dealers in the US) have no such leeway. The broker-dealers cannot escape marking to market, because their whole business is about trading such loans and other securities.
Unsurprisingly, this accounting discrepancy infuriates some of the broker-dealers. "We think all financial instruments should be marked at fair value for consistency across the system and to simplify the accounting for hedging," says a senior accounting officer at one of the big USbroker-dealers.
Such arguments elicit some sympathy from the regulatory world. Indeed, regulators have quietly indicated that they will keep a close eye out for any sign that commercial banks are trying to flatter their accounts in the forthcoming results by failing to use "fair value" accounting approaches when this would be appropriate. Fair value for financial instruments means exit - or sale - price, which should in theory be equivalent to market value but, for some complex products or in illiquid markets, might differ drastically.
Even if all the banks use fair-value approaches, the nature of the banking pipeline creates further scope for problems. It typically takes a bank a month or more to arrange a leveraged loan and sell it on.
However, if a crisis strikes when banks are in the middle of arranging deals - as in the case of the finance to back the Boots acquisition - the banks may vary in how they book these loans on their books. "These things are not black and white," admits one senior banker.
However, the problems in using market prices become even more complex in areas such as the complex bonds backed by mortgages. At present, the leveraged loan markets are at least reasonably active - which means that bankers can find a price for an asset if they try, even if they do not like the answer. But in the more esoteric corners of the credit markets, which have been at the centre of the summerwoes, it is often much harder to determine a price, because there is no market. In some cases that is because these assets have never actually traded. But even for those where trading has taken place before, activity has often dried up in recent months.
Michel Prada, head of the AMF, France's bourse regulator, asks: "How in the world can all these [accounting] rules be of any use if one is not able to determine the price of a product?"
One way the industry seeks to address this problem is to value their products using mathematical models instead. These typically work by plugging a set of assumptions into mathematical models that deliver an estimate of what a derivative should be worth. But the results of these models can vary enormously from bank to bank, depending not only on what the "inputs" might be but also on the actual models that are used.
Accountants at the banks say their job is to ensure their traders are using sensible and verifiable inputs and check their results against a real transaction. "There is huge oversight," says an accountant at a big broker-dealer - in the sense of supervision rather than neglect.
But in the case of bonds backed by mortgages, many of the inputs are necessarily based on subjective assumptions about the future payment behaviour of mortgagees. On top of this, with the market not functioning, real transactions are hard to come by.
"The question here is to find, and constantly update, a valuation model which could reflect or approach the economic reality, as consensually defined by the market," says Mr Prada. "With products such as CDOs [collateralised debt obligations], based on many different model assumptions, the risk of such an approach is to become 'mark to myth', as Warren Buffett would call it."
Another option, which many investors now prefer, is to ask third-party data providers to offer a price for assets. These are garnered by asking brokers across the industry to supply anonymous estimates for asset values and calculating an average. But while these services have grown in popularity, they do not cover all asset classes. Some of the recently troubled mortgage-linked securities, for example, are barely covered at all.
Moreover, these third-party prices can also be contested by brokers who do not like the results. Markit Group, one such provider, is seeing increased demand for its valuation services but is facing a sharp rise in queries about the results, because differences between price quotes have grown very wide.
As a result, some observers think that in the longer term much more radical reforms are needed. In the next few weeks, regulators around the world are expected to call for more transparency in structured finance.
They may push the industry, for example, to disclose better figures on the performance of such securities and demand that banks become more open about the price at which these instruments are trading, or being quoted, even in private deals.
But even if these initiatives help to improve the credibility of the financial profession in the medium term, they will not necessarily offer investors much comfort right now. Nor will they address the fundamental difficulty that faces the accounting world today: namely that fair- value accounting based on market prices is easy to apply only when markets function properly.
For the moment, most senior accountants insist that such problems are not enough to abandon the fair value approach - partly because most other options are also flawed.
"Fair value in a credit crunch is more difficult, for sure, but what's the alternative? We certainly don't want people to be cooking the books as they used to by creating reserves and smoothing earnings," says Tom Jones, vice-chairman of the International Accounting Standards Board. "I would make the case that in the long run, the damage of being able to hide losses is far worse, we saw this in the [1980s] savings and loans crisis in the US where accounting hid the scale of the problem.
"You need fair value to get to the truth: the facts are the facts," he adds. "The idea of people selling compound instruments, then saying they're too complex to value in a credit crunch - that's not acceptable. People [should] take the writedown now and, if markets come around again, they can mark it up again."
Decomposition is agony in a moribund market
By Jennifer Hughes
Copyright The Financial Times Limited 2007
Published: September 13 2007 03:00 | Last updated: September 13 2007 03:00
When markets are fretting about where the financial bodies are buried, a discussion about "decomposing" might seem a little alarmist. But that is what auditors call the process of unpicking complex financial instruments to verify their value.
Amid the current market uncertainty, the teams involved in this task will come under unusually intense scrutiny. The auditors are particularly busy at the largest broker-dealers, such as Goldman Sachs, Bear Stearns and Morgan Stanley, as they prepare to report third-quarter earnings. But some auditors warn privately that the most pressing problems with valuation are likely to come further down the food chain among the smaller players, because these are more likely to lack the expertise and risk management resources of the biggest houses.
"The big guys will come up with something defensible. I'd worry more about the smaller houses, the pension funds, the regional banks who were looking for yield without understanding what they're buying or how to value it now," says a financial sector auditor.
Behind the scenes, regulators, auditors and those they scrutinise are discussing the problems of valuing complex, illiquid and troubled securities and what needs to be done.
"The primary effect is clearly to take a loss if there is one to take, no matter what the basis of accounting or the structure of the instrument is," says Bill Michael, head of audit for financial services at KPMG in the UK. "The secondary impact is the lack of liquidity, which makes fair-valuing something very, very hard."
For financial instruments, "fair value" is generally considered to be the "exit price" - how much a third party would pay to buy the asset. Withmany corners of the market frozen, that value has become much harder to establish.
This is the case even for formerly liquid and relatively simple assets such as single-name credit default swaps, a form of insurance against a company defaulting on its debt. More complex assets rely on spreadsheet-based models, which involve making various assumptions that still rely in some form on market activity.
This is the crux of the model-based world: how do you model the reality of something when there is not enough reality, in the form of trading, taking place?
The system begins with the models devised and used by traders. These are first checked by the bank's financial control group, which has an independent reporting line. It verifies the assumptions and checks that the models work. Then another group tests the models for market risk - in other words, that if they are meant to produce a certain value for a certain price move, that they do this.
Periodically, auditors come in and pick over these controls, using their own quantitative analysts to "decompose" the models, review the algorithms and question the assumptions. But that task has also become problematic.
"Assumptions which previously could have been fairly straightforward will need to be treated with a high level of scepticism when the market is behaving like this," says Martyn Jones, national audit technical partner at Deloitte UK. "The fact that something last traded a month ago is not, in these markets, necessarily a pointer that you'd find a similar purchaser today. Three months ago, when markets were more liquid, you're more likely to have assumed that you would have found one at that price than you are to think that now."
Owners of assets are inevitably reluctant to mark them down to what they consider forced prices - which are sometimes the only price currently available. In some cases they may be allowed to use different valuations, but auditors are wary of this. "We'd ask clients to demonstrate that the price was a one-off fire sale and why that is so, then have them explain why their price is more valid," says Paul Sater, financial services partner at Ernst & Young.
He and others stress that the current turmoil is only the latest in a long line of illiquid market events that challenge accountants. "The 1994 bond crash, Mexico in 1995, Asia in 1997, Russia and LTCM in 1998, the internet bubble - all these were huge challenges too," says Mr Sater. "In times like this the audit of valuations requires significant application of auditors' judgment. There is no silver bullet."
By Paul J Davies, Jennifer Hughes and Gillian Tett
Copyright The Financial Times Limited 2007
Published: September 13 2007 03:00 | Last updated: September 13 2007 03:00
When Synapse Investment Management, a London asset manager, revealed last week that it was closing a $300m (£148m, €216m) fund, its decision sent an ominous message for bankers and accountants around the world.
That was because the death knell came not as a result of huge tangible losses on the fund's investments; instead, the main trigger was that the fund had become embroiled in a bitter, secretive fight with Barclays Capital, its prime broker, about valuation issues - how to price the debt instruments the fund held.
"The fund was closed due to the severe illiquidity in the market, which led to an inability to properly value the assets," says Mark Holman, one of Synapse's founding partners, who notes that the fund held none of the subprime assets at all that have been at the centre of recent market upheavals.
The tale highlights a much bigger battle about valuation that has already brought down other funds and still rages behind the scenes in numerous offices at banks, hedge funds and accountancy firms on Wall Street and in the City of London. One of the biggest problems spooking the markets is the sheer uncertainty about just how large the losses on many financial instruments might be - and which institutions will be hit.
This uncertainty has in turn created a crisis in trust among banks worried about the creditworthiness of their peers and therefore wary of lending to each other - which increases concerns about the possibility of a bank failure. While central banks can inject liquidity, that will only cure part of the problem: what is really needed is for banks to trust one another - and that requires transparency.
Many investors are therefore hoping that the coming weeks will produce some welcome clarity. Big US banks will start reporting their third-quarter results next week. Less publicly, a host of hedge funds are also starting to tell investors how they performed during August, the month of worst turmoil.
"The crucial question in the next few days and weeks is, how do you mark the positions? I can only hope that we do not muddle through - that we mark them to market," Josef Ackermann, chief executive officer of Deutsche Bank, said recently. Marking to market means recording the value of assets at the prevailing market price.
"That gives the reassurance and the stability back to the system. Because people will say 'OK, we have seen that people have their positions marked properly' and . . . hopefully markets will recover and some of these price levels [will] come back."
But while this call for more transparency is something investors and policymakers alike would support, in practice it will be fiendishly hard to deliver. One of the most pernicious challenges that face the financial world today is that the industry does not have any common, uncontested standard for measuring the value of many of the instruments - such as leveraged loans or securities linked to subprime mortgages - that have been at the heart of this summer's storm.
Thus, the type of valuation battle that has erupted around the Synapse fund and others could be replayed in the coming weeks, as banks and hedge funds attempt to put the best possible gloss on their numbers but investors, lenders and shareholders keep wondering where the bodies might lie (see below).
Take the case of leveraged loans, which - like subprime consumer mortgages - are made to borrowers with low credit ratings, such as companies owned by private equity groups. Traditionally, these were booked at face value, because the banks intended to hold them until they matured. But with these loans becoming more often sold in the market, banks no longer intend to hold most of them to maturity, meaning that traded prices are usually available. These are considered more relevant for the investors who use financial statements to gauge the true position of a bank.
A typical, difficult example is the £5bn ($10.2bn, €7.3bn) worth of senior loans for the planned private equity purchase of Alliance Boots, the UK pharmacies group, by Kohlberg Kravis Roberts, the US buy-out group, and Stefano Pessina, a Boots executive. Eight European and US banks arranged this finance at the start of the summer and expected to sell it quickly to capital market investors. But when the credit turmoil struck, these planned sales fell through, leaving the loans stuck on banks' books. Investors in so-called distressed debt are now offering to buy these loans at 95 per cent of face value - but most banks are reluctant to record a loss since they think the loans will recover in value soon.
The worldwide volume of such leveraged loans that banks are stuck with is estimated at between $350bn and $380bn.
While commercial banks with investment banking arms can legitimately choose at the outset between holding these loans or classing them as for sale, investment banks (known as broker-dealers in the US) have no such leeway. The broker-dealers cannot escape marking to market, because their whole business is about trading such loans and other securities.
Unsurprisingly, this accounting discrepancy infuriates some of the broker-dealers. "We think all financial instruments should be marked at fair value for consistency across the system and to simplify the accounting for hedging," says a senior accounting officer at one of the big USbroker-dealers.
Such arguments elicit some sympathy from the regulatory world. Indeed, regulators have quietly indicated that they will keep a close eye out for any sign that commercial banks are trying to flatter their accounts in the forthcoming results by failing to use "fair value" accounting approaches when this would be appropriate. Fair value for financial instruments means exit - or sale - price, which should in theory be equivalent to market value but, for some complex products or in illiquid markets, might differ drastically.
Even if all the banks use fair-value approaches, the nature of the banking pipeline creates further scope for problems. It typically takes a bank a month or more to arrange a leveraged loan and sell it on.
However, if a crisis strikes when banks are in the middle of arranging deals - as in the case of the finance to back the Boots acquisition - the banks may vary in how they book these loans on their books. "These things are not black and white," admits one senior banker.
However, the problems in using market prices become even more complex in areas such as the complex bonds backed by mortgages. At present, the leveraged loan markets are at least reasonably active - which means that bankers can find a price for an asset if they try, even if they do not like the answer. But in the more esoteric corners of the credit markets, which have been at the centre of the summerwoes, it is often much harder to determine a price, because there is no market. In some cases that is because these assets have never actually traded. But even for those where trading has taken place before, activity has often dried up in recent months.
Michel Prada, head of the AMF, France's bourse regulator, asks: "How in the world can all these [accounting] rules be of any use if one is not able to determine the price of a product?"
One way the industry seeks to address this problem is to value their products using mathematical models instead. These typically work by plugging a set of assumptions into mathematical models that deliver an estimate of what a derivative should be worth. But the results of these models can vary enormously from bank to bank, depending not only on what the "inputs" might be but also on the actual models that are used.
Accountants at the banks say their job is to ensure their traders are using sensible and verifiable inputs and check their results against a real transaction. "There is huge oversight," says an accountant at a big broker-dealer - in the sense of supervision rather than neglect.
But in the case of bonds backed by mortgages, many of the inputs are necessarily based on subjective assumptions about the future payment behaviour of mortgagees. On top of this, with the market not functioning, real transactions are hard to come by.
"The question here is to find, and constantly update, a valuation model which could reflect or approach the economic reality, as consensually defined by the market," says Mr Prada. "With products such as CDOs [collateralised debt obligations], based on many different model assumptions, the risk of such an approach is to become 'mark to myth', as Warren Buffett would call it."
Another option, which many investors now prefer, is to ask third-party data providers to offer a price for assets. These are garnered by asking brokers across the industry to supply anonymous estimates for asset values and calculating an average. But while these services have grown in popularity, they do not cover all asset classes. Some of the recently troubled mortgage-linked securities, for example, are barely covered at all.
Moreover, these third-party prices can also be contested by brokers who do not like the results. Markit Group, one such provider, is seeing increased demand for its valuation services but is facing a sharp rise in queries about the results, because differences between price quotes have grown very wide.
As a result, some observers think that in the longer term much more radical reforms are needed. In the next few weeks, regulators around the world are expected to call for more transparency in structured finance.
They may push the industry, for example, to disclose better figures on the performance of such securities and demand that banks become more open about the price at which these instruments are trading, or being quoted, even in private deals.
But even if these initiatives help to improve the credibility of the financial profession in the medium term, they will not necessarily offer investors much comfort right now. Nor will they address the fundamental difficulty that faces the accounting world today: namely that fair- value accounting based on market prices is easy to apply only when markets function properly.
For the moment, most senior accountants insist that such problems are not enough to abandon the fair value approach - partly because most other options are also flawed.
"Fair value in a credit crunch is more difficult, for sure, but what's the alternative? We certainly don't want people to be cooking the books as they used to by creating reserves and smoothing earnings," says Tom Jones, vice-chairman of the International Accounting Standards Board. "I would make the case that in the long run, the damage of being able to hide losses is far worse, we saw this in the [1980s] savings and loans crisis in the US where accounting hid the scale of the problem.
"You need fair value to get to the truth: the facts are the facts," he adds. "The idea of people selling compound instruments, then saying they're too complex to value in a credit crunch - that's not acceptable. People [should] take the writedown now and, if markets come around again, they can mark it up again."
Decomposition is agony in a moribund market
By Jennifer Hughes
Copyright The Financial Times Limited 2007
Published: September 13 2007 03:00 | Last updated: September 13 2007 03:00
When markets are fretting about where the financial bodies are buried, a discussion about "decomposing" might seem a little alarmist. But that is what auditors call the process of unpicking complex financial instruments to verify their value.
Amid the current market uncertainty, the teams involved in this task will come under unusually intense scrutiny. The auditors are particularly busy at the largest broker-dealers, such as Goldman Sachs, Bear Stearns and Morgan Stanley, as they prepare to report third-quarter earnings. But some auditors warn privately that the most pressing problems with valuation are likely to come further down the food chain among the smaller players, because these are more likely to lack the expertise and risk management resources of the biggest houses.
"The big guys will come up with something defensible. I'd worry more about the smaller houses, the pension funds, the regional banks who were looking for yield without understanding what they're buying or how to value it now," says a financial sector auditor.
Behind the scenes, regulators, auditors and those they scrutinise are discussing the problems of valuing complex, illiquid and troubled securities and what needs to be done.
"The primary effect is clearly to take a loss if there is one to take, no matter what the basis of accounting or the structure of the instrument is," says Bill Michael, head of audit for financial services at KPMG in the UK. "The secondary impact is the lack of liquidity, which makes fair-valuing something very, very hard."
For financial instruments, "fair value" is generally considered to be the "exit price" - how much a third party would pay to buy the asset. Withmany corners of the market frozen, that value has become much harder to establish.
This is the case even for formerly liquid and relatively simple assets such as single-name credit default swaps, a form of insurance against a company defaulting on its debt. More complex assets rely on spreadsheet-based models, which involve making various assumptions that still rely in some form on market activity.
This is the crux of the model-based world: how do you model the reality of something when there is not enough reality, in the form of trading, taking place?
The system begins with the models devised and used by traders. These are first checked by the bank's financial control group, which has an independent reporting line. It verifies the assumptions and checks that the models work. Then another group tests the models for market risk - in other words, that if they are meant to produce a certain value for a certain price move, that they do this.
Periodically, auditors come in and pick over these controls, using their own quantitative analysts to "decompose" the models, review the algorithms and question the assumptions. But that task has also become problematic.
"Assumptions which previously could have been fairly straightforward will need to be treated with a high level of scepticism when the market is behaving like this," says Martyn Jones, national audit technical partner at Deloitte UK. "The fact that something last traded a month ago is not, in these markets, necessarily a pointer that you'd find a similar purchaser today. Three months ago, when markets were more liquid, you're more likely to have assumed that you would have found one at that price than you are to think that now."
Owners of assets are inevitably reluctant to mark them down to what they consider forced prices - which are sometimes the only price currently available. In some cases they may be allowed to use different valuations, but auditors are wary of this. "We'd ask clients to demonstrate that the price was a one-off fire sale and why that is so, then have them explain why their price is more valid," says Paul Sater, financial services partner at Ernst & Young.
He and others stress that the current turmoil is only the latest in a long line of illiquid market events that challenge accountants. "The 1994 bond crash, Mexico in 1995, Asia in 1997, Russia and LTCM in 1998, the internet bubble - all these were huge challenges too," says Mr Sater. "In times like this the audit of valuations requires significant application of auditors' judgment. There is no silver bullet."
US suffers decline in prestige/America's wishful thinking on Iraq/Lessons from the rubble of Iraq
US suffers decline in prestige
By Stephen Fidler in London
Copyright The Financial Times Limited 2007
Published: September 12 2007 20:55 | Last updated: September 12 2007 20:55
The US has suffered a significant loss of power and prestige around the world in the years since George W. Bush came to power, limiting its ability to influence international crises, an annual survey from a well regarded British security think-tank concluded on Tuesday.
The 2007 Strategic Survey of the non-partisan International Institute for Strategic Studies picked the decline of US authority as one of the most important security developments of the past year – but suggested the fading of American prestige began earlier, largely due to its failings in Iraq.
John Chipman, the institute’s director-general, said the “authority, prestige and reputation of the US is not what it might have been four or five years ago”. The deter ioration of American power had led to a “non-polar” world in which other actors, such as Russia, had been able to assert themselves.
The report says the US failure in Iraq had meant the Bush administration suffered from a much-reduced ability to hold sway in both domestic and international affairs. This was evident, it says, from the president’s failure to push through a new immigration bill, to the scant regard paid to US efforts to influence Israeli-Palestinian developments and Mr Bush’s sudden acceptance of the need for action on climate change.
But a more fundamental loss of clout occurred at a strategic level. “It was evident that exercise of military power – in which, on paper, America dominated the world – had not secured its goal,” the survey says. The failings in Iraq created a sense around the world of American power “diminished and demystified”, with adversaries believing they will prevail if they manage to draw the US into a prolonged engagement.
In the Middle East, the survey says, the loss of US influence encouraged some countries – notably Iran – to flex their muscles in the region; it provided ammunition for radical groups seeking to discredit the leaders of countries maintaining solid links with the US; and it encouraged other countries to hedge their diplomatic relations with the US by strengthening their links with other regional powers.
Washington’s ability to act as an honest broker in the world had declined; and Iraq had meant the US had failed to pay as much attention as it should have to other parts of the world.
The report concludes that the “the restoration of American strategic authority seemed bound to take much longer than the mere installation of a new president”.
America's wishful thinking on Iraq
By Clive Crook
Copyright The Financial Times Limited 2007
Published: September 13 2007 03:00 | Last updated: September 13 2007 03:00
When you reflect on the war in Iraq - on the false assumptions, on all the errors of execution, on the price already paid - it is hard to believe that wishful thinking could still be the prevailing mode of analysis. Yet it is, and on both sides. George W. Bush thinks that the US is winning, and will prevail if the country "stays the course". The president's critics are not much less deluded. Their solution is rapid withdrawal of American forces. Just quit, and the US can start to put the whole mess behind it.
If only that were true. Awful as it is to contemplate, things can get much worse in Iraq and in no plausible scenario are they likely any time soon to get better. Success, meaning victory or clean disengagement, is not an option. The question is how to control the damage. The US needs consensus around a strategy not to "win" and not to "bring America home" - the first is impossible, the second very risky - but to dig in for a protracted, limited and hence (with luck) feasible effort to contain the harm. Perhaps by default that is where policy will end up, under either this president or the next. Meanwhile, though, an honest discussion of the issue in those gloomy but realistic terms has barely even begun.
This week's report and congressional testimony of General David Petraeus, the US commander in Iraq, proved to be beside the point. Taking the administration at its word - not to be recommended, on the whole - the "surge" has failed. It is true the evidence suggests that sectarian killing is down somewhat and that the policy of using extra soldiers to hold areas wrested from insurgent control rather than handing them back makes sense. This is hardly a surprise and underlines the fatal error of committing too few forces at the start.
Yet the surge has failed, nonetheless, because a temporary curbing of the violence was not its aim. The president accepted political and security benchmarks to measure the surge and stressed the larger purpose of fostering a political breakthrough. Most of those targets have been missed, civil war still rages and Iraqis are no closer to coming to terms. Judged by the administration's own tests, the game is over.
Gen Petraeus's proposal to unwind the surge next year is a simple matter of military necessity. The US lacks the resources to sustain its deployment in Iraq at present levels. The vastly bigger commitment that would be needed for a surge-like initiative across the whole country is entirely out of the question. And, it goes without saying, this would be politically impossible in any case.
Rapid disengagement, the preferred alternative of many Democrats, looks much more sensible, until you consider the possible consequences: a failed state (Afghanistan pre-9/11, on a much larger scale), a haven for global jihadists, outright ethnic cleansing and a widening regional conflict in a strategically crucial part of the world. All this, if it came to the worst, could fairly be blamed on the Bush administration. But what consolation is that, even to a Democrat? A Democratic president, after all,will most likely have to deal with it.
America needs to plan for a substantial and open-ended military commitment in Iraq, not to achieve victory but to guard against the worst possible outcomes, difficult as even this will be. For military and political reasons, far fewer soldiers will be available: planning has to start acknowledging that constraint, rather than continuing to deny it. The focus must shift towards containing the conflict within Iraq's borders, securing havens for internal refugees, striking jihadist targets and other containment strategies. Hard as it will be for this administration, and maybe impossible, the US should seek allies and renewed international legitimacy in this more limited mission. For their part, the administration's critics need to recognise that America - in good conscience and its own interests - cannot wash its hands of the problem.
Can Democratic and Republican centrists come together around such a strategy - one that limits America's purpose in Iraq, but resolves to stay engaged? This deeply unappealing prospect may be the least of the available evils. For it to happen, though, both parties will need to divide. That is unlikely, but not impossible. Amid the clamour this week there were intimations of a possible new consensus.
Republican support for the administration shows new signs of cracking, notably among senators seeking re-election. A withdrawal of forces that merely unwinds the surge by next summer, as now proposed, is less than they had hoped for and less than their voters are demanding.
On the other side, centrist Democrats got a push from the reliably bone-headed leftists of MoveOn.org, which ran a controversial advertisement this week trashing the integrity of "General Betray Us". Aside from firing up the administration's apologists with synthetic outrage, and giving them talking-points they would otherwise have lacked, it drew some centrist Democrats into distancing themselves from the anti-war left, and towards a more accommodating posture.
But these are no more than hints of a bipartisan centre. The administration is unlikely to help and the longer it persists with "we can win", the greater the chances of an abrupt, total and possibly calamitous withdrawal. Whatever happens, Iraq is not going away.
Lessons from the rubble of Iraq
By Philip Stephens
Copyright The Financial Times Limited 2007
Published: September 13 2007 17:51 | Last updated: September 13 2007 17:51
The lesson of September 11 2001 was that to be invincible is not to be invulnerable; the moral to be drawn from the quagmire of Iraq is that the ability to conquer does not confer the capacity to control. If post-Bush America is to reclaim global leadership, it must better understand the limits of its power.
The US remains the world’s sole superpower, the one nation with the capacity to intervene almost anywhere, at almost any time. It is stronger in every dimension – military, economic, political, cultural – than any potential adversary. Separate out the animus towards the persona and policies of George W. Bush and the US is also still quite liked. Odd though it seems, most Iranians declare themselves pro-American.
But in the exercise of US power, the present administration has eroded it. For much of the past six years, Washington has preferred to define itself against its handful of enemies instead of with its multitude of friends. The Bush White House has never really understood the need to map the boundaries, as well as test the reach, of US primacy.
The administration presented the invasion of Iraq as vital to the defeat of al-Qaeda. It was a fraudulent prospectus. “Shock and awe” was intended as a demonstration of raw power. As that well-known Francophile Donald Rumsfeld might have put it, Saddam Hussein was removed pour encourager les autres. Instead, the war in Iraq has energised violent Islamism and distracted US attention from the pursuit of al-Qaeda.
You could sense that this week. Tuesday was the sixth anniversary of the destruction of the World Trade Center in New York. Last year, Mr Bush marked the anniversary at Ground Zero. This year, the president felt the need to stay in Washington to hear General David Petraeus plead his case for staying in Iraq.
After the hyperbole of the advance billing, it was probably inevitable that America’s cerebral soldier would disappoint. The commander of the surge could scarcely have told Congress he had failed. Armed with charts and statistics, he made the best of the tactical military successes. Even from such a media-attentive general, it was not enough.
The more interesting testimony came from Ryan Crocker, the US ambassador in Baghdad. Mr Crocker’s job was to report on progress towards political reconciliation among Iraq’s Shia and Sunni communities. He applied whatever gloss he could find to the long-stalled efforts to bridge the sectarian divides. But the surge has failed in its principal purpose of providing the security in which national politics would take root.
For Mr Bush, though, the testimony had another purpose. At the White House, success is now measured not just by events on the ground, but by whether a final reckoning can be delayed beyond the president’s departure from office. From this perspective, Mr Bush can claim a small victory.
The number of US troops in Iraq will probably fall next summer to 130,000. This drawdown to pre-surge levels is more military imperative than political choice. The administration has half-promised another cut – perhaps to 100,000 – as the presidential campaign intensifies in the autumn of 2008. The timetable, though, would still leave Mr Bush’s successor with the responsibility for dispatching the helicopters to the roof of the Baghdad embassy.
A cynic might say that Mr Bush wants Iraq to inflict as much damage on his successor – most likely a Democrat – as it has on his own presidency. There must be a fair chance he will get his wish. As long as they are on the campaign trail, the candidates for 2008 can avoid discussion of the consequences of withdrawal. The voters, after all, want the troops home. The reality of disengagement is likely to be very different. The choice facing the new president may be between disaster and catastrophe.
She or he will not be entirely powerless. If there is little prospect of changing the outcome in Iraq itself, Mr Bush’s successor can set the context in which the US acknowledges failure. Will the America that eventually leaves Iraq be a sore, sullen superpower resolved to lash out at enemies from behind the walls of its fortress? Or will it be a US intent on understanding the difference between leadership and hegemony?
There is no simple route map for this latter course, but there are some markers. The first is an appreciation of the importance in global affairs of motives – perceived as well as real. Brent Scowcroft, the former national security adviser to the first President Bush, puts it well. For most of the postwar period, Mr Scowcroft observes, America’s many friends gave it the benefit of the doubt. Even when Washington got things wrong, people thought it had meant well. Now the opposite is true. Even when the present administration gets things right – and it occasionally does – it is suspected of hiding a darker agenda.
Linked umbilically to this issue of trust is the one of legitimacy.
There is no need for the next administration to embrace multilateralism with all its warts and weaknesses. But the lesson shared between Iraq and the fight against terrorism is that the absence of legitimacy is as a stone to a knife in its capacity to blunt American power.
Mr Bush’s successor will find the United Nations at a crossroads. American indifference alongside Russian obstructionism could well return it to the freezer of the cold war. Or, albeit with some effort, it could become an ally in America’s effort to rebuild something from the rubble of its reputation.
A third marker – and one with specific relevance to Iraq – calls for the US to talk to its enemies as well as its friends: to understand, as it did during the stand-off with the Soviet Union, that such engagement can be a source of strength rather than a sign of weakness.
Talking clarifies motives. US efforts to halt Iran’s nuclear programme would win wider support if the rest of the world were not suspicious of US intent. A dialogue with Tehran would shine a powerful light on Iran’s intentions and reassure doubters about American motives. Curiously, Mr Bush seems to have grasped this point in talking to North Korea.
There are lots of people in Washington, on the Democratic as well as the Republican side of politics, who think multilateralism is for wimps, that international rules are for the weak. The irony, of course, is that the global system thus scorned was made in America – and at a moment when the US had never been stronger. Roosevelt and Truman understood the transmission mechanism between power and leadership.
philip.stephens@ft.com
By Stephen Fidler in London
Copyright The Financial Times Limited 2007
Published: September 12 2007 20:55 | Last updated: September 12 2007 20:55
The US has suffered a significant loss of power and prestige around the world in the years since George W. Bush came to power, limiting its ability to influence international crises, an annual survey from a well regarded British security think-tank concluded on Tuesday.
The 2007 Strategic Survey of the non-partisan International Institute for Strategic Studies picked the decline of US authority as one of the most important security developments of the past year – but suggested the fading of American prestige began earlier, largely due to its failings in Iraq.
John Chipman, the institute’s director-general, said the “authority, prestige and reputation of the US is not what it might have been four or five years ago”. The deter ioration of American power had led to a “non-polar” world in which other actors, such as Russia, had been able to assert themselves.
The report says the US failure in Iraq had meant the Bush administration suffered from a much-reduced ability to hold sway in both domestic and international affairs. This was evident, it says, from the president’s failure to push through a new immigration bill, to the scant regard paid to US efforts to influence Israeli-Palestinian developments and Mr Bush’s sudden acceptance of the need for action on climate change.
But a more fundamental loss of clout occurred at a strategic level. “It was evident that exercise of military power – in which, on paper, America dominated the world – had not secured its goal,” the survey says. The failings in Iraq created a sense around the world of American power “diminished and demystified”, with adversaries believing they will prevail if they manage to draw the US into a prolonged engagement.
In the Middle East, the survey says, the loss of US influence encouraged some countries – notably Iran – to flex their muscles in the region; it provided ammunition for radical groups seeking to discredit the leaders of countries maintaining solid links with the US; and it encouraged other countries to hedge their diplomatic relations with the US by strengthening their links with other regional powers.
Washington’s ability to act as an honest broker in the world had declined; and Iraq had meant the US had failed to pay as much attention as it should have to other parts of the world.
The report concludes that the “the restoration of American strategic authority seemed bound to take much longer than the mere installation of a new president”.
America's wishful thinking on Iraq
By Clive Crook
Copyright The Financial Times Limited 2007
Published: September 13 2007 03:00 | Last updated: September 13 2007 03:00
When you reflect on the war in Iraq - on the false assumptions, on all the errors of execution, on the price already paid - it is hard to believe that wishful thinking could still be the prevailing mode of analysis. Yet it is, and on both sides. George W. Bush thinks that the US is winning, and will prevail if the country "stays the course". The president's critics are not much less deluded. Their solution is rapid withdrawal of American forces. Just quit, and the US can start to put the whole mess behind it.
If only that were true. Awful as it is to contemplate, things can get much worse in Iraq and in no plausible scenario are they likely any time soon to get better. Success, meaning victory or clean disengagement, is not an option. The question is how to control the damage. The US needs consensus around a strategy not to "win" and not to "bring America home" - the first is impossible, the second very risky - but to dig in for a protracted, limited and hence (with luck) feasible effort to contain the harm. Perhaps by default that is where policy will end up, under either this president or the next. Meanwhile, though, an honest discussion of the issue in those gloomy but realistic terms has barely even begun.
This week's report and congressional testimony of General David Petraeus, the US commander in Iraq, proved to be beside the point. Taking the administration at its word - not to be recommended, on the whole - the "surge" has failed. It is true the evidence suggests that sectarian killing is down somewhat and that the policy of using extra soldiers to hold areas wrested from insurgent control rather than handing them back makes sense. This is hardly a surprise and underlines the fatal error of committing too few forces at the start.
Yet the surge has failed, nonetheless, because a temporary curbing of the violence was not its aim. The president accepted political and security benchmarks to measure the surge and stressed the larger purpose of fostering a political breakthrough. Most of those targets have been missed, civil war still rages and Iraqis are no closer to coming to terms. Judged by the administration's own tests, the game is over.
Gen Petraeus's proposal to unwind the surge next year is a simple matter of military necessity. The US lacks the resources to sustain its deployment in Iraq at present levels. The vastly bigger commitment that would be needed for a surge-like initiative across the whole country is entirely out of the question. And, it goes without saying, this would be politically impossible in any case.
Rapid disengagement, the preferred alternative of many Democrats, looks much more sensible, until you consider the possible consequences: a failed state (Afghanistan pre-9/11, on a much larger scale), a haven for global jihadists, outright ethnic cleansing and a widening regional conflict in a strategically crucial part of the world. All this, if it came to the worst, could fairly be blamed on the Bush administration. But what consolation is that, even to a Democrat? A Democratic president, after all,will most likely have to deal with it.
America needs to plan for a substantial and open-ended military commitment in Iraq, not to achieve victory but to guard against the worst possible outcomes, difficult as even this will be. For military and political reasons, far fewer soldiers will be available: planning has to start acknowledging that constraint, rather than continuing to deny it. The focus must shift towards containing the conflict within Iraq's borders, securing havens for internal refugees, striking jihadist targets and other containment strategies. Hard as it will be for this administration, and maybe impossible, the US should seek allies and renewed international legitimacy in this more limited mission. For their part, the administration's critics need to recognise that America - in good conscience and its own interests - cannot wash its hands of the problem.
Can Democratic and Republican centrists come together around such a strategy - one that limits America's purpose in Iraq, but resolves to stay engaged? This deeply unappealing prospect may be the least of the available evils. For it to happen, though, both parties will need to divide. That is unlikely, but not impossible. Amid the clamour this week there were intimations of a possible new consensus.
Republican support for the administration shows new signs of cracking, notably among senators seeking re-election. A withdrawal of forces that merely unwinds the surge by next summer, as now proposed, is less than they had hoped for and less than their voters are demanding.
On the other side, centrist Democrats got a push from the reliably bone-headed leftists of MoveOn.org, which ran a controversial advertisement this week trashing the integrity of "General Betray Us". Aside from firing up the administration's apologists with synthetic outrage, and giving them talking-points they would otherwise have lacked, it drew some centrist Democrats into distancing themselves from the anti-war left, and towards a more accommodating posture.
But these are no more than hints of a bipartisan centre. The administration is unlikely to help and the longer it persists with "we can win", the greater the chances of an abrupt, total and possibly calamitous withdrawal. Whatever happens, Iraq is not going away.
Lessons from the rubble of Iraq
By Philip Stephens
Copyright The Financial Times Limited 2007
Published: September 13 2007 17:51 | Last updated: September 13 2007 17:51
The lesson of September 11 2001 was that to be invincible is not to be invulnerable; the moral to be drawn from the quagmire of Iraq is that the ability to conquer does not confer the capacity to control. If post-Bush America is to reclaim global leadership, it must better understand the limits of its power.
The US remains the world’s sole superpower, the one nation with the capacity to intervene almost anywhere, at almost any time. It is stronger in every dimension – military, economic, political, cultural – than any potential adversary. Separate out the animus towards the persona and policies of George W. Bush and the US is also still quite liked. Odd though it seems, most Iranians declare themselves pro-American.
But in the exercise of US power, the present administration has eroded it. For much of the past six years, Washington has preferred to define itself against its handful of enemies instead of with its multitude of friends. The Bush White House has never really understood the need to map the boundaries, as well as test the reach, of US primacy.
The administration presented the invasion of Iraq as vital to the defeat of al-Qaeda. It was a fraudulent prospectus. “Shock and awe” was intended as a demonstration of raw power. As that well-known Francophile Donald Rumsfeld might have put it, Saddam Hussein was removed pour encourager les autres. Instead, the war in Iraq has energised violent Islamism and distracted US attention from the pursuit of al-Qaeda.
You could sense that this week. Tuesday was the sixth anniversary of the destruction of the World Trade Center in New York. Last year, Mr Bush marked the anniversary at Ground Zero. This year, the president felt the need to stay in Washington to hear General David Petraeus plead his case for staying in Iraq.
After the hyperbole of the advance billing, it was probably inevitable that America’s cerebral soldier would disappoint. The commander of the surge could scarcely have told Congress he had failed. Armed with charts and statistics, he made the best of the tactical military successes. Even from such a media-attentive general, it was not enough.
The more interesting testimony came from Ryan Crocker, the US ambassador in Baghdad. Mr Crocker’s job was to report on progress towards political reconciliation among Iraq’s Shia and Sunni communities. He applied whatever gloss he could find to the long-stalled efforts to bridge the sectarian divides. But the surge has failed in its principal purpose of providing the security in which national politics would take root.
For Mr Bush, though, the testimony had another purpose. At the White House, success is now measured not just by events on the ground, but by whether a final reckoning can be delayed beyond the president’s departure from office. From this perspective, Mr Bush can claim a small victory.
The number of US troops in Iraq will probably fall next summer to 130,000. This drawdown to pre-surge levels is more military imperative than political choice. The administration has half-promised another cut – perhaps to 100,000 – as the presidential campaign intensifies in the autumn of 2008. The timetable, though, would still leave Mr Bush’s successor with the responsibility for dispatching the helicopters to the roof of the Baghdad embassy.
A cynic might say that Mr Bush wants Iraq to inflict as much damage on his successor – most likely a Democrat – as it has on his own presidency. There must be a fair chance he will get his wish. As long as they are on the campaign trail, the candidates for 2008 can avoid discussion of the consequences of withdrawal. The voters, after all, want the troops home. The reality of disengagement is likely to be very different. The choice facing the new president may be between disaster and catastrophe.
She or he will not be entirely powerless. If there is little prospect of changing the outcome in Iraq itself, Mr Bush’s successor can set the context in which the US acknowledges failure. Will the America that eventually leaves Iraq be a sore, sullen superpower resolved to lash out at enemies from behind the walls of its fortress? Or will it be a US intent on understanding the difference between leadership and hegemony?
There is no simple route map for this latter course, but there are some markers. The first is an appreciation of the importance in global affairs of motives – perceived as well as real. Brent Scowcroft, the former national security adviser to the first President Bush, puts it well. For most of the postwar period, Mr Scowcroft observes, America’s many friends gave it the benefit of the doubt. Even when Washington got things wrong, people thought it had meant well. Now the opposite is true. Even when the present administration gets things right – and it occasionally does – it is suspected of hiding a darker agenda.
Linked umbilically to this issue of trust is the one of legitimacy.
There is no need for the next administration to embrace multilateralism with all its warts and weaknesses. But the lesson shared between Iraq and the fight against terrorism is that the absence of legitimacy is as a stone to a knife in its capacity to blunt American power.
Mr Bush’s successor will find the United Nations at a crossroads. American indifference alongside Russian obstructionism could well return it to the freezer of the cold war. Or, albeit with some effort, it could become an ally in America’s effort to rebuild something from the rubble of its reputation.
A third marker – and one with specific relevance to Iraq – calls for the US to talk to its enemies as well as its friends: to understand, as it did during the stand-off with the Soviet Union, that such engagement can be a source of strength rather than a sign of weakness.
Talking clarifies motives. US efforts to halt Iran’s nuclear programme would win wider support if the rest of the world were not suspicious of US intent. A dialogue with Tehran would shine a powerful light on Iran’s intentions and reassure doubters about American motives. Curiously, Mr Bush seems to have grasped this point in talking to North Korea.
There are lots of people in Washington, on the Democratic as well as the Republican side of politics, who think multilateralism is for wimps, that international rules are for the weak. The irony, of course, is that the global system thus scorned was made in America – and at a moment when the US had never been stronger. Roosevelt and Truman understood the transmission mechanism between power and leadership.
philip.stephens@ft.com
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