American Airlines to test in-flight Internet access for passengers this week
DAVID KOENIG
Copyright 2009 Associated Press
11:05 PM CDT, March 30, 2009
http://www.chicagotribune.com/travel/sns-ap-na-us-airborne-internet-american,0,3202551.story
DALLAS (AP) — American Airlines plans to expand Internet access to about half its fleet of aircraft over the next two years as it attempts to raise revenue and improve customer service.
The company said Tuesday it will install flying Wi-Fi hot spots on about 300 planes used in the continental U.S. and charge up to $12.95 for browsing the Web, sending e-mail or connecting with corporate VPN sites.
American has been testing in-flight Internet service for several months on 15 planes. The airline declined to give figures on usage during the test, but an American technology executive called the response positive.
"American Airlines is a very financially driven airline," said the executive, Doug Backelin. "We are especially careful in how we're spending, but this is a good strategic investment, something our customers will value."
AMR Corp.'s American is one of several U.S. carriers getting into Internet service. Delta Air Lines Inc., the world's largest airline operator, plans a quicker rollout, from about 80 planes currently to more than 300 late this year and more than 500 by the end of 2010.
Both airlines will use the Gogo service from Aircell. American will add access to many of its McDonnell Douglas MD-80 series aircraft beginning this year and on new Boeing 737-800 jets as it receives them.
Aircell sets the prices and shares revenue with the airline, although neither company would discuss their financial arrangement.
Prices will range from $5.95 for some redeye flights to $7.95 for using a handheld device, $9.95 for using a laptop computer on a flight up to three hours, and $12.95 for using a laptop on a longer flight. Aircell plans to add other prices for day passes and perhaps monthly subscription rates for frequent fliers.
Travelers can sign up on the ground and connect once the plane reaches 10,000 feet in altitude. They'll use their browser to connect to Aircell's Gogo portal site.
In theory, if enough passengers are online at the same time the speed of the service would degrade. Aircell Chief Executive Jack Blumenstein said that mass hasn't been reached on any trial flights. Each plane will be outfitted with three overlapping Wi-Fi signals, he said.
Backelin said the Internet access will be filtered to block pornographic sites — the airline at first said it wouldn't do that, but relented after hearing complaints from customers and flight attendants. And American won't allow voice-over-Internet phone service, to keep chattering to a minimum.
In customer surveys, Backelin said, "there was a very loud chorus telling us, 'Do not allow voice-over-IP calls in the cabin.'"
Tuesday, March 31, 2009
EHarmony launches gay matchmaking service
EHarmony launches gay matchmaking service - The heterosexual dating website agreed to start Compatible Partners for same-sex couples as part of the settlement of a discrimination suit.
By David Colker
Copyright © 2009, The Los Angeles Times
10:01 PM CDT, March 30, 2009
http://www.chicagotribune.com/features/la-fi-eharmony31-2009mar31,0,4312726.story
As of today, EHarmony comes out of the closet.
The adamantly heterosexual dating website, which has accepted only male-female couples since its inception in 2000, is launching a gay matchmaking service called Compatible Partners (www.compatiblepartners.net).
But EHarmony's new relationship with the gay community is more like a shotgun wedding: The company agreed in November to start the dating service as part of a settlement with the New Jersey attorney general in the wake of a discrimination suit.
Dating site consultant Mark Brooks says Compatible Partners will be watched closely.
"This will be one of the most scrutinized products in Internet dating," said Brooks, who hasn't worked for EHarmony. "They will have to introduce an A1 product."
It's not a comfortable fit for EHarmony's founder, Neil Clark Warren, who based the original service -- which requires applicants to fill out lengthy questionnaires -- on his own practice as a psychologist.
"It's what I did for 40 years," said Warren, 74, who is retired but remains on the board. "I never had a gay couple."
Warren is the former dean of the psychology graduate school at Fuller Theological Seminary in Pasadena. Much of the early promotion of EHarmony was done by well-known figures in the evangelical community, some of whom preach against gay rights.
As part of the settlement, Pasadena-based EHarmony must make a "good-faith commitment" to promoting Compatible Partners. But the company seems as nervous as the groom at a rehearsal dinner, insisting that the only on-the-record interview be with Chief Executive Greg Waldorf. That interview was canceled when the company learned Warren had spoken with The Times.
Brooks thinks Compatible Partners could be a winner.
"Niche products are proving to be very effective," he said. "People are more likely to connect with a brand that serves it, specifically."
Even Warren is finding out that gay couples might not be so different after all. He and his wife are friends with a male couple they met in Maine, where they live most of the year.
"I asked them, 'Are you guys committed?' " Warren said, "and one said yes and the other said, 'I think so.'
"And the first one said, 'You'd better be!' "
david.colker@latimes.com
By David Colker
Copyright © 2009, The Los Angeles Times
10:01 PM CDT, March 30, 2009
http://www.chicagotribune.com/features/la-fi-eharmony31-2009mar31,0,4312726.story
As of today, EHarmony comes out of the closet.
The adamantly heterosexual dating website, which has accepted only male-female couples since its inception in 2000, is launching a gay matchmaking service called Compatible Partners (www.compatiblepartners.net).
But EHarmony's new relationship with the gay community is more like a shotgun wedding: The company agreed in November to start the dating service as part of a settlement with the New Jersey attorney general in the wake of a discrimination suit.
Dating site consultant Mark Brooks says Compatible Partners will be watched closely.
"This will be one of the most scrutinized products in Internet dating," said Brooks, who hasn't worked for EHarmony. "They will have to introduce an A1 product."
It's not a comfortable fit for EHarmony's founder, Neil Clark Warren, who based the original service -- which requires applicants to fill out lengthy questionnaires -- on his own practice as a psychologist.
"It's what I did for 40 years," said Warren, 74, who is retired but remains on the board. "I never had a gay couple."
Warren is the former dean of the psychology graduate school at Fuller Theological Seminary in Pasadena. Much of the early promotion of EHarmony was done by well-known figures in the evangelical community, some of whom preach against gay rights.
As part of the settlement, Pasadena-based EHarmony must make a "good-faith commitment" to promoting Compatible Partners. But the company seems as nervous as the groom at a rehearsal dinner, insisting that the only on-the-record interview be with Chief Executive Greg Waldorf. That interview was canceled when the company learned Warren had spoken with The Times.
Brooks thinks Compatible Partners could be a winner.
"Niche products are proving to be very effective," he said. "People are more likely to connect with a brand that serves it, specifically."
Even Warren is finding out that gay couples might not be so different after all. He and his wife are friends with a male couple they met in Maine, where they live most of the year.
"I asked them, 'Are you guys committed?' " Warren said, "and one said yes and the other said, 'I think so.'
"And the first one said, 'You'd better be!' "
david.colker@latimes.com
Chicago Sun-Times files for bankruptcy
Chicago Sun-Times files for bankruptcy
By James P. Miller
Copyright © 2009, Chicago Tribune
8:36 AM CDT, March 31, 2009
http://www.chicagotribune.com/business/chi-biz-sun-times-media-bankruptcy-march31,0,3147313.story
The Sun-Times has filed for protection from creditors under Chapter 11 of the federal bankruptcy code. (Tribune photo by E. Jason Wambsgans / May 18, 2008)
Sun-Times Media Group Inc., reeling from a painful revenue decline and tax liabilities that date back to the looting of the company during the tenure of former CEO Conrad Black, disclosed Tuesday that it has filed for protection from creditors under Chapter 11 of the federal bankruptcy code.
The publisher of the Chicago Sun-Times and other Chicago-area papers emphasized that it will continue to operate its newspapers and online sites as usual "while it focuses on further improving its cost structure and stabilizing operations" during the Chapter 11 financial reorganization.
Tuesday's filing can't be characterized as a surprise. Many observers have marveled that the company has been able to stay on its feet as long as it has, given the pressures it faces.
The bankruptcy comes on the heels of a proxy fight that led to the ouster earlier this year of almost all of Sun-Times Media's former board members, and the subsequent exit of CEO Cyrus Freidheim, the turnaround expert brought in two years earlier to revive the company's fortunes.
Freidheim had been given the unenviable job of cleaning up the mess left after Conrad Black and his lieutenant, David Radler, diverted millions of dollars' in company revenue into their own pockets. Sun-Times' fortunes were also damaged by an embarassing and costly circulation-overstatement scandal that occurred when Radler was publisher of the Chicago Sun-Times.
Black and Radler were eventually covicted on criminal fraud charges and jailed, but the financial fallout from their actions has been an additional burden as Sun-Times Media fought to stay viable in a newspaper industry that has seen its century-old financial model upended.
Like other newspaper companies, Sun-Times has slashed repeatedly at its staffing levels in order to reduce costs, as ad revenues continued to dwindle because of recessionary pressures and an ongoing migration of advertisers' spending to less-costly Internet platforms.
Left-over issues from the Black era also played a role. Sun-Times Media recently paid $21 million to settle a lawsuit filed by a Canadian company that claimed Black deceived it when it purchased Canadian newspapers from the Chicago holding company several years ago. And although some tax claims from the company's financial footwork during the Black era have been resolved, others linger.
"Unfortunately," said Jeremy Halbreich, Chairman and interm CEO of the company, the "deteriorating economic climate, coupled with a significant pending IRS tax liability dating back to previous management, has led us to today's difficult action."
Sun-Times executives, he added, "firmly believe that filing for Chapter 11 protection and exploring the potential sale of assets or new investment in the company offers us the best opportunity to protect our respected media properties for the long term."
jpmiller@tribune.com
By James P. Miller
Copyright © 2009, Chicago Tribune
8:36 AM CDT, March 31, 2009
http://www.chicagotribune.com/business/chi-biz-sun-times-media-bankruptcy-march31,0,3147313.story
The Sun-Times has filed for protection from creditors under Chapter 11 of the federal bankruptcy code. (Tribune photo by E. Jason Wambsgans / May 18, 2008)
Sun-Times Media Group Inc., reeling from a painful revenue decline and tax liabilities that date back to the looting of the company during the tenure of former CEO Conrad Black, disclosed Tuesday that it has filed for protection from creditors under Chapter 11 of the federal bankruptcy code.
The publisher of the Chicago Sun-Times and other Chicago-area papers emphasized that it will continue to operate its newspapers and online sites as usual "while it focuses on further improving its cost structure and stabilizing operations" during the Chapter 11 financial reorganization.
Tuesday's filing can't be characterized as a surprise. Many observers have marveled that the company has been able to stay on its feet as long as it has, given the pressures it faces.
The bankruptcy comes on the heels of a proxy fight that led to the ouster earlier this year of almost all of Sun-Times Media's former board members, and the subsequent exit of CEO Cyrus Freidheim, the turnaround expert brought in two years earlier to revive the company's fortunes.
Freidheim had been given the unenviable job of cleaning up the mess left after Conrad Black and his lieutenant, David Radler, diverted millions of dollars' in company revenue into their own pockets. Sun-Times' fortunes were also damaged by an embarassing and costly circulation-overstatement scandal that occurred when Radler was publisher of the Chicago Sun-Times.
Black and Radler were eventually covicted on criminal fraud charges and jailed, but the financial fallout from their actions has been an additional burden as Sun-Times Media fought to stay viable in a newspaper industry that has seen its century-old financial model upended.
Like other newspaper companies, Sun-Times has slashed repeatedly at its staffing levels in order to reduce costs, as ad revenues continued to dwindle because of recessionary pressures and an ongoing migration of advertisers' spending to less-costly Internet platforms.
Left-over issues from the Black era also played a role. Sun-Times Media recently paid $21 million to settle a lawsuit filed by a Canadian company that claimed Black deceived it when it purchased Canadian newspapers from the Chicago holding company several years ago. And although some tax claims from the company's financial footwork during the Black era have been resolved, others linger.
"Unfortunately," said Jeremy Halbreich, Chairman and interm CEO of the company, the "deteriorating economic climate, coupled with a significant pending IRS tax liability dating back to previous management, has led us to today's difficult action."
Sun-Times executives, he added, "firmly believe that filing for Chapter 11 protection and exploring the potential sale of assets or new investment in the company offers us the best opportunity to protect our respected media properties for the long term."
jpmiller@tribune.com
Washington Post Editorial: JAMA's Hush-Up - A medical journal's problematic rule on public disclosure of complaints
Washington Post Editorial: JAMA's Hush-Up - A medical journal's problematic rule on public disclosure of complaints
Copyright by The Washington Post
Tuesday, March 31, 2009; Page A16
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/30/AR2009033002765.html
THE EDITORS of the Journal of the American Medical Association (JAMA) surely appreciated that Jonathan Leo, a professor at Lincoln Memorial University, made them aware of an undisclosed conflict involving a pharmaceutical company and the author of a study published in the journal. The JAMA editors did not, however, appreciate that Mr. Leo sent a copy of an e-mail to them to a reporter at the New York Times. Nor did they like his airing of his allegation in an article on the Web site of the British Medical Journal (BMJ) -- almost five months after Mr. Leo sent his initial inquiry to JAMA. As a result, the esteemed medical journal has instituted a new set of complaint compliance rules that leave us wondering whether it cares more about its reputation than the integrity of its articles.
The controversy surrounds a May 2008 study on the effects of an antidepressant drug on stroke patients by Robert Robinson and colleagues. JAMA requires disclosure of any financial relationships and other potential conflicts of interest by its authors. But Mr. Leo discovered that Mr. Robinson failed to disclose that he was on the speakers bureau of the company that made the drug that was the subject of his study. On March 5, six days before the journal was to publish the details of its investigation into Mr. Robinson's incomplete disclosure, Mr. Leo went public with his piece for BMJ.
The new rules from JAMA, announced in its March 20 edition, discourage such third-party disclosure from happening again. "The person bringing the allegation will be specifically informed that he/she should not reveal this information to third parties or the media while the investigation is under way," the editors wrote. Cathy DeAngelis, editor of JAMA, told us that the journal "can do nothing if the 'accuser' goes public, and we do not intend to try." But her insistence that concern for "[p]rotecting the accused person and thereby assuring due process" while the journal conducts its review misses the larger point of Mr. Leo's going public. This is a matter of transparency: If the information in scientific journals and studies is not free of conflicts, its value is diminished and its authors and the publications become suspect.
JAMA's commitment to keep those who bring allegations informed of the investigation's progress and its completion helps with transparency. So does its commitment to immediately put its findings on the Web, instead of waiting until the magazine's next publication date. Muzzling whistleblowers might help JAMA control its image -- but it's a disservice to the public.
Copyright by The Washington Post
Tuesday, March 31, 2009; Page A16
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/30/AR2009033002765.html
THE EDITORS of the Journal of the American Medical Association (JAMA) surely appreciated that Jonathan Leo, a professor at Lincoln Memorial University, made them aware of an undisclosed conflict involving a pharmaceutical company and the author of a study published in the journal. The JAMA editors did not, however, appreciate that Mr. Leo sent a copy of an e-mail to them to a reporter at the New York Times. Nor did they like his airing of his allegation in an article on the Web site of the British Medical Journal (BMJ) -- almost five months after Mr. Leo sent his initial inquiry to JAMA. As a result, the esteemed medical journal has instituted a new set of complaint compliance rules that leave us wondering whether it cares more about its reputation than the integrity of its articles.
The controversy surrounds a May 2008 study on the effects of an antidepressant drug on stroke patients by Robert Robinson and colleagues. JAMA requires disclosure of any financial relationships and other potential conflicts of interest by its authors. But Mr. Leo discovered that Mr. Robinson failed to disclose that he was on the speakers bureau of the company that made the drug that was the subject of his study. On March 5, six days before the journal was to publish the details of its investigation into Mr. Robinson's incomplete disclosure, Mr. Leo went public with his piece for BMJ.
The new rules from JAMA, announced in its March 20 edition, discourage such third-party disclosure from happening again. "The person bringing the allegation will be specifically informed that he/she should not reveal this information to third parties or the media while the investigation is under way," the editors wrote. Cathy DeAngelis, editor of JAMA, told us that the journal "can do nothing if the 'accuser' goes public, and we do not intend to try." But her insistence that concern for "[p]rotecting the accused person and thereby assuring due process" while the journal conducts its review misses the larger point of Mr. Leo's going public. This is a matter of transparency: If the information in scientific journals and studies is not free of conflicts, its value is diminished and its authors and the publications become suspect.
JAMA's commitment to keep those who bring allegations informed of the investigation's progress and its completion helps with transparency. So does its commitment to immediately put its findings on the Web, instead of waiting until the magazine's next publication date. Muzzling whistleblowers might help JAMA control its image -- but it's a disservice to the public.
FDA Says to Avoid Pistachios Amid Salmonella Scare
FDA Says to Avoid Pistachios Amid Salmonella Scare
By GARANCE BURKE
Copyright by The Associated Press
Monday, March 30, 2009; 11:53 PM
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/30/AR2009033002637.html?hpid=artslot
FRESNO, Calif. -- Federal food safety officials warned Monday that consumers should stop eating all foods containing pistachios while they figure out the source of a possible salmonella contamination.
Still reeling from the national salmonella outbreak in peanuts, the Food and Drug Administration said central California-based Setton Pistachio of Terra Bella Inc., the nation's second-largest pistachio processor, was voluntarily recalling a portion of the roasted nuts it has been shipping since last fall. A Setton spokeswoman said that amounts to more than 2 million pounds of nuts.
"Our advice to consumers is that they avoid eating pistachio products, and that they hold onto those products," said Dr. David Acheson, assistant commissioner for food safety. "The number of products that are going to be recalled over the coming days will grow, simply because these pistachio nuts have then been repackaged into consumer-level containers."
Two people called the FDA complaining of gastrointestinal illness that could be associated with the nuts, but the link hasn't been confirmed, Acheson said. Still, the plant decided to shut down late last week, officials said.
The recalled nuts represent a small fraction of the 55 million pounds of pistachios that the company's plant processed last year and an even smaller portion of the 278 million pounds produced in the state in the 2008 season, according to the Fresno-based Administrative Committee for Pistachios.
California alone is the second-largest producer of pistachios in the world.
According to the company's Web site, Setton Pistachio is in the corporate family of Commack, N.Y.-based Setton International Foods Inc. The company sells nuts, dried fruit, edible seeds, chocolate and yogurt-coated candies.
The FDA learned about the problem last Tuesday, when Kraft Foods Inc. notified the agency that it had detected salmonella in roasted pistachios through routine product testing. Kraft and the Georgia Nut Co. recalled their Back to Nature Nantucket Blend trail mix the next day.
The FDA contacted Setton Pistachio and California health officials shortly afterward, in what Acheson called a "proactive move."
By Friday, grocery operator Kroger Co. recalled one of its lines of bagged pistachios because of possible salmonella contamination, saying the California plant also supplied its nuts. Those nuts were sold in 31 states.
Fabia D'Arienzo, a spokeswoman for Tulare County-based Setton Pistachio, said the company was only recalling certain bulk roasted in-shell and roasted shelled pistachios that were shipped on or after September 1.
Because Setton Pistachio shipped tote bags of nuts weighing up to 2,000 pounds to 36 wholesalers across the country, it will take weeks to figure out how many products could be affected, said Jeff Farrar, chief of the Food and Drug Branch of the California Department of Public Health.
"It will be safe to assume based on the volume that this will be an ingredient in a lot of different products, and that may possibly include things like ice cream and cake mixes," Farrar said. "The firm is already turning around trucks in transit to bring those back to the facility."
Salmonella, the most common cause of food-borne illness, is a bacteria that causes diarrhea, fever and cramping. Most people recover, but the infection can be life-threatening for children, the elderly and people with weakened immune systems.
For nuts, roasting is supposed to kill the bacteria. But problems can occur if the roasting is not done correctly or if roasted nuts are re-contaminated. That can happen if mice, rats or birds get into the facility.
Last winter, a national salmonella outbreak was blamed on a Georgia company under federal investigation for flouting safety procedures and knowingly shipping contaminated peanuts.
The outbreak is still ongoing. More than 690 people in 46 states have gotten sick. Nearly 3,900 products made with peanut ingredients from Peanut Corp of America have been recalled.
California public health authorities have taken hundreds of samples at Setton's processing facility, but lab results have not yet determined whether salmonella was found at the plant, Farrar said. The food companies' own tests of the contaminated products isolated four different types of salmonella, but none were the same strain as the one found in the peanuts, Acheson said.
Associated Press writers Ricardo Alonso-Zaldivar in Washington and Tracie Cone in Fresno contributed to this report.
By GARANCE BURKE
Copyright by The Associated Press
Monday, March 30, 2009; 11:53 PM
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/30/AR2009033002637.html?hpid=artslot
FRESNO, Calif. -- Federal food safety officials warned Monday that consumers should stop eating all foods containing pistachios while they figure out the source of a possible salmonella contamination.
Still reeling from the national salmonella outbreak in peanuts, the Food and Drug Administration said central California-based Setton Pistachio of Terra Bella Inc., the nation's second-largest pistachio processor, was voluntarily recalling a portion of the roasted nuts it has been shipping since last fall. A Setton spokeswoman said that amounts to more than 2 million pounds of nuts.
"Our advice to consumers is that they avoid eating pistachio products, and that they hold onto those products," said Dr. David Acheson, assistant commissioner for food safety. "The number of products that are going to be recalled over the coming days will grow, simply because these pistachio nuts have then been repackaged into consumer-level containers."
Two people called the FDA complaining of gastrointestinal illness that could be associated with the nuts, but the link hasn't been confirmed, Acheson said. Still, the plant decided to shut down late last week, officials said.
The recalled nuts represent a small fraction of the 55 million pounds of pistachios that the company's plant processed last year and an even smaller portion of the 278 million pounds produced in the state in the 2008 season, according to the Fresno-based Administrative Committee for Pistachios.
California alone is the second-largest producer of pistachios in the world.
According to the company's Web site, Setton Pistachio is in the corporate family of Commack, N.Y.-based Setton International Foods Inc. The company sells nuts, dried fruit, edible seeds, chocolate and yogurt-coated candies.
The FDA learned about the problem last Tuesday, when Kraft Foods Inc. notified the agency that it had detected salmonella in roasted pistachios through routine product testing. Kraft and the Georgia Nut Co. recalled their Back to Nature Nantucket Blend trail mix the next day.
The FDA contacted Setton Pistachio and California health officials shortly afterward, in what Acheson called a "proactive move."
By Friday, grocery operator Kroger Co. recalled one of its lines of bagged pistachios because of possible salmonella contamination, saying the California plant also supplied its nuts. Those nuts were sold in 31 states.
Fabia D'Arienzo, a spokeswoman for Tulare County-based Setton Pistachio, said the company was only recalling certain bulk roasted in-shell and roasted shelled pistachios that were shipped on or after September 1.
Because Setton Pistachio shipped tote bags of nuts weighing up to 2,000 pounds to 36 wholesalers across the country, it will take weeks to figure out how many products could be affected, said Jeff Farrar, chief of the Food and Drug Branch of the California Department of Public Health.
"It will be safe to assume based on the volume that this will be an ingredient in a lot of different products, and that may possibly include things like ice cream and cake mixes," Farrar said. "The firm is already turning around trucks in transit to bring those back to the facility."
Salmonella, the most common cause of food-borne illness, is a bacteria that causes diarrhea, fever and cramping. Most people recover, but the infection can be life-threatening for children, the elderly and people with weakened immune systems.
For nuts, roasting is supposed to kill the bacteria. But problems can occur if the roasting is not done correctly or if roasted nuts are re-contaminated. That can happen if mice, rats or birds get into the facility.
Last winter, a national salmonella outbreak was blamed on a Georgia company under federal investigation for flouting safety procedures and knowingly shipping contaminated peanuts.
The outbreak is still ongoing. More than 690 people in 46 states have gotten sick. Nearly 3,900 products made with peanut ingredients from Peanut Corp of America have been recalled.
California public health authorities have taken hundreds of samples at Setton's processing facility, but lab results have not yet determined whether salmonella was found at the plant, Farrar said. The food companies' own tests of the contaminated products isolated four different types of salmonella, but none were the same strain as the one found in the peanuts, Acheson said.
Associated Press writers Ricardo Alonso-Zaldivar in Washington and Tracie Cone in Fresno contributed to this report.
New York Times Editorial: Evolutionary Semantics, Texas-Style
New York Times Editorial: Evolutionary Semantics, Texas-Style
Copyright by The New York Times
Published: March 30, 2009
http://www.nytimes.com/2009/03/31/opinion/31tue3.html?ref=global
The Texas Board of Education gave grudging support last week to teaching the mainstream theory of evolution without the most troubling encumbrances sought by religious and social conservatives. But the margins on crucial amendments were disturbingly close, typically a single vote on a 15-member board, and compromise language left ample room for the struggle to continue.
This was not a straightforward battle over whether to include creationism or its close cousin, intelligent design, in the science curriculum. That battle has been lost by Darwin’s opponents in the courts, the schools and most political arenas.
Rather, this was a struggle to insert into the state science standards various phrases and code words that may seem innocuous or meaningless at first glance but could open the door to doubts about evolution. In the most ballyhooed vote, those like us who support the teaching of sound science can claim a narrow victory.
Conservatives tried — but failed — to reinsert a phrase requiring students to study the “strengths and weaknesses” of all scientific theories, including evolution. That language had been in the standards for years, but it was eliminated by experts who prepared the new standards for board approval because it has become a banner for critics of Darwinian evolution who seek to exaggerate supposed weaknesses in the theory.
The conservatives also narrowly lost attempts to have students study the “sufficiency or insufficiency” of natural selection to explain the complexities of the cell, a major issue for proponents of intelligent design. The conservatives also failed to get the word “sufficiency” inserted by itself, presumably because that would imply insufficiency as well. They had to settle for language requiring students to “analyze, evaluate and critique” scientific explanations and examine “all sides” of the scientific evidence.
At the end of a tense, confusing three-day meeting, Darwin’s critics claimed that this and other compromise language amounted to a huge victory that would still allow their critiques into textbooks and classrooms. One can only hope that teachers in Texas will use common sense and teach evolution as scientists understand it.
Copyright by The New York Times
Published: March 30, 2009
http://www.nytimes.com/2009/03/31/opinion/31tue3.html?ref=global
The Texas Board of Education gave grudging support last week to teaching the mainstream theory of evolution without the most troubling encumbrances sought by religious and social conservatives. But the margins on crucial amendments were disturbingly close, typically a single vote on a 15-member board, and compromise language left ample room for the struggle to continue.
This was not a straightforward battle over whether to include creationism or its close cousin, intelligent design, in the science curriculum. That battle has been lost by Darwin’s opponents in the courts, the schools and most political arenas.
Rather, this was a struggle to insert into the state science standards various phrases and code words that may seem innocuous or meaningless at first glance but could open the door to doubts about evolution. In the most ballyhooed vote, those like us who support the teaching of sound science can claim a narrow victory.
Conservatives tried — but failed — to reinsert a phrase requiring students to study the “strengths and weaknesses” of all scientific theories, including evolution. That language had been in the standards for years, but it was eliminated by experts who prepared the new standards for board approval because it has become a banner for critics of Darwinian evolution who seek to exaggerate supposed weaknesses in the theory.
The conservatives also narrowly lost attempts to have students study the “sufficiency or insufficiency” of natural selection to explain the complexities of the cell, a major issue for proponents of intelligent design. The conservatives also failed to get the word “sufficiency” inserted by itself, presumably because that would imply insufficiency as well. They had to settle for language requiring students to “analyze, evaluate and critique” scientific explanations and examine “all sides” of the scientific evidence.
At the end of a tense, confusing three-day meeting, Darwin’s critics claimed that this and other compromise language amounted to a huge victory that would still allow their critiques into textbooks and classrooms. One can only hope that teachers in Texas will use common sense and teach evolution as scientists understand it.
Europe spurns the beloved Obama
Europe spurns the beloved Obama
By Gideon Rachman
Copyright The Financial Times Limited 2009
Published: March 30 2009 20:18 | Last updated: March 30 2009 20:18
http://www.ft.com/cms/s/0/32902674-1d55-11de-9eb3-00144feabdc0.html
Europeans have long worshipped Barack Obama from afar. Now the beloved one is paying his first visit as US president to the old continent. Yet there is every indication that Europe’s leaders are about to stiff him.
Mr Obama is on a rapid-fire tour that will take him from the Group of 20 meeting in London to a Nato summit in Strasbourg, then on to a US-European Union meeting in Prague and, finally, a state visit in Turkey. But he will be lucky to return from Europe with much more than commemorative photos and some presents for the kids. (“I went to the G20 summit in London and all I got was this lousy T-shirt.”)
If you look at Mr Obama’s top priorities, you get a sense of just how little the Europeans are prepared to give him. More help in Afghanistan? Most Europeans will do the bare minimum. A co-ordinated fiscal stimulus? Sorry, Europe is out of cash as well as troops.
Europe’s grudging attitude to the new president is not only discourteous. It is unwise and self-defeating. Mr Obama is an internationalist. But the American public is war weary and preoccupied by the domestic economic disaster. If even a liberal, internationalist president seems to be getting nothing out of America’s allies, then protectionist and isolationist voices in Congress will only get louder.
Any such development would be disastrous for Europe. The US remains the core of the global economy and the guarantor of security in Europe. The continent’s leaders have a huge interest in fostering and fanning the new American internationalism represented by Mr Obama. Instead, they seem to be doing their utmost to pour cold water on it.
Already you hear grumbles in Europe that the new president has little instinctive sympathy for or understanding of Europeans (unlike that nice George W. Bush). There are complaints that the Obama administration is too concerned with domestic affairs. The president is accused of being too casual with European visitors. How dare he give the visiting British prime minister a box of old films? Couldn’t he think of something more lavish?
This is pathetic stuff. If you look at the actual substance of what his administration has been doing, Obama has made a point of moving significantly on four issues that bedevilled US-European relations during the Bush years: climate change, Guantánamo, Iraq and Iran. The prison camp at Guantánamo Bay is to be closed. Mr Obama has appointed people such as Steven Chu, the new energy secretary, who are passionate about tackling global warming. He has announced a timetable for withdrawal from Iraq. And he has launched a diplomatic initiative with Iran.
Naturally, the Obama administration wants something in return from the Europeans. A few months ago the Americans were hoping that their allies might come up with more troops for Afghanistan, and relax some of the notorious “caveats” that restrict what German soldiers, in particular, can do. That hope has proved largely vain. The British might send a couple of thousand more troops. The Poles and Italians could also chip in. But any new European contribution will be feeble compared with the 21,000 extra troops that the US is committing.
Rather than confront the Europeans on the issue of troops, the Obama administration has decided to try to find other areas in which Europe could contribute. A laundry list of such actions will be flourished at the Nato summit; more money, more Europeans to train the Afghan army and police. But while the list will be long, it will not be all that impressive. There will certainly be nothing to compare with Japan’s decision to pay the entire salary bill for the Afghan police for the next six months.
There are aspects of Mr Obama’s new Afghanistan policy that can be legitimately disagreed with. The decision to expand the fight inside Pakistan looks risky. But allied reservations would be listened to with more attention if the Europeans were prepared to make more effort themselves. Mr Obama is certainly right when he insists that the fight in Afghanistan is one that concerns the entire western world. A resurgent al-Qaeda would be just as big a threat to Europe as to the US.
It is the same story on Iran. The Europeans say they are very pleased with Mr Obama’s new tone. But there is little indication that the Germans, in particular, are prepared to tighten sanctions, should diplomacy stall and Iran’s nuclear programme accelerate.
The G20 summit in London is also being overshadowed by a US-European dispute about how to respond to the economic crisis. The Americans want to emphasise co-ordinated Keynesian spending to jolt the world economy back into life. Many Europeans are sceptical. Mirek Topolanek, the recently deposed Czech prime minister – apparently inspired by watching AC/DC perform “Highway to Hell” in Prague – has helpfully warned that US economic policy has put the country on the “road to hell”. This has set just the right atmosphere for the EU-US summit in Prague next weekend.
The Europeans would rather emphasise institutional reform than fiscal stimuli. Both ideas will get a nod in the G20 communiqué. But the American emphasis on dealing with the immediate crisis is surely preferable to the European predilection for abstract discussions of institutions.
Mr Obama was the president that Europeans hoped and prayed for. Now they have got him, they need to give him some help.
gideon.rachman@ft.com
Post and read comments at Gideon Rachman’s blog
More columns at www.ft.com/gideonrachman
By Gideon Rachman
Copyright The Financial Times Limited 2009
Published: March 30 2009 20:18 | Last updated: March 30 2009 20:18
http://www.ft.com/cms/s/0/32902674-1d55-11de-9eb3-00144feabdc0.html
Europeans have long worshipped Barack Obama from afar. Now the beloved one is paying his first visit as US president to the old continent. Yet there is every indication that Europe’s leaders are about to stiff him.
Mr Obama is on a rapid-fire tour that will take him from the Group of 20 meeting in London to a Nato summit in Strasbourg, then on to a US-European Union meeting in Prague and, finally, a state visit in Turkey. But he will be lucky to return from Europe with much more than commemorative photos and some presents for the kids. (“I went to the G20 summit in London and all I got was this lousy T-shirt.”)
If you look at Mr Obama’s top priorities, you get a sense of just how little the Europeans are prepared to give him. More help in Afghanistan? Most Europeans will do the bare minimum. A co-ordinated fiscal stimulus? Sorry, Europe is out of cash as well as troops.
Europe’s grudging attitude to the new president is not only discourteous. It is unwise and self-defeating. Mr Obama is an internationalist. But the American public is war weary and preoccupied by the domestic economic disaster. If even a liberal, internationalist president seems to be getting nothing out of America’s allies, then protectionist and isolationist voices in Congress will only get louder.
Any such development would be disastrous for Europe. The US remains the core of the global economy and the guarantor of security in Europe. The continent’s leaders have a huge interest in fostering and fanning the new American internationalism represented by Mr Obama. Instead, they seem to be doing their utmost to pour cold water on it.
Already you hear grumbles in Europe that the new president has little instinctive sympathy for or understanding of Europeans (unlike that nice George W. Bush). There are complaints that the Obama administration is too concerned with domestic affairs. The president is accused of being too casual with European visitors. How dare he give the visiting British prime minister a box of old films? Couldn’t he think of something more lavish?
This is pathetic stuff. If you look at the actual substance of what his administration has been doing, Obama has made a point of moving significantly on four issues that bedevilled US-European relations during the Bush years: climate change, Guantánamo, Iraq and Iran. The prison camp at Guantánamo Bay is to be closed. Mr Obama has appointed people such as Steven Chu, the new energy secretary, who are passionate about tackling global warming. He has announced a timetable for withdrawal from Iraq. And he has launched a diplomatic initiative with Iran.
Naturally, the Obama administration wants something in return from the Europeans. A few months ago the Americans were hoping that their allies might come up with more troops for Afghanistan, and relax some of the notorious “caveats” that restrict what German soldiers, in particular, can do. That hope has proved largely vain. The British might send a couple of thousand more troops. The Poles and Italians could also chip in. But any new European contribution will be feeble compared with the 21,000 extra troops that the US is committing.
Rather than confront the Europeans on the issue of troops, the Obama administration has decided to try to find other areas in which Europe could contribute. A laundry list of such actions will be flourished at the Nato summit; more money, more Europeans to train the Afghan army and police. But while the list will be long, it will not be all that impressive. There will certainly be nothing to compare with Japan’s decision to pay the entire salary bill for the Afghan police for the next six months.
There are aspects of Mr Obama’s new Afghanistan policy that can be legitimately disagreed with. The decision to expand the fight inside Pakistan looks risky. But allied reservations would be listened to with more attention if the Europeans were prepared to make more effort themselves. Mr Obama is certainly right when he insists that the fight in Afghanistan is one that concerns the entire western world. A resurgent al-Qaeda would be just as big a threat to Europe as to the US.
It is the same story on Iran. The Europeans say they are very pleased with Mr Obama’s new tone. But there is little indication that the Germans, in particular, are prepared to tighten sanctions, should diplomacy stall and Iran’s nuclear programme accelerate.
The G20 summit in London is also being overshadowed by a US-European dispute about how to respond to the economic crisis. The Americans want to emphasise co-ordinated Keynesian spending to jolt the world economy back into life. Many Europeans are sceptical. Mirek Topolanek, the recently deposed Czech prime minister – apparently inspired by watching AC/DC perform “Highway to Hell” in Prague – has helpfully warned that US economic policy has put the country on the “road to hell”. This has set just the right atmosphere for the EU-US summit in Prague next weekend.
The Europeans would rather emphasise institutional reform than fiscal stimuli. Both ideas will get a nod in the G20 communiqué. But the American emphasis on dealing with the immediate crisis is surely preferable to the European predilection for abstract discussions of institutions.
Mr Obama was the president that Europeans hoped and prayed for. Now they have got him, they need to give him some help.
gideon.rachman@ft.com
Post and read comments at Gideon Rachman’s blog
More columns at www.ft.com/gideonrachman
Complaints of internet crime hit record in US
Complaints of internet crime hit record in US
By Joseph Menn in San Francisco
Copyright The Financial Times Limited 2009
Published: March 31 2009 00:32 | Last updated: March 31 2009 00:32
http://www.ft.com/cms/s/0/e160f504-1d76-11de-9eb3-00144feabdc0.html
Victims of internet crime filed 33 per cent more complaints in the US last year than the year before, signally that electronic fraud is being exasperated by the economic crisis.
The Internet Crime Complaint Center, which tracks trends and refers cases to law enforcement agencies for investigation, said on Monday that it processed a record 275,284 complaints last year.
The number filed each month grew as the year progressed and the economy deteriorated. October, November and December were three of the worst five months.
The most frequent complaints – some 33 per cent – were over electronic correspondents failing to deliver promised goods or failing to pay for goods they received. Auction fraud at sites such as Ebay and Craigslist drove another 25 per cent of the cases.
“Anecdotally, there’s some indication that the economy is a factor,” said spokesman Paul Bresson of the Federal Bureau of Investigation, which helps run the Complaint Center.
Harder times might tempt more unemployed to turn to crime, and they can also provide more subtle support for an upward trend. Budget-conscious consumers look harder for bargains, falling for more too-good-to-be-true offers.
The spike could also derive in part from increased consumer awareness of the Complaint Center and referral links on web pages hosted by Ebay and other companies.
Those seeking work can become victims when they are hired to process funds by crooks who drain their bank accounts. Another popular trick involves apparent overpayments to new landlords or sellers, who are instructed to return some of the money before learning that the original cheque is no good.
The total loss of victims filed at the complaint centre reached another record, $265m – up from $239m in 2007. Victims of cheque fraud lost the most, a median of $3,000.
Reports to the Complaint Center provide only a partial picture. Only about one in seven fraud cases get reported anywhere, and many victims who do complain go to police or other officials instead of to the nine-year-old centre.
By Joseph Menn in San Francisco
Copyright The Financial Times Limited 2009
Published: March 31 2009 00:32 | Last updated: March 31 2009 00:32
http://www.ft.com/cms/s/0/e160f504-1d76-11de-9eb3-00144feabdc0.html
Victims of internet crime filed 33 per cent more complaints in the US last year than the year before, signally that electronic fraud is being exasperated by the economic crisis.
The Internet Crime Complaint Center, which tracks trends and refers cases to law enforcement agencies for investigation, said on Monday that it processed a record 275,284 complaints last year.
The number filed each month grew as the year progressed and the economy deteriorated. October, November and December were three of the worst five months.
The most frequent complaints – some 33 per cent – were over electronic correspondents failing to deliver promised goods or failing to pay for goods they received. Auction fraud at sites such as Ebay and Craigslist drove another 25 per cent of the cases.
“Anecdotally, there’s some indication that the economy is a factor,” said spokesman Paul Bresson of the Federal Bureau of Investigation, which helps run the Complaint Center.
Harder times might tempt more unemployed to turn to crime, and they can also provide more subtle support for an upward trend. Budget-conscious consumers look harder for bargains, falling for more too-good-to-be-true offers.
The spike could also derive in part from increased consumer awareness of the Complaint Center and referral links on web pages hosted by Ebay and other companies.
Those seeking work can become victims when they are hired to process funds by crooks who drain their bank accounts. Another popular trick involves apparent overpayments to new landlords or sellers, who are instructed to return some of the money before learning that the original cheque is no good.
The total loss of victims filed at the complaint centre reached another record, $265m – up from $239m in 2007. Victims of cheque fraud lost the most, a median of $3,000.
Reports to the Complaint Center provide only a partial picture. Only about one in seven fraud cases get reported anywhere, and many victims who do complain go to police or other officials instead of to the nine-year-old centre.
US housing price freefall extends into January
US housing price freefall extends into January
By Simone Baribeau in New York
Copyright The Financial Times Limited 2009
Published: March 31 2009 14:54 | Last updated: March 31 2009 14:54
http://www.ft.com/cms/s/0/3de81a3c-1df9-11de-830b-00144feabdc0.html
Single family home prices in the 20 largest metropolitan areas dropped 2.8 per cent in January, according to Case-Shiller’s index of the 20 largest US cities, another sign that the housing market bottom may still be distant.
Nationwide home prices are down 19 per cent on the year, the largest fall since the index started in 2000. Home prices in the 10 largest metropolitan areas dropped 2.5 per cent in January, leaving them more than 30 per cent below their peak in mid-2006. Prices, which rose at roughly the rate of inflation over the first 13 years of the index, grew more than 90 per cent in real terms between 2000 and the market’s peak.
“[There is] no let-up in home price misery with the Case Shiller data 20 major cities number showing no sign of price decline deceleration,” said Alan Ruskin strategist at RBS Capital. “If there is some hope it largely centers on the idea that the data is unlikely to continue to record large price declines [month on month], but unfortunately that does not suggest that a bottom is anywhere close at hand.”
The price declines were widespread, with the Las Vegas, Minneapolis, Detroit, Chicago, Tampa, and San Francisco metropolitan areas all losing more than 4 per cent.
Nationwide housing prices have about another 20 per cent to fall before they stabilise, said Dean Baker, co-director of the Center for Economic and Policy Research, who has been warning of an inflated housing market since 2002.
But with home prices falling at around 2 per cent a month, he said, “I think the real question is whether they overshoot.” Some markets, including Cleveland and Detroit, may already be selling at a discount, he said.
Other housing price indices have been showing glimmers of hope for home price stability. The National Association of Realtors’ initial estimates of home prices in February showed prices remained virtually unchanged from January to February, after falling 15.5 per cent on the year. According to the Office of Federal Housing Enterprise Oversight, which tracks purchase prices of houses with conforming loans, home prices rose 1.7 per cent from December to January but the increase was due largely to a change in the geographic mix of the sales.
“The last thing to turn will be the 10-city index,” which contains some of the most overbuilt areas, said Mark Zandi, chief economist at Moody’s Economy.com, who estimates home prices will fall another 10-15 per cent before stabilising.
He said prices were unlikely to fall to that level before next year and risked overshooting on the downside if the White House’s efforts to mitigate foreclosures do not kick in by the end of the year, but added that was “still a risky forecast”.
Meanwhile, the Chicago Business Barometer fell to 31.4 in March from 34.2 in February to its lowest level in over 29 years, the Institute for Supply Management-Chicago said on Tuesday.
By Simone Baribeau in New York
Copyright The Financial Times Limited 2009
Published: March 31 2009 14:54 | Last updated: March 31 2009 14:54
http://www.ft.com/cms/s/0/3de81a3c-1df9-11de-830b-00144feabdc0.html
Single family home prices in the 20 largest metropolitan areas dropped 2.8 per cent in January, according to Case-Shiller’s index of the 20 largest US cities, another sign that the housing market bottom may still be distant.
Nationwide home prices are down 19 per cent on the year, the largest fall since the index started in 2000. Home prices in the 10 largest metropolitan areas dropped 2.5 per cent in January, leaving them more than 30 per cent below their peak in mid-2006. Prices, which rose at roughly the rate of inflation over the first 13 years of the index, grew more than 90 per cent in real terms between 2000 and the market’s peak.
“[There is] no let-up in home price misery with the Case Shiller data 20 major cities number showing no sign of price decline deceleration,” said Alan Ruskin strategist at RBS Capital. “If there is some hope it largely centers on the idea that the data is unlikely to continue to record large price declines [month on month], but unfortunately that does not suggest that a bottom is anywhere close at hand.”
The price declines were widespread, with the Las Vegas, Minneapolis, Detroit, Chicago, Tampa, and San Francisco metropolitan areas all losing more than 4 per cent.
Nationwide housing prices have about another 20 per cent to fall before they stabilise, said Dean Baker, co-director of the Center for Economic and Policy Research, who has been warning of an inflated housing market since 2002.
But with home prices falling at around 2 per cent a month, he said, “I think the real question is whether they overshoot.” Some markets, including Cleveland and Detroit, may already be selling at a discount, he said.
Other housing price indices have been showing glimmers of hope for home price stability. The National Association of Realtors’ initial estimates of home prices in February showed prices remained virtually unchanged from January to February, after falling 15.5 per cent on the year. According to the Office of Federal Housing Enterprise Oversight, which tracks purchase prices of houses with conforming loans, home prices rose 1.7 per cent from December to January but the increase was due largely to a change in the geographic mix of the sales.
“The last thing to turn will be the 10-city index,” which contains some of the most overbuilt areas, said Mark Zandi, chief economist at Moody’s Economy.com, who estimates home prices will fall another 10-15 per cent before stabilising.
He said prices were unlikely to fall to that level before next year and risked overshooting on the downside if the White House’s efforts to mitigate foreclosures do not kick in by the end of the year, but added that was “still a risky forecast”.
Meanwhile, the Chicago Business Barometer fell to 31.4 in March from 34.2 in February to its lowest level in over 29 years, the Institute for Supply Management-Chicago said on Tuesday.
Japan outlines new stimulus move
Japan outlines new stimulus move
By Michiyo Nakamoto in Tokyo
Copyright The Financial Times Limited 2009
Published: March 31 2009 10:36 | Last updated: March 31 2009 10:36
http://www.ft.com/cms/s/0/64362f08-1dd6-11de-830b-00144feabdc0.html
Taro Aso on Tuesday instructed his ministers to compile a new economic stimulus package “as soon as possible before mid-April” in addition to a longer-term programme for growth.
“The Japanese economy is still in a critical situation,” Mr Aso said.
“I would like to make utmost efforts (to stimulate the economy) based on bold thinking,” he said.
The new stimulus package, which came just ahead of Mr Aso’s departure to join world leaders at the G20 summit in London on Wednesday, will have three main priorities: to ensure that the Japanese economy does not deteriorate further, to maintain jobs and boost Japan’s future growth potential, Mr Aso said.
The additional stimulus package comes as government figures showed unemployment rose to a three-year high of 4.4 per cent and the number of new jobs created sank to a 6-year low. Meanwhile, household spending fell 3.5 per cent year-on-year, a 12th consecutive monthly decline.
Japan’s Financial Services Agency is to inspect banks and credit associations to ensure they are extending loans to keep liquidity flowing to companies in need, Reuters reported on Tuesday.
Japan has already committed Y12,000bn in fiscal spending to revive the ailing economy and Mr Aso said the execution of those measures would be frontloaded as much as possible.
The prime minister failed to indicate how much more spending the new measures would entail, saying only that the cost of the package would depend on the details.
With the new package, Japan’s fiscal spending to combat the adverse effects of the global crisis, is likely to comfortably exceed the 2 per cent of GDP recommended by the IMF.
The new economic stimulus measures come as the Organisation for Economic Cooperation and Development warned that “the unemployment rate is likely to rise above 5.5 per cent and deflation may become entrenched.”
The OECD urged the Bank of Japan to keep the benchmark interest rate near zero and increase liquidity and recommended the Japanese government reform the tax system to promote growth.
The Nikkei stock average closed moderately lower amid concerns about the future outlook following nervousness in the US market over the fate of the car and banking industries.
Meanwhile, the ruling Liberal Democratic Party yesterday decided to submit legislation that would allow the use of public funds to buy exchange traded funds and real estate investment trusts, in a desperate bid to bolster Japan’s sagging markets.
Mr Aso said further that the government was considering measures to channel Japan’s Y1,400,000bn in household financial assets, much of which is held by the elderly, towards consumption.
The government is also working on a long-term growth programme that would bring the public and private sectors together to create new jobs and stimulate demand, Mr Aso said.
The programme will aim to stimulate growth by channelling Japan’s strength in environmental technology, animation, fashion and popular music to revenue-generating businesses.
Japan will also use its financial resources, including overseas development aid, to stimulate growth in Asia, Mr Aso said.
“It is important to look beyond Japan’s borders and think about Asian growth as a whole,” he said.
“I would like Japan to use its technology to lead a low-carbon revolution,” Mr Aso said.
By Michiyo Nakamoto in Tokyo
Copyright The Financial Times Limited 2009
Published: March 31 2009 10:36 | Last updated: March 31 2009 10:36
http://www.ft.com/cms/s/0/64362f08-1dd6-11de-830b-00144feabdc0.html
Taro Aso on Tuesday instructed his ministers to compile a new economic stimulus package “as soon as possible before mid-April” in addition to a longer-term programme for growth.
“The Japanese economy is still in a critical situation,” Mr Aso said.
“I would like to make utmost efforts (to stimulate the economy) based on bold thinking,” he said.
The new stimulus package, which came just ahead of Mr Aso’s departure to join world leaders at the G20 summit in London on Wednesday, will have three main priorities: to ensure that the Japanese economy does not deteriorate further, to maintain jobs and boost Japan’s future growth potential, Mr Aso said.
The additional stimulus package comes as government figures showed unemployment rose to a three-year high of 4.4 per cent and the number of new jobs created sank to a 6-year low. Meanwhile, household spending fell 3.5 per cent year-on-year, a 12th consecutive monthly decline.
Japan’s Financial Services Agency is to inspect banks and credit associations to ensure they are extending loans to keep liquidity flowing to companies in need, Reuters reported on Tuesday.
Japan has already committed Y12,000bn in fiscal spending to revive the ailing economy and Mr Aso said the execution of those measures would be frontloaded as much as possible.
The prime minister failed to indicate how much more spending the new measures would entail, saying only that the cost of the package would depend on the details.
With the new package, Japan’s fiscal spending to combat the adverse effects of the global crisis, is likely to comfortably exceed the 2 per cent of GDP recommended by the IMF.
The new economic stimulus measures come as the Organisation for Economic Cooperation and Development warned that “the unemployment rate is likely to rise above 5.5 per cent and deflation may become entrenched.”
The OECD urged the Bank of Japan to keep the benchmark interest rate near zero and increase liquidity and recommended the Japanese government reform the tax system to promote growth.
The Nikkei stock average closed moderately lower amid concerns about the future outlook following nervousness in the US market over the fate of the car and banking industries.
Meanwhile, the ruling Liberal Democratic Party yesterday decided to submit legislation that would allow the use of public funds to buy exchange traded funds and real estate investment trusts, in a desperate bid to bolster Japan’s sagging markets.
Mr Aso said further that the government was considering measures to channel Japan’s Y1,400,000bn in household financial assets, much of which is held by the elderly, towards consumption.
The government is also working on a long-term growth programme that would bring the public and private sectors together to create new jobs and stimulate demand, Mr Aso said.
The programme will aim to stimulate growth by channelling Japan’s strength in environmental technology, animation, fashion and popular music to revenue-generating businesses.
Japan will also use its financial resources, including overseas development aid, to stimulate growth in Asia, Mr Aso said.
“It is important to look beyond Japan’s borders and think about Asian growth as a whole,” he said.
“I would like Japan to use its technology to lead a low-carbon revolution,” Mr Aso said.
OECD urges ECB to start quantitative easing/Eurozone inflation plunges to record low
OECD urges ECB to start quantitative easing
By Daniel Pimlott in London
Copyright The Financial Times Limited 2009
Published: March 31 2009 11:57 | Last updated: March 31 2009 11:57
http://www.ft.com/cms/s/0/18cdef6e-1dd7-11de-830b-00144feabdc0.html
The Organisation for Economic Co-operation and Development on Tuesday urged the European Central Bank to cut interest rates closer to zero and begin quantitative easing, as it forecast a deeper recession in Europe and Japan than in the US and UK.
The call to the ECB to begin creating money in order to head off deflation comes after the central bank has been less aggressive in cutting interest rates than its American and British counterparts.
While the Federal Reserve and the Bank of England have begun programmes of quantitative easing – increasing reserves in order to buy up government and corporate bonds – the ECB is still exploring expanding its range of monetary weapons to head off the recession.
The Paris-based thinktank warned in its quarterly forecasts for advanced economies that “the growing disinflationary pressures anticipated during the next two years” implied that the “remaining scope for cutting policy rates should be used quickly and quantitative easing policies implemented”.
Interest rates in the ECB currently stand at 1.5 per cent compared to 0.5 per cent in the UK and a range of between zero and 0.25 per cent in the US.
The call for further monetary stimulus in Europe came as the OECD forecast that advanced economies around the world will contract by 4.3 per cent in 2009 with little or no growth expected in 2010.
The whole world economy will shrink by 2.7 per cent this year, the OECD forecasts, before rebounding to a growth rate of 1.2 per cent next year.
“The downturn is the most severe and synchronised in post-war history,” the OECD said.
The call for further monetary stimulus in Europe came as the OECD predicted that one in 10 workers in advanced economies will be without a job next year. Other figures out on Tuesday showed that Japan and Germany have seen sharp increases in unemployment.
On Monday Angel Gurría, the head of the OECD, said that unemployment in the 30 advanced OECD countries would swell “by about 25m million people, by far the largest and most rapid increase in OECD unemployment in the postwar period”.
However, while the downturn will leave no advanced economies unscathed, the OECD is forecasting that it will be less severe in the US and UK, where banking systems have proved more fragile.
While the US is expected to suffer a 4 per cent decline in GDP this year, followed by no growth in 2010, the eurozone is set to contract by 4.1 per cent in 2009 and 0.3 per cent next year.
Within the eurozone, Germany is expected to see the worst recession, with a 5.3 per cent decline in GDP in 2009, with Italy suffering a drop of 4.3 per cent. By comparison the UK gets off relatively lightly with a 3.7 per cent drop in GDP in 2009 and a 0.2 per cent decline in 2010. Japan will suffer most of all with a 6.6 per cent decline this year and a further decline of 0.5 per cent next year.
The OECD appeared to call for further fiscal stimulus in Europe, a demand that is likely to strike a jarring note with Germany and others, who say they want to see the effects of stimulus packages already in place before embarking on another round of spending.
“Additional discretionary fiscal measures are also warranted in member countries that have sufficient budgetary scope,” the OECD said.
In the UK, the OECD warned that although further fiscal stimulus could be warranted if the recession gets much worse, there was not much scope for increased public spending or lower taxes due to the rapid deterioraiton in the public finances.
“The room for additional fiscal manoeuvre to respond to worse-than-expected activity developments is therefore limited and new measures would need to be accompanied by detailed and credible fiscal consolidation plans, in order to ensure that confidence is not eroded,” the report said. “In this regard, the formulation of a strong and credible medium-term fiscal framework would be helpful.”
The report shows world trade growth collapsed at a nearly 25 per cent annualised pace in the fourth quarter of last year, compared with an average of 8 per cent growth over the last 5 years. This was the sharpest contraction since records began in 1965.
Inflation would slow sharply across developed economies this year, with some experiencing prolonged periods of falling prices.
But it said that policy introduced so far would help the world avoid another Great Depression.
“The Great Depression was deepened by terrible policy mistakes, ranging from contractionary monetary policy to beggar-thy-neighbour policies in the form of trade protection and competitive devaluations,” the report said. “In contrast, this recession has broadly elicited the right policy.”
Eurozone inflation plunges to record low
By Ralph Atkins in Frankfurt
Copyright The Financial Times Limited 2009
Published: March 31 2009 11:31 | Last updated: March 31 2009 11:31
http://www.ft.com/cms/s/0/3d8c80ce-1dda-11de-830b-00144feabdc0.html
Eurozone inflation has fallen to a record low, strengthening the case for further European Central Bank action to boost the economy of the 16-country bloc and head off any risk of deflation.
The annual rate of eurozone price increases fell more than expected, from 1.2 per cent in February to just 0.6 per cent in March, according to an initial estimate on Tuesday by Eurostat, the European Union’s statistical unit.
That was the lowest since comparable records began in the early 1990s. Some economists calculated that it was the lowest seen in continental Europe for half a century. It also pointed to substantial undershooting of the ECB's target of an annual inflation rate "below but close" to 2 per cent.
Oil prices accounted for much of the fall but economists said the weakness of the eurozone economy almost certainly added significantly to the downward pressure on prices. Eurostat gave no details.
Spain earlier this week became the first eurozone country to report a negative annual inflation rate. The ECB is braced for the overall eurozone inflation rate to turn negative in coming months, and the unexpected weakness of the eurozone data could heighten fears that the region will enter a deflationary phase.
The ECB sees full-blown deflation – sustained and general falls in prices that wreak substantial economic damage – remaining a remote risk, largely because of rigidities in the eurozone economy.
Jean-Claude Trichet, ECB president, told the European Parliament on Monday that neither the ECB nor other international institutions considered the risk of eurozone deflation to be “elevated and substantiated”. But he added that “we have to remain permanently alert”.
The danger the ECB faces is that negative inflation rates fuel expectations about future trends in prices that become deflationary. A European Commission report this week showed that the rate of price increases expected by eurozone consumers for the next 12 months was the weakest since its survey began in 1985.
The ECB is widely expected to cut its main policy interest rate by a further half percentage point to 1 per cent at its meeting on Thursday. So far its “non-standard” actions to combat the recession have focused on so-called “enhanced credit support” – the ECB’s answer to quantitative easing – by which it is flooding the banking sector with unlimited amounts of liquidity at low interest rates.
But the ECB is activity considering further steps, including the possible purchase of private sector debt. “The ECB’s work will not be finished with the rate cut expected on Thursday,” said Rainer Guntermann, economist at Commerzbank in Frankfurt.
The Organisation for Economic Co-operation and Development on Tuesday urged the ECB to cut interest rates closer to zero and begin quantitative easing, as it forecast a deeper recession in Europe and Japan than in the US and UK.
The Paris-based think-tank warned in its quarterly forecasts for advanced economies that “the growing disinflationary pressures anticipated during the next two years” implied that the “remaining scope for cutting policy rates should be used quickly and quantitative easing policies implemented”.
Additional reporting by Daniel Pimlott
By Daniel Pimlott in London
Copyright The Financial Times Limited 2009
Published: March 31 2009 11:57 | Last updated: March 31 2009 11:57
http://www.ft.com/cms/s/0/18cdef6e-1dd7-11de-830b-00144feabdc0.html
The Organisation for Economic Co-operation and Development on Tuesday urged the European Central Bank to cut interest rates closer to zero and begin quantitative easing, as it forecast a deeper recession in Europe and Japan than in the US and UK.
The call to the ECB to begin creating money in order to head off deflation comes after the central bank has been less aggressive in cutting interest rates than its American and British counterparts.
While the Federal Reserve and the Bank of England have begun programmes of quantitative easing – increasing reserves in order to buy up government and corporate bonds – the ECB is still exploring expanding its range of monetary weapons to head off the recession.
The Paris-based thinktank warned in its quarterly forecasts for advanced economies that “the growing disinflationary pressures anticipated during the next two years” implied that the “remaining scope for cutting policy rates should be used quickly and quantitative easing policies implemented”.
Interest rates in the ECB currently stand at 1.5 per cent compared to 0.5 per cent in the UK and a range of between zero and 0.25 per cent in the US.
The call for further monetary stimulus in Europe came as the OECD forecast that advanced economies around the world will contract by 4.3 per cent in 2009 with little or no growth expected in 2010.
The whole world economy will shrink by 2.7 per cent this year, the OECD forecasts, before rebounding to a growth rate of 1.2 per cent next year.
“The downturn is the most severe and synchronised in post-war history,” the OECD said.
The call for further monetary stimulus in Europe came as the OECD predicted that one in 10 workers in advanced economies will be without a job next year. Other figures out on Tuesday showed that Japan and Germany have seen sharp increases in unemployment.
On Monday Angel Gurría, the head of the OECD, said that unemployment in the 30 advanced OECD countries would swell “by about 25m million people, by far the largest and most rapid increase in OECD unemployment in the postwar period”.
However, while the downturn will leave no advanced economies unscathed, the OECD is forecasting that it will be less severe in the US and UK, where banking systems have proved more fragile.
While the US is expected to suffer a 4 per cent decline in GDP this year, followed by no growth in 2010, the eurozone is set to contract by 4.1 per cent in 2009 and 0.3 per cent next year.
Within the eurozone, Germany is expected to see the worst recession, with a 5.3 per cent decline in GDP in 2009, with Italy suffering a drop of 4.3 per cent. By comparison the UK gets off relatively lightly with a 3.7 per cent drop in GDP in 2009 and a 0.2 per cent decline in 2010. Japan will suffer most of all with a 6.6 per cent decline this year and a further decline of 0.5 per cent next year.
The OECD appeared to call for further fiscal stimulus in Europe, a demand that is likely to strike a jarring note with Germany and others, who say they want to see the effects of stimulus packages already in place before embarking on another round of spending.
“Additional discretionary fiscal measures are also warranted in member countries that have sufficient budgetary scope,” the OECD said.
In the UK, the OECD warned that although further fiscal stimulus could be warranted if the recession gets much worse, there was not much scope for increased public spending or lower taxes due to the rapid deterioraiton in the public finances.
“The room for additional fiscal manoeuvre to respond to worse-than-expected activity developments is therefore limited and new measures would need to be accompanied by detailed and credible fiscal consolidation plans, in order to ensure that confidence is not eroded,” the report said. “In this regard, the formulation of a strong and credible medium-term fiscal framework would be helpful.”
The report shows world trade growth collapsed at a nearly 25 per cent annualised pace in the fourth quarter of last year, compared with an average of 8 per cent growth over the last 5 years. This was the sharpest contraction since records began in 1965.
Inflation would slow sharply across developed economies this year, with some experiencing prolonged periods of falling prices.
But it said that policy introduced so far would help the world avoid another Great Depression.
“The Great Depression was deepened by terrible policy mistakes, ranging from contractionary monetary policy to beggar-thy-neighbour policies in the form of trade protection and competitive devaluations,” the report said. “In contrast, this recession has broadly elicited the right policy.”
Eurozone inflation plunges to record low
By Ralph Atkins in Frankfurt
Copyright The Financial Times Limited 2009
Published: March 31 2009 11:31 | Last updated: March 31 2009 11:31
http://www.ft.com/cms/s/0/3d8c80ce-1dda-11de-830b-00144feabdc0.html
Eurozone inflation has fallen to a record low, strengthening the case for further European Central Bank action to boost the economy of the 16-country bloc and head off any risk of deflation.
The annual rate of eurozone price increases fell more than expected, from 1.2 per cent in February to just 0.6 per cent in March, according to an initial estimate on Tuesday by Eurostat, the European Union’s statistical unit.
That was the lowest since comparable records began in the early 1990s. Some economists calculated that it was the lowest seen in continental Europe for half a century. It also pointed to substantial undershooting of the ECB's target of an annual inflation rate "below but close" to 2 per cent.
Oil prices accounted for much of the fall but economists said the weakness of the eurozone economy almost certainly added significantly to the downward pressure on prices. Eurostat gave no details.
Spain earlier this week became the first eurozone country to report a negative annual inflation rate. The ECB is braced for the overall eurozone inflation rate to turn negative in coming months, and the unexpected weakness of the eurozone data could heighten fears that the region will enter a deflationary phase.
The ECB sees full-blown deflation – sustained and general falls in prices that wreak substantial economic damage – remaining a remote risk, largely because of rigidities in the eurozone economy.
Jean-Claude Trichet, ECB president, told the European Parliament on Monday that neither the ECB nor other international institutions considered the risk of eurozone deflation to be “elevated and substantiated”. But he added that “we have to remain permanently alert”.
The danger the ECB faces is that negative inflation rates fuel expectations about future trends in prices that become deflationary. A European Commission report this week showed that the rate of price increases expected by eurozone consumers for the next 12 months was the weakest since its survey began in 1985.
The ECB is widely expected to cut its main policy interest rate by a further half percentage point to 1 per cent at its meeting on Thursday. So far its “non-standard” actions to combat the recession have focused on so-called “enhanced credit support” – the ECB’s answer to quantitative easing – by which it is flooding the banking sector with unlimited amounts of liquidity at low interest rates.
But the ECB is activity considering further steps, including the possible purchase of private sector debt. “The ECB’s work will not be finished with the rate cut expected on Thursday,” said Rainer Guntermann, economist at Commerzbank in Frankfurt.
The Organisation for Economic Co-operation and Development on Tuesday urged the ECB to cut interest rates closer to zero and begin quantitative easing, as it forecast a deeper recession in Europe and Japan than in the US and UK.
The Paris-based think-tank warned in its quarterly forecasts for advanced economies that “the growing disinflationary pressures anticipated during the next two years” implied that the “remaining scope for cutting policy rates should be used quickly and quantitative easing policies implemented”.
Additional reporting by Daniel Pimlott
Monday, March 30, 2009
The debate over equality for same-sex and unmarried elderly couples
The debate over equality for same-sex and unmarried elderly couples
By JASON PIERCESON
Copyright by THE STATE JOURNAL-REGISTER (Springfield, IL)
Posted Mar 28, 2009 @ 12:03 AM
The debate over equality for same-sex and unmarried elderly couples continues in Illinois with the passage of the Religious Freedom Protection and Civil Union Act by the Illinois House’s Youth and Family Committee.
At the hearing, most of the testimony from opponents invoked religious objections to the legislation, even though the bill explicitly states that no church will be required to perform civil unions. On the positive side, it appears that opponents of rights and equal treatment under the law for sexual minorities no longer feel comfortable making public statements that are rooted in myths and stereotypes. Public opinion has clearly shifted against these extreme views, and groups like the American Psychological Association and the American Academy of Pediatrics have clearly stated that same-sex relationships are equivalent to opposite-sex relationships. In other words, the window of opportunity for the effective use of this extreme language in the public square is rapidly closing, if not already completely closed.
This has left opponents with two arguments. First, they argue that the law should be consistent with their version of theology. The only relationship that is “natural” is a heterosexual one, and the law should recognize nothing else.
The danger of a purely theological approach and applying this subjective assessment to what is “natural” to issues of civil rights is chillingly exemplified by a Virginia judge who stated in defense of laws that made interracial marriage illegal: “Almighty God created the races ... and he placed them on separate continents ... The fact that he separated the races shows that he did not intend for the races to mix.” This, of course, was not the theology of all religious Americans at the time, but it was a view favored by many, perhaps a majority.
Opponents insist that their theology ought to directly drive public policy in the state. While religious voices are certainly valuable in all public policy discussions, the public and lawmakers generally reject this direct link. Many religious individuals and groups want the law to further limit or ban reproductive choice, but a majority of the people and lawmakers disagree. Many religious individuals and groups want no recognition for same-sex couples and their families in the law. The majority of the people of the state disagree, and hopefully lawmakers will listen. Poll after poll reflects strong support for relationship equality through civil unions at the state and national levels. Only about a third of the residents of Illinois want no recognition of same-sex relationships. Of course, not all theological perspectives lead to opposition to civil unions. Nearly 150 clergy from around the state have voiced support for the proposed law.
The second argument of opponents is perhaps more serious: Civil unions will limit religious freedom, even though churches have the freedom to refuse to perform civil unions under the bill. In fact, one of the opponents who testified at the hearing referenced a photographer in New Mexico who was fined by the state’s human rights commission for refusing to photograph a same-sex commitment ceremony. The problem with this example is that New Mexico does not have a law recognizing same-sex relationships. However, the state does have a law prohibiting discrimination on the basis of sexual orientation, as does Illinois. The photographer was fined not under a civil union law but under the anti-discrimination law. In other words, the potential for diminishing religious freedom already exists under current state and federal laws.
This is not a new problem, and policy-makers have generally allowed exemptions for religious institutions under anti-discrimination frameworks, but this does not exist for individuals engaging in activities where religion is only tangentially related to a person’s role or profession. For instance, if the photographer were an anti-Semite, he or she is still obligated to offer photography services for Jewish clients under state and federal anti-discrimination laws and subject to penalties for violation of the law, even if the bias had its foundation in theology. In a society that values both freedom and equality, this will always be a source of tension in law and policy. If anything, the proposed law in Illinois errs on the side of protecting religious freedom.
No good arguments are left for opposing civil unions, only those that are purely theological, and the public clearly supports extending civil protections and responsibilities to the tens of thousands of same-sex and unmarried couples who need these protections in Illinois.
Jason Pierceson is assistant professor of political studies and legal studies at the University of Illinois at Springfield and is author of the book, “Courts, Liberalism, and Rights: Gay Law and Politics in the United States and Canada,” and is co-author of the forthcoming book, “Moral Argument, Religion, and Same-Sex Marriage: Advancing the Public Good.”
By JASON PIERCESON
Copyright by THE STATE JOURNAL-REGISTER (Springfield, IL)
Posted Mar 28, 2009 @ 12:03 AM
The debate over equality for same-sex and unmarried elderly couples continues in Illinois with the passage of the Religious Freedom Protection and Civil Union Act by the Illinois House’s Youth and Family Committee.
At the hearing, most of the testimony from opponents invoked religious objections to the legislation, even though the bill explicitly states that no church will be required to perform civil unions. On the positive side, it appears that opponents of rights and equal treatment under the law for sexual minorities no longer feel comfortable making public statements that are rooted in myths and stereotypes. Public opinion has clearly shifted against these extreme views, and groups like the American Psychological Association and the American Academy of Pediatrics have clearly stated that same-sex relationships are equivalent to opposite-sex relationships. In other words, the window of opportunity for the effective use of this extreme language in the public square is rapidly closing, if not already completely closed.
This has left opponents with two arguments. First, they argue that the law should be consistent with their version of theology. The only relationship that is “natural” is a heterosexual one, and the law should recognize nothing else.
The danger of a purely theological approach and applying this subjective assessment to what is “natural” to issues of civil rights is chillingly exemplified by a Virginia judge who stated in defense of laws that made interracial marriage illegal: “Almighty God created the races ... and he placed them on separate continents ... The fact that he separated the races shows that he did not intend for the races to mix.” This, of course, was not the theology of all religious Americans at the time, but it was a view favored by many, perhaps a majority.
Opponents insist that their theology ought to directly drive public policy in the state. While religious voices are certainly valuable in all public policy discussions, the public and lawmakers generally reject this direct link. Many religious individuals and groups want the law to further limit or ban reproductive choice, but a majority of the people and lawmakers disagree. Many religious individuals and groups want no recognition for same-sex couples and their families in the law. The majority of the people of the state disagree, and hopefully lawmakers will listen. Poll after poll reflects strong support for relationship equality through civil unions at the state and national levels. Only about a third of the residents of Illinois want no recognition of same-sex relationships. Of course, not all theological perspectives lead to opposition to civil unions. Nearly 150 clergy from around the state have voiced support for the proposed law.
The second argument of opponents is perhaps more serious: Civil unions will limit religious freedom, even though churches have the freedom to refuse to perform civil unions under the bill. In fact, one of the opponents who testified at the hearing referenced a photographer in New Mexico who was fined by the state’s human rights commission for refusing to photograph a same-sex commitment ceremony. The problem with this example is that New Mexico does not have a law recognizing same-sex relationships. However, the state does have a law prohibiting discrimination on the basis of sexual orientation, as does Illinois. The photographer was fined not under a civil union law but under the anti-discrimination law. In other words, the potential for diminishing religious freedom already exists under current state and federal laws.
This is not a new problem, and policy-makers have generally allowed exemptions for religious institutions under anti-discrimination frameworks, but this does not exist for individuals engaging in activities where religion is only tangentially related to a person’s role or profession. For instance, if the photographer were an anti-Semite, he or she is still obligated to offer photography services for Jewish clients under state and federal anti-discrimination laws and subject to penalties for violation of the law, even if the bias had its foundation in theology. In a society that values both freedom and equality, this will always be a source of tension in law and policy. If anything, the proposed law in Illinois errs on the side of protecting religious freedom.
No good arguments are left for opposing civil unions, only those that are purely theological, and the public clearly supports extending civil protections and responsibilities to the tens of thousands of same-sex and unmarried couples who need these protections in Illinois.
Jason Pierceson is assistant professor of political studies and legal studies at the University of Illinois at Springfield and is author of the book, “Courts, Liberalism, and Rights: Gay Law and Politics in the United States and Canada,” and is co-author of the forthcoming book, “Moral Argument, Religion, and Same-Sex Marriage: Advancing the Public Good.”
Gunmen Storm Police Training School in Pakistan
Gunmen Storm Police Training School in Pakistan
By WAQAR GILLANI, SABRINA TAVERNISE and SALMAN MASOOD
copyright by The New York Times
Published: March 30, 2009
http://www.nytimes.com/2009/03/31/world/asia/31pstan.html?_r=1&ref=global-home
MANAWAN, Pakistan — Elite police forces recaptured a police training school from more than a dozen well-armed gunmen after an eight-hour siege near Lahore on Monday, with reports of the death toll ranging from 10 to 34.
It was the second brazen terrorist attack in tense Punjab Province this year as the authorities confront a tangle of insurgency and political challenges. The fragility of Pakistan has become a priority for the Obama administration along with the war in neighboring Afghanistan.
Only weeks ago, in early March, a dozen gunmen in Lahore opened fire on a bus carrying the Sri Lankan cricket team and its police escort, killing six police officers and a driver. That assault in the center of the busy provincial capital, a city of nine million people, led to the suspension of international cricket tours to Pakistan, a severe blow to national pride.
On Monday afternoon, after hours of confused explosions and gunfire as security forces battled to retake control of the building, rescue workers began evacuating the wounded in ambulances.
A police commando involved in the operation said three of the gunmen blew themselves up as commandos closed in.
“We announced: Give yourself up,” said Arif Ali, 32, a member of an elite squad of 15 men. “But they chose to kill themselves.”
His team was at the academy at the start of the assault, and said the attackers lobbed at least 10 to 12 grenades. They were armed with light machine guns and pistols and wore the sleeveless padded vests that are commonly used by suicide bombers, he said.
After retaking the building, Pakistani security forces emerged onto its roof and black-clad commandos shouted in jubilation, firing into the air.
Announcing the end of the operation, the senior official at the Pakistani Ministry of Interior, Rehman Malik, said the attack was intended to destabilize Pakistan and illustrated how far "our enemies" had penetrated the country.
The identity of the attackers was not immediately known. Shahid Iqbal, a senior officer commanding some of the forces that retook the school, described the attackers as Afghans, but offered no evidence. He said gunbattles raged in stairwells as the security forces moved in. The attackers threw grenades from upper floors onto police armored vehicles below, he said, and he saw at least one attacker blow himself up.
“One man blasted himself right there,” he said, gesturing toward a window.
Tajamal Hussein, a 20-year-old recruit, said that the attackers spoke with the Saraiki accent of the southern Punjab region of Pakistan and that they shouted: “We have come, O attackers of the Red Mosque, we have come.” The reference was apparently to a bloody, eight-day siege of a militant mosque in Islamabad, in July, 2007, finally ended by the military.
The police academy appeared to have been chosen carefully, and the gunmen struck while hundreds of young recruits were on the parade ground.
The assault began at around 8 a.m. when the gunmen entered the building from a rear entrance, firing indiscriminately and throwing grenades at the parade ground where hundreds of new recruits were starting their morning drill. Adnan Ali had been on night duty with other cadets and was awoken to the sound of gunfire shattering the windows of a sleeping area with mattresses on the floor. Outside, he said in an interview, he saw recruits crawling to safety and joined them to hide under buses parked outside.
Soon afterward, television footage showed bodies of dead policemen littering the ground. Scores of recruits clambered over walls to escape, then crawled along the ground to seek shelter in nearby buildings.
“You can’t even imagine such a situation,” said Saqib Butt, deputy superintendent of Manawan police, as shots rang out behind him. “We were very surprised.”
One police commando said he had personally helped carry into ambulances the bodies of 32 dead police recruits who had been on the parade ground at the time of the assault.
The assault appeared to have been well-planned, an intelligence expert said. “This took many weeks to plan, someone should have smelled this was going to happen,” said Masood Sharif, the former chief of intelligence in Lahore.
Government troops outside the police training school in Lahore.
Scores of police vehicles and ambulances crowded around the high walls of the academy as police rushed to the compound. The attackers fired from the roof of the school as a police helicopter hovered overhead. Police sharpshooters positioned at nearby buildings fired into the compound.
A helicopter ferrying troops to the scene was hit by fire from the attackers, but managed to land safely, according to Dawn television.
A police officer who had been inside the compound, Mohammed Imtiaz Khaliq, said one of the attackers had a short beard and was dressed in traditional Pakistani dress and had said repeatedly in Urdu: “I’m a Muslim.”
The officer said he saw at least 30 people critically wounded after he entered the building through a kitchen area where dozens of police recruits and an instructor were cowering on a floor, some with blood on their clothing.
After the security forces completed their assault, police who entered the building said there were a number of dead bodies inside the compound. It was not immediately clear how high the death toll would climb, or at what stage of the operation people inside the building were killed.
A recruit who identified himself only as Rafique, 20, said he heard an intense blast at the beginning of the regular morning parade. "We ran out immediately. I didn’t come back till the end of the operation," he said, as he stood at the main entrance. The secretary of information for Punjab, Taimur Azmat Usman, said three men, including one carrying hand grenades, had been arrested on the perimeter of the compound on suspicion of helping the attackers inside the building.
There was immediate speculation that the assault may have been carried out by Lashkar-e-Jangvi, a sectarian group that recruits in southern Punjab but in recent years has moved to South and North Waziristan to train alongside Al Qaeda.
A cadet who was on the parade ground at the time of the attack said the gunmen entered the school at about 8 a.m. from the rear. The attackers immediately threw grenades and opened fire, said Amir Farook, 22. “Most of the recruits were present on the parade ground,” Mr. Farook said as he waited for treatment at a Lahore hospital. Contradicting some reports, he said the gunmen were not wearing police uniforms.
Another recruit, Mushammad Raza, 22, said he heard blasts and then saw the attackers throw hand grenades. With a dozen other recruits, he clambered over a wall and crawled across a road before taking shelter in a house for half an hour. Rescue workers then took him to a hospital.
Rizwan Naseer, a doctor in charge of emergency operations, said at least 48 people were being treated at hospitals. Local media cited 90 wounded and said there could be many more casualties. Former police officials told television reporters that security around the school was light, allowing the gunmen to breach the walls easily.
Wounded cadets were carried out of the center on stretchers and some who had escaped by jumping over walls were shown weeping in television footage. The school was believed to have 850 cadets under training. One of them, Khalil Zaman, said the attack had destroyed his ambition to be a police officer. “I will not join the police, not after this,” he said. “I love my life.”
Jane Perlez and Pir Zubair Shah contributed reporting from Islamabad.
By WAQAR GILLANI, SABRINA TAVERNISE and SALMAN MASOOD
copyright by The New York Times
Published: March 30, 2009
http://www.nytimes.com/2009/03/31/world/asia/31pstan.html?_r=1&ref=global-home
MANAWAN, Pakistan — Elite police forces recaptured a police training school from more than a dozen well-armed gunmen after an eight-hour siege near Lahore on Monday, with reports of the death toll ranging from 10 to 34.
It was the second brazen terrorist attack in tense Punjab Province this year as the authorities confront a tangle of insurgency and political challenges. The fragility of Pakistan has become a priority for the Obama administration along with the war in neighboring Afghanistan.
Only weeks ago, in early March, a dozen gunmen in Lahore opened fire on a bus carrying the Sri Lankan cricket team and its police escort, killing six police officers and a driver. That assault in the center of the busy provincial capital, a city of nine million people, led to the suspension of international cricket tours to Pakistan, a severe blow to national pride.
On Monday afternoon, after hours of confused explosions and gunfire as security forces battled to retake control of the building, rescue workers began evacuating the wounded in ambulances.
A police commando involved in the operation said three of the gunmen blew themselves up as commandos closed in.
“We announced: Give yourself up,” said Arif Ali, 32, a member of an elite squad of 15 men. “But they chose to kill themselves.”
His team was at the academy at the start of the assault, and said the attackers lobbed at least 10 to 12 grenades. They were armed with light machine guns and pistols and wore the sleeveless padded vests that are commonly used by suicide bombers, he said.
After retaking the building, Pakistani security forces emerged onto its roof and black-clad commandos shouted in jubilation, firing into the air.
Announcing the end of the operation, the senior official at the Pakistani Ministry of Interior, Rehman Malik, said the attack was intended to destabilize Pakistan and illustrated how far "our enemies" had penetrated the country.
The identity of the attackers was not immediately known. Shahid Iqbal, a senior officer commanding some of the forces that retook the school, described the attackers as Afghans, but offered no evidence. He said gunbattles raged in stairwells as the security forces moved in. The attackers threw grenades from upper floors onto police armored vehicles below, he said, and he saw at least one attacker blow himself up.
“One man blasted himself right there,” he said, gesturing toward a window.
Tajamal Hussein, a 20-year-old recruit, said that the attackers spoke with the Saraiki accent of the southern Punjab region of Pakistan and that they shouted: “We have come, O attackers of the Red Mosque, we have come.” The reference was apparently to a bloody, eight-day siege of a militant mosque in Islamabad, in July, 2007, finally ended by the military.
The police academy appeared to have been chosen carefully, and the gunmen struck while hundreds of young recruits were on the parade ground.
The assault began at around 8 a.m. when the gunmen entered the building from a rear entrance, firing indiscriminately and throwing grenades at the parade ground where hundreds of new recruits were starting their morning drill. Adnan Ali had been on night duty with other cadets and was awoken to the sound of gunfire shattering the windows of a sleeping area with mattresses on the floor. Outside, he said in an interview, he saw recruits crawling to safety and joined them to hide under buses parked outside.
Soon afterward, television footage showed bodies of dead policemen littering the ground. Scores of recruits clambered over walls to escape, then crawled along the ground to seek shelter in nearby buildings.
“You can’t even imagine such a situation,” said Saqib Butt, deputy superintendent of Manawan police, as shots rang out behind him. “We were very surprised.”
One police commando said he had personally helped carry into ambulances the bodies of 32 dead police recruits who had been on the parade ground at the time of the assault.
The assault appeared to have been well-planned, an intelligence expert said. “This took many weeks to plan, someone should have smelled this was going to happen,” said Masood Sharif, the former chief of intelligence in Lahore.
Government troops outside the police training school in Lahore.
Scores of police vehicles and ambulances crowded around the high walls of the academy as police rushed to the compound. The attackers fired from the roof of the school as a police helicopter hovered overhead. Police sharpshooters positioned at nearby buildings fired into the compound.
A helicopter ferrying troops to the scene was hit by fire from the attackers, but managed to land safely, according to Dawn television.
A police officer who had been inside the compound, Mohammed Imtiaz Khaliq, said one of the attackers had a short beard and was dressed in traditional Pakistani dress and had said repeatedly in Urdu: “I’m a Muslim.”
The officer said he saw at least 30 people critically wounded after he entered the building through a kitchen area where dozens of police recruits and an instructor were cowering on a floor, some with blood on their clothing.
After the security forces completed their assault, police who entered the building said there were a number of dead bodies inside the compound. It was not immediately clear how high the death toll would climb, or at what stage of the operation people inside the building were killed.
A recruit who identified himself only as Rafique, 20, said he heard an intense blast at the beginning of the regular morning parade. "We ran out immediately. I didn’t come back till the end of the operation," he said, as he stood at the main entrance. The secretary of information for Punjab, Taimur Azmat Usman, said three men, including one carrying hand grenades, had been arrested on the perimeter of the compound on suspicion of helping the attackers inside the building.
There was immediate speculation that the assault may have been carried out by Lashkar-e-Jangvi, a sectarian group that recruits in southern Punjab but in recent years has moved to South and North Waziristan to train alongside Al Qaeda.
A cadet who was on the parade ground at the time of the attack said the gunmen entered the school at about 8 a.m. from the rear. The attackers immediately threw grenades and opened fire, said Amir Farook, 22. “Most of the recruits were present on the parade ground,” Mr. Farook said as he waited for treatment at a Lahore hospital. Contradicting some reports, he said the gunmen were not wearing police uniforms.
Another recruit, Mushammad Raza, 22, said he heard blasts and then saw the attackers throw hand grenades. With a dozen other recruits, he clambered over a wall and crawled across a road before taking shelter in a house for half an hour. Rescue workers then took him to a hospital.
Rizwan Naseer, a doctor in charge of emergency operations, said at least 48 people were being treated at hospitals. Local media cited 90 wounded and said there could be many more casualties. Former police officials told television reporters that security around the school was light, allowing the gunmen to breach the walls easily.
Wounded cadets were carried out of the center on stretchers and some who had escaped by jumping over walls were shown weeping in television footage. The school was believed to have 850 cadets under training. One of them, Khalil Zaman, said the attack had destroyed his ambition to be a police officer. “I will not join the police, not after this,” he said. “I love my life.”
Jane Perlez and Pir Zubair Shah contributed reporting from Islamabad.
Fox News’s Mad, Apocalyptic, Tearful Rising Star
Fox News’s Mad, Apocalyptic, Tearful Rising Star
By BRIAN STELTER and BILL CARTER
Copyright by The New York Times
Published: March 29, 2009
http://www.nytimes.com/2009/03/30/business/media/30beck.html?th&emc=th
“You are not alone,” Glenn Beck likes to say. For the disaffected and aggrieved Americans of the Obama era, he could not have picked a better rallying cry.
Critics of Glenn Beck say he engages in incendiary rhetoric, but he says, “I’m a rodeo clown.”
Mr. Beck, an early-evening host on the Fox News Channel, is suddenly one of the most powerful media voices for the nation’s conservative populist anger. Barely two months into his job at Fox, his program is a phenomenon: it typically draws about 2.3 million viewers, more than any other cable news host except Bill O’Reilly or Sean Hannity, despite being on at 5 p.m., a slow shift for cable news.
With a mix of moral lessons, outrage and an apocalyptic view of the future, Mr. Beck, a longtime radio host who jumped to Fox from CNN’s Headline News channel this year, is capturing the feelings of an alienated class of Americans.
In an interview, Mr. Beck, who recently rewatched the 1976 film “Network,” said he identified with the character of Howard Beale, the unhinged TV news anchorman who declares on the air that he is “mad as hell.”
“I think that’s the way people feel,” Mr. Beck said. “That’s the way I feel.” In part because of Mr. Beck, Fox News — long identified as the favored channel for conservatives and Republican leaders — is enjoying a resurgence just two months into Mr. Obama’s term. While always top-rated among cable news channels, Fox’s ratings slipped during the long Democratic primary season last year. Now it is back on firm footing as the presumptive network of the opposition, with more than 1.2 million viewers watching at any given time, about twice as many as CNN or MSNBC.
While Mr. O’Reilly, the 8 p.m. host, paints himself as the outsider and Mr. Hannity, at 9, is more consistently ideological, Mr. Beck presents himself as a revivalist in a troubled land.
He preaches against politicians, hosts regular segments titled “Constitution Under Attack” and “Economic Apocalypse,” and occasionally breaks into tears.
Michael Smerconish, a fellow syndicated talk show host, said that Mr. Beck “has a gift for touching the passion nerve.”
Tapping into fear about the future, Mr. Beck also lingers over doomsday situations; in a series called “The War Room” last month he talked to experts about the possibility of global financial panic and widespread outbreaks of violence. He challenged viewers to “think the unthinkable” so that they would be prepared in case of emergency.
“The truth is — that you are the defender of liberty,” he said. “It’s not the government. It’s not an army or anybody else. It’s you. This is your country.”
And always, Mr. Beck’s emotions are never far from the surface. “That’s good dramatic television,” said Phil Griffin, the president of a Fox rival, MSNBC. “That’s who Glenn Beck is.”
Mr. Beck says he believes every word he says on his TV show, and the radio show that he still hosts from 9 a.m. to noon each weekday.
He says that America is “on the road to socialism” and that “God and religion are under attack in the U.S.” He recently wondered aloud whether FEMA was setting up concentration camps, calling it a rumor that he was unable to debunk.
At the same time, though, he says he is an entertainer. “I’m a rodeo clown,” he said in an interview, adding with a coy smile, “It takes great skill.”
And like a rodeo clown, Mr. Beck incites critics to attack by dancing in front of them.
“There are absolutely historical precedents for what is happening with Beck,” said Tom Rosenstiel, the director of the Project for Excellence in Journalism. “There was a lot of radio evangelism during the Depression. People were frustrated and frightened. There are a lot of scary parallels now.”
The conservative writer David Frum said Mr. Beck’s success “is a product of the collapse of conservatism as an organized political force, and the rise of conservatism as an alienated cultural sensibility.”
“It’s a show for people who feel they belong to an embattled minority that is disenfranchised and cut off,” he said.
Joel Cheatwood, a senior vice president for development at Fox News, said he thought Mr. Beck’s audience was a “somewhat disenfranchised” one. And, he added, “it’s a huge audience.”
Mr. Beck has used phrases like “we surround them,” invoked while speaking vaguely about people who do not share his discomfort with the “direction America is being taken in.”
His comments have prompted several bloggers to speculate recently that the TV host may have been promoting an armed revolt.
Jeffrey Jones, a professor of media and politics at Old Dominion University and author of the book “Entertaining Politics,” said that Mr. Beck engages in “inciting rhetoric. People hear their values are under attack and they get worried. It becomes an opportunity for them to stand up and do something.”
Sitting in his corner office overlooking Avenue of the Americas in Manhattan, Mr. Beck rejected such charges but acknowledged that some people see sinister meanings in his commentaries. He said the people “who are spreading the garbage that I’m stirring up a revolution haven’t watched the show.”
To answer his critics, Mr. Beck delivered a 17-minute commentary — remarkably long by cable standards — last Monday, answering criticisms, including one from Bill Maher that he was producing “the same kind of talking” that led Timothy McVeigh to blow up the Oklahoma City federal building in 1995.
“Let me be clear,” Mr. Beck said. “If someone tries to harm another person in the name of the Constitution or the ‘truth’ behind 9/11 or anything else, they are just as dangerous and crazy as those we don’t seem to recognize anymore, who kill in the name of Allah.”
Born in Mount Vernon, Wash., in 1964, Mr. Beck has long been a performer. His roots are in comedy — he spent years as a morning radio disc jockey — and continues to perform comedy on stages across the country.
He got into the radio business to “share my opinion in a humorous way,” but the times “are so serious now that I find myself sometimes being the guy I don’t want to be — the guy saying things that are sometimes pretty scary, but nobody else is willing to say them.”
In 2006, he joined Headline News. There, his show was taped, denying viewers some of the what-will-he-say-next quality of his live program on Fox.
On March 12 Mr. Beck introduced the 9/12 Project, an initiative to reclaim the values and principles that he said were evident the day after the Sept. 11, 2001, terrorist attacks. On a special broadcast he asked: “What ever happened to the country that loved the underdog and stood up for the little guy?”
When it was suggested in an interview that he sometimes sounds like a preacher, he responded, “No. You’ve never met a more flawed guy than me.”
He added later: “I say on the air all time, ‘if you take what I say as gospel, you’re an idiot.’ ”
By BRIAN STELTER and BILL CARTER
Copyright by The New York Times
Published: March 29, 2009
http://www.nytimes.com/2009/03/30/business/media/30beck.html?th&emc=th
“You are not alone,” Glenn Beck likes to say. For the disaffected and aggrieved Americans of the Obama era, he could not have picked a better rallying cry.
Critics of Glenn Beck say he engages in incendiary rhetoric, but he says, “I’m a rodeo clown.”
Mr. Beck, an early-evening host on the Fox News Channel, is suddenly one of the most powerful media voices for the nation’s conservative populist anger. Barely two months into his job at Fox, his program is a phenomenon: it typically draws about 2.3 million viewers, more than any other cable news host except Bill O’Reilly or Sean Hannity, despite being on at 5 p.m., a slow shift for cable news.
With a mix of moral lessons, outrage and an apocalyptic view of the future, Mr. Beck, a longtime radio host who jumped to Fox from CNN’s Headline News channel this year, is capturing the feelings of an alienated class of Americans.
In an interview, Mr. Beck, who recently rewatched the 1976 film “Network,” said he identified with the character of Howard Beale, the unhinged TV news anchorman who declares on the air that he is “mad as hell.”
“I think that’s the way people feel,” Mr. Beck said. “That’s the way I feel.” In part because of Mr. Beck, Fox News — long identified as the favored channel for conservatives and Republican leaders — is enjoying a resurgence just two months into Mr. Obama’s term. While always top-rated among cable news channels, Fox’s ratings slipped during the long Democratic primary season last year. Now it is back on firm footing as the presumptive network of the opposition, with more than 1.2 million viewers watching at any given time, about twice as many as CNN or MSNBC.
While Mr. O’Reilly, the 8 p.m. host, paints himself as the outsider and Mr. Hannity, at 9, is more consistently ideological, Mr. Beck presents himself as a revivalist in a troubled land.
He preaches against politicians, hosts regular segments titled “Constitution Under Attack” and “Economic Apocalypse,” and occasionally breaks into tears.
Michael Smerconish, a fellow syndicated talk show host, said that Mr. Beck “has a gift for touching the passion nerve.”
Tapping into fear about the future, Mr. Beck also lingers over doomsday situations; in a series called “The War Room” last month he talked to experts about the possibility of global financial panic and widespread outbreaks of violence. He challenged viewers to “think the unthinkable” so that they would be prepared in case of emergency.
“The truth is — that you are the defender of liberty,” he said. “It’s not the government. It’s not an army or anybody else. It’s you. This is your country.”
And always, Mr. Beck’s emotions are never far from the surface. “That’s good dramatic television,” said Phil Griffin, the president of a Fox rival, MSNBC. “That’s who Glenn Beck is.”
Mr. Beck says he believes every word he says on his TV show, and the radio show that he still hosts from 9 a.m. to noon each weekday.
He says that America is “on the road to socialism” and that “God and religion are under attack in the U.S.” He recently wondered aloud whether FEMA was setting up concentration camps, calling it a rumor that he was unable to debunk.
At the same time, though, he says he is an entertainer. “I’m a rodeo clown,” he said in an interview, adding with a coy smile, “It takes great skill.”
And like a rodeo clown, Mr. Beck incites critics to attack by dancing in front of them.
“There are absolutely historical precedents for what is happening with Beck,” said Tom Rosenstiel, the director of the Project for Excellence in Journalism. “There was a lot of radio evangelism during the Depression. People were frustrated and frightened. There are a lot of scary parallels now.”
The conservative writer David Frum said Mr. Beck’s success “is a product of the collapse of conservatism as an organized political force, and the rise of conservatism as an alienated cultural sensibility.”
“It’s a show for people who feel they belong to an embattled minority that is disenfranchised and cut off,” he said.
Joel Cheatwood, a senior vice president for development at Fox News, said he thought Mr. Beck’s audience was a “somewhat disenfranchised” one. And, he added, “it’s a huge audience.”
Mr. Beck has used phrases like “we surround them,” invoked while speaking vaguely about people who do not share his discomfort with the “direction America is being taken in.”
His comments have prompted several bloggers to speculate recently that the TV host may have been promoting an armed revolt.
Jeffrey Jones, a professor of media and politics at Old Dominion University and author of the book “Entertaining Politics,” said that Mr. Beck engages in “inciting rhetoric. People hear their values are under attack and they get worried. It becomes an opportunity for them to stand up and do something.”
Sitting in his corner office overlooking Avenue of the Americas in Manhattan, Mr. Beck rejected such charges but acknowledged that some people see sinister meanings in his commentaries. He said the people “who are spreading the garbage that I’m stirring up a revolution haven’t watched the show.”
To answer his critics, Mr. Beck delivered a 17-minute commentary — remarkably long by cable standards — last Monday, answering criticisms, including one from Bill Maher that he was producing “the same kind of talking” that led Timothy McVeigh to blow up the Oklahoma City federal building in 1995.
“Let me be clear,” Mr. Beck said. “If someone tries to harm another person in the name of the Constitution or the ‘truth’ behind 9/11 or anything else, they are just as dangerous and crazy as those we don’t seem to recognize anymore, who kill in the name of Allah.”
Born in Mount Vernon, Wash., in 1964, Mr. Beck has long been a performer. His roots are in comedy — he spent years as a morning radio disc jockey — and continues to perform comedy on stages across the country.
He got into the radio business to “share my opinion in a humorous way,” but the times “are so serious now that I find myself sometimes being the guy I don’t want to be — the guy saying things that are sometimes pretty scary, but nobody else is willing to say them.”
In 2006, he joined Headline News. There, his show was taped, denying viewers some of the what-will-he-say-next quality of his live program on Fox.
On March 12 Mr. Beck introduced the 9/12 Project, an initiative to reclaim the values and principles that he said were evident the day after the Sept. 11, 2001, terrorist attacks. On a special broadcast he asked: “What ever happened to the country that loved the underdog and stood up for the little guy?”
When it was suggested in an interview that he sometimes sounds like a preacher, he responded, “No. You’ve never met a more flawed guy than me.”
He added later: “I say on the air all time, ‘if you take what I say as gospel, you’re an idiot.’ ”
Banks Starting to Walk Away on Foreclosures
Banks Starting to Walk Away on Foreclosures
By SUSAN SAULNY
Copyright by The The New York Times
Published: March 29, 2009
http://www.nytimes.com/2009/03/30/us/30walkaway.html?th=&adxnnl=1&emc=th&adxnnlx=1238421719-IsqDrBouYfJr047SXKJ/Wg
SOUTH BEND, Ind. — Mercy James thought she had lost her rental property here to foreclosure. A date for a sheriff’s sale had been set, and notices about the foreclosure process were piling up in her mailbox.
After Ms. James had her tenants move out, vandals hit the home. It is set for demolition, but the title is still in her name.
Ms. James had the tenants move out, and soon her white house at the corner of Thomas and Maple Streets fell into the hands of looters and vandals, and then, into disrepair. Dejected and broke, Ms. James said she salvaged but a lesson from her loss.
So imagine her surprise when the City of South Bend contacted her recently, demanding that she resume maintenance on the property. The sheriff’s sale had been canceled at the last minute, leaving the property title — and a world of trouble — in her name.
“I thought, ‘What kind of game is this?’ ” Ms. James, 41, said while picking at trash at the house, now so worthless the city plans to demolish it — another bill for which she will be liable.
City officials and housing advocates here and in cities as varied as Buffalo, Kansas City, Mo., and Jacksonville, Fla., say they are seeing an unsettling development: Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal — from legal fees to maintenance — exceeds the diminishing value of the real estate.
The so-called bank walkaways rarely mean relief for the property owners, caught unaware months after the fact, and often mean additional financial burdens and bureaucratic headaches. Technically, they still owe on the mortgage, but as a practicality, rarely would a mortgage holder receive any more payments on the loan. The way mortgages are bundled and resold, it can be enormously time-consuming just trying to determine what company holds the loan on a property thought to be in foreclosure.
In Ms. James’s case, the company that was most recently servicing her loan is now defunct. Its parent company filed for bankruptcy and dissolved. And the original bank that sold her the loan said it could not find a record of it.
“It is what some of us think is the next wave of the crisis,” said Kermit Lind, a clinical professor at the Cleveland-Marshall College of Law and an expert on foreclosure law.
For older industrial cities like South Bend, hard times in the mortgage market began before the recent national downturn, as did the problem of bank walkaways. In the case of Ms. James, a home health care administrator, the foreclosure proceedings began in the summer of 2007, when she could not keep up with the adjustable rate on her mortgage.
In Buffalo, where officials said the problem had reached “epidemic” proportions in recent months, the city sued 37 banks last year, claiming they were responsible for the deterioration of at least 57 abandoned homes; the city chose a sampling of houses to include in the lawsuit, even though the banks had walked away from many more foreclosures. So far, five banks have settled.
In Kansas City, Rachel Foley, a lawyer who handles housing cases, said bank walkaways were “a rare occurrence two to three years ago.”
“We’re seeing them dumped more and more at the moment,” she said.
Experts suggest the bank walkaways are most visible in states where foreclosures are processed through the courts and therefore tend to be more transparent. Other states, like Indiana and New York, have court-mandated foreclosures, but roughly half of the states allow foreclosures to proceed without court intervention, making it difficult to accurately count the number of bank walkaways in recent months.
The soft housing market and the vandalism that often occurs when a house sits empty are the two main factors influencing the mortgage holders’ decisions to walk away, said Larry Rothenberg, a lawyer for Weltman, Weinberg & Reis, one of the larger creditors’ rights firms in the country.
“Oftentimes when the foreclosure starts out, it’s a viable property,” Mr. Rothenberg said, “but by the time it gets to a sheriff’s sale, it might not have enough value to justify further expense. We’ve always had cases where property was vandalized or lost value, but they were rare compared to these times.”
The problem seems most acute at the bottom of the market — houses that were inexpensive to begin with — and with investment properties, where investors and banks want speedy closure by writing off bad loans as losses. Banks and investors typically lose 40 percent to 50 percent of their investment on every foreclosure.
Guy Cecala, publisher of Inside Mortgage Finance, an industry newsletter, said some properties had become such liabilities for investors that it was not even worth holding on to them to strip valuable fixtures, like kitchen appliances, toilets and hardware.
“The whole purpose of foreclosure is to take title of the property, sell it and recoup what money you can,” Mr. Cecala said. “It’s just a sign of the times that things are so bad no one wants to take possession of the property.”
In South Bend, boarded-up houses for whom no one has stepped forward are dotting the landscape, adding a fresh layer of blight to communities that were already scarred from the area’s industrial decline.
The city is hoping to create a new type of legal mediation process that would bring together the homeowners and the mortgage holders to settle their disputes while allowing the owners to remain in the home — considered crucial to any stabilization effort.
“I’d say in the last three or four months, we’ve seen dozens of these cases,” said Chuck Leone, the South Bend city attorney. “We see it one of two ways. One is that the bank will simply dismiss the foreclosure complaint. The other is that the mortgage holder will follow through and take a judgment of foreclosure, but then not schedule the property for sheriff’s sale.”
In Ms. James’s case, it has been impossible to determine who canceled the sheriff’s sale, since her last mortgage holder went out of business. Even the city clerk’s records did not provide an answer.
“Nobody has any idea who owns what or who’s responsible,” said Judy Fox, Ms. James’s lawyer at the Notre Dame Legal Aid Clinic. “It’s a very common story.”
Mayor Stephen J. Luecke of South Bend added: “It’s just a crime the way it puts people in limbo. They first off have gone through the grief of losing their house, then they move out and find out that they still own it and have responsibility for it.”
In Jacksonville, Fla., Sylvester Kimbrough Jr. found himself caught in the limbo between foreclosure and ownership last year, 10 years into his 30-year mortgage on a $42,000 two-bedroom house.
Mr. Kimbrough, 56, a former driver for a car dealership who is now unemployed, had already moved out when he learned that the foreclosure had been stopped.
“That move really almost destroyed us,” Mr. Kimbrough said. “It was all for nothing.”
By SUSAN SAULNY
Copyright by The The New York Times
Published: March 29, 2009
http://www.nytimes.com/2009/03/30/us/30walkaway.html?th=&adxnnl=1&emc=th&adxnnlx=1238421719-IsqDrBouYfJr047SXKJ/Wg
SOUTH BEND, Ind. — Mercy James thought she had lost her rental property here to foreclosure. A date for a sheriff’s sale had been set, and notices about the foreclosure process were piling up in her mailbox.
After Ms. James had her tenants move out, vandals hit the home. It is set for demolition, but the title is still in her name.
Ms. James had the tenants move out, and soon her white house at the corner of Thomas and Maple Streets fell into the hands of looters and vandals, and then, into disrepair. Dejected and broke, Ms. James said she salvaged but a lesson from her loss.
So imagine her surprise when the City of South Bend contacted her recently, demanding that she resume maintenance on the property. The sheriff’s sale had been canceled at the last minute, leaving the property title — and a world of trouble — in her name.
“I thought, ‘What kind of game is this?’ ” Ms. James, 41, said while picking at trash at the house, now so worthless the city plans to demolish it — another bill for which she will be liable.
City officials and housing advocates here and in cities as varied as Buffalo, Kansas City, Mo., and Jacksonville, Fla., say they are seeing an unsettling development: Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal — from legal fees to maintenance — exceeds the diminishing value of the real estate.
The so-called bank walkaways rarely mean relief for the property owners, caught unaware months after the fact, and often mean additional financial burdens and bureaucratic headaches. Technically, they still owe on the mortgage, but as a practicality, rarely would a mortgage holder receive any more payments on the loan. The way mortgages are bundled and resold, it can be enormously time-consuming just trying to determine what company holds the loan on a property thought to be in foreclosure.
In Ms. James’s case, the company that was most recently servicing her loan is now defunct. Its parent company filed for bankruptcy and dissolved. And the original bank that sold her the loan said it could not find a record of it.
“It is what some of us think is the next wave of the crisis,” said Kermit Lind, a clinical professor at the Cleveland-Marshall College of Law and an expert on foreclosure law.
For older industrial cities like South Bend, hard times in the mortgage market began before the recent national downturn, as did the problem of bank walkaways. In the case of Ms. James, a home health care administrator, the foreclosure proceedings began in the summer of 2007, when she could not keep up with the adjustable rate on her mortgage.
In Buffalo, where officials said the problem had reached “epidemic” proportions in recent months, the city sued 37 banks last year, claiming they were responsible for the deterioration of at least 57 abandoned homes; the city chose a sampling of houses to include in the lawsuit, even though the banks had walked away from many more foreclosures. So far, five banks have settled.
In Kansas City, Rachel Foley, a lawyer who handles housing cases, said bank walkaways were “a rare occurrence two to three years ago.”
“We’re seeing them dumped more and more at the moment,” she said.
Experts suggest the bank walkaways are most visible in states where foreclosures are processed through the courts and therefore tend to be more transparent. Other states, like Indiana and New York, have court-mandated foreclosures, but roughly half of the states allow foreclosures to proceed without court intervention, making it difficult to accurately count the number of bank walkaways in recent months.
The soft housing market and the vandalism that often occurs when a house sits empty are the two main factors influencing the mortgage holders’ decisions to walk away, said Larry Rothenberg, a lawyer for Weltman, Weinberg & Reis, one of the larger creditors’ rights firms in the country.
“Oftentimes when the foreclosure starts out, it’s a viable property,” Mr. Rothenberg said, “but by the time it gets to a sheriff’s sale, it might not have enough value to justify further expense. We’ve always had cases where property was vandalized or lost value, but they were rare compared to these times.”
The problem seems most acute at the bottom of the market — houses that were inexpensive to begin with — and with investment properties, where investors and banks want speedy closure by writing off bad loans as losses. Banks and investors typically lose 40 percent to 50 percent of their investment on every foreclosure.
Guy Cecala, publisher of Inside Mortgage Finance, an industry newsletter, said some properties had become such liabilities for investors that it was not even worth holding on to them to strip valuable fixtures, like kitchen appliances, toilets and hardware.
“The whole purpose of foreclosure is to take title of the property, sell it and recoup what money you can,” Mr. Cecala said. “It’s just a sign of the times that things are so bad no one wants to take possession of the property.”
In South Bend, boarded-up houses for whom no one has stepped forward are dotting the landscape, adding a fresh layer of blight to communities that were already scarred from the area’s industrial decline.
The city is hoping to create a new type of legal mediation process that would bring together the homeowners and the mortgage holders to settle their disputes while allowing the owners to remain in the home — considered crucial to any stabilization effort.
“I’d say in the last three or four months, we’ve seen dozens of these cases,” said Chuck Leone, the South Bend city attorney. “We see it one of two ways. One is that the bank will simply dismiss the foreclosure complaint. The other is that the mortgage holder will follow through and take a judgment of foreclosure, but then not schedule the property for sheriff’s sale.”
In Ms. James’s case, it has been impossible to determine who canceled the sheriff’s sale, since her last mortgage holder went out of business. Even the city clerk’s records did not provide an answer.
“Nobody has any idea who owns what or who’s responsible,” said Judy Fox, Ms. James’s lawyer at the Notre Dame Legal Aid Clinic. “It’s a very common story.”
Mayor Stephen J. Luecke of South Bend added: “It’s just a crime the way it puts people in limbo. They first off have gone through the grief of losing their house, then they move out and find out that they still own it and have responsibility for it.”
In Jacksonville, Fla., Sylvester Kimbrough Jr. found himself caught in the limbo between foreclosure and ownership last year, 10 years into his 30-year mortgage on a $42,000 two-bedroom house.
Mr. Kimbrough, 56, a former driver for a car dealership who is now unemployed, had already moved out when he learned that the foreclosure had been stopped.
“That move really almost destroyed us,” Mr. Kimbrough said. “It was all for nothing.”
Rising Powers Challenge U.S. on Role in I.M.F.
Rising Powers Challenge U.S. on Role in I.M.F.
By MARK LANDLER
Copyright by The New York Times
Published: March 29, 2009
http://www.nytimes.com/2009/03/30/world/30fund.html?_r=1&th&emc=th
WASHINGTON — Barely six months ago, the International Monetary Fund emerged from years of declining relevance, hurriedly cobbling together emergency loans for countries from Iceland to Pakistan, as the first wave of the financial crisis hit.
Now, with world leaders gathering this week in London to plot a response to the gravest global economic downturn since World War II, the fund is becoming a chip in a contest to reshape the postcrisis landscape.
The Obama administration has made fortifying the I.M.F. one of its primary goals for the meeting of the Group of 20, which includes leading industrial and developing countries and the European Union. But China, India and other rising powers seem to believe that the made-in-America crisis has curtailed the ability of the United States to set the agenda. They view the Western-dominated fund as a place to begin staking their claim to a greater voice in global economic affairs.
Treasury Secretary Timothy F. Geithner, who once worked at the fund, has called for its financial resources to be expanded by $500 billion, effectively tripling its lending capacity to distressed countries and cementing its status as the lender of last resort for much of the world.
Japan and the European Union have each pledged $100 billion; the United States has signaled it will contribute a similar sum, though its money will take longer to arrive because of the need for Congressional approval. China, with its mammoth foreign exchange reserves, is the next obvious donor.
Yet officials of China and other developing countries have served notice that they are reluctant to make comparable pledges without getting a greater say in the operations of the fund, which is run by a Frenchman, Dominique Strauss-Kahn, and is heavily influenced by the United States and Western Europe.
A senior Chinese leader, Wang Qishan, said Friday that Beijing was willing to kick in some money, but he called for an overhaul of the way the fund is governed. China wants its quota — which determines its financial contribution and voting power — adjusted to reflect its economic weight better.
China’s contribution, Mr. Wang said, should not be based on the size of its reserves but on its economic output per person, which is still modest. Some American officials now expect a pledge on the order of $50 billion from China.
“Their arms may yet be twisted, but they simply do not want to pony up based on vague promises of governance reform,” said Eswar S. Prasad, a professor of economics at Cornell University who has discussed the matter in recent days with Chinese and Indian officials.
Given the inevitability that these countries will have a growing influence, the London summit meeting, which begins Thursday, is likely to be remembered “as the last hurrah for the U.S. and Europe rescuing the world economy,” said Simon Johnson, a professor at M.I.T. and a former chief economist of the fund.
One reason the I.M.F. has emerged as such a popular cause is that the United States has been unable to rally countries behind its other major priority: economic stimulus. The European Union opposes further stimulus packages in 2010, arguing that its social safety net makes an increase in government spending unnecessary.
European and American officials are also still divided, to a lesser degree, on how to rewrite international financial regulations. France and Germany are more receptive than the United States to giving regulators supranational authority to scrutinize global banks and other financial companies.
“The United States is desperately trying to assert leadership, as if it were 10 years ago, when the U.S. set the agenda,” said Kenneth S. Rogoff, an economist at Harvard and another former chief economist of the fund.
With more countries slipping into crisis by the week, there is general agreement that the fund needs additional resources. Since last year, the I.M.F. has made nearly $50 billion in loans to 13 countries. It is streamlining the process for making loans and loosening its strings, hoping to counter the resentment that built up against it during past crises because of its stringent demands.
At a preparatory meeting two weeks ago, finance ministers of the Group of 20 agreed to “very substantially” increase financing, though the Europeans favored an extra $250 billion, not $500 billion.
Whatever their reservations about financing, the Chinese have seized on the fund for another purpose: to tweak the United States. The governor of China’s central bank, Zhou Xiaochuan, recently proposed that the American dollar be phased out as the world’s default reserve currency. As a replacement, he suggested using special drawing rights, or S.D.R.’s, the synthetic currency created by the fund that is used for transactions between it and its 185 member countries.
Few economists view that idea as a realistic one, at least for years to come. But the mere assertion that the dollar’s pre-eminence is waning — a theme picked up by Russian officials as well — sends a message.
“I don’t think the Chinese or Russians really believe the S.D.R. is a viable currency,” said Mr. Prasad, the Cornell economist. “But they’re laying down a very clear marker that they’re going to be much more assertive about their role.”
Mr. Geithner took the remarks seriously enough that he publicly reaffirmed the primacy of the dollar.
The United States will address China’s status this week, when it announces details of a new high-level strategic and economic dialogue with Beijing, led by Mr. Geithner and Secretary of State Hillary Rodham Clinton, according to a senior administration official, who spoke anonymously because the information was not yet public. The announcement will come after the first meeting between President Obama and the Chinese president, Hu Jintao, in London.
The Obama administration has personal reasons to support the fund. Mr. Geithner was the I.M.F. director of policy planning from 2001 to 2003, after his first stint in the Treasury Department. He recruited Edwin M. Truman, another former Treasury official and a longtime advocate of the fund, as a temporary adviser to develop policies for the Group of 20 meeting.
Just before leaving his academic position at the Peterson Institute for International Economics, Mr. Truman proposed that the fund issue $250 billion in S.D.R.’s on a one-time basis to be allocated to all its members, as another way of increasing its resources. Western European countries, he said, could use their S.D.R.’s to lend money to their troubled Eastern neighbors.
That proposal is in a current draft of the statement to be issued at the Group of 20 meeting. If all the American proposals for the fund are adopted, its resources will approach $1 trillion — a big number, even in these extraordinary times.
Yet for Mr. Johnson of M.I.T., it merely shows how difficult it is for the United States to marshal support for anything else.
“They can’t agree on fiscal policy; they can’t agree on regulations,” he said. “The only thing left is the I.M.F.”
By MARK LANDLER
Copyright by The New York Times
Published: March 29, 2009
http://www.nytimes.com/2009/03/30/world/30fund.html?_r=1&th&emc=th
WASHINGTON — Barely six months ago, the International Monetary Fund emerged from years of declining relevance, hurriedly cobbling together emergency loans for countries from Iceland to Pakistan, as the first wave of the financial crisis hit.
Now, with world leaders gathering this week in London to plot a response to the gravest global economic downturn since World War II, the fund is becoming a chip in a contest to reshape the postcrisis landscape.
The Obama administration has made fortifying the I.M.F. one of its primary goals for the meeting of the Group of 20, which includes leading industrial and developing countries and the European Union. But China, India and other rising powers seem to believe that the made-in-America crisis has curtailed the ability of the United States to set the agenda. They view the Western-dominated fund as a place to begin staking their claim to a greater voice in global economic affairs.
Treasury Secretary Timothy F. Geithner, who once worked at the fund, has called for its financial resources to be expanded by $500 billion, effectively tripling its lending capacity to distressed countries and cementing its status as the lender of last resort for much of the world.
Japan and the European Union have each pledged $100 billion; the United States has signaled it will contribute a similar sum, though its money will take longer to arrive because of the need for Congressional approval. China, with its mammoth foreign exchange reserves, is the next obvious donor.
Yet officials of China and other developing countries have served notice that they are reluctant to make comparable pledges without getting a greater say in the operations of the fund, which is run by a Frenchman, Dominique Strauss-Kahn, and is heavily influenced by the United States and Western Europe.
A senior Chinese leader, Wang Qishan, said Friday that Beijing was willing to kick in some money, but he called for an overhaul of the way the fund is governed. China wants its quota — which determines its financial contribution and voting power — adjusted to reflect its economic weight better.
China’s contribution, Mr. Wang said, should not be based on the size of its reserves but on its economic output per person, which is still modest. Some American officials now expect a pledge on the order of $50 billion from China.
“Their arms may yet be twisted, but they simply do not want to pony up based on vague promises of governance reform,” said Eswar S. Prasad, a professor of economics at Cornell University who has discussed the matter in recent days with Chinese and Indian officials.
Given the inevitability that these countries will have a growing influence, the London summit meeting, which begins Thursday, is likely to be remembered “as the last hurrah for the U.S. and Europe rescuing the world economy,” said Simon Johnson, a professor at M.I.T. and a former chief economist of the fund.
One reason the I.M.F. has emerged as such a popular cause is that the United States has been unable to rally countries behind its other major priority: economic stimulus. The European Union opposes further stimulus packages in 2010, arguing that its social safety net makes an increase in government spending unnecessary.
European and American officials are also still divided, to a lesser degree, on how to rewrite international financial regulations. France and Germany are more receptive than the United States to giving regulators supranational authority to scrutinize global banks and other financial companies.
“The United States is desperately trying to assert leadership, as if it were 10 years ago, when the U.S. set the agenda,” said Kenneth S. Rogoff, an economist at Harvard and another former chief economist of the fund.
With more countries slipping into crisis by the week, there is general agreement that the fund needs additional resources. Since last year, the I.M.F. has made nearly $50 billion in loans to 13 countries. It is streamlining the process for making loans and loosening its strings, hoping to counter the resentment that built up against it during past crises because of its stringent demands.
At a preparatory meeting two weeks ago, finance ministers of the Group of 20 agreed to “very substantially” increase financing, though the Europeans favored an extra $250 billion, not $500 billion.
Whatever their reservations about financing, the Chinese have seized on the fund for another purpose: to tweak the United States. The governor of China’s central bank, Zhou Xiaochuan, recently proposed that the American dollar be phased out as the world’s default reserve currency. As a replacement, he suggested using special drawing rights, or S.D.R.’s, the synthetic currency created by the fund that is used for transactions between it and its 185 member countries.
Few economists view that idea as a realistic one, at least for years to come. But the mere assertion that the dollar’s pre-eminence is waning — a theme picked up by Russian officials as well — sends a message.
“I don’t think the Chinese or Russians really believe the S.D.R. is a viable currency,” said Mr. Prasad, the Cornell economist. “But they’re laying down a very clear marker that they’re going to be much more assertive about their role.”
Mr. Geithner took the remarks seriously enough that he publicly reaffirmed the primacy of the dollar.
The United States will address China’s status this week, when it announces details of a new high-level strategic and economic dialogue with Beijing, led by Mr. Geithner and Secretary of State Hillary Rodham Clinton, according to a senior administration official, who spoke anonymously because the information was not yet public. The announcement will come after the first meeting between President Obama and the Chinese president, Hu Jintao, in London.
The Obama administration has personal reasons to support the fund. Mr. Geithner was the I.M.F. director of policy planning from 2001 to 2003, after his first stint in the Treasury Department. He recruited Edwin M. Truman, another former Treasury official and a longtime advocate of the fund, as a temporary adviser to develop policies for the Group of 20 meeting.
Just before leaving his academic position at the Peterson Institute for International Economics, Mr. Truman proposed that the fund issue $250 billion in S.D.R.’s on a one-time basis to be allocated to all its members, as another way of increasing its resources. Western European countries, he said, could use their S.D.R.’s to lend money to their troubled Eastern neighbors.
That proposal is in a current draft of the statement to be issued at the Group of 20 meeting. If all the American proposals for the fund are adopted, its resources will approach $1 trillion — a big number, even in these extraordinary times.
Yet for Mr. Johnson of M.I.T., it merely shows how difficult it is for the United States to marshal support for anything else.
“They can’t agree on fiscal policy; they can’t agree on regulations,” he said. “The only thing left is the I.M.F.”
A fine balance for Obama to strike/‘Robust and stable’ system is goal of US
A fine balance for Obama to strike
By Edward Luce, Lionel Barber and Chrystia Freeland
Copyright The Financial Times Limited 2009
Published: March 30 2009 00:30 | Last updated: March 30 2009 00:30
http://www.ft.com/cms/s/0/74ab7ed2-1c8d-11de-977c-00144feabdc0.html
American presidents sometimes give interviews in the Oval Office. On this occasion Barack Obama chooses the nearby Roosevelt room, named after Teddy Roosevelt and his distant relative Franklin Delano Roosevelt, the last American president to be faced with a global economic crisis of this magnitude.
Then, like now, the president inherited a world economic summit in London that was scheduled just a few weeks after he took up residence in the White House (FDR came to office in March 1933, the summit was in April). Fatefully, Roosevelt chose not to attend.
Then, like now, the politics of domestic economic collapse crowded out much time for the rest of the world. Yet this time the crisis is even more global. Mr Obama also inherits an April crisis summit in London, the meeting this Thursday of the leaders of the group of 20 industrialised and developing nations.
Mindful, perhaps, that posterity blames FDR’s absence as the chief reason the 1933 summit failed to arrest global depression, Mr Obama emphasises the need for G20 leaders to be singing from the same song sheet: “The most important task for all of us is to deliver a strong message of unity in the face of crisis,” he says.
But his biggest challenges are probably at home. Dressed in a dark suit and a tie in the ruby-red he often favours, Mr Obama discloses that he reads global newspapers – an option not available to FDR: “I read the Financial Times before other people read the Financial Times [in Chicago in the 1980s],” the president says. “Now it’s trendy and everybody carries around a Financial Times.”
Seated opposite an imposing portrait of FDR and flanked by the famous “Rough Rider” portrait of Theodore Roosevelt, Mr Obama betrays few signs – other than a hint of fatigue – that the economic and political maelstrom around him has induced personal stress. Speaking without notes, props or assistance from aides, the president answers in the professorial “no drama Obama” manner which helped persuade America’s voters last November he had a better temperament than John McCain to cope with this multiplicity of emergencies.
These are immediate and tangible. Just 66 days into his new job, Mr Obama enters the interview having just unveiled a new strategic policy on Afghanistan and Pakistan, including sending another 4,000 American troops into the field on top of the 17,000 he announced last month.
Earlier he had also hosted a meeting with a group of Wall Street executives, including Lloyd Blankfein of Goldman Sachs and Jamie Dimon of JPMorgan Chase, who seemed grateful simply to be invited rather than pilloried by legislators on Capitol Hill.
Mr Obama speaks of the Wall Street executives with disapproval rather than resentment, in a clear moderation of some of the rhetoric he was employing until recently. “It was a constructive conversation,” he says. “But one of the points that I made is that at a time when everybody is needing to sacrifice there has to be a similar sense of sacrifice on the part of those various sectors of the economy that helped to precipitate this crisis.”
Shortly after his election, Mr Obama promised to “hit the ground running”. Even the highly ambitious president-elect could not have anticipated just how much running that would entail. Or how many opportunities there would be to trip up, one or two of which he has taken, such as the succession of nominees for senior posts who had to withdraw.
Following the failure of the first attempt last month by Tim Geithner, Treasury secretary, to announce guidelines for the removal of toxic assets from bank balance sheets, critics fear that Mr Obama still lacks a full strategy to revitalise the financial system.
Last week Mr Geithner unveiled the latest initiative to deal with toxic assets. The plan was attacked by some as insufficiently radical, but the president points to the stock market rally that followed. “Tim Geithner’s efforts to provide a market for asset-backed securities has helped [but] we still have a long way to go,” he says.
The president is also in the midst of increasingly tense negotiations with Capitol Hill over the White House’s breathtakingly ambitious $3,600bn (€2,700bn, £2,518bn) budget – incorporating the biggest pledges, notably universal healthcare and a cap-and-trade system for carbon emissions, on which Mr Obama campaigned before the economy started collapsing.
His budget could yet unravel amid outrage over the kind of double digit fiscal deficits last seen in the second world war when FDR was in the closing stages of his life. Then there is the small matter of managing a drawdown of US combat troops in Iraq, their redeployment to Afghanistan – the “graveyard of empires” – a continued global terrorist threat and, closer to home, the possibility of neighbouring Mexico being torn apart by a drugs war.
Much like FDR, who believed presidents should try everything, junk whatever fails and move swiftly on, Mr Obama conveys a pragmatic approach to the economic emergency, suggesting it is still a work-in-progress.
Nor, perhaps, can Mr Obama have anticipated the degree of high-wire balancing that is required of him – between the demands of increasingly populist politics and the need to take steps that will dig America and the world out of the economic crisis as quickly as possible.
Here the president faces an Everest. He concedes there is a gulf between what is politically possible and what may prove to be economically necessary. Ten days ago the House of Representatives voted to impose a 90 per cent tax retroactively on bonuses for those earning more than $125,000 who work at taxpayer-aided firms – the same firms who may now be deterred from participating in future government rescues.
The final version is likely to be diluted in the Senate next month. “That is one gap,” says Mr Obama. “Then there is a gap in ideas about how to approach a crisis like this, especially among economists – although on the issue of the stimulus there seems to be a much broader consensus [Mr Obama signed a $787bn two-year stimulus bill into law last month].”
He admits there is much less unity on how to repair the financial sector. Some, including liberal critics such as the Nobel-prize winning economists Paul Krugman and Joseph Stiglitz, argue for all-out bank nationalisation. Conservatives, meanwhile, believe the White House bail-out plan is the road to socialism.
Where consensus does reign is in the outrage felt across the political spectrum over the bonuses that recipients of US taxpayer largesse, such as AIG and Citigroup, have been awarding senior employees. There is also the balancing act of pumping lots of new spending into the economy while reassuring Treasury bond investors, particularly the Chinese, that the US remains committed to medium-term fiscal discipline. “In all countries there is an understandable tension between the steps that are needed to kick-start the economy and the fact that many of these steps are very expensive,” says Mr Obama.
This also requires balancing. The president is trying to share the public’s outrage over Wall Street’s runaway culture of over-remuneration without alienating the financiers whose co-operation would be integral to the success of his bail-out plans.
The admonition is calibrated. “To the extent that they [the Wall Street bosses] are showing restraint that compensation packages are structured so that there is some deferral until money is returned to taxpayers, that will be good for everybody,” he says. “That will put me in a stronger position to help them.”
Mr Obama has tried, with limited success, to persuade the US public that what is good for Wall Street is good for Main Street. Until bankers show serious restraint, it will be hard for him to return to Capitol Hill to ask for the hundreds of billions more that most economists believe will be needed to recapitalise the US banking sector. There is a limit to public largesse.
“If voters perceive that it is a one-way street, that we are just pouring more and more money into institutions and seeing no return other than avoiding catastrophe, then it is harder to make an argument for further intervention,” he says.
Moreover, the steps the White House has taken since Inauguration Day will take time to show results, assuming, that is, they ever do. The president believes they already are. He cites “glimmers of stabilisation” in the US property market, where housing starts recently rose, and in the markets for cars and student loans.
Only a handful of economists forecast a return to strong growth next year. Some fear that a contraction of between 3 and 6 per cent in gross domestic product this year could be followed by more of the same in 2010. “What is also difficult is the fact that the policies we initiate all take time to take effect and by its very nature politics looks for more instantaneous gratification,” the president says.
Then there is the international balancing act. Mr Obama wants to unite America’s potentially fractious partners behind a co-ordinated stimulus and new financial regulation in London this week while also arresting the threat of protectionism. Unlike FDR, Mr Obama does not inherit the Smoot-Hawley Act, which erected steep trade barriers that entrenched the Great Depression and helped pave the way to world war two.
However, the US and its partners broke their promise at the first G20 summit last November to restart the Doha round of world trade talks. According to the World Bank, which has accumulated 73 examples of protectionist measures since then, many countries are moving in the opposite direction.
The president is understanding towards his partners, not least perhaps because he recently signed into law “Buy American” clauses that discriminate against foreign suppliers. While pointing out the “Buy American” provisions are consistent with World Trade Organisation rules, he observes: “I think in a democracy there are always going to be some loose ends out there. That is true here and true around the world but overall I don’t think that we have seen a huge rush to protectionism,” he adds. “To the extent that the American people [and others] feel confident their leaders are doing everything they can to encourage and promote economic growth, I think we are going to be able to hold the line on any significant slippage.”
The modulated phrasing strikes a clear contrast to the stentorian tone favoured by many of the president’s predecessors, George W. Bush in particular. Yet there is still an underlying message. On the need for a co-ordinated stimulus, with which many European leaders – most recently Angela Merkel, the German chancellor, in an FT interview – disagree, Mr Obama says: “Each country has its own constraints, its own political rhythms and what we want to make sure is that everybody is doing something...and that we are prepared to step into the breach should current efforts prove inadequate.”
Likewise, time would convince Washington’s partners of the necessity of stronger steps. “You know the financial crisis hit the United States first...Not surprisingly we took some very aggressive action earlier than some other countries...I think the sense of urgency has grown and you are going to start seeing a convergence.”
At home Mr Obama has been criticised for displaying an allegedly light-hearted attitude towards the crisis. One interviewer even accused him of being “punch drunk”. Supporters say that while Mr Obama may not be able to “feel your pain” in the manner of Bill Clinton, for example, America’s 44th president is good at reducing your fever.
Mr Obama conveys a degree of pragmatism that may strike a contrast to Mr Bush with some of his counterparts this week – notably Dmitry Medvedev, the Russian president, and Hu Jintao, his Chinese counterpart, who will hold one-to-one meetings with Mr Obama in London. Neither has yet met him.
Along with the pragmatism, Mr Obama also shows an occasional flash of humour. “Obviously I admire economists – I have a whole bunch of them on my staff,” said Mr Obama, whose senior economic adviser, Lawrence Summers, is arguably the most powerful of that profession in the world. “But to start to make a whole host of plans about next year, without having better information on how the current stimulus efforts are working, is something that I think is of concern.”
Following the London meeting, Mr Obama will travel to Strasbourg for a Nato summit where he will attempt to drum up support for the expanded US operations in Afghanistan, then on to Prague for a meeting with the heads of the European Union and finally on Sunday to Turkey where he will deliver a set-piece address – his first visit as president to a majority Muslim country. It is an ambitious itinerary. Everywhere he goes, thousands of anti-globalisation protesters await him along with tens of thousands of celebrity-watchers hoping to catch a glimpse of America’s most popular leader since John F. Kennedy.
Many believe that the G20 summit will prove a vacuous waste of time and that the world economy will continue to be sucked into the recessionary vortex. Mr Obama, however, projects a Zen-like calm towards the emergencies that he faces. If his rescue operations fail to arrest the tide, history may show him to have been too unfazed. If things started to stabilise and improve, Mr Obama could be hailed as the new FDR.
On the eve of the most important world economic gathering in decades, Mr Obama is still keeping the drama at arm’s length. “I am confident that the American people, and I think people around the world, are looking to its leaders to lead and that some of the steps we have already taken are starting to bear fruit,” Mr Obama says with the same tone he has struck at home in recent weeks.
Politics demands that Mr Obama continues to rally the support of America’s increasingly impatient – and economically beleaguered – electorate. Governance requires he keeps trying to lower its pulse.
In the meantime, Mr Obama may yet have settled on a lasting plan to revive the financial sector. “I am confident that if we are persistent and we don’t approach this with a thought that there is a silver bullet out there but instead we are willing to try a range of methods...that we will get out of this current crisis,” he says.
TOUR OF DUTY:
If it’s Tuesday...
Barack Obama embarks on Tuesday on an eight-day visit to Europe – his first major overseas trip as US president. The busy itinerary includes:
●Tuesday evening: the president arrives at Stansted airport, north of London
●Wednesday: breakfast with Gordon Brown, UK prime minister, at Downing Street; bi-lateral meetings with Dmitry Medvedev of Russia and Hu Jintao of China; private meeting with Queen Elizabeth II
●Thursday: G20 meeting, London
●Friday: flight to Strasbourg, meeting with President Nicolas Sarkozy of France; helicopter to Baden-Baden, meeting with Angela Merkel, German chancellor
●Saturday: meeting with Nato leaders in Germany and France
●Sunday: Prague, EU-US summit
●Monday: Turkey, two-day visit to Istanbul and Ankara
‘Robust and stable’ system is goal of US
By Krishna Guha in Washington
Copyright The Financial Times Limited 2009
Published: March 30 2009 23:27 | Last updated: March 30 2009 23:27
http://www.ft.com/cms/s/0/86ab7a64-1d65-11de-9eb3-00144feabdc0.html
The US and Europe are united in their desire for far-reaching regulatory reform to strengthen the global financial system, Tim Geithner, the US Treasury secretary, has told the Financial Times.
Mr Geithner said ahead of the G20 summit that the “US has a huge interest in acting quickly and comprehensively to use this opportunity to develop an international consensus on how to make the system more robust and stable”.
He rejected the notion that the US is only interested in fiscal stimulus while continental Europeans want regulatory reform. He said all G20 nations agreed on the need for a strong regulatory response to the crisis and on the broad shape it should take.
“Relative to where we were in 1998 during the Asian crisis, there is a much stronger degree of consensus,” he said. “The gap between where the French are, where the Germans are, where the Americans are, where the Chinese are – it is a very small gap.”
Mr Geithner last week unveiled plans for an overhaul of US financial regulation as well as a scheme to clean up toxic bank assets – moves US officials believe give them greater credibility in international discussions.
The Treasury secretary said regulation would remain a sovereign issue. “We are not going to give anyone else the responsibility for deciding what balance between stability and efficiency is right for our markets.” But national reforms “will not work unless we are able to bring others along with us”.
Mr Geithner said the “philosophy is to make both the core institutions and the markets more robust”. The US is focused above all on strengthening capital requirements and market infrastructure.
“I begin with capital. We have a clear imperative to reform capital requirements. I think the basic cushions in the system – capital, liquidity, reserves – were too thin and procyclical in their effects.”
Mr Geithner favours what some call a “systemic risk surcharge” – tougher requirements for the most systemically important companies. The “crucial test of a financial system” is its ability to withstand failure. “That requires core institutions to hold more capital against risk. It also means market infrastructure in all these markets – in derivative markets, in securities lending, in the repo market – has to be able to absorb failure and contagion.”
But the US does not support moves to create new derivative market infrastructure at the European level.
The US and Europe both want to crack down on regulatory arbitrage. There is agreement on the need for hedge funds to register and disclose information, allowing regulators to guard against market manipulation and impose capital requirements on funds that present systemic risks. “We want the system to be able to evolve. But if an entity wants to perform the functions of a bank it should be regulated like a bank.”
Mr Geithner said the Financial Stability Forum would provide the basic infrastructure for future regulatory co-operation. Once the crisis was over the world should maintain an enhanced crisis response capacity through multilateral institutions.
For the Lehmans of this world – global financial institutions – “we need to improve the way insolvency regimes operate in different jurisdictions” he said. “In principle, you want to be able to manage the controlled failure of a global institution. But this is very hard to implement in a crisis. This is going to be a critical piece of the puzzle, but we are only at the beginning of thinking about it.”
Mr Geithner said there would be no global systemic risk regulator. “The home country authority has to have responsibility for consolidated supervision of its institutions.”
It was good for regulators to think more about system rather than institution- specific risks. But he said: “I am sceptical about the ability of central banks and regulators to provide early warnings of crises. We need to build a system that is safe against uncertainty, against ignorance, against the failure to identify the future source of crisis.”
By Edward Luce, Lionel Barber and Chrystia Freeland
Copyright The Financial Times Limited 2009
Published: March 30 2009 00:30 | Last updated: March 30 2009 00:30
http://www.ft.com/cms/s/0/74ab7ed2-1c8d-11de-977c-00144feabdc0.html
American presidents sometimes give interviews in the Oval Office. On this occasion Barack Obama chooses the nearby Roosevelt room, named after Teddy Roosevelt and his distant relative Franklin Delano Roosevelt, the last American president to be faced with a global economic crisis of this magnitude.
Then, like now, the president inherited a world economic summit in London that was scheduled just a few weeks after he took up residence in the White House (FDR came to office in March 1933, the summit was in April). Fatefully, Roosevelt chose not to attend.
Then, like now, the politics of domestic economic collapse crowded out much time for the rest of the world. Yet this time the crisis is even more global. Mr Obama also inherits an April crisis summit in London, the meeting this Thursday of the leaders of the group of 20 industrialised and developing nations.
Mindful, perhaps, that posterity blames FDR’s absence as the chief reason the 1933 summit failed to arrest global depression, Mr Obama emphasises the need for G20 leaders to be singing from the same song sheet: “The most important task for all of us is to deliver a strong message of unity in the face of crisis,” he says.
But his biggest challenges are probably at home. Dressed in a dark suit and a tie in the ruby-red he often favours, Mr Obama discloses that he reads global newspapers – an option not available to FDR: “I read the Financial Times before other people read the Financial Times [in Chicago in the 1980s],” the president says. “Now it’s trendy and everybody carries around a Financial Times.”
Seated opposite an imposing portrait of FDR and flanked by the famous “Rough Rider” portrait of Theodore Roosevelt, Mr Obama betrays few signs – other than a hint of fatigue – that the economic and political maelstrom around him has induced personal stress. Speaking without notes, props or assistance from aides, the president answers in the professorial “no drama Obama” manner which helped persuade America’s voters last November he had a better temperament than John McCain to cope with this multiplicity of emergencies.
These are immediate and tangible. Just 66 days into his new job, Mr Obama enters the interview having just unveiled a new strategic policy on Afghanistan and Pakistan, including sending another 4,000 American troops into the field on top of the 17,000 he announced last month.
Earlier he had also hosted a meeting with a group of Wall Street executives, including Lloyd Blankfein of Goldman Sachs and Jamie Dimon of JPMorgan Chase, who seemed grateful simply to be invited rather than pilloried by legislators on Capitol Hill.
Mr Obama speaks of the Wall Street executives with disapproval rather than resentment, in a clear moderation of some of the rhetoric he was employing until recently. “It was a constructive conversation,” he says. “But one of the points that I made is that at a time when everybody is needing to sacrifice there has to be a similar sense of sacrifice on the part of those various sectors of the economy that helped to precipitate this crisis.”
Shortly after his election, Mr Obama promised to “hit the ground running”. Even the highly ambitious president-elect could not have anticipated just how much running that would entail. Or how many opportunities there would be to trip up, one or two of which he has taken, such as the succession of nominees for senior posts who had to withdraw.
Following the failure of the first attempt last month by Tim Geithner, Treasury secretary, to announce guidelines for the removal of toxic assets from bank balance sheets, critics fear that Mr Obama still lacks a full strategy to revitalise the financial system.
Last week Mr Geithner unveiled the latest initiative to deal with toxic assets. The plan was attacked by some as insufficiently radical, but the president points to the stock market rally that followed. “Tim Geithner’s efforts to provide a market for asset-backed securities has helped [but] we still have a long way to go,” he says.
The president is also in the midst of increasingly tense negotiations with Capitol Hill over the White House’s breathtakingly ambitious $3,600bn (€2,700bn, £2,518bn) budget – incorporating the biggest pledges, notably universal healthcare and a cap-and-trade system for carbon emissions, on which Mr Obama campaigned before the economy started collapsing.
His budget could yet unravel amid outrage over the kind of double digit fiscal deficits last seen in the second world war when FDR was in the closing stages of his life. Then there is the small matter of managing a drawdown of US combat troops in Iraq, their redeployment to Afghanistan – the “graveyard of empires” – a continued global terrorist threat and, closer to home, the possibility of neighbouring Mexico being torn apart by a drugs war.
Much like FDR, who believed presidents should try everything, junk whatever fails and move swiftly on, Mr Obama conveys a pragmatic approach to the economic emergency, suggesting it is still a work-in-progress.
Nor, perhaps, can Mr Obama have anticipated the degree of high-wire balancing that is required of him – between the demands of increasingly populist politics and the need to take steps that will dig America and the world out of the economic crisis as quickly as possible.
Here the president faces an Everest. He concedes there is a gulf between what is politically possible and what may prove to be economically necessary. Ten days ago the House of Representatives voted to impose a 90 per cent tax retroactively on bonuses for those earning more than $125,000 who work at taxpayer-aided firms – the same firms who may now be deterred from participating in future government rescues.
The final version is likely to be diluted in the Senate next month. “That is one gap,” says Mr Obama. “Then there is a gap in ideas about how to approach a crisis like this, especially among economists – although on the issue of the stimulus there seems to be a much broader consensus [Mr Obama signed a $787bn two-year stimulus bill into law last month].”
He admits there is much less unity on how to repair the financial sector. Some, including liberal critics such as the Nobel-prize winning economists Paul Krugman and Joseph Stiglitz, argue for all-out bank nationalisation. Conservatives, meanwhile, believe the White House bail-out plan is the road to socialism.
Where consensus does reign is in the outrage felt across the political spectrum over the bonuses that recipients of US taxpayer largesse, such as AIG and Citigroup, have been awarding senior employees. There is also the balancing act of pumping lots of new spending into the economy while reassuring Treasury bond investors, particularly the Chinese, that the US remains committed to medium-term fiscal discipline. “In all countries there is an understandable tension between the steps that are needed to kick-start the economy and the fact that many of these steps are very expensive,” says Mr Obama.
This also requires balancing. The president is trying to share the public’s outrage over Wall Street’s runaway culture of over-remuneration without alienating the financiers whose co-operation would be integral to the success of his bail-out plans.
The admonition is calibrated. “To the extent that they [the Wall Street bosses] are showing restraint that compensation packages are structured so that there is some deferral until money is returned to taxpayers, that will be good for everybody,” he says. “That will put me in a stronger position to help them.”
Mr Obama has tried, with limited success, to persuade the US public that what is good for Wall Street is good for Main Street. Until bankers show serious restraint, it will be hard for him to return to Capitol Hill to ask for the hundreds of billions more that most economists believe will be needed to recapitalise the US banking sector. There is a limit to public largesse.
“If voters perceive that it is a one-way street, that we are just pouring more and more money into institutions and seeing no return other than avoiding catastrophe, then it is harder to make an argument for further intervention,” he says.
Moreover, the steps the White House has taken since Inauguration Day will take time to show results, assuming, that is, they ever do. The president believes they already are. He cites “glimmers of stabilisation” in the US property market, where housing starts recently rose, and in the markets for cars and student loans.
Only a handful of economists forecast a return to strong growth next year. Some fear that a contraction of between 3 and 6 per cent in gross domestic product this year could be followed by more of the same in 2010. “What is also difficult is the fact that the policies we initiate all take time to take effect and by its very nature politics looks for more instantaneous gratification,” the president says.
Then there is the international balancing act. Mr Obama wants to unite America’s potentially fractious partners behind a co-ordinated stimulus and new financial regulation in London this week while also arresting the threat of protectionism. Unlike FDR, Mr Obama does not inherit the Smoot-Hawley Act, which erected steep trade barriers that entrenched the Great Depression and helped pave the way to world war two.
However, the US and its partners broke their promise at the first G20 summit last November to restart the Doha round of world trade talks. According to the World Bank, which has accumulated 73 examples of protectionist measures since then, many countries are moving in the opposite direction.
The president is understanding towards his partners, not least perhaps because he recently signed into law “Buy American” clauses that discriminate against foreign suppliers. While pointing out the “Buy American” provisions are consistent with World Trade Organisation rules, he observes: “I think in a democracy there are always going to be some loose ends out there. That is true here and true around the world but overall I don’t think that we have seen a huge rush to protectionism,” he adds. “To the extent that the American people [and others] feel confident their leaders are doing everything they can to encourage and promote economic growth, I think we are going to be able to hold the line on any significant slippage.”
The modulated phrasing strikes a clear contrast to the stentorian tone favoured by many of the president’s predecessors, George W. Bush in particular. Yet there is still an underlying message. On the need for a co-ordinated stimulus, with which many European leaders – most recently Angela Merkel, the German chancellor, in an FT interview – disagree, Mr Obama says: “Each country has its own constraints, its own political rhythms and what we want to make sure is that everybody is doing something...and that we are prepared to step into the breach should current efforts prove inadequate.”
Likewise, time would convince Washington’s partners of the necessity of stronger steps. “You know the financial crisis hit the United States first...Not surprisingly we took some very aggressive action earlier than some other countries...I think the sense of urgency has grown and you are going to start seeing a convergence.”
At home Mr Obama has been criticised for displaying an allegedly light-hearted attitude towards the crisis. One interviewer even accused him of being “punch drunk”. Supporters say that while Mr Obama may not be able to “feel your pain” in the manner of Bill Clinton, for example, America’s 44th president is good at reducing your fever.
Mr Obama conveys a degree of pragmatism that may strike a contrast to Mr Bush with some of his counterparts this week – notably Dmitry Medvedev, the Russian president, and Hu Jintao, his Chinese counterpart, who will hold one-to-one meetings with Mr Obama in London. Neither has yet met him.
Along with the pragmatism, Mr Obama also shows an occasional flash of humour. “Obviously I admire economists – I have a whole bunch of them on my staff,” said Mr Obama, whose senior economic adviser, Lawrence Summers, is arguably the most powerful of that profession in the world. “But to start to make a whole host of plans about next year, without having better information on how the current stimulus efforts are working, is something that I think is of concern.”
Following the London meeting, Mr Obama will travel to Strasbourg for a Nato summit where he will attempt to drum up support for the expanded US operations in Afghanistan, then on to Prague for a meeting with the heads of the European Union and finally on Sunday to Turkey where he will deliver a set-piece address – his first visit as president to a majority Muslim country. It is an ambitious itinerary. Everywhere he goes, thousands of anti-globalisation protesters await him along with tens of thousands of celebrity-watchers hoping to catch a glimpse of America’s most popular leader since John F. Kennedy.
Many believe that the G20 summit will prove a vacuous waste of time and that the world economy will continue to be sucked into the recessionary vortex. Mr Obama, however, projects a Zen-like calm towards the emergencies that he faces. If his rescue operations fail to arrest the tide, history may show him to have been too unfazed. If things started to stabilise and improve, Mr Obama could be hailed as the new FDR.
On the eve of the most important world economic gathering in decades, Mr Obama is still keeping the drama at arm’s length. “I am confident that the American people, and I think people around the world, are looking to its leaders to lead and that some of the steps we have already taken are starting to bear fruit,” Mr Obama says with the same tone he has struck at home in recent weeks.
Politics demands that Mr Obama continues to rally the support of America’s increasingly impatient – and economically beleaguered – electorate. Governance requires he keeps trying to lower its pulse.
In the meantime, Mr Obama may yet have settled on a lasting plan to revive the financial sector. “I am confident that if we are persistent and we don’t approach this with a thought that there is a silver bullet out there but instead we are willing to try a range of methods...that we will get out of this current crisis,” he says.
TOUR OF DUTY:
If it’s Tuesday...
Barack Obama embarks on Tuesday on an eight-day visit to Europe – his first major overseas trip as US president. The busy itinerary includes:
●Tuesday evening: the president arrives at Stansted airport, north of London
●Wednesday: breakfast with Gordon Brown, UK prime minister, at Downing Street; bi-lateral meetings with Dmitry Medvedev of Russia and Hu Jintao of China; private meeting with Queen Elizabeth II
●Thursday: G20 meeting, London
●Friday: flight to Strasbourg, meeting with President Nicolas Sarkozy of France; helicopter to Baden-Baden, meeting with Angela Merkel, German chancellor
●Saturday: meeting with Nato leaders in Germany and France
●Sunday: Prague, EU-US summit
●Monday: Turkey, two-day visit to Istanbul and Ankara
‘Robust and stable’ system is goal of US
By Krishna Guha in Washington
Copyright The Financial Times Limited 2009
Published: March 30 2009 23:27 | Last updated: March 30 2009 23:27
http://www.ft.com/cms/s/0/86ab7a64-1d65-11de-9eb3-00144feabdc0.html
The US and Europe are united in their desire for far-reaching regulatory reform to strengthen the global financial system, Tim Geithner, the US Treasury secretary, has told the Financial Times.
Mr Geithner said ahead of the G20 summit that the “US has a huge interest in acting quickly and comprehensively to use this opportunity to develop an international consensus on how to make the system more robust and stable”.
He rejected the notion that the US is only interested in fiscal stimulus while continental Europeans want regulatory reform. He said all G20 nations agreed on the need for a strong regulatory response to the crisis and on the broad shape it should take.
“Relative to where we were in 1998 during the Asian crisis, there is a much stronger degree of consensus,” he said. “The gap between where the French are, where the Germans are, where the Americans are, where the Chinese are – it is a very small gap.”
Mr Geithner last week unveiled plans for an overhaul of US financial regulation as well as a scheme to clean up toxic bank assets – moves US officials believe give them greater credibility in international discussions.
The Treasury secretary said regulation would remain a sovereign issue. “We are not going to give anyone else the responsibility for deciding what balance between stability and efficiency is right for our markets.” But national reforms “will not work unless we are able to bring others along with us”.
Mr Geithner said the “philosophy is to make both the core institutions and the markets more robust”. The US is focused above all on strengthening capital requirements and market infrastructure.
“I begin with capital. We have a clear imperative to reform capital requirements. I think the basic cushions in the system – capital, liquidity, reserves – were too thin and procyclical in their effects.”
Mr Geithner favours what some call a “systemic risk surcharge” – tougher requirements for the most systemically important companies. The “crucial test of a financial system” is its ability to withstand failure. “That requires core institutions to hold more capital against risk. It also means market infrastructure in all these markets – in derivative markets, in securities lending, in the repo market – has to be able to absorb failure and contagion.”
But the US does not support moves to create new derivative market infrastructure at the European level.
The US and Europe both want to crack down on regulatory arbitrage. There is agreement on the need for hedge funds to register and disclose information, allowing regulators to guard against market manipulation and impose capital requirements on funds that present systemic risks. “We want the system to be able to evolve. But if an entity wants to perform the functions of a bank it should be regulated like a bank.”
Mr Geithner said the Financial Stability Forum would provide the basic infrastructure for future regulatory co-operation. Once the crisis was over the world should maintain an enhanced crisis response capacity through multilateral institutions.
For the Lehmans of this world – global financial institutions – “we need to improve the way insolvency regimes operate in different jurisdictions” he said. “In principle, you want to be able to manage the controlled failure of a global institution. But this is very hard to implement in a crisis. This is going to be a critical piece of the puzzle, but we are only at the beginning of thinking about it.”
Mr Geithner said there would be no global systemic risk regulator. “The home country authority has to have responsibility for consolidated supervision of its institutions.”
It was good for regulators to think more about system rather than institution- specific risks. But he said: “I am sceptical about the ability of central banks and regulators to provide early warnings of crises. We need to build a system that is safe against uncertainty, against ignorance, against the failure to identify the future source of crisis.”
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