Foreclosure Rate Rises 17 Percent
By Renae Merle
Copyright by The Washington Post
Wednesday, September 30, 2009; 10:46 AM
http://www.washingtonpost.com/wp-dyn/content/article/2009/09/30/AR2009093001696.html?hpid=topnews
The number of homes lost to foreclosures rose about 17 percent in the second quarter of this year despite the launch of an extensive government program aimed at helping borrowers save their home, according to government data released Wednesday.
Completed foreclosures reached 106,007 during the second quarter, compared with 90,696 during the first three months of the year, according to the report by the Office of Thrift Supervision and the Office of the Comptroller of the Currency, which regulates banks. Their quarterly report examines 64 percent of outstanding mortgages in the country.
The increase was primarily the result of various government and industry foreclosure moratoriums, the report said.
Efforts to keep borrowers in their homes increased during that same period, including the implementation of the Making Home Affordable plan. Under that plan, lenders are paid to lower a borrower's monthly payments. Government data has shown that since the program was launched in March, nearly 400,000 borrowers have been helped. The Obama administration aims to complete 500,000 loan modifications by November.
But even as that program ramps up, rising unemployment continues to hamper foreclosure prevention efforts. The level of foreclosure actions started during the quarter stayed steady, while the number of seriously delinquent borrowers -- those who had missed at least two payments -- increased 10 percent, according to the report.
The mortgage data "continued to reflect negative trends influenced by weakness in economic conditions including high unemployment and declining home prices in weak housing markets," the report said.
The report also reflected the risks still posed by hundreds of thousands of risky home loans known as option adjustable-rate mortgages, which reset to significantly higher payments. With these "option ARMs," also known as pick-a-pay loans, a borrower chooses how much to pay each month, often less than the interest due. But the payments on these mortgages eventually rise significantly, putting the borrower at risk of losing the home.
More than 15 percent of these types of loans were seriously delinquent during the second quarter, compared with 5.3 percent of all mortgages, according to the report, and 10 percent were in the process of foreclosure. "The risks of these loans and geographic concentration caused them to perform significantly worse than the overall portfolio," the report said.
Wednesday, September 30, 2009
UN Official Out After Afghan Vote Fraud Dispute
UN Official Out After Afghan Vote Fraud Dispute
Copyright By THE ASSOCIATED PRESS
Published: September 30, 2009
http://www.nytimes.com/aponline/2009/09/30/world/AP-AS-Afghanistan.html?hpw
KABUL (AP) -- The top American official at the U.N. mission in Afghanistan is losing his job after he disagreed with superiors over how to deal with widespread fraud charges from the presidential election, people familiar with the decision said Wednesday. The U.S. diplomat, Peter Galbraith, denied he had been fired.
The delay in final results from the Aug. 20 vote has led to fears of a power vacuum in the Afghan government that could endure until spring, even as Taliban violence against U.S. and NATO soldiers and Afghan civilians continues to rise. On Wednesday, an American service member died in a suicide car attack on a military convoy in Khost province, near the Pakistani border.
Two U.N. officials confirmed that Galbraith was being recalled by Secretary-General Ban Ki-moon from his job as deputy special representative for Afghanistan. They spoke anonymously because the information has not been officially released.
In an e-mail to the British Broadcasting Corp., which first reported Galbraith had lost his job, Galbraith said: ''The secretary general appointed me and has not fired me so far as I know.''
A U.N. spokesman declined to confirm reports that Galbraith was fired.
''We are aware of the reports. An announcement of this nature would usually come from the secretary-general's office in New York, but so far there has been no announcement,'' Dan McNorton said.
Galbraith oversaw electoral matters for the U.N. before and after the vote. He has been in the United States since mid-September, when he left Afghanistan following a dispute with his boss over the best way to handle vote fraud investigations. Both Galbraith and his boss, top U.N. Afghan envoy Kai Eide, said then he was expected to resume his duties in Afghanistan.
Neither Galbraith nor Eide have offered details of the disagreement, though Eide has confirmed that the two split over election issues. ''Primarily, we had a somewhat different approach to the election process,'' he told The Associated Press. He declined to elaborate.
The vote has been marred by charges of ballot stuffing and tally rigging that have delayed final results for weeks and opened the possibility of a government in limbo well into the spring. Preliminary results show President Hamid Karzai winning with 54.6 percent of the vote, but enough votes are questionable that he could dip below the 50 percent needed to avoid a runoff with his top challenger.
Election officials have said a runoff needs to be held by late October to avoid winter snows that block whole sections of the mountainous country until spring.
Afghanistan's Independent Election Commission, which is in charge of running the election, voted overwhelmingly to apply a set of fraud standards to their count that likely would have excluded tens of thousands of votes, only to reverse the decision next day, saying it lacked the authority to enforce the standards, said Galbraith, who had advised the commission. He said at the time the reversal was part of his reason for leaving.
''I leave it to others to decide the plausibility of their decision,'' he said in a phone interview from Vermont in mid-September.
At the U.N. on Tuesday, Ban said Galbraith had not been removed from his post at that time, but declined to comment on whether Galbraith would remain in the position.
Galbraith worked for the U.N. in East Timor in 2000-2001 and as the U.S. ambassador to Croatia from 1993 to 1998.
Separately on Wednesday, British Prime Minister Gordon Brown said he would do whatever is necessary in response to calls from the American commander in Afghanistan for more troops.
U.S. Gen. Stanley McChrystal -- who also commands NATO forces -- is expected to ask for 40,000 more troops to fight the Taliban-led insurgency and help Afghanistan rebuild.
When asked on Sky News if he was prepared to commit more British troops, Brown said ''we will do whatever is necessary.''
NATO chief Anders Fogh Rasmussen has stopped short of calling for more combat troops to be sent to Afghanistan, as the Obama administration currently is discussing.
But Fogh Rasmussen says more needs to be done to prepare Afghan military and civilian forces to secure and rebuild their nation.
Copyright By THE ASSOCIATED PRESS
Published: September 30, 2009
http://www.nytimes.com/aponline/2009/09/30/world/AP-AS-Afghanistan.html?hpw
KABUL (AP) -- The top American official at the U.N. mission in Afghanistan is losing his job after he disagreed with superiors over how to deal with widespread fraud charges from the presidential election, people familiar with the decision said Wednesday. The U.S. diplomat, Peter Galbraith, denied he had been fired.
The delay in final results from the Aug. 20 vote has led to fears of a power vacuum in the Afghan government that could endure until spring, even as Taliban violence against U.S. and NATO soldiers and Afghan civilians continues to rise. On Wednesday, an American service member died in a suicide car attack on a military convoy in Khost province, near the Pakistani border.
Two U.N. officials confirmed that Galbraith was being recalled by Secretary-General Ban Ki-moon from his job as deputy special representative for Afghanistan. They spoke anonymously because the information has not been officially released.
In an e-mail to the British Broadcasting Corp., which first reported Galbraith had lost his job, Galbraith said: ''The secretary general appointed me and has not fired me so far as I know.''
A U.N. spokesman declined to confirm reports that Galbraith was fired.
''We are aware of the reports. An announcement of this nature would usually come from the secretary-general's office in New York, but so far there has been no announcement,'' Dan McNorton said.
Galbraith oversaw electoral matters for the U.N. before and after the vote. He has been in the United States since mid-September, when he left Afghanistan following a dispute with his boss over the best way to handle vote fraud investigations. Both Galbraith and his boss, top U.N. Afghan envoy Kai Eide, said then he was expected to resume his duties in Afghanistan.
Neither Galbraith nor Eide have offered details of the disagreement, though Eide has confirmed that the two split over election issues. ''Primarily, we had a somewhat different approach to the election process,'' he told The Associated Press. He declined to elaborate.
The vote has been marred by charges of ballot stuffing and tally rigging that have delayed final results for weeks and opened the possibility of a government in limbo well into the spring. Preliminary results show President Hamid Karzai winning with 54.6 percent of the vote, but enough votes are questionable that he could dip below the 50 percent needed to avoid a runoff with his top challenger.
Election officials have said a runoff needs to be held by late October to avoid winter snows that block whole sections of the mountainous country until spring.
Afghanistan's Independent Election Commission, which is in charge of running the election, voted overwhelmingly to apply a set of fraud standards to their count that likely would have excluded tens of thousands of votes, only to reverse the decision next day, saying it lacked the authority to enforce the standards, said Galbraith, who had advised the commission. He said at the time the reversal was part of his reason for leaving.
''I leave it to others to decide the plausibility of their decision,'' he said in a phone interview from Vermont in mid-September.
At the U.N. on Tuesday, Ban said Galbraith had not been removed from his post at that time, but declined to comment on whether Galbraith would remain in the position.
Galbraith worked for the U.N. in East Timor in 2000-2001 and as the U.S. ambassador to Croatia from 1993 to 1998.
Separately on Wednesday, British Prime Minister Gordon Brown said he would do whatever is necessary in response to calls from the American commander in Afghanistan for more troops.
U.S. Gen. Stanley McChrystal -- who also commands NATO forces -- is expected to ask for 40,000 more troops to fight the Taliban-led insurgency and help Afghanistan rebuild.
When asked on Sky News if he was prepared to commit more British troops, Brown said ''we will do whatever is necessary.''
NATO chief Anders Fogh Rasmussen has stopped short of calling for more combat troops to be sent to Afghanistan, as the Obama administration currently is discussing.
But Fogh Rasmussen says more needs to be done to prepare Afghan military and civilian forces to secure and rebuild their nation.
Scores Are Killed as Tsunami Hits Samoa Islands
Scores Are Killed as Tsunami Hits Samoa Islands
By MERAIAH FOLEY
Copyright by The Associated Press
Published: September 30, 2009
http://www.nytimes.com/2009/10/01/world/asia/01tsunami.html?ref=global-home
SYDNEY, Australia — A powerful tsunami generated by an undersea earthquake on Tuesday has killed at least 89 people and wiped out several villages on the tropical islands of American Samoa and Samoa, according to government officials, the police and local residents.
The earthquake, with a magnitude of 8.0, struck around dawn on Tuesday, as many residents were preparing for work and getting their children ready for school. Over the next 12 hours, 15 smaller quakes rumbled through the Samoan islands region, and 14 more were recorded near Tonga, to the south, according to the United States Geological Survey.
At least 24 people were killed in American Samoa, according to officials there, and the territory’s governor, Togiola T. A. Tulafono, said in a news conference that the worst damage had been caused by the second and third waves in a series of four. There was also widespread devastation reported in the territory’s capital, Pago Pago.
In a statement from the White House, President Obama declared that “a major disaster exists in the Territory of American Samoa,” and he authorized federal aid to supplement local recovery efforts.
Filipo Ilaoa, deputy director of the American Samoan office in Honolulu, said that the tsunami struck the territory’s coast in “a matter of minutes” after the quake and that many residents would not have had much time to run for higher ground.
“American Samoa is a small island, and most of the residents are around the coastline,” he said. “There was no warning or anything at all. By the time the alert was out of the Pacific Tsunami Warning Center, it had already hit.”
On Samoa, 65 people had died and 145 had been injured, according to the general manager of the National Health Service, who spoke Wednesday afternoon to the BBC.
There were reports late Wednesday that six people had been killed on Tonga, but those reports could not be immediately verified.
Officials and rescue teams worked throughout Wednesday to assess the damage and to begin relief efforts, and they said witnesses had seen heavy destruction in the southern parts of Samoa and American Samoa, a United States territory with about 60,000 residents.
Samoa, governed by New Zealand until gaining its independence in 1962, has a population of 180,000 spread across its islands. Upolu, the second largest of the islands, has numerous resorts and guesthouses along its southern shores, and initial reports from the coast described widespread destruction.
A Red Cross worker, Sati Young, speaking to Radio New Zealand, said waves 10 feet high had flattened beachside resorts on Upolu and that residents told him the tourist zone of Lalomanu had been crushed by a 33-foot wall of water. Graeme Ansell, a New Zealander, told the radio station that every building had been destroyed in the village of Faofao Beach Fales on Upolu’s southeastern coast.
“There’s not a building standing,” he said. “We’ve all clambered up hills, and one of our party has a broken leg. There will be people in a great lot of need around here.”
Damaged telephone lines on both islands hampered efforts to count the casualties and obtain comprehensive damage assessments. The earthquake struck below the ocean about 120 miles southwest of American Samoa and 125 miles south of Samoa, and it was centered only 11 miles below the seabed, according to the geological agency.
The Pacific Tsunami Warning Center at Ewa Beach, Hawaii, raised a regionwide alert that extended from American Samoa to New Zealand, though minimal damage was reported elsewhere.
On Wednesday morning, the Japan Meteorological Agency issued a tsunami advisory for the entire eastern coast of Japan. The advisory carried warnings of high waves, but by early evening the agency scaled back the advisory to parts of southern Japan, Okinawa and northern Hokkaido.
Tsunami awareness is relatively high in this earthquake-prone part of the world, particularly after the devastating earthquake and tsunami on Dec. 26, 2004, which killed 227,898 people around the Indian Ocean, according to the United States Geological Survey.
Both Samoan islands are just east of the international date line, which is why it was early Tuesday morning when the quake occurred, but it was already early Wednesday in Japan, China and Australia.
Meraiah Foley reported from Sydney. Mark McDonald contributed reporting from Hong Kong, and Sarah Wheaton from New York.
By MERAIAH FOLEY
Copyright by The Associated Press
Published: September 30, 2009
http://www.nytimes.com/2009/10/01/world/asia/01tsunami.html?ref=global-home
SYDNEY, Australia — A powerful tsunami generated by an undersea earthquake on Tuesday has killed at least 89 people and wiped out several villages on the tropical islands of American Samoa and Samoa, according to government officials, the police and local residents.
The earthquake, with a magnitude of 8.0, struck around dawn on Tuesday, as many residents were preparing for work and getting their children ready for school. Over the next 12 hours, 15 smaller quakes rumbled through the Samoan islands region, and 14 more were recorded near Tonga, to the south, according to the United States Geological Survey.
At least 24 people were killed in American Samoa, according to officials there, and the territory’s governor, Togiola T. A. Tulafono, said in a news conference that the worst damage had been caused by the second and third waves in a series of four. There was also widespread devastation reported in the territory’s capital, Pago Pago.
In a statement from the White House, President Obama declared that “a major disaster exists in the Territory of American Samoa,” and he authorized federal aid to supplement local recovery efforts.
Filipo Ilaoa, deputy director of the American Samoan office in Honolulu, said that the tsunami struck the territory’s coast in “a matter of minutes” after the quake and that many residents would not have had much time to run for higher ground.
“American Samoa is a small island, and most of the residents are around the coastline,” he said. “There was no warning or anything at all. By the time the alert was out of the Pacific Tsunami Warning Center, it had already hit.”
On Samoa, 65 people had died and 145 had been injured, according to the general manager of the National Health Service, who spoke Wednesday afternoon to the BBC.
There were reports late Wednesday that six people had been killed on Tonga, but those reports could not be immediately verified.
Officials and rescue teams worked throughout Wednesday to assess the damage and to begin relief efforts, and they said witnesses had seen heavy destruction in the southern parts of Samoa and American Samoa, a United States territory with about 60,000 residents.
Samoa, governed by New Zealand until gaining its independence in 1962, has a population of 180,000 spread across its islands. Upolu, the second largest of the islands, has numerous resorts and guesthouses along its southern shores, and initial reports from the coast described widespread destruction.
A Red Cross worker, Sati Young, speaking to Radio New Zealand, said waves 10 feet high had flattened beachside resorts on Upolu and that residents told him the tourist zone of Lalomanu had been crushed by a 33-foot wall of water. Graeme Ansell, a New Zealander, told the radio station that every building had been destroyed in the village of Faofao Beach Fales on Upolu’s southeastern coast.
“There’s not a building standing,” he said. “We’ve all clambered up hills, and one of our party has a broken leg. There will be people in a great lot of need around here.”
Damaged telephone lines on both islands hampered efforts to count the casualties and obtain comprehensive damage assessments. The earthquake struck below the ocean about 120 miles southwest of American Samoa and 125 miles south of Samoa, and it was centered only 11 miles below the seabed, according to the geological agency.
The Pacific Tsunami Warning Center at Ewa Beach, Hawaii, raised a regionwide alert that extended from American Samoa to New Zealand, though minimal damage was reported elsewhere.
On Wednesday morning, the Japan Meteorological Agency issued a tsunami advisory for the entire eastern coast of Japan. The advisory carried warnings of high waves, but by early evening the agency scaled back the advisory to parts of southern Japan, Okinawa and northern Hokkaido.
Tsunami awareness is relatively high in this earthquake-prone part of the world, particularly after the devastating earthquake and tsunami on Dec. 26, 2004, which killed 227,898 people around the Indian Ocean, according to the United States Geological Survey.
Both Samoan islands are just east of the international date line, which is why it was early Tuesday morning when the quake occurred, but it was already early Wednesday in Japan, China and Australia.
Meraiah Foley reported from Sydney. Mark McDonald contributed reporting from Hong Kong, and Sarah Wheaton from New York.
Global AIDS Detection and Treatment Sees Major Increase
Global AIDS Detection and Treatment Sees Major Increase
By CELIA W. DUGGER
Copyright by The New York Times
Published: September 30, 2009
http://www.nytimes.com/2009/10/01/world/01aids.html?_r=1&ref=global-home
JOHANNESBURG — The number of people being tested for H.I.V. more than doubled in dozens of countries last year, improving detection of AIDS and contributing to a major surge in those being treated.
The ranks of people taking antiretroviral drugs in the developing world rose by over a million to surpass 4 million people globally, the United Nations reported Wednesday in its 2009 progress report on H.I.V. and AIDS.
The vast international effort on AIDS, financed by the United States, European countries and other donors, also ensured that growing numbers of children with AIDS, who had largely been left to die quick, unheralded deaths in past years, also benefited from the life-saving drug therapies. Their number rose to 275,700 in 2008 from 198,000 just a year earlier.
And the portion of mothers who got medicines to prevent them from infecting their babies with H.I.V. also rose markedly in the parts of Africa hardest hit by the disease to more than half those in need.
“In the space of one year, you’re seeing a huge ramping up of AIDS services,” said Mark Stirling, regional director for the United Nations’ efforts against AIDS in eastern and southern Africa. “It’s unprecedented. In the acceleration and intensification of reach, 2008 was an extraordinary year.”
But the United Nations’ progress report on AIDS also contained sobering news. While over a million people were put on drugs in the past year — drugs they will need for the rest of their lives — 2.7 million people were newly infected with H.I.V. in 2007, the latest year for which there were estimates.
“We are walking backward on the treadmill,” said Prof. Salim S. Abdool Karim, who heads the Center for the AIDS Program of Research in South Africa, based in Durban. “We’re not going to treat our way out of this problem.”
The United Nations report stressed that African countries this past year laid the ground work to broadly offer men circumcisions, a surgical procedure to remove the foreskin that has been shown to cut their risk of H.I.V. infection by more than half.
But health officials, experts and advocates said that political leaders, particularly in Africa, would have to be far more outspoken about the practice of having more than one long-term sexual partner fueling the epidemic — and about circumcision cutting the risk of infection.
“I’m worried,” said Mr. Stirling. “I don’t hear the most senior political leaders talking about concurrent partners or male circumcision, not enough.”
South Africa, which has more H.I.V.-positive citizens than any other nation, exemplified both the progress on treatment and the uncertain prospects for prevention, experts said.
The number of people getting antiretroviral drugs last year grew by more than half, faster than in any other country. South Africa now has by far the largest AIDS treatment program in the world. The United Nations estimated that more than 700,000 South Africans were getting the medicines, though advocates here have said the number is actually closer to 600,000 after discounting those who have died or dropped out.
Even with the gains, however, less than half those here who need the drugs are getting them, advocates say. And South Africa lacks a policy on male circumcision. The country is still overcoming setbacks from the years when its president, Thabo Mbeki, denied the scientific consensus that H.I.V. causes AIDS and that antiretroviral drugs are essential to treat the disease.
The country’s new leaders have broken cleanly with those views but still need to act with greater urgency on H.I.V. prevention, said Mark Heywood, executive director of the AIDS Law Project and deputy chairman of the South African National AIDS Council, which advises the government.
“South Africa will get its act together, but it hasn’t at the moment,” he said.
By CELIA W. DUGGER
Copyright by The New York Times
Published: September 30, 2009
http://www.nytimes.com/2009/10/01/world/01aids.html?_r=1&ref=global-home
JOHANNESBURG — The number of people being tested for H.I.V. more than doubled in dozens of countries last year, improving detection of AIDS and contributing to a major surge in those being treated.
The ranks of people taking antiretroviral drugs in the developing world rose by over a million to surpass 4 million people globally, the United Nations reported Wednesday in its 2009 progress report on H.I.V. and AIDS.
The vast international effort on AIDS, financed by the United States, European countries and other donors, also ensured that growing numbers of children with AIDS, who had largely been left to die quick, unheralded deaths in past years, also benefited from the life-saving drug therapies. Their number rose to 275,700 in 2008 from 198,000 just a year earlier.
And the portion of mothers who got medicines to prevent them from infecting their babies with H.I.V. also rose markedly in the parts of Africa hardest hit by the disease to more than half those in need.
“In the space of one year, you’re seeing a huge ramping up of AIDS services,” said Mark Stirling, regional director for the United Nations’ efforts against AIDS in eastern and southern Africa. “It’s unprecedented. In the acceleration and intensification of reach, 2008 was an extraordinary year.”
But the United Nations’ progress report on AIDS also contained sobering news. While over a million people were put on drugs in the past year — drugs they will need for the rest of their lives — 2.7 million people were newly infected with H.I.V. in 2007, the latest year for which there were estimates.
“We are walking backward on the treadmill,” said Prof. Salim S. Abdool Karim, who heads the Center for the AIDS Program of Research in South Africa, based in Durban. “We’re not going to treat our way out of this problem.”
The United Nations report stressed that African countries this past year laid the ground work to broadly offer men circumcisions, a surgical procedure to remove the foreskin that has been shown to cut their risk of H.I.V. infection by more than half.
But health officials, experts and advocates said that political leaders, particularly in Africa, would have to be far more outspoken about the practice of having more than one long-term sexual partner fueling the epidemic — and about circumcision cutting the risk of infection.
“I’m worried,” said Mr. Stirling. “I don’t hear the most senior political leaders talking about concurrent partners or male circumcision, not enough.”
South Africa, which has more H.I.V.-positive citizens than any other nation, exemplified both the progress on treatment and the uncertain prospects for prevention, experts said.
The number of people getting antiretroviral drugs last year grew by more than half, faster than in any other country. South Africa now has by far the largest AIDS treatment program in the world. The United Nations estimated that more than 700,000 South Africans were getting the medicines, though advocates here have said the number is actually closer to 600,000 after discounting those who have died or dropped out.
Even with the gains, however, less than half those here who need the drugs are getting them, advocates say. And South Africa lacks a policy on male circumcision. The country is still overcoming setbacks from the years when its president, Thabo Mbeki, denied the scientific consensus that H.I.V. causes AIDS and that antiretroviral drugs are essential to treat the disease.
The country’s new leaders have broken cleanly with those views but still need to act with greater urgency on H.I.V. prevention, said Mark Heywood, executive director of the AIDS Law Project and deputy chairman of the South African National AIDS Council, which advises the government.
“South Africa will get its act together, but it hasn’t at the moment,” he said.
Fed Proposes Rules on Credit Cards
Fed Proposes Rules on Credit Cards
Copyright By REUTERS
Published: September 29, 2009
http://www.nytimes.com/2009/09/30/your-money/credit-and-debit-cards/30card.html?th&emc=th
WASHINGTON (Reuters) — The Federal Reserve proposed tough credit card rules on Tuesday to protect consumers from potentially costly practices by lenders, and moved to put in place legislation enacted in May.
“This proposal is another step forward in the Federal Reserve’s efforts to ensure that consumers who rely on credit cards are treated fairly,” Elizabeth A. Duke, a Fed governor, said in a statement.
The proposals, issued for public comment, represent part of the Fed’s execution of the Credit Card Act, which was signed by President Obama in May.
The Fed adopted final rules prohibiting unfair credit card practices in December 2008. The proposals released on Tuesday amend those regulations to incorporate provisions in the new law.
“The rule bans several harmful practices and requires greater transparency in the disclosure of the terms and conditions of credit card accounts,” Ms. Duke said.
They would protect consumers from unexpected increases in credit card interest rates by generally prohibiting a rate rise in the first year after an account is opened, and increases in a rate that applies to an existing card balance.
They would also prohibit creditors from issuing a card to anyone under the age of 21 unless the borrower had either the ability to make the required payment, or had the signature of a parent or other co-signer who had the means to do so.
In addition, the proposed rules would mean a consumer’s consent would be needed before creditors could charge fees for transactions that exceed the credit limit, and would curb fees linked to subprime cards for consumers with risky credit.
They would also ban “two-cycle” billing methods, where a creditor raises an interest rate and charges the higher rate for a customers’ previous borrowing.
Copyright By REUTERS
Published: September 29, 2009
http://www.nytimes.com/2009/09/30/your-money/credit-and-debit-cards/30card.html?th&emc=th
WASHINGTON (Reuters) — The Federal Reserve proposed tough credit card rules on Tuesday to protect consumers from potentially costly practices by lenders, and moved to put in place legislation enacted in May.
“This proposal is another step forward in the Federal Reserve’s efforts to ensure that consumers who rely on credit cards are treated fairly,” Elizabeth A. Duke, a Fed governor, said in a statement.
The proposals, issued for public comment, represent part of the Fed’s execution of the Credit Card Act, which was signed by President Obama in May.
The Fed adopted final rules prohibiting unfair credit card practices in December 2008. The proposals released on Tuesday amend those regulations to incorporate provisions in the new law.
“The rule bans several harmful practices and requires greater transparency in the disclosure of the terms and conditions of credit card accounts,” Ms. Duke said.
They would protect consumers from unexpected increases in credit card interest rates by generally prohibiting a rate rise in the first year after an account is opened, and increases in a rate that applies to an existing card balance.
They would also prohibit creditors from issuing a card to anyone under the age of 21 unless the borrower had either the ability to make the required payment, or had the signature of a parent or other co-signer who had the means to do so.
In addition, the proposed rules would mean a consumer’s consent would be needed before creditors could charge fees for transactions that exceed the credit limit, and would curb fees linked to subprime cards for consumers with risky credit.
They would also ban “two-cycle” billing methods, where a creditor raises an interest rate and charges the higher rate for a customers’ previous borrowing.
Senators Reject Pair of Public Option Proposals
Senators Reject Pair of Public Option Proposals
By ROBERT PEAR and JACKIE CALMES
Copyright by The New York Times
Published: September 29, 2009
http://www.nytimes.com/2009/09/30/health/policy/30health.html?th&emc=th
WASHINGTON — After an intense debate that captured the essence of the national struggle over health care, a pivotal Senate committee on Tuesday rejected two Democratic proposals to create a government insurance plan to compete with private insurers.
The votes, in the Senate Finance Committee, underscored divisions among Democrats and were a setback for President Obama, who has endorsed the public plan as a way to “keep insurance companies honest.”
The first proposal, by Senator John D. Rockefeller IV of West Virginia, was rejected 15 to 8, as five Democrats joined all Republicans on the panel in voting no. The second proposal, by Senator Charles E. Schumer of New York, was defeated 13 to 10, with three Democrats voting no.
The votes vindicated the middle-of-the-road approach taken by the committee chairman, Senator Max Baucus, Democrat of Montana. Mr. Baucus voted against both proposals, which were offered as amendments to his bill to expand coverage and rein in health costs.
“There’s a lot to like about a public option,” Mr. Baucus said, but he asserted that the idea could not get the 60 votes needed to overcome a Republican filibuster on the Senate floor.
Proponents of a public plan said it was needed to compete with private insurers, and they said consumers would benefit from the competition, getting lower prices and better benefits.
Republicans on the committee unanimously opposed the public option, saying it was, in the words of Senator Orrin G. Hatch of Utah, “a Trojan horse for a single-payer system” in which the government would eventually control most health care.
Mr. Obama has said he wants a public plan, but he has not always insisted on it, and the administration has sent mixed signals about how important it is. In the debate on Tuesday, few senators mentioned the president’s preferences, although several noted that many House Democrats, including Speaker Nancy Pelosi, supported the public option.
House Democratic leaders met for several hours on Tuesday to continue the dicey work of melding bills from three committees into a consensus package that could win a House majority.
Mr. Schumer said the public option would hold down costs because it would not have to generate profits, answer to shareholders or incur marketing expenses. His proposal would have required the public plan to negotiate rates with doctors and hospitals, rather than setting prices based on Medicare reimbursement rates. Under Mr. Rockefeller’s plan, the payment of doctors and hospitals would have been based on Medicare rates for the first two years.
Mr. Rockefeller said the Congressional Budget Office had estimated that a government insurance plan could slice $50 billion from the cost of Mr. Baucus’s bill, originally put at $774 billion over 10 years. The budget office predicted that eight million people would initially enroll in the public plan — about one-third of those who would seek coverage through new markets, or insurance exchanges.
“The public plan will be optional,” Mr. Rockefeller insisted. “It will be voluntary. It will be affordable to people who are now helpless before their insurance companies.”
But Senator Charles E. Grassley of Iowa, the senior Republican on the committee, said a government insurance plan would have inherent advantages over private insurers. “Government is not a fair competitor,” Mr. Grassley said. “It’s a predator.” He predicted that “a government plan will ultimately force private insurers out of business,” reducing choices for consumers.
Senator John Ensign, Republican of Nevada, said he feared that a government plan would prove so popular it could never be uprooted. “Does anybody believe Congress would let this public plan go away once it has a constituency?” Mr. Ensign asked. “No way. Once it’s started, you will never get rid of it. Congress will subsidize it more and more, allow it to grow and grow.”
Besides Mr. Baucus, two Democrats, Senators Kent Conrad of North Dakota and Blanche Lincoln of Arkansas, voted against both public option proposals. Two other Democrats, Senators Thomas R. Carper of Delaware and Bill Nelson of Florida, voted against the first amendment, but supported the second.
Mr. Carper said he liked Mr. Schumer’s proposal because it “would establish a level playing field” for competition between private insurers and the government plan.
The votes on Tuesday set the stage for a compromise under which the public plan could be offered in states where people could not find affordable private coverage, Mr. Carper said. He and Senator Olympia J. Snowe, Republican of Maine, have proposed such a compromise.
Democrats hope Ms. Snowe will eventually break with her party and support the legislation.
In the House, the Democratic leader, Representative Steny H. Hoyer of Maryland, echoed Mr. Schumer’s argument that the Finance Committee was the least friendly of the forums that would consider a public option.
“The Senate floor may be better, and the conference even better,” Mr. Hoyer said, looking ahead to negotiations where differences between the two chambers might be resolved.
Senator Lincoln, who faces an increasingly competitive race for re-election next year, said she supported efforts to cover the uninsured and to protect consumers by imposing strict new federal rules on insurance companies. But she said Congress could achieve those goals “without creating a purely public new government program, which most Arkansans do not support.”
Mr. Baucus’s bill does not include a public plan, but would set up nonprofit insurance cooperatives as an alternative to private insurers. The Congressional Budget Office has suggested that the cooperatives would have little effect on federal costs.
Mr. Rockefeller and Mr. Schumer were undaunted. “We will keep fighting so the bill that lands on the president’s desk has a good, strong, robust public option,” Mr. Schumer said.
By ROBERT PEAR and JACKIE CALMES
Copyright by The New York Times
Published: September 29, 2009
http://www.nytimes.com/2009/09/30/health/policy/30health.html?th&emc=th
WASHINGTON — After an intense debate that captured the essence of the national struggle over health care, a pivotal Senate committee on Tuesday rejected two Democratic proposals to create a government insurance plan to compete with private insurers.
The votes, in the Senate Finance Committee, underscored divisions among Democrats and were a setback for President Obama, who has endorsed the public plan as a way to “keep insurance companies honest.”
The first proposal, by Senator John D. Rockefeller IV of West Virginia, was rejected 15 to 8, as five Democrats joined all Republicans on the panel in voting no. The second proposal, by Senator Charles E. Schumer of New York, was defeated 13 to 10, with three Democrats voting no.
The votes vindicated the middle-of-the-road approach taken by the committee chairman, Senator Max Baucus, Democrat of Montana. Mr. Baucus voted against both proposals, which were offered as amendments to his bill to expand coverage and rein in health costs.
“There’s a lot to like about a public option,” Mr. Baucus said, but he asserted that the idea could not get the 60 votes needed to overcome a Republican filibuster on the Senate floor.
Proponents of a public plan said it was needed to compete with private insurers, and they said consumers would benefit from the competition, getting lower prices and better benefits.
Republicans on the committee unanimously opposed the public option, saying it was, in the words of Senator Orrin G. Hatch of Utah, “a Trojan horse for a single-payer system” in which the government would eventually control most health care.
Mr. Obama has said he wants a public plan, but he has not always insisted on it, and the administration has sent mixed signals about how important it is. In the debate on Tuesday, few senators mentioned the president’s preferences, although several noted that many House Democrats, including Speaker Nancy Pelosi, supported the public option.
House Democratic leaders met for several hours on Tuesday to continue the dicey work of melding bills from three committees into a consensus package that could win a House majority.
Mr. Schumer said the public option would hold down costs because it would not have to generate profits, answer to shareholders or incur marketing expenses. His proposal would have required the public plan to negotiate rates with doctors and hospitals, rather than setting prices based on Medicare reimbursement rates. Under Mr. Rockefeller’s plan, the payment of doctors and hospitals would have been based on Medicare rates for the first two years.
Mr. Rockefeller said the Congressional Budget Office had estimated that a government insurance plan could slice $50 billion from the cost of Mr. Baucus’s bill, originally put at $774 billion over 10 years. The budget office predicted that eight million people would initially enroll in the public plan — about one-third of those who would seek coverage through new markets, or insurance exchanges.
“The public plan will be optional,” Mr. Rockefeller insisted. “It will be voluntary. It will be affordable to people who are now helpless before their insurance companies.”
But Senator Charles E. Grassley of Iowa, the senior Republican on the committee, said a government insurance plan would have inherent advantages over private insurers. “Government is not a fair competitor,” Mr. Grassley said. “It’s a predator.” He predicted that “a government plan will ultimately force private insurers out of business,” reducing choices for consumers.
Senator John Ensign, Republican of Nevada, said he feared that a government plan would prove so popular it could never be uprooted. “Does anybody believe Congress would let this public plan go away once it has a constituency?” Mr. Ensign asked. “No way. Once it’s started, you will never get rid of it. Congress will subsidize it more and more, allow it to grow and grow.”
Besides Mr. Baucus, two Democrats, Senators Kent Conrad of North Dakota and Blanche Lincoln of Arkansas, voted against both public option proposals. Two other Democrats, Senators Thomas R. Carper of Delaware and Bill Nelson of Florida, voted against the first amendment, but supported the second.
Mr. Carper said he liked Mr. Schumer’s proposal because it “would establish a level playing field” for competition between private insurers and the government plan.
The votes on Tuesday set the stage for a compromise under which the public plan could be offered in states where people could not find affordable private coverage, Mr. Carper said. He and Senator Olympia J. Snowe, Republican of Maine, have proposed such a compromise.
Democrats hope Ms. Snowe will eventually break with her party and support the legislation.
In the House, the Democratic leader, Representative Steny H. Hoyer of Maryland, echoed Mr. Schumer’s argument that the Finance Committee was the least friendly of the forums that would consider a public option.
“The Senate floor may be better, and the conference even better,” Mr. Hoyer said, looking ahead to negotiations where differences between the two chambers might be resolved.
Senator Lincoln, who faces an increasingly competitive race for re-election next year, said she supported efforts to cover the uninsured and to protect consumers by imposing strict new federal rules on insurance companies. But she said Congress could achieve those goals “without creating a purely public new government program, which most Arkansans do not support.”
Mr. Baucus’s bill does not include a public plan, but would set up nonprofit insurance cooperatives as an alternative to private insurers. The Congressional Budget Office has suggested that the cooperatives would have little effect on federal costs.
Mr. Rockefeller and Mr. Schumer were undaunted. “We will keep fighting so the bill that lands on the president’s desk has a good, strong, robust public option,” Mr. Schumer said.
General Says Iraq Troop Reductions May Quicken
General Says Iraq Troop Reductions May Quicken
By THOM SHANKER
Copyright by The New York Times
Published: September 29, 2009
http://www.nytimes.com/2009/09/30/world/middleeast/30military.html?th&emc=th
WASHINGTON — The senior American commander in Iraq said Tuesday that he could reduce American forces to 50,000 troops even before the end of next summer if the expected January elections in Iraq went smoothly.
Gen. Ray Odierno said he had drafted a new plan for transferring duties to the Iraqis.
At War
Notes from Afghanistan, Pakistan, Iraq and other areas of conflict in the post-9/11 era. Go to the Blog »
Related
From McChrystal’s Mouth to Obama’s Ear (September 30, 2009)
That could ease the strain across the American armed forces and free up extra combat units for duty in the Afghanistan war, which has become a priority for the Obama administration.
In an interview at the Pentagon, the commander, Gen. Ray Odierno, said he had already ordered some service members and equipment diverted from the Iraq mission to Afghanistan, in particular surveillance aircraft and units known as “combat enablers,” which include engineers for clearing roadside bombs and military police officers for training Afghan forces.
The United States and Iraq agreed last year that American combat forces would be out of Iraq by August 2010, leaving 50,000 troops to advise and support the Iraqis. Since that schedule was set, the need for troops in Afghanistan has made that timing especially important — all the more so if commanders in Afghanistan formally request even more troops and President Obama agrees. In recent months American combat forces pulled out of Iraq’s city centers.
General Odierno described his continuing security concerns, especially in the north of Iraq, where there are deep Kurdish-Arab tensions and where homegrown insurgents who claim allegiance to Al Qaeda continue to operate.
But the general said he was confident enough in the path to stability — with orderly elections and a smooth transfer of power in the winter — that he had drafted a new plan that set out how the duties now performed by American forces would be increasingly transferred to Iraqis before the full withdrawal, planned for Dec. 31, 2011. For the final year and a half or so, the Americans would be advising and training the Iraqis and providing logistics to them.
He did caution that if the Iraqi government and military were not able to shoulder the entire burden of responsibility by that deadline, the ministries in Baghdad would have to rely for support on civilian United States agencies, in particular the State and Treasury Departments.
“We failed the first time in 2003, when things were fairly calm and we didn’t have a plan to transition what we had done militarily over to a civilian-led solution to help solve these problems,” General Odierno said.
“We have another opportunity here in 2010 and 2011 to do this,” he added. “What are the enduring functions that have to be transitioned over that will continue to build Iraqi civilian capacity and continue to improve their ability to provide security? We are very focused on that.”
The new Joint Campaign Plan was written in partnership with the American Embassy in Baghdad, the general said, and should be approved later this fall as the detailed map guiding the American withdrawal from Iraq.
The next benchmark for the American military withdrawal is Aug. 31, 2010, when forces must drop to 50,000. Military officers based in Baghdad said Tuesday that American military forces in Iraq numbered slightly more than 124,000, a reduction of 40,000 since 2008.
General Odierno said he had no intention of dropping below the 50,000-troop level required under a bilateral security agreement by the end of August, but he said he might reach that level before the deadline.
“Between now and May, I could accelerate the drawdown,” he said. “If we get through successful elections, and you seat the government peacefully, that provides another level of stability. That will help to reduce tensions.”
General Odierno said he had discussed the military needs for Afghanistan with Gen. Stanley A. McChrystal, the senior commander in Kabul, and with Gen. David H. Petraeus, the top officer in the Middle East, and he said all three had agreed that the military urgently required surveillance and transport aircraft in Afghanistan, as well as engineers and military police officers.
“We have been able to move some already over to Afghanistan,” General Odierno said. “We don’t want to affect the mission in Iraq, but we know some of this is needed in Afghanistan. I think we’ve been able to balance this so far.”
He said overall progress in Iraq was “slow, steady.” The leadership of Iraq’s security units has improved, and there is less sectarianism within these forces, the general said. But pitfalls remain.
“There is still too much political interference in the military,” General Odierno said. “That has always been a case there. It is better than it was, but it is still too much, and from a lot of different sources.”
The north of Iraq remains a serious security concern, especially in Nineveh Province, where, he said, “Al Qaeda in Iraq is still trying to re-establish a foothold and then be able to extend its tentacles down into Baghdad.”
Minority tensions, in particular between Kurds and Arabs in the north, are also a “driver of instability” and could be “exploited to destabilize the government of Iraq,” he noted.
And Iran has not halted its efforts to train insurgents and to send weapons and money in a bid for influence across the southern provinces of Iraq, General Odierno said, although Iranian agents “have reduced some of what they are doing.”
Even so, he said that Iraqi security forces continued to intercept large shipments of weapons and high-powered explosives sent from Iran.
By THOM SHANKER
Copyright by The New York Times
Published: September 29, 2009
http://www.nytimes.com/2009/09/30/world/middleeast/30military.html?th&emc=th
WASHINGTON — The senior American commander in Iraq said Tuesday that he could reduce American forces to 50,000 troops even before the end of next summer if the expected January elections in Iraq went smoothly.
Gen. Ray Odierno said he had drafted a new plan for transferring duties to the Iraqis.
At War
Notes from Afghanistan, Pakistan, Iraq and other areas of conflict in the post-9/11 era. Go to the Blog »
Related
From McChrystal’s Mouth to Obama’s Ear (September 30, 2009)
That could ease the strain across the American armed forces and free up extra combat units for duty in the Afghanistan war, which has become a priority for the Obama administration.
In an interview at the Pentagon, the commander, Gen. Ray Odierno, said he had already ordered some service members and equipment diverted from the Iraq mission to Afghanistan, in particular surveillance aircraft and units known as “combat enablers,” which include engineers for clearing roadside bombs and military police officers for training Afghan forces.
The United States and Iraq agreed last year that American combat forces would be out of Iraq by August 2010, leaving 50,000 troops to advise and support the Iraqis. Since that schedule was set, the need for troops in Afghanistan has made that timing especially important — all the more so if commanders in Afghanistan formally request even more troops and President Obama agrees. In recent months American combat forces pulled out of Iraq’s city centers.
General Odierno described his continuing security concerns, especially in the north of Iraq, where there are deep Kurdish-Arab tensions and where homegrown insurgents who claim allegiance to Al Qaeda continue to operate.
But the general said he was confident enough in the path to stability — with orderly elections and a smooth transfer of power in the winter — that he had drafted a new plan that set out how the duties now performed by American forces would be increasingly transferred to Iraqis before the full withdrawal, planned for Dec. 31, 2011. For the final year and a half or so, the Americans would be advising and training the Iraqis and providing logistics to them.
He did caution that if the Iraqi government and military were not able to shoulder the entire burden of responsibility by that deadline, the ministries in Baghdad would have to rely for support on civilian United States agencies, in particular the State and Treasury Departments.
“We failed the first time in 2003, when things were fairly calm and we didn’t have a plan to transition what we had done militarily over to a civilian-led solution to help solve these problems,” General Odierno said.
“We have another opportunity here in 2010 and 2011 to do this,” he added. “What are the enduring functions that have to be transitioned over that will continue to build Iraqi civilian capacity and continue to improve their ability to provide security? We are very focused on that.”
The new Joint Campaign Plan was written in partnership with the American Embassy in Baghdad, the general said, and should be approved later this fall as the detailed map guiding the American withdrawal from Iraq.
The next benchmark for the American military withdrawal is Aug. 31, 2010, when forces must drop to 50,000. Military officers based in Baghdad said Tuesday that American military forces in Iraq numbered slightly more than 124,000, a reduction of 40,000 since 2008.
General Odierno said he had no intention of dropping below the 50,000-troop level required under a bilateral security agreement by the end of August, but he said he might reach that level before the deadline.
“Between now and May, I could accelerate the drawdown,” he said. “If we get through successful elections, and you seat the government peacefully, that provides another level of stability. That will help to reduce tensions.”
General Odierno said he had discussed the military needs for Afghanistan with Gen. Stanley A. McChrystal, the senior commander in Kabul, and with Gen. David H. Petraeus, the top officer in the Middle East, and he said all three had agreed that the military urgently required surveillance and transport aircraft in Afghanistan, as well as engineers and military police officers.
“We have been able to move some already over to Afghanistan,” General Odierno said. “We don’t want to affect the mission in Iraq, but we know some of this is needed in Afghanistan. I think we’ve been able to balance this so far.”
He said overall progress in Iraq was “slow, steady.” The leadership of Iraq’s security units has improved, and there is less sectarianism within these forces, the general said. But pitfalls remain.
“There is still too much political interference in the military,” General Odierno said. “That has always been a case there. It is better than it was, but it is still too much, and from a lot of different sources.”
The north of Iraq remains a serious security concern, especially in Nineveh Province, where, he said, “Al Qaeda in Iraq is still trying to re-establish a foothold and then be able to extend its tentacles down into Baghdad.”
Minority tensions, in particular between Kurds and Arabs in the north, are also a “driver of instability” and could be “exploited to destabilize the government of Iraq,” he noted.
And Iran has not halted its efforts to train insurgents and to send weapons and money in a bid for influence across the southern provinces of Iraq, General Odierno said, although Iranian agents “have reduced some of what they are doing.”
Even so, he said that Iraqi security forces continued to intercept large shipments of weapons and high-powered explosives sent from Iran.
China’s Ties With Iran Complicate Diplomacy
China’s Ties With Iran Complicate Diplomacy
By MICHAEL WINES
Copyright by The New York Times
Published: September 29, 2009
http://www.nytimes.com/2009/09/30/world/asia/30china.html?th&emc=th
BEIJING — Leaders of the House Foreign Affairs Committee swept into Beijing last month to meet with Chinese officials, carrying a plea from Washington: if Iran were to be kept from developing nuclear weapons, China would have to throw more diplomatic weight behind the cause.
In fact, the appeal had been largely answered even before the legislators arrived.
In June, China National Petroleum signed a $5 billion deal to develop the South Pars natural gas field in Iran. In July, Iran invited Chinese companies to join a $42.8 billion project to build seven oil refineries and a 1,019-mile trans-Iran pipeline. And in August, almost as the Americans arrived in China, Tehran and Beijing struck another deal, this time for $3 billion, that will pave the way for China to help Iran expand two more oil refineries.
The string of energy deals appalled the Democratic chairman of the Foreign Affairs Committee, Representative Howard L. Berman of California, who called them “exactly the wrong message” to send to an Iran that seemed determined to flout international nuclear rules.
But some analysts see another message: as the United States issues new calls to punish Iran for secretly expanding its nuclear program, it is not at all clear that Washington’s interests are the same as Beijing’s.
That will make it doubly difficult, these analysts say, to push meaningful sanctions against Iran through the United Nations Security Council, where China not only holds a veto but has also been one of Iran’s more reliable defenders.
“Their threat perception on this issue is different from ours,” said Zalmay Khalilzad, who as the American ambassador to the United Nations under President George W. Bush helped persuade China to approve limited sanctions against Iran. “They don’t see Iran in the same way as we do.”
François Godement, a prominent China scholar and the president of the Paris-based Asia Center, put it more bluntly. “Basically,” he said, “the rise of Iran is not bad news for China.”
To be sure, China and the United States, leading members of the club of nuclear nations, share a practical interest in halting the spread of nuclear weapons to volatile areas like the Middle East. And it is in China’s interest to avoid alienating the United States, its economic and, increasingly, diplomatic partner on matters of global importance.
But beyond that, many experts say, their differences over Iran are not only economic but also ideological and strategic.
The United States has almost no financial ties with Iran, regards its government as a threat to global stability and worries that a rising Tehran would threaten American alliances and energy agreements in the Persian Gulf.
In contrast, China’s economic links to Tehran are growing rapidly, and China’s leaders see Iran not as a threat but as a potential ally. Nor would the Chinese be distressed, the reasoning goes, should a nuclear-armed Iran sap American influence in the region and drain the Pentagon’s resources in more Middle East maneuvering.
“Chinese leaders view Iran as a country of great potential power, perhaps already the economic and, maybe, militarily dominant power in that region,” said John W. Garver, a professor of international relations at Georgia Tech and the author of “China and Iran: Ancient Partners in a Post-Imperial World.”
An alliance with Tehran, he said, would be a bulwark against what China suspects is an American plan to maintain global dominance by controlling Middle Eastern energy supplies.
Beyond that, China relies heavily on Iran’s vast energy reserves — perhaps 15 percent of the world’s natural gas deposits and a tenth of its oil — to offset its own shortages. The Chinese are estimated to have $120 billion committed to Iranian gas and oil projects, and China has been Iran’s biggest oil export market for the past five years. In return, Iran has loaded up on imported Chinese machine tools, factory equipment, locomotives and other heavy goods, building China into one of its largest trading partners.
China scholars say that the relationship is anything but one-sided. Iran has skillfully parceled out its oil and gas reserves to Chinese companies, holding exploration and development as a sort of insurance policy to retain Chinese diplomatic backing in the United Nations.
For its part, China has opposed stiff sanctions against Iran’s nuclear program, acceding mostly to restrictions on trade in nuclear-related materials and orders to freeze the overseas assets of some Iranian companies.
Many experts question how much more punishment Beijing would agree to support. Iran has already been cited three times by the Security Council, with Beijing’s backing, for flouting prohibitions against its nuclear program.
In each case, Beijing agreed to measures only after stronger American proposals had been watered down and after Russia, the Council’s other critic of stiff sanctions and a close ally of Iran, had signed off on the proposal.
One noted Chinese analyst, Shi Yinhong of People’s University in Beijing, said in a telephone interview this week that China would probably follow much the same course should a new sanctions proposal reach the Security Council.
“China will do its utmost to find a balance” between Iran and the United States, Mr. Shi said. If Russia joins the other Council members in supporting a new sanctions resolution, he said, “China will do its best to try to dilute it, to make it limited, rather than veto it.”
But it is unlikely to do so happily. Supporting stronger sanctions might elevate China’s image as a global diplomatic leader, but the United States, not China, would reap the real benefits.
“China is not anxious to jump on this American train,” said one Chinese analyst, who spoke on the condition of anonymity in order to freely assess China’s foreign policy.
Li Bibo contributed research.
By MICHAEL WINES
Copyright by The New York Times
Published: September 29, 2009
http://www.nytimes.com/2009/09/30/world/asia/30china.html?th&emc=th
BEIJING — Leaders of the House Foreign Affairs Committee swept into Beijing last month to meet with Chinese officials, carrying a plea from Washington: if Iran were to be kept from developing nuclear weapons, China would have to throw more diplomatic weight behind the cause.
In fact, the appeal had been largely answered even before the legislators arrived.
In June, China National Petroleum signed a $5 billion deal to develop the South Pars natural gas field in Iran. In July, Iran invited Chinese companies to join a $42.8 billion project to build seven oil refineries and a 1,019-mile trans-Iran pipeline. And in August, almost as the Americans arrived in China, Tehran and Beijing struck another deal, this time for $3 billion, that will pave the way for China to help Iran expand two more oil refineries.
The string of energy deals appalled the Democratic chairman of the Foreign Affairs Committee, Representative Howard L. Berman of California, who called them “exactly the wrong message” to send to an Iran that seemed determined to flout international nuclear rules.
But some analysts see another message: as the United States issues new calls to punish Iran for secretly expanding its nuclear program, it is not at all clear that Washington’s interests are the same as Beijing’s.
That will make it doubly difficult, these analysts say, to push meaningful sanctions against Iran through the United Nations Security Council, where China not only holds a veto but has also been one of Iran’s more reliable defenders.
“Their threat perception on this issue is different from ours,” said Zalmay Khalilzad, who as the American ambassador to the United Nations under President George W. Bush helped persuade China to approve limited sanctions against Iran. “They don’t see Iran in the same way as we do.”
François Godement, a prominent China scholar and the president of the Paris-based Asia Center, put it more bluntly. “Basically,” he said, “the rise of Iran is not bad news for China.”
To be sure, China and the United States, leading members of the club of nuclear nations, share a practical interest in halting the spread of nuclear weapons to volatile areas like the Middle East. And it is in China’s interest to avoid alienating the United States, its economic and, increasingly, diplomatic partner on matters of global importance.
But beyond that, many experts say, their differences over Iran are not only economic but also ideological and strategic.
The United States has almost no financial ties with Iran, regards its government as a threat to global stability and worries that a rising Tehran would threaten American alliances and energy agreements in the Persian Gulf.
In contrast, China’s economic links to Tehran are growing rapidly, and China’s leaders see Iran not as a threat but as a potential ally. Nor would the Chinese be distressed, the reasoning goes, should a nuclear-armed Iran sap American influence in the region and drain the Pentagon’s resources in more Middle East maneuvering.
“Chinese leaders view Iran as a country of great potential power, perhaps already the economic and, maybe, militarily dominant power in that region,” said John W. Garver, a professor of international relations at Georgia Tech and the author of “China and Iran: Ancient Partners in a Post-Imperial World.”
An alliance with Tehran, he said, would be a bulwark against what China suspects is an American plan to maintain global dominance by controlling Middle Eastern energy supplies.
Beyond that, China relies heavily on Iran’s vast energy reserves — perhaps 15 percent of the world’s natural gas deposits and a tenth of its oil — to offset its own shortages. The Chinese are estimated to have $120 billion committed to Iranian gas and oil projects, and China has been Iran’s biggest oil export market for the past five years. In return, Iran has loaded up on imported Chinese machine tools, factory equipment, locomotives and other heavy goods, building China into one of its largest trading partners.
China scholars say that the relationship is anything but one-sided. Iran has skillfully parceled out its oil and gas reserves to Chinese companies, holding exploration and development as a sort of insurance policy to retain Chinese diplomatic backing in the United Nations.
For its part, China has opposed stiff sanctions against Iran’s nuclear program, acceding mostly to restrictions on trade in nuclear-related materials and orders to freeze the overseas assets of some Iranian companies.
Many experts question how much more punishment Beijing would agree to support. Iran has already been cited three times by the Security Council, with Beijing’s backing, for flouting prohibitions against its nuclear program.
In each case, Beijing agreed to measures only after stronger American proposals had been watered down and after Russia, the Council’s other critic of stiff sanctions and a close ally of Iran, had signed off on the proposal.
One noted Chinese analyst, Shi Yinhong of People’s University in Beijing, said in a telephone interview this week that China would probably follow much the same course should a new sanctions proposal reach the Security Council.
“China will do its utmost to find a balance” between Iran and the United States, Mr. Shi said. If Russia joins the other Council members in supporting a new sanctions resolution, he said, “China will do its best to try to dilute it, to make it limited, rather than veto it.”
But it is unlikely to do so happily. Supporting stronger sanctions might elevate China’s image as a global diplomatic leader, but the United States, not China, would reap the real benefits.
“China is not anxious to jump on this American train,” said one Chinese analyst, who spoke on the condition of anonymity in order to freely assess China’s foreign policy.
Li Bibo contributed research.
In Dispute With Iran, Path to Iraq Is in Spotlight
In Dispute With Iran, Path to Iraq Is in Spotlight
By SCOTT SHANE
Copyright by The Associated Press
Published: September 29, 2009
http://www.nytimes.com/2009/09/30/world/middleeast/30intel.html?th&emc=th
WASHINGTON — To many Americans, Secretary of State Colin L. Powell’s February 2003 speech to the United Nations on Iraq’s unconventional weapons was powerfully persuasive. It was a dazzling performance, featuring satellite images and intercepts of Iraqi communications, delivered by one of the most trusted figures in public life.
Then a long and costly war began, and the country discovered that the assertions that Iraq possessed illicit weapons had been completely unfounded.
Now the United States’ confrontation with Iran over its nuclear program is heating up, with the disclosure last week that the Iranian government is building a second uranium enrichment complex it had not previously acknowledged.
The question is inevitable: Is the uproar over the secret plant near Qum another rush to judgment, based on ambiguous evidence, spurred on by a desire to appear tough toward a loathed regime? In other words, is the United States repeating the mistakes of 2002?
Antiwar activists, with a fool-me-once skepticism, watch the dispute over the Qum plant with an alarmed sense of déjà vu. And some specialists on arms control and Iran are asking for more evidence and warning against hasty conclusions.
But while the similarities between 2002, when the faulty intelligence estimates were produced, and 2009 are unmistakable, the differences are profound.
This time, by all accounts, there is no White House-led march toward war. Defense Secretary Robert M. Gates has said that military action would merely delay Iranian nuclear weapons for one to three years, and there is no evidence that President Obama wants to add a third war to his responsibilities.
This time, too, the dispute over facts is narrower. Iran has admitted the existence of nuclear enrichment facilities, and on Tuesday it acknowledged that it was building the plant underground, next to a military base, for its protection. Still, Iran disputes claims that the plant is part of a weapons program.
American intelligence officials say that they learned a traumatic lesson from the Iraqi weapons debacle, and that assessments of Iran’s nuclear program are hedged and not influenced by political or policy considerations.
“We’d let the country down, and we wanted to make sure it would never happen again,” said Thomas Fingar, who before the Iraq war led the State Department’s intelligence bureau, which dissented from the inaccurate claims about Iraq’s nuclear program. Dissent from majority views in intelligence assessments is now encouraged, and assumptions are spelled out, said Mr. Fingar, who is now at Stanford University.
“Now, it’s much more of a transparent tussle of ideas,” he said.
That tussle produced a surprising conclusion in a 2007 national intelligence assessment on Iran’s nuclear program: that Tehran’s work on designing a warhead was halted in 2003. Today, the American view is that the design work has still not resumed, a more conservative stance than that of some close allies, who say they believe the work has resumed or never stopped at all, including Germany, Israel and, according to a report Tuesday by The Financial Times, Britain.
In assessing the construction near Qum, the Central Intelligence Agency “formed its conclusions carefully and patiently over time, weighing and testing each piece of information that came in,” said Paul Gimigliano, an agency spokesman. “This was a major intelligence success.”
Not all are persuaded. Glenn Greenwald, an author and a left-leaning blogger for the online magazine Salon, called the parallels with the charges that Iraq had so-called weapons of mass destruction in 2002 “substantial and disturbing.”
“The administration is making inflammatory claims about another country’s W.M.D. program and intentions without providing any evidence,” he said.
Gary Sick, an expert on Iran at Columbia University, said that ever since 1992, American officials had claimed that Iran was just a few years away from a nuclear bomb. Like Saddam Hussein, the clerical government in Iran is “despised,” he said, leading to worst-case assumptions.
“In 2002, it seemed utterly naïve to believe Saddam didn’t have a program,” Mr. Sick said. Now, the notion that Iran is not racing to build a bomb is similarly excluded from serious discussion, he said.
Mr. Sick, like some in the intelligence community, said he believed that Iran might intend to stop short of building a weapon while creating “breakout capability” — the ability to make a bomb in a matter of months in the future. That chain of events might allow room for later intervention.
Without actually constructing a bomb, Iran could gain the influence of being an almost nuclear power, without facing the repercussions that would ensue if it finished the job.
Greg Thielmann, an intelligence analyst in the State Department before the Iraq war, said he believed that the Iran intelligence assessments were far more balanced, in part because there was not the urgent pressure from the White House to reach a particular conclusion, as there was in 2002. But he said he was bothered by what he said was an exaggerated sense of crisis over the Iranian nuclear issue.
“Some people are saying time’s running out and we have to act by the end of the year,” said Mr. Thielmann, now a senior fellow at the Arms Control Association. “I’ve been arguing that we have years, not months. The facts argue for a calmer approach.”
David Albright, a former nuclear arms inspector who is now the president of the Institute for Science and International Security, said Iran’s “well-documented history of undeclared nuclear programs” lent credibility to American suspicions.
Still, Mr. Albright said, the government must provide more information to back up its charges. On the Qum plant, for example, he asked, do intelligence agencies have evidence that it was intended to produce weapons-grade uranium, or merely that it could accommodate the equipment for such a purpose?
“They have to show their hand,” he said of American intelligence agencies. “Or we don’t have to believe them.”
In many dissections of the blunders before the Iraq war, the news media, including The New York Times, came in for a share of the criticism, for repeating Bush administration claims about Iraq without sufficient scrutiny or skepticism.
Mr. Greenwald, the Salon blogger, said he found in the coverage about the Qum plant little improvement in the performance of the press. “There is virtually no questioning of whether this facility could be used for civilian purposes, or whether Iran’s reporting it more than a year before operability demonstrates its good faith,” he said.
Greg Mitchell, whose 2008 book “So Wrong for So Long” analyzed the media’s failures on Iraq, said he would give the Iran coverage better marks. “I don’t see the same level of blindly accepting what the hawks are saying,” said Mr. Mitchell, editor of the trade publication Editor & Publisher. “I think the press has learned some lessons.”
By SCOTT SHANE
Copyright by The Associated Press
Published: September 29, 2009
http://www.nytimes.com/2009/09/30/world/middleeast/30intel.html?th&emc=th
WASHINGTON — To many Americans, Secretary of State Colin L. Powell’s February 2003 speech to the United Nations on Iraq’s unconventional weapons was powerfully persuasive. It was a dazzling performance, featuring satellite images and intercepts of Iraqi communications, delivered by one of the most trusted figures in public life.
Then a long and costly war began, and the country discovered that the assertions that Iraq possessed illicit weapons had been completely unfounded.
Now the United States’ confrontation with Iran over its nuclear program is heating up, with the disclosure last week that the Iranian government is building a second uranium enrichment complex it had not previously acknowledged.
The question is inevitable: Is the uproar over the secret plant near Qum another rush to judgment, based on ambiguous evidence, spurred on by a desire to appear tough toward a loathed regime? In other words, is the United States repeating the mistakes of 2002?
Antiwar activists, with a fool-me-once skepticism, watch the dispute over the Qum plant with an alarmed sense of déjà vu. And some specialists on arms control and Iran are asking for more evidence and warning against hasty conclusions.
But while the similarities between 2002, when the faulty intelligence estimates were produced, and 2009 are unmistakable, the differences are profound.
This time, by all accounts, there is no White House-led march toward war. Defense Secretary Robert M. Gates has said that military action would merely delay Iranian nuclear weapons for one to three years, and there is no evidence that President Obama wants to add a third war to his responsibilities.
This time, too, the dispute over facts is narrower. Iran has admitted the existence of nuclear enrichment facilities, and on Tuesday it acknowledged that it was building the plant underground, next to a military base, for its protection. Still, Iran disputes claims that the plant is part of a weapons program.
American intelligence officials say that they learned a traumatic lesson from the Iraqi weapons debacle, and that assessments of Iran’s nuclear program are hedged and not influenced by political or policy considerations.
“We’d let the country down, and we wanted to make sure it would never happen again,” said Thomas Fingar, who before the Iraq war led the State Department’s intelligence bureau, which dissented from the inaccurate claims about Iraq’s nuclear program. Dissent from majority views in intelligence assessments is now encouraged, and assumptions are spelled out, said Mr. Fingar, who is now at Stanford University.
“Now, it’s much more of a transparent tussle of ideas,” he said.
That tussle produced a surprising conclusion in a 2007 national intelligence assessment on Iran’s nuclear program: that Tehran’s work on designing a warhead was halted in 2003. Today, the American view is that the design work has still not resumed, a more conservative stance than that of some close allies, who say they believe the work has resumed or never stopped at all, including Germany, Israel and, according to a report Tuesday by The Financial Times, Britain.
In assessing the construction near Qum, the Central Intelligence Agency “formed its conclusions carefully and patiently over time, weighing and testing each piece of information that came in,” said Paul Gimigliano, an agency spokesman. “This was a major intelligence success.”
Not all are persuaded. Glenn Greenwald, an author and a left-leaning blogger for the online magazine Salon, called the parallels with the charges that Iraq had so-called weapons of mass destruction in 2002 “substantial and disturbing.”
“The administration is making inflammatory claims about another country’s W.M.D. program and intentions without providing any evidence,” he said.
Gary Sick, an expert on Iran at Columbia University, said that ever since 1992, American officials had claimed that Iran was just a few years away from a nuclear bomb. Like Saddam Hussein, the clerical government in Iran is “despised,” he said, leading to worst-case assumptions.
“In 2002, it seemed utterly naïve to believe Saddam didn’t have a program,” Mr. Sick said. Now, the notion that Iran is not racing to build a bomb is similarly excluded from serious discussion, he said.
Mr. Sick, like some in the intelligence community, said he believed that Iran might intend to stop short of building a weapon while creating “breakout capability” — the ability to make a bomb in a matter of months in the future. That chain of events might allow room for later intervention.
Without actually constructing a bomb, Iran could gain the influence of being an almost nuclear power, without facing the repercussions that would ensue if it finished the job.
Greg Thielmann, an intelligence analyst in the State Department before the Iraq war, said he believed that the Iran intelligence assessments were far more balanced, in part because there was not the urgent pressure from the White House to reach a particular conclusion, as there was in 2002. But he said he was bothered by what he said was an exaggerated sense of crisis over the Iranian nuclear issue.
“Some people are saying time’s running out and we have to act by the end of the year,” said Mr. Thielmann, now a senior fellow at the Arms Control Association. “I’ve been arguing that we have years, not months. The facts argue for a calmer approach.”
David Albright, a former nuclear arms inspector who is now the president of the Institute for Science and International Security, said Iran’s “well-documented history of undeclared nuclear programs” lent credibility to American suspicions.
Still, Mr. Albright said, the government must provide more information to back up its charges. On the Qum plant, for example, he asked, do intelligence agencies have evidence that it was intended to produce weapons-grade uranium, or merely that it could accommodate the equipment for such a purpose?
“They have to show their hand,” he said of American intelligence agencies. “Or we don’t have to believe them.”
In many dissections of the blunders before the Iraq war, the news media, including The New York Times, came in for a share of the criticism, for repeating Bush administration claims about Iraq without sufficient scrutiny or skepticism.
Mr. Greenwald, the Salon blogger, said he found in the coverage about the Qum plant little improvement in the performance of the press. “There is virtually no questioning of whether this facility could be used for civilian purposes, or whether Iran’s reporting it more than a year before operability demonstrates its good faith,” he said.
Greg Mitchell, whose 2008 book “So Wrong for So Long” analyzed the media’s failures on Iraq, said he would give the Iran coverage better marks. “I don’t see the same level of blindly accepting what the hawks are saying,” said Mr. Mitchell, editor of the trade publication Editor & Publisher. “I think the press has learned some lessons.”
Justices Will Weigh Challenges to Gun Laws
Justices Will Weigh Challenges to Gun Laws
By ADAM LIPTAK
Copyright by The New York Times
Published: September 30, 2009
http://www.nytimes.com/2009/10/01/us/01scotus.html?_r=1&th&emc=th
WASHINGTON — The Supreme Court announced on Wednesday that it would decide whether state and local gun control laws may be challenged under the Second Amendment.
The court also agreed to hear nine other cases from among those that had piled up over its summer break, including one concerning the constitutionality of an antiterrorism law that is a favorite tool of federal prosecutors.
The Second Amendment case, McDonald v. Chicago, No. 08-1521, addresses a question that was left open last year when the court decided that the Second Amendment protects an individual right to own firearms rather than a collective right tied to state militias.
Last year’s decision, District of Columbia v. Heller, concerned only federal laws and struck down parts of the gun control law in the District of Columbia, a federal enclave. The court ruled that the law violated the Second Amendment by barring law-abiding people from keeping guns in their homes for self-defense.
The new case was brought by residents of Chicago who say their city’s handgun ban is identical to the one struck down in Heller.
Several Supreme Court decisions, all more than a century old, have said that the Second Amendment does not apply to the states.
In June, the United States Court of Appeals for the Seventh Circuit, in Chicago, affirmed the dismissal of the new case, saying it was up to the Supreme Court to overrule its own precedents if it wished to do so. Chief Judge Frank H. Easterbrook, writing for a unanimous three-judge panel of the appeals court, added that it was not certain whether and how the Supreme Court might apply the Second Amendment to the states.
The Supreme Court has ruled that most but not all of the protections of the Bill of Rights apply to the states, thanks to the due process clause of the 14th Amendment, one of the post-Civil War amendments. (Exceptions include the Fifth Amendment’s requirement of indictment by a grand jury and Eighth Amendment’s ban on excessive bail.)
Most legal scholars expect the court to apply the Second Amendment to the states. But many of them are urging the court to take an unusual route to that result. Rather than continuing to rely on the 14th Amendment’s due process clause, the court should, these scholars say, look to the amendment’s “privileges or immunities” clause, which says that “no state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States.”
There is some evidence that the amendment’s writers specifically wanted the clause to apply to allow freed slaves to have guns to defend themselves. Scholars on the right and left believe, moreover, that the clause could play a role in protecting rights not specifically mentioned in the Constitution.
A decision that the Second Amendment applies to the states would not answer most questions about what kinds of gun laws are vulnerable to challenges under the Second Amendment. In the Heller decision, Justice Antonin Scalia seemed to identify quite a few kinds of laws that are presumptively constitutional.
“Nothing in our opinion,” Justice Scalia wrote, “should be taken to cast doubt on longstanding prohibitions on the possession of firearms by felons and the mentally ill, or laws forbidding the carrying of firearms in sensitive places such as schools and government buildings, or laws imposing conditions and qualifications on the commercial sale of arms.”
The antiterrorism law at issue in a second case the court agreed to hear, Holder v. Humanitarian Law Project, No. 08-1498, makes it a crime to provide various kinds of “material support” to organizations the government says have engaged in terrorist activities. The United States Court of Appeals for the Ninth Circuit, in San Francisco, ruled that the law’s bans on providing “training,” “service” and some kinds of “expert advice and assistance” were unconstitutionally vague.
The case was brought by people and organizations who sought to provide support for what they said were lawful and nonviolent activities of a Kurdish political party and a Tamil group. The two organizations, the Kurdistan Workers’ Party and the Liberation Tigers of Tamil Eelam, have been designated as foreign terrorist organizations by the State Department.
In its brief asking the Supreme Court to hear the case, the government said the appeals court’s decision frustrated “a vital part of the nation’s effort to fight international terrorism.” The brief added that the federal government had charged approximately 120 defendants with violations of the material-support law since 2001 and had obtained about 60 convictions under it.
The law’s challengers filed a separate appeal to the Supreme Court, objecting to another aspect of the appeals court’s ruling, this one upholding bans on providing support consisting of “personnel” or of expert advice derived from scientific or technical knowledge. The Supreme Court consolidated that appeal, Humanitarian Law Project v. Holder, No. 09-89, with the government’s appeal.
“The material support law resurrects guilt by association and makes it a crime for a human rights group in the U.S. to provide human rights training,” David D. Cole, a lawyer for the challengers, said in a statement.
Robert Chesney, a law professor at the University of Texas, said the case was “extraordinarily important.” The material-support law not only provides federal prosecutors with an important tool, he said, but it may also provide the government with a basis for bringing cases in civilian courts against prisoners detained at Guantánamo Bay.
By ADAM LIPTAK
Copyright by The New York Times
Published: September 30, 2009
http://www.nytimes.com/2009/10/01/us/01scotus.html?_r=1&th&emc=th
WASHINGTON — The Supreme Court announced on Wednesday that it would decide whether state and local gun control laws may be challenged under the Second Amendment.
The court also agreed to hear nine other cases from among those that had piled up over its summer break, including one concerning the constitutionality of an antiterrorism law that is a favorite tool of federal prosecutors.
The Second Amendment case, McDonald v. Chicago, No. 08-1521, addresses a question that was left open last year when the court decided that the Second Amendment protects an individual right to own firearms rather than a collective right tied to state militias.
Last year’s decision, District of Columbia v. Heller, concerned only federal laws and struck down parts of the gun control law in the District of Columbia, a federal enclave. The court ruled that the law violated the Second Amendment by barring law-abiding people from keeping guns in their homes for self-defense.
The new case was brought by residents of Chicago who say their city’s handgun ban is identical to the one struck down in Heller.
Several Supreme Court decisions, all more than a century old, have said that the Second Amendment does not apply to the states.
In June, the United States Court of Appeals for the Seventh Circuit, in Chicago, affirmed the dismissal of the new case, saying it was up to the Supreme Court to overrule its own precedents if it wished to do so. Chief Judge Frank H. Easterbrook, writing for a unanimous three-judge panel of the appeals court, added that it was not certain whether and how the Supreme Court might apply the Second Amendment to the states.
The Supreme Court has ruled that most but not all of the protections of the Bill of Rights apply to the states, thanks to the due process clause of the 14th Amendment, one of the post-Civil War amendments. (Exceptions include the Fifth Amendment’s requirement of indictment by a grand jury and Eighth Amendment’s ban on excessive bail.)
Most legal scholars expect the court to apply the Second Amendment to the states. But many of them are urging the court to take an unusual route to that result. Rather than continuing to rely on the 14th Amendment’s due process clause, the court should, these scholars say, look to the amendment’s “privileges or immunities” clause, which says that “no state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States.”
There is some evidence that the amendment’s writers specifically wanted the clause to apply to allow freed slaves to have guns to defend themselves. Scholars on the right and left believe, moreover, that the clause could play a role in protecting rights not specifically mentioned in the Constitution.
A decision that the Second Amendment applies to the states would not answer most questions about what kinds of gun laws are vulnerable to challenges under the Second Amendment. In the Heller decision, Justice Antonin Scalia seemed to identify quite a few kinds of laws that are presumptively constitutional.
“Nothing in our opinion,” Justice Scalia wrote, “should be taken to cast doubt on longstanding prohibitions on the possession of firearms by felons and the mentally ill, or laws forbidding the carrying of firearms in sensitive places such as schools and government buildings, or laws imposing conditions and qualifications on the commercial sale of arms.”
The antiterrorism law at issue in a second case the court agreed to hear, Holder v. Humanitarian Law Project, No. 08-1498, makes it a crime to provide various kinds of “material support” to organizations the government says have engaged in terrorist activities. The United States Court of Appeals for the Ninth Circuit, in San Francisco, ruled that the law’s bans on providing “training,” “service” and some kinds of “expert advice and assistance” were unconstitutionally vague.
The case was brought by people and organizations who sought to provide support for what they said were lawful and nonviolent activities of a Kurdish political party and a Tamil group. The two organizations, the Kurdistan Workers’ Party and the Liberation Tigers of Tamil Eelam, have been designated as foreign terrorist organizations by the State Department.
In its brief asking the Supreme Court to hear the case, the government said the appeals court’s decision frustrated “a vital part of the nation’s effort to fight international terrorism.” The brief added that the federal government had charged approximately 120 defendants with violations of the material-support law since 2001 and had obtained about 60 convictions under it.
The law’s challengers filed a separate appeal to the Supreme Court, objecting to another aspect of the appeals court’s ruling, this one upholding bans on providing support consisting of “personnel” or of expert advice derived from scientific or technical knowledge. The Supreme Court consolidated that appeal, Humanitarian Law Project v. Holder, No. 09-89, with the government’s appeal.
“The material support law resurrects guilt by association and makes it a crime for a human rights group in the U.S. to provide human rights training,” David D. Cole, a lawyer for the challengers, said in a statement.
Robert Chesney, a law professor at the University of Texas, said the case was “extraordinarily important.” The material-support law not only provides federal prosecutors with an important tool, he said, but it may also provide the government with a basis for bringing cases in civilian courts against prisoners detained at Guantánamo Bay.
Tuesday, September 29, 2009
Arizona Governor Takes Away State Domestic Partner Benefits - Says 'God Has Placed Me in This Powerful Position'
Arizona Governor Takes Away State Domestic Partner Benefits - Says 'God Has Placed Me in This Powerful Position'
Copyright by Towler Road.com
September 18, 2009
http://www.towleroad.com/2009/09/arizona-governor-takes-away-state-domestic-partner-benefits-says-god-has-placed-me-in-this-powerful-.html
Arizona Governor Jan Brewer has eliminated state domestic partner benefits a year after they were implemented, the Arizona Daily Star reports:
Brewer "A bill signed by Gov. Jan Brewer redefined a 'dependent,' canceling the rule change made by Gov. Janet Napolitano that allowed domestic partners to receive benefits. Also eliminated are children of domestic partners, full-time students ages 23-24 and disabled adult dependents. The legislation is in legal review. About 800 state employees are affected, according to the state's administration department...Liz Sawyer, a UA staff member, said the exclusion is 'deplorable and it's tragic.' Sawyer is a spokeswoman for OUTReach, a staff group that lobbies for domestic-partner benefits at UA. Last year 170 UA employees signed up for domestic-partner benefits, she said. Forty were same-sex couples and the remainder were unmarried, opposite-sex couples, she said."
Did God tell Brewer to do it?
"Gov. Jan Brewer said Wednesday that she believes 'God has placed me in this powerful position as Arizona's governor' to help the state weather its troubles. In a wide-ranging speech on the role of religion in politics and in her life, Brewer detailed to a group of pastors of the Missouri Synod of the Lutheran Church how she relies on her faith and in prayer to deal with many of the issues she faces as the state's chief executive. Brewer also said there are times when, during a meeting with staffers, one will suggest praying about an issue. ... But Brewer also said she recognizes the difference between bringing her faith to the office and having an 'agenda.' ... 'The problem with having a political agenda is that we give the impression that we have God's truth,' the governor said. 'We think we can convert God's truth into a political platform, a set of political issues, and that there is 'God's way' in our politics,' Brewer continued. 'I don't believe that for a moment, any more than you believe that God's way is exclusively the Lutheran way.' The governor said, though, she believes it is right — if not inevitable — that elected officials bring their faith to their offices."
Gag.
Copyright by Towler Road.com
September 18, 2009
http://www.towleroad.com/2009/09/arizona-governor-takes-away-state-domestic-partner-benefits-says-god-has-placed-me-in-this-powerful-.html
Arizona Governor Jan Brewer has eliminated state domestic partner benefits a year after they were implemented, the Arizona Daily Star reports:
Brewer "A bill signed by Gov. Jan Brewer redefined a 'dependent,' canceling the rule change made by Gov. Janet Napolitano that allowed domestic partners to receive benefits. Also eliminated are children of domestic partners, full-time students ages 23-24 and disabled adult dependents. The legislation is in legal review. About 800 state employees are affected, according to the state's administration department...Liz Sawyer, a UA staff member, said the exclusion is 'deplorable and it's tragic.' Sawyer is a spokeswoman for OUTReach, a staff group that lobbies for domestic-partner benefits at UA. Last year 170 UA employees signed up for domestic-partner benefits, she said. Forty were same-sex couples and the remainder were unmarried, opposite-sex couples, she said."
Did God tell Brewer to do it?
"Gov. Jan Brewer said Wednesday that she believes 'God has placed me in this powerful position as Arizona's governor' to help the state weather its troubles. In a wide-ranging speech on the role of religion in politics and in her life, Brewer detailed to a group of pastors of the Missouri Synod of the Lutheran Church how she relies on her faith and in prayer to deal with many of the issues she faces as the state's chief executive. Brewer also said there are times when, during a meeting with staffers, one will suggest praying about an issue. ... But Brewer also said she recognizes the difference between bringing her faith to the office and having an 'agenda.' ... 'The problem with having a political agenda is that we give the impression that we have God's truth,' the governor said. 'We think we can convert God's truth into a political platform, a set of political issues, and that there is 'God's way' in our politics,' Brewer continued. 'I don't believe that for a moment, any more than you believe that God's way is exclusively the Lutheran way.' The governor said, though, she believes it is right — if not inevitable — that elected officials bring their faith to their offices."
Gag.
U.S. Says Taliban Has A New Haven in Pakistan
U.S. Says Taliban Has A New Haven in Pakistan
By Pamela Constable
Copyright by The Washington Post
Tuesday, September 29, 2009
http://www.washingtonpost.com/wp-dyn/content/article/2009/09/28/AR2009092803751.html?hpid=topnews
ISLAMABAD, Pakistan -- As American troops move deeper into southern Afghanistan to fight Taliban insurgents, U.S. officials are expressing new concerns about the role of fugitive Taliban leader Mohammad Omar and his council of lieutenants, who reportedly plan and launch cross-border strikes from safe havens around the southwestern Pakistani city of Quetta.
But U.S. officials acknowledge they know relatively little about the remote and arid Pakistani border region, have no capacity to strike there, and have few windows into the turbulent mix of Pashtun tribal and religious politics that has turned the area into a sanctuary for the Taliban leaders, who are known collectively as the Quetta Shura.
Pakistani officials, in turn, have been accused of allowing the Taliban movement to regroup in the Quetta area, viewing it as a strategic asset rather than a domestic threat, while the army has been heavily focused on curbing violent Islamist extremists in the northwest border region hundreds of miles away.
As a result, Pakistani and foreign analysts here said, Quetta, the capital of Baluchistan province, has suddenly emerged as an urgent but elusive new target as Washington grapples with the Taliban's rapidly spreading arc of influence and terror across Afghanistan.
"In the past, we focused on al-Qaeda because they were a threat to us. The Quetta Shura mattered less to us because we had no troops in the region," said Anne W. Patterson, the U.S. ambassador to Pakistan. "Now our troops are there on the other side of the border, and the Quetta Shura is high on Washington's list."
Patterson also acknowledged that the United States is far less familiar with the vast desert region than with the northwestern tribal areas, where it has been cooperating closely with Pakistan for several years in the hunt for al-Qaeda and Taliban leaders and where it periodically kills insurgents with missiles fired from remotely piloted aircraft. The United States does not carry out such drone strikes in the Quetta region.
As Patterson put it, bluntly: "Our intelligence on Quetta is vastly less. We have no people there, no cross-border operations, no Predators."
According to Pakistani analysts, the Taliban's presence in the Quetta region is more discreet than it was earlier in the decade, when Omar fled there from U.S. and Afghan military attacks. He was joined by thousands of fighters, who blended into ethnic Pashtun neighborhoods and refugee camps.
But although Omar and his associates now keep a low profile and move constantly among villages and mosques in the lawless Pashtun strip between Quetta and the border, Pakistani and foreign experts said Baluchistan has reemerged as a Taliban sanctuary, recruiting ground and command post.
"Quetta is absolutely crucial to the Taliban today," said Ahmed Rashid, a Pakistani expert on the Taliban, in a telephone interview. "From there they get recruits, fuel and fertilizer for explosives, weapons, and food. Suicide bombers are trained on that side. They have support from the mosques and madrassas."
Michael Semple, a former U.N. official in Afghanistan now based in Islamabad, described the Quetta region's refugee camps as "a great reserve army" for the Taliban. He said Pashtun tribes in the Kandahar region of Afghanistan, the Taliban's ethnic and spiritual base, have strong ties with those on the Pakistan side.
"They are intermarried, they have Pakistani ID cards, and you can't tell the difference," Semple said. On the other hand, he said, reports of Taliban leaders living openly in Quetta, even attending weddings, are nonsense. "They are deeply suspicious of the Pakistanis, and they have their own agenda," he said.
During Ramadan, the Muslim month of fasting that ended last week, posters appeared on walls across Quetta, asking people to contribute their money, vehicles and sons to the "fight against occupying forces" across the border in Afghanistan.
Gen. Stanley A. McChrystal, the top U.S. and NATO commander in Afghanistan, has raised new alarms about the Quetta Shura, describing it in his recent report to President Obama as a major command center for the widening wave of Taliban bombings and attacks.
Virtually all of the Afghan Taliban's strategic decisions are made by the Quetta Shura, according to U.S. officials. Decisions flow from the group "to Taliban field commanders, who in turn make tactical decisions that support the shura's strategic direction," a counterterrorism official said.
Unlike Pakistani Taliban groups based farther north in the rugged mountains on the Afghanistan-Pakistan border, the Quetta Shura is considered uninterested in operations inside Pakistan. Pakistani officials have discounted the shura's dominance and even its existence. But U.S. military officials describe it as "effective" and a "viable command and control organization."
Critics have long raised doubts about whether Pakistan's security forces are willing to seriously pursue Taliban leaders and activities in Baluchistan. Some allege that Pakistan's intelligence services continue to secretly train Taliban fighters there, although Pakistani officials assert that they have purged their ranks of religiously motivated officers. Patterson said Pakistani officials were growing "extremely nervous" that the current policy disputes in Washington would lead to a premature U.S. pullout from Afghanistan. "They will not rush to cut ties with the Taliban if they think they will be back in charge there again," she said.
Afghan President Hamid Karzai has repeatedly accused the Pakistanis of ignoring the activities of Omar and his associates. Twice he gave Pakistani officials lists with what he said were the names and locations of Taliban leaders in the Quetta area, but Pakistan flatly rejected the allegations.
Pakistani security officials said they have made significant efforts to stop Taliban cross-border infiltration in Baluchistan, stepping up border patrols at Washington's request. The army has conducted no major anti-Taliban operations there, however, leaving raids to the police and frontier constabulary.
"From our judgment, there are no Taliban in Baluchistan," said Maj. Gen. Athar Abbas, Pakistan's military spokesman. Asked about the names of Quetta Shura leaders provided by Afghan and U.S. officials, he said: "Six to 10 of them have been killed, two are in Afghanistan, and two are insignificant. When people call Mullah Omar the mayor of Quetta, that is incorrect."
Abbas noted that the recent Pakistani army operation in the northwest Swat Valley had successfully driven Pakistani Taliban forces out of the area, and he said he hoped the Swat campaign had overcome any concerns Washington might have about Pakistan's willingness to take on the Islamist insurgents. If the United States has information about Taliban leaders in Baluchistan, "tell us who and where they are," he said. "We will not allow your forces inside, but if you lead, we will follow."
Patterson said Pakistani officials had "made it crystal clear that they have different priorities from ours," being far more concerned about Taliban attacks inside Pakistan than across the border. She noted that Pakistan had once trained Islamist fighters to operate against India and elsewhere and that the same groups have now turned against the state.
"You cannot tolerate vipers in your bosom without getting bitten," Patterson said. "Our concern is whether Pakistan really controls its territory. There are people who do not threaten Pakistan but who are extremely important to us."
Another concern raised by critics and foreign officials is the support by some political and religious leaders in Baluchistan toward the Taliban. They note that the strong local presence of Jamiat-i-Islami, a conservative Islamic party that backed the original Taliban movement and virtually ran the Baluchistan government from 2002 to 2008, has given the Afghan extremists additional protection.
Mehmood Jan, a newspaper publisher in Quetta, said in a telephone interview that there are "thousands" of Jamiat madrassas in the Pashtun belt and that some Jamiat legislators openly champion the Taliban. Jan said provincial police forces had regularly raided Taliban hideouts, including mosques and madrassas, but with only limited success. In many Pashtun neighborhoods, he said, "everywhere you see the white turbans of the young Taliban and the black turbans of the adults."
Staff writer Karen DeYoung in Washington contributed to this report.
By Pamela Constable
Copyright by The Washington Post
Tuesday, September 29, 2009
http://www.washingtonpost.com/wp-dyn/content/article/2009/09/28/AR2009092803751.html?hpid=topnews
ISLAMABAD, Pakistan -- As American troops move deeper into southern Afghanistan to fight Taliban insurgents, U.S. officials are expressing new concerns about the role of fugitive Taliban leader Mohammad Omar and his council of lieutenants, who reportedly plan and launch cross-border strikes from safe havens around the southwestern Pakistani city of Quetta.
But U.S. officials acknowledge they know relatively little about the remote and arid Pakistani border region, have no capacity to strike there, and have few windows into the turbulent mix of Pashtun tribal and religious politics that has turned the area into a sanctuary for the Taliban leaders, who are known collectively as the Quetta Shura.
Pakistani officials, in turn, have been accused of allowing the Taliban movement to regroup in the Quetta area, viewing it as a strategic asset rather than a domestic threat, while the army has been heavily focused on curbing violent Islamist extremists in the northwest border region hundreds of miles away.
As a result, Pakistani and foreign analysts here said, Quetta, the capital of Baluchistan province, has suddenly emerged as an urgent but elusive new target as Washington grapples with the Taliban's rapidly spreading arc of influence and terror across Afghanistan.
"In the past, we focused on al-Qaeda because they were a threat to us. The Quetta Shura mattered less to us because we had no troops in the region," said Anne W. Patterson, the U.S. ambassador to Pakistan. "Now our troops are there on the other side of the border, and the Quetta Shura is high on Washington's list."
Patterson also acknowledged that the United States is far less familiar with the vast desert region than with the northwestern tribal areas, where it has been cooperating closely with Pakistan for several years in the hunt for al-Qaeda and Taliban leaders and where it periodically kills insurgents with missiles fired from remotely piloted aircraft. The United States does not carry out such drone strikes in the Quetta region.
As Patterson put it, bluntly: "Our intelligence on Quetta is vastly less. We have no people there, no cross-border operations, no Predators."
According to Pakistani analysts, the Taliban's presence in the Quetta region is more discreet than it was earlier in the decade, when Omar fled there from U.S. and Afghan military attacks. He was joined by thousands of fighters, who blended into ethnic Pashtun neighborhoods and refugee camps.
But although Omar and his associates now keep a low profile and move constantly among villages and mosques in the lawless Pashtun strip between Quetta and the border, Pakistani and foreign experts said Baluchistan has reemerged as a Taliban sanctuary, recruiting ground and command post.
"Quetta is absolutely crucial to the Taliban today," said Ahmed Rashid, a Pakistani expert on the Taliban, in a telephone interview. "From there they get recruits, fuel and fertilizer for explosives, weapons, and food. Suicide bombers are trained on that side. They have support from the mosques and madrassas."
Michael Semple, a former U.N. official in Afghanistan now based in Islamabad, described the Quetta region's refugee camps as "a great reserve army" for the Taliban. He said Pashtun tribes in the Kandahar region of Afghanistan, the Taliban's ethnic and spiritual base, have strong ties with those on the Pakistan side.
"They are intermarried, they have Pakistani ID cards, and you can't tell the difference," Semple said. On the other hand, he said, reports of Taliban leaders living openly in Quetta, even attending weddings, are nonsense. "They are deeply suspicious of the Pakistanis, and they have their own agenda," he said.
During Ramadan, the Muslim month of fasting that ended last week, posters appeared on walls across Quetta, asking people to contribute their money, vehicles and sons to the "fight against occupying forces" across the border in Afghanistan.
Gen. Stanley A. McChrystal, the top U.S. and NATO commander in Afghanistan, has raised new alarms about the Quetta Shura, describing it in his recent report to President Obama as a major command center for the widening wave of Taliban bombings and attacks.
Virtually all of the Afghan Taliban's strategic decisions are made by the Quetta Shura, according to U.S. officials. Decisions flow from the group "to Taliban field commanders, who in turn make tactical decisions that support the shura's strategic direction," a counterterrorism official said.
Unlike Pakistani Taliban groups based farther north in the rugged mountains on the Afghanistan-Pakistan border, the Quetta Shura is considered uninterested in operations inside Pakistan. Pakistani officials have discounted the shura's dominance and even its existence. But U.S. military officials describe it as "effective" and a "viable command and control organization."
Critics have long raised doubts about whether Pakistan's security forces are willing to seriously pursue Taliban leaders and activities in Baluchistan. Some allege that Pakistan's intelligence services continue to secretly train Taliban fighters there, although Pakistani officials assert that they have purged their ranks of religiously motivated officers. Patterson said Pakistani officials were growing "extremely nervous" that the current policy disputes in Washington would lead to a premature U.S. pullout from Afghanistan. "They will not rush to cut ties with the Taliban if they think they will be back in charge there again," she said.
Afghan President Hamid Karzai has repeatedly accused the Pakistanis of ignoring the activities of Omar and his associates. Twice he gave Pakistani officials lists with what he said were the names and locations of Taliban leaders in the Quetta area, but Pakistan flatly rejected the allegations.
Pakistani security officials said they have made significant efforts to stop Taliban cross-border infiltration in Baluchistan, stepping up border patrols at Washington's request. The army has conducted no major anti-Taliban operations there, however, leaving raids to the police and frontier constabulary.
"From our judgment, there are no Taliban in Baluchistan," said Maj. Gen. Athar Abbas, Pakistan's military spokesman. Asked about the names of Quetta Shura leaders provided by Afghan and U.S. officials, he said: "Six to 10 of them have been killed, two are in Afghanistan, and two are insignificant. When people call Mullah Omar the mayor of Quetta, that is incorrect."
Abbas noted that the recent Pakistani army operation in the northwest Swat Valley had successfully driven Pakistani Taliban forces out of the area, and he said he hoped the Swat campaign had overcome any concerns Washington might have about Pakistan's willingness to take on the Islamist insurgents. If the United States has information about Taliban leaders in Baluchistan, "tell us who and where they are," he said. "We will not allow your forces inside, but if you lead, we will follow."
Patterson said Pakistani officials had "made it crystal clear that they have different priorities from ours," being far more concerned about Taliban attacks inside Pakistan than across the border. She noted that Pakistan had once trained Islamist fighters to operate against India and elsewhere and that the same groups have now turned against the state.
"You cannot tolerate vipers in your bosom without getting bitten," Patterson said. "Our concern is whether Pakistan really controls its territory. There are people who do not threaten Pakistan but who are extremely important to us."
Another concern raised by critics and foreign officials is the support by some political and religious leaders in Baluchistan toward the Taliban. They note that the strong local presence of Jamiat-i-Islami, a conservative Islamic party that backed the original Taliban movement and virtually ran the Baluchistan government from 2002 to 2008, has given the Afghan extremists additional protection.
Mehmood Jan, a newspaper publisher in Quetta, said in a telephone interview that there are "thousands" of Jamiat madrassas in the Pashtun belt and that some Jamiat legislators openly champion the Taliban. Jan said provincial police forces had regularly raided Taliban hideouts, including mosques and madrassas, but with only limited success. In many Pashtun neighborhoods, he said, "everywhere you see the white turbans of the young Taliban and the black turbans of the adults."
Staff writer Karen DeYoung in Washington contributed to this report.
Puerto Rico asks Washington for federal aid
Puerto Rico asks Washington for federal aid
By Tom Braithwaite in Washington
Copyright The Financial Times Limited 2009
Published: September 28 2009 23:03 | Last updated: September 28 2009 23:03
http://www.ft.com/cms/s/0/7a9eab28-ac77-11de-a754-00144feabdc0.html
Puerto Rico has appealed to the Obama administration for federal assistance as it battles a $3.2bn budget deficit, a three-year recession and the worst credit rating of any state or territory in the US.
Luis Fortuño, governor of the territory, met Lawrence Summers, chief economic adviser to President Barack Obama, and Treasury officials last week. He told the Financial Times the administration had been “shocked” at the state of Puerto Rico’s finances.
The US Treasury and a spokesman for Mr Summers both confirmed they had met Mr Fortuño last week. They declined to comment on the detail of the talks.
While California’s much bigger nominal debt has worried creditors and the federal government, Puerto Rico’s deficit for 2009 of $3.2bn (€2.2bn, £2bn) ranked the highest as a percentage of the general fund, at 29 per cent.
Mr Fortuño, a Republican who took office in January, also visited credit rating agencies in New York during his trip to the US mainland as part of an effort to preserve his territory’s investment grade status. Moody’s and Standard & Poor’s rank Puerto Rico’s debt just one notch above “junk”, although the outlook is “stable”.
US states’ budget woes
US states face budget shortfalls and our interactive graphic shows the “state of the states”, and those in most trouble
Carlos Garcia, president of the Government Development Bank of Puerto Rico, warned of devastating consequences if the investment grade were lost.
“We modelled what that would mean and we were talking about unemployment going to 25 per cent,” he said.
Like other territories and states, Puerto Rico is receiving federal stimulus money but Mr Fortuño is also requesting help shoring up the banking sector and reforming a local Medicaid programme that covers 1.5m of the territory’s 4m population and costs more than $1bn.
“We need assistance from the federal government to ensure that we have a strong banking sector to support both the fiscal and economic measures that the government is introducing,” said Mr Garcia.
However, in spite of efforts to win what he can in terms of additional federal support, the governor is determined to enact a largely homegrown solution to the deficit.
“The credit ratings agencies can’t believe we’re doing what we’re doing but we’re serious about this: we’re going to bring Puerto Rico back to growth,” said Mr Fortuño. “I told them we’re going to address this this next year.”
He has set a target of saving $2bn from a $10.8bn budget, enacting serious austerity measures and last week announced the government would be laying off almost 17,000 workers.
His government is predicting a 5.5 per cent decline in real gross national product this year followed by a 0.7 per cent increase next year.
Unlike some Republican governors he is not critical of the stimulus money, although he would like more autonomy on how to spend it. “I wish we had a bit more leeway on that but I’m not giving it back,” he said.
But he does not diverge from his party in a belief in low taxes, which has helped to attract pharmaceutical companies such as Merck and Pfizer to the island, and encouraged the development of a life sciences sector, which boasts skilled workers and research and development tax credits.
Mr Fortuño said “aggressive public private partnership” legislation would help to attract new businesses. “We want to showcase different opportunities for the development of ports, airports, tourism and development projects,” he said.
His Washington visit included a meeting with Pharmaceutical Research and Manufacturers of America, the drugmakers’ lobby group. He is offering his political voice to try to delay the expiration of patents on medicines, which would hurt one of the most successful industries on Puerto Rico.
Ultimately, like many Puerto Ricans, Mr Fortuño wants the status resolved for good – whether it is to remain a territory or make a change to permanent statehood or independence. “The founding fathers when they drafted the constitution never intended the territorial status to last for ever,” he said.
By Tom Braithwaite in Washington
Copyright The Financial Times Limited 2009
Published: September 28 2009 23:03 | Last updated: September 28 2009 23:03
http://www.ft.com/cms/s/0/7a9eab28-ac77-11de-a754-00144feabdc0.html
Puerto Rico has appealed to the Obama administration for federal assistance as it battles a $3.2bn budget deficit, a three-year recession and the worst credit rating of any state or territory in the US.
Luis Fortuño, governor of the territory, met Lawrence Summers, chief economic adviser to President Barack Obama, and Treasury officials last week. He told the Financial Times the administration had been “shocked” at the state of Puerto Rico’s finances.
The US Treasury and a spokesman for Mr Summers both confirmed they had met Mr Fortuño last week. They declined to comment on the detail of the talks.
While California’s much bigger nominal debt has worried creditors and the federal government, Puerto Rico’s deficit for 2009 of $3.2bn (€2.2bn, £2bn) ranked the highest as a percentage of the general fund, at 29 per cent.
Mr Fortuño, a Republican who took office in January, also visited credit rating agencies in New York during his trip to the US mainland as part of an effort to preserve his territory’s investment grade status. Moody’s and Standard & Poor’s rank Puerto Rico’s debt just one notch above “junk”, although the outlook is “stable”.
US states’ budget woes
US states face budget shortfalls and our interactive graphic shows the “state of the states”, and those in most trouble
Carlos Garcia, president of the Government Development Bank of Puerto Rico, warned of devastating consequences if the investment grade were lost.
“We modelled what that would mean and we were talking about unemployment going to 25 per cent,” he said.
Like other territories and states, Puerto Rico is receiving federal stimulus money but Mr Fortuño is also requesting help shoring up the banking sector and reforming a local Medicaid programme that covers 1.5m of the territory’s 4m population and costs more than $1bn.
“We need assistance from the federal government to ensure that we have a strong banking sector to support both the fiscal and economic measures that the government is introducing,” said Mr Garcia.
However, in spite of efforts to win what he can in terms of additional federal support, the governor is determined to enact a largely homegrown solution to the deficit.
“The credit ratings agencies can’t believe we’re doing what we’re doing but we’re serious about this: we’re going to bring Puerto Rico back to growth,” said Mr Fortuño. “I told them we’re going to address this this next year.”
He has set a target of saving $2bn from a $10.8bn budget, enacting serious austerity measures and last week announced the government would be laying off almost 17,000 workers.
His government is predicting a 5.5 per cent decline in real gross national product this year followed by a 0.7 per cent increase next year.
Unlike some Republican governors he is not critical of the stimulus money, although he would like more autonomy on how to spend it. “I wish we had a bit more leeway on that but I’m not giving it back,” he said.
But he does not diverge from his party in a belief in low taxes, which has helped to attract pharmaceutical companies such as Merck and Pfizer to the island, and encouraged the development of a life sciences sector, which boasts skilled workers and research and development tax credits.
Mr Fortuño said “aggressive public private partnership” legislation would help to attract new businesses. “We want to showcase different opportunities for the development of ports, airports, tourism and development projects,” he said.
His Washington visit included a meeting with Pharmaceutical Research and Manufacturers of America, the drugmakers’ lobby group. He is offering his political voice to try to delay the expiration of patents on medicines, which would hurt one of the most successful industries on Puerto Rico.
Ultimately, like many Puerto Ricans, Mr Fortuño wants the status resolved for good – whether it is to remain a territory or make a change to permanent statehood or independence. “The founding fathers when they drafted the constitution never intended the territorial status to last for ever,” he said.
Indian PM attacks nuclear treaty - Manmohan Singh says NPT has failed on security
Indian PM attacks nuclear treaty - Manmohan Singh says NPT has failed on security
By James Lamont in New Delhi
Copyright The Financial Times Limited 2009
Published: September 29 2009 14:34 | Last updated: September 29 2009 16:26
http://www.ft.com/cms/s/0/cb5b3a26-acf5-11de-91dc-00144feabdc0.html
India’s prime minister Manmohan Singh on Tuesday criticised the Nuclear Non-Proliferation Treaty as not being up to the “formidable” task of protecting the world from nuclear terrorism just days after Barack Obama appealed to world leaders to support the Treaty.
Mr Singh said the NPT’s “deficiencies” had made the world a more dangerous place and called for the replacement of the NPT with a Nuclear Weapons Convention that would agree steps towards the elimination of nuclear weapons.
Last week, the UN Security Council launched a resolution calling on all countries to comply with the obligations of the NPT, refrain from nuclear test explosions and ratify the Comprehensive Test Ban Treaty.
The Prime Minister’s comments are at odds with an appeal by US President Barack Obama to strengthen the NPT in the face of grave anxieties about Iran’s nuclear programme.
India, which developed nuclear weapons in an arms race with Pakistan, is not a signatory of the NPT. Although it insists on an “impeccable” non-proliferation record and supports a voluntary moratorium on nuclear testing, New Delhi strongly resists the NPT and the CTBT.
“It is a matter of regret that the global non-proliferation regime has not succeeded in preventing nuclear proliferation,” said Mr Singh at a conference in Delhi on the peaceful use of atomic energy.
“Its deficiencies, in fact, have had an adverse impact on our security.”
A global non-proliferation initiative had to be “universal, comprehensive and non-discriminatory” if nuclear powers like India were to be brought into the fold, Mr Singh said.
Mr Singh was careful, however, to acknowledge Mr Obama’s recent efforts to tighten nuclear controls. The Indian premier said there were some “positive signs” of the US reducing the role of its arsenal, cutting its stockpile alongside former foe Russia and working towards a world free of weapons of mass destruction.
He also applauded Mr Obama’s initiative to hold a global summit on nuclear security next year.
India owes its entry into the international nuclear global mainstream to the US and the administration of former US president George W. Bush. Last year, New Delhi signed a civil nuclear deal with Washington that ended decades of isolation for India’s nuclear programme. It opened the way for the supply of nuclear materials to India and international investment in nuclear power plants.
The contribution of nuclear energy in India is estimated to rise from about its present 4,120 MW to 470,000 MW over the next 40 years.
India’s public debate over the shortcomings of the NPT received praise from Mohammad ElBaradei, the outgoing head of the UN’s International Atomic Energy Agency, who attended the Delhi conference.
”India called for the elimination of all nuclear weapons as far back as 1948. It is important that India’s voice should continue to be heard as a leading advocate for nuclear disarmament,” he said.
New Delhi last week vigorously rejected Mr Obama’s proposal that countries, like India, join the NPT as non-nuclear weapon states.
In a letter to Susan Rice, the US ambassador to the UN and president of the UN Security Council last Wednesday, the Indian government said: “There is no question of India joining the NPT as a non-nuclear weapon state. Nuclear weapons are an integral part of India’s national security and will remain so, pending non-discriminatory and global nuclear disarmament.”
Only four states - India, Israel, Pakistan and Cuba - have not signed the NPT. All have nuclear weapons except Cuba.
By James Lamont in New Delhi
Copyright The Financial Times Limited 2009
Published: September 29 2009 14:34 | Last updated: September 29 2009 16:26
http://www.ft.com/cms/s/0/cb5b3a26-acf5-11de-91dc-00144feabdc0.html
India’s prime minister Manmohan Singh on Tuesday criticised the Nuclear Non-Proliferation Treaty as not being up to the “formidable” task of protecting the world from nuclear terrorism just days after Barack Obama appealed to world leaders to support the Treaty.
Mr Singh said the NPT’s “deficiencies” had made the world a more dangerous place and called for the replacement of the NPT with a Nuclear Weapons Convention that would agree steps towards the elimination of nuclear weapons.
Last week, the UN Security Council launched a resolution calling on all countries to comply with the obligations of the NPT, refrain from nuclear test explosions and ratify the Comprehensive Test Ban Treaty.
The Prime Minister’s comments are at odds with an appeal by US President Barack Obama to strengthen the NPT in the face of grave anxieties about Iran’s nuclear programme.
India, which developed nuclear weapons in an arms race with Pakistan, is not a signatory of the NPT. Although it insists on an “impeccable” non-proliferation record and supports a voluntary moratorium on nuclear testing, New Delhi strongly resists the NPT and the CTBT.
“It is a matter of regret that the global non-proliferation regime has not succeeded in preventing nuclear proliferation,” said Mr Singh at a conference in Delhi on the peaceful use of atomic energy.
“Its deficiencies, in fact, have had an adverse impact on our security.”
A global non-proliferation initiative had to be “universal, comprehensive and non-discriminatory” if nuclear powers like India were to be brought into the fold, Mr Singh said.
Mr Singh was careful, however, to acknowledge Mr Obama’s recent efforts to tighten nuclear controls. The Indian premier said there were some “positive signs” of the US reducing the role of its arsenal, cutting its stockpile alongside former foe Russia and working towards a world free of weapons of mass destruction.
He also applauded Mr Obama’s initiative to hold a global summit on nuclear security next year.
India owes its entry into the international nuclear global mainstream to the US and the administration of former US president George W. Bush. Last year, New Delhi signed a civil nuclear deal with Washington that ended decades of isolation for India’s nuclear programme. It opened the way for the supply of nuclear materials to India and international investment in nuclear power plants.
The contribution of nuclear energy in India is estimated to rise from about its present 4,120 MW to 470,000 MW over the next 40 years.
India’s public debate over the shortcomings of the NPT received praise from Mohammad ElBaradei, the outgoing head of the UN’s International Atomic Energy Agency, who attended the Delhi conference.
”India called for the elimination of all nuclear weapons as far back as 1948. It is important that India’s voice should continue to be heard as a leading advocate for nuclear disarmament,” he said.
New Delhi last week vigorously rejected Mr Obama’s proposal that countries, like India, join the NPT as non-nuclear weapon states.
In a letter to Susan Rice, the US ambassador to the UN and president of the UN Security Council last Wednesday, the Indian government said: “There is no question of India joining the NPT as a non-nuclear weapon state. Nuclear weapons are an integral part of India’s national security and will remain so, pending non-discriminatory and global nuclear disarmament.”
Only four states - India, Israel, Pakistan and Cuba - have not signed the NPT. All have nuclear weapons except Cuba.
China seeks big stake in Nigerian oil - CNOOC in talks to buy a sixth of the country’s reserves
China seeks big stake in Nigerian oil - CNOOC in talks to buy a sixth of the country’s reserves
By Tom Burgis in Lagos
Copyright The Financial Times Limited 2009.
Published: September 28 2009 23:30 | Last updated: September 28 2009 23:30
http://www.ft.com/cms/s/0/9d714f96-ac60-11de-a754-00144feabdc0.html
In the pipeline: oil production in Nigeria is at about two-thirds of capacity after years of rebellion and lack of investment
A Chinese state-owned oil company is in talks with Nigeria to buy large stakes in some of the world’s richest oil blocs in a deal that would eclipse Beijing’s previous efforts to secure crude overseas.
The attempt could pitch the Chinese into competition with western oil groups, including Shell, Chevron, Total and ExxonMobil, which partly or wholly control and operate the 23 blocks under discussion. Sixteen licences are up for renewal.
CNOOC, one of China’s three energy majors, is trying to buy 6bn barrels of oil, equivalent to one in every six barrels of the proven reserves in Nigeria, sub-Saharan Africa’s biggest crude producer and a major supplier to the US.
Details of the talks were revealed in a letter from the office of Umaru Yar’Adua, Nigeria’s president, to Sunrise, CNOOC’s representative, a copy of which was obtained by the Financial Times. The overall value of the Chinese offer is not disclosed, although some details suggest a figure of about $30bn. Some oil sector executives said the total on the table was $50bn.
A spokesman for Mr Yar’Adua said: “Negotiations are ongoing not only with Sunrise/CNOOC but also with all other stakeholders in the industry. The federal government has not taken any final position on the issue.”
The letter, dated August 13, said an initial offer was “unacceptable” but added: “Your interest in all the listed blocs will be considered if your revised offer is favourable.”
Details of how the Nigerian government would allocate equity in the blocks to CNOOC have yet to emerge and it is unclear whether this would involve forcing western groups to relinquish stakes.
“There are serious legal implications. You don’t want to go to court but if it gets to this then you have little choice,” an oil industry insider said.
China’s push to gain a significant foothold in Nigeria underlines the scale of its long-term ambitions to secure access to energy resources across the globe. Much of its investment has been for exploration, in contrast with the Nigerian blocks which are already producing or due to start pumping soon.
Tanimu Yakubu, the Nigerian president’s economic adviser, said China might not secure “anything close” to 6bn barrels from the negotiations, adding: “We want to retain our traditional friends.”
However, Mr Yakubu told the FT the Chinese “are really offering multiples of what existing producers are pledging [for licences] ... we love to see this kind of competition”.
The talks come with oil groups and the government at loggerheads over a planned overhaul of the energy sector, where underinvestment and unrest in the oil-producing Niger Delta have drastically curbed production.
Basil Omiyi, Shell’s country chair in Nigeria, said: “The blocs referred to are under active exploration, development and production, mostly by the majority government-owned joint venture operated by Shell.” CNOOC declined to comment.
Total, Chevron and the Nigerian National Petroleum Corporation did not respond to requests for comment.
Large deals run aground
The fate of NigComSat-1 has been emblematic of China’s recent dealings with Nigeria
Last November, 18 months after its launch, the controllers of Nigeria’s $257m Chinese-built satellite switched it off after a faulty power supply meant it risked colliding with other objects in orbit.
It was a public relations disaster for China at a time when it seemed to be stumbling in its efforts to gain a strategic foothold in Africa’s biggest energy producer.
In 2006, towards the end of the presidency of Olusegun Obasanjo, Chinese companies won four oil-drilling licences in exchange for pledges to build a hydroelectric power plant, a railway and a refinery.
Oil-for-infrastructure deals have flourished elsewhere for China, notably in Angola. In Nigeria they faltered, as Umaru Yar’Adua, the new president, ordered investigations into the pacts. The projects stopped before they had started.
There are 20,000 Chinese expatriates living in Nigeria, according to official estimates, and Chinese products have made inroads into the country’s teeming markets. But until now the big state-to-state deals that have typically paved the way for China’s entry into other resource rich African markets have mostly run aground.
By Tom Burgis in Lagos
Copyright The Financial Times Limited 2009.
Published: September 28 2009 23:30 | Last updated: September 28 2009 23:30
http://www.ft.com/cms/s/0/9d714f96-ac60-11de-a754-00144feabdc0.html
In the pipeline: oil production in Nigeria is at about two-thirds of capacity after years of rebellion and lack of investment
A Chinese state-owned oil company is in talks with Nigeria to buy large stakes in some of the world’s richest oil blocs in a deal that would eclipse Beijing’s previous efforts to secure crude overseas.
The attempt could pitch the Chinese into competition with western oil groups, including Shell, Chevron, Total and ExxonMobil, which partly or wholly control and operate the 23 blocks under discussion. Sixteen licences are up for renewal.
CNOOC, one of China’s three energy majors, is trying to buy 6bn barrels of oil, equivalent to one in every six barrels of the proven reserves in Nigeria, sub-Saharan Africa’s biggest crude producer and a major supplier to the US.
Details of the talks were revealed in a letter from the office of Umaru Yar’Adua, Nigeria’s president, to Sunrise, CNOOC’s representative, a copy of which was obtained by the Financial Times. The overall value of the Chinese offer is not disclosed, although some details suggest a figure of about $30bn. Some oil sector executives said the total on the table was $50bn.
A spokesman for Mr Yar’Adua said: “Negotiations are ongoing not only with Sunrise/CNOOC but also with all other stakeholders in the industry. The federal government has not taken any final position on the issue.”
The letter, dated August 13, said an initial offer was “unacceptable” but added: “Your interest in all the listed blocs will be considered if your revised offer is favourable.”
Details of how the Nigerian government would allocate equity in the blocks to CNOOC have yet to emerge and it is unclear whether this would involve forcing western groups to relinquish stakes.
“There are serious legal implications. You don’t want to go to court but if it gets to this then you have little choice,” an oil industry insider said.
China’s push to gain a significant foothold in Nigeria underlines the scale of its long-term ambitions to secure access to energy resources across the globe. Much of its investment has been for exploration, in contrast with the Nigerian blocks which are already producing or due to start pumping soon.
Tanimu Yakubu, the Nigerian president’s economic adviser, said China might not secure “anything close” to 6bn barrels from the negotiations, adding: “We want to retain our traditional friends.”
However, Mr Yakubu told the FT the Chinese “are really offering multiples of what existing producers are pledging [for licences] ... we love to see this kind of competition”.
The talks come with oil groups and the government at loggerheads over a planned overhaul of the energy sector, where underinvestment and unrest in the oil-producing Niger Delta have drastically curbed production.
Basil Omiyi, Shell’s country chair in Nigeria, said: “The blocs referred to are under active exploration, development and production, mostly by the majority government-owned joint venture operated by Shell.” CNOOC declined to comment.
Total, Chevron and the Nigerian National Petroleum Corporation did not respond to requests for comment.
Large deals run aground
The fate of NigComSat-1 has been emblematic of China’s recent dealings with Nigeria
Last November, 18 months after its launch, the controllers of Nigeria’s $257m Chinese-built satellite switched it off after a faulty power supply meant it risked colliding with other objects in orbit.
It was a public relations disaster for China at a time when it seemed to be stumbling in its efforts to gain a strategic foothold in Africa’s biggest energy producer.
In 2006, towards the end of the presidency of Olusegun Obasanjo, Chinese companies won four oil-drilling licences in exchange for pledges to build a hydroelectric power plant, a railway and a refinery.
Oil-for-infrastructure deals have flourished elsewhere for China, notably in Angola. In Nigeria they faltered, as Umaru Yar’Adua, the new president, ordered investigations into the pacts. The projects stopped before they had started.
There are 20,000 Chinese expatriates living in Nigeria, according to official estimates, and Chinese products have made inroads into the country’s teeming markets. But until now the big state-to-state deals that have typically paved the way for China’s entry into other resource rich African markets have mostly run aground.
Home prices rise for 3rd straight month, still off from 2008
Home prices rise for 3rd straight month, still off from 2008
Copyright © 2009, Chicago Tribune
9:26 a.m. CDT, September 29, 2009
http://www.chicagotribune.com/business/dow-home-prices-case-shiller-sep29,0,5688181.story
U.S. home prices rose in July from a month earlier, according to the S&P Case-Shiller home-price indexes, with just two of 20 metropolitan areas showing declines.
They were Las Vegas, one of the nation's most-battered markets, and Seattle. By contrast, 13 of the top 20 markets measured have had price gains for at least three straight months.
Home prices in the Chicago area rose 2.7 percent from June. But prices remain down 14.2 percent from July 2008's level.
David M. Blitzer, chairman of S&P's index committee, said the rate of annual decline in home price values continues to decelerate, "and we now seem to be witnessing some sustained monthly increases across many of the markets."
Fourteen of 20 major metropolitan areas posted price declines of more than 10 percent from a year earlier. As of July, the 10-city index is down 33.5 percent from its mid-2006 peak, and the 20-city index is down 32.6 percent.
For the 16th straight month, every region posted year-over-year declines. Las Vegas again was the worst performer, posting a drop of 31.4 percent. The best year-on-year performer was Cleveland, which posted a 1.3 percent decline.
The data come after the Commerce Department last week said that new-home sales climbed for the fifth straight month in August as sharply lower prices lured buyers into the market despite worries about unemployment. However, the National Association of Realtors a day earlier reported demand for used homes fell unexpectedly in that month from July, the first decline after four months of increases.
Copyright © 2009, Chicago Tribune
9:26 a.m. CDT, September 29, 2009
http://www.chicagotribune.com/business/dow-home-prices-case-shiller-sep29,0,5688181.story
U.S. home prices rose in July from a month earlier, according to the S&P Case-Shiller home-price indexes, with just two of 20 metropolitan areas showing declines.
They were Las Vegas, one of the nation's most-battered markets, and Seattle. By contrast, 13 of the top 20 markets measured have had price gains for at least three straight months.
Home prices in the Chicago area rose 2.7 percent from June. But prices remain down 14.2 percent from July 2008's level.
David M. Blitzer, chairman of S&P's index committee, said the rate of annual decline in home price values continues to decelerate, "and we now seem to be witnessing some sustained monthly increases across many of the markets."
Fourteen of 20 major metropolitan areas posted price declines of more than 10 percent from a year earlier. As of July, the 10-city index is down 33.5 percent from its mid-2006 peak, and the 20-city index is down 32.6 percent.
For the 16th straight month, every region posted year-over-year declines. Las Vegas again was the worst performer, posting a drop of 31.4 percent. The best year-on-year performer was Cleveland, which posted a 1.3 percent decline.
The data come after the Commerce Department last week said that new-home sales climbed for the fifth straight month in August as sharply lower prices lured buyers into the market despite worries about unemployment. However, the National Association of Realtors a day earlier reported demand for used homes fell unexpectedly in that month from July, the first decline after four months of increases.
Banks to Prepay Assessments to Rescue F.D.I.C.
Banks to Prepay Assessments to Rescue F.D.I.C.
By STEPHEN LABATON
Copyright by The New York Times
Published: September 29, 2009
http://www.nytimes.com/2009/09/30/business/economy/30regulate.html?_r=1&th&emc=th
WASHINGTON — Acknowledging that they had greatly underestimated the problems plaguing the nation’s banks, federal officials on Tuesday proposed a $45 billion plan financed by the industry to rescue the ailing insurance fund that protects bank depositors.
Sheila C. Bair, chairman of the Federal Deposit Insurance Corporation, said that bank depositors need not worry about the insurance coverage on their accounts, despite the fund’s problems.
They also announced that the fund, which had more than $50 billion before the crisis began last year, had been so battered by bank collapses that it would be in the red this week.
The plan proposed by the Federal Deposit Insurance Corporation would, in effect, have the industry lend money to the insurance fund by ordering banks to prepay their annual assessments that would otherwise have been due through 2012.
If adopted, the proposal, the agency’s third restoration plan for the fund in a year, would raise $45 billion from the banks to replenish the fund.
That would almost certainly wipe out the industry’s earnings for this year — in the first half of the year the banking industry reported $1.8 billion in income.
Regulators have told the banks that they will not have to record the prepayments as an expense until the fees would ordinarily have been due, postponing the hit to balance sheets until a time when officials believe the industry will be better able to weather the costs.
Senior officials emphasized that the plight of the fund would have no impact on insurance for bank deposits. Accounts are protected up to $250,000.
With nearly 100 bank failures so far this year, the fund has encountered its greatest crisis since the savings and loan debacle of the 1980s and ’90s. In May, officials projected $70 billion in losses to the fund to rescue failed banks. That estimate was a $5 billion increase from earlier in the year.
On Tuesday the F.D.I.C. increased that estimate by more than 40 percent, to $100 billion in total losses — mostly over this year and next. That would be on top of the nearly $20 billion in losses to the fund last year, when the crisis began and 25 banks failed.
Officials said that as of this week, the fund, which began the year at more than $30 billion and had about $10 billion over the summer, would have a negative net worth.
The officials said that if nothing was done, the fund would be holding almost exclusively hard-to-sell real estate and other unmarketable assets by early next year. At its last report this summer, the fund had about $22 billion in cash and other marketable securities. As more banks have collapsed, most of its liquid assets have been exchanged for less marketable assets seized from the failed institutions, like foreclosed property.
Officials said that the plan disclosed Tuesday was less expensive than a direct loan from the banks, an idea that many banks supported, because no interest would have to be paid and the plan would not be voluntary. And it was preferable to a loan from the Treasury, which some lawmakers and industry executives supported, because even though it would be paid back by the industry, such a loan could be seen as yet another taxpayer bailout.
“It’s clear that the American people would prefer to see an end to policies that look to the federal balance sheet as a remedy for every problem,” said Sheila C. Bair, chairwoman of the F.D.I.C. “In choosing this path, it should be clear to the public that the industry will not simply tap the shoulder of the increasingly weary taxpayer.”
Regulators are permitting the banks to record the prepayments as an asset known as a “prepaid expense” until the time that the payments would ordinarily have been due.
In addition, beginning in 2011, the banks will face an increase in their annual assessments of 3 cents for every $100 in deposits. The healthiest banks now pay 12 to 16 cents on every $100 in deposits.
Created in 1933 to restore confidence and arrest a wave of bank runs that contributed to the Great Depression, the insurance fund now stands behind some $4.8 trillion in deposits. The insurance fund is financed by the industry and is backed by the United States. Officials have the ability to borrow $100 billion from the Treasury immediately, and up to $500 billion with the approval of the Treasury secretary and the Federal Reserve.
The plan proposed by the deposit insurance agency was a partial victory for industry executives and lobbyists who fought against the idea of another special assessment. Last May the government imposed an assessment of 5 cents for every $100 in deposits, on top of the regular premiums.
But some bank executives expressed concern about the increase in premiums in two years.
The premium increase was a surprise, said Edward L. Yingling, president of the American Bankers Association. “The industry agrees that this is a better alternative to what clearly would have been several special assessments, but this prepayment will decrease the ability to lend.”
The agency agreed to accept comment on the proposal for 30 days before deciding how to proceed. Troubled banks can seek a waiver from the prepayments.
There was a split in the industry about whether to seek a loan for the fund from the Treasury, as the fund had after the savings and loan crisis.
Some viewed it as a low-cost way of replenishing the fund, while others opposed it because of the fear that it would be seen as another taxpayer bailout and come with a new round of conditions on the banks in such areas as executive pay. Some executives also expressed concern that the proposal could limit the ability of banks to expand lending.
“This prepayment will be a short-term asset, like an investment, but particularly for banks with a high percentage of loans, the prepayment will mean they have less money to lend as it will be tied up in this asset,” Mr. Yingling said.
“There will and should be a discussion of whether it makes sense to use the Treasury line. Banks will pay the whole thing one way or another, but the line will not constrict lending as much in the short term.”
Ms. Bair said that the prepayment proposal would have little impact on the ability of most banks to continue their lending businesses, since the payments were a tiny fraction of the industry’s available assets. She also said that the banks did not face a significant liquidity problem now because of the many lending programs created by the Treasury and the Federal Reserve.
By STEPHEN LABATON
Copyright by The New York Times
Published: September 29, 2009
http://www.nytimes.com/2009/09/30/business/economy/30regulate.html?_r=1&th&emc=th
WASHINGTON — Acknowledging that they had greatly underestimated the problems plaguing the nation’s banks, federal officials on Tuesday proposed a $45 billion plan financed by the industry to rescue the ailing insurance fund that protects bank depositors.
Sheila C. Bair, chairman of the Federal Deposit Insurance Corporation, said that bank depositors need not worry about the insurance coverage on their accounts, despite the fund’s problems.
They also announced that the fund, which had more than $50 billion before the crisis began last year, had been so battered by bank collapses that it would be in the red this week.
The plan proposed by the Federal Deposit Insurance Corporation would, in effect, have the industry lend money to the insurance fund by ordering banks to prepay their annual assessments that would otherwise have been due through 2012.
If adopted, the proposal, the agency’s third restoration plan for the fund in a year, would raise $45 billion from the banks to replenish the fund.
That would almost certainly wipe out the industry’s earnings for this year — in the first half of the year the banking industry reported $1.8 billion in income.
Regulators have told the banks that they will not have to record the prepayments as an expense until the fees would ordinarily have been due, postponing the hit to balance sheets until a time when officials believe the industry will be better able to weather the costs.
Senior officials emphasized that the plight of the fund would have no impact on insurance for bank deposits. Accounts are protected up to $250,000.
With nearly 100 bank failures so far this year, the fund has encountered its greatest crisis since the savings and loan debacle of the 1980s and ’90s. In May, officials projected $70 billion in losses to the fund to rescue failed banks. That estimate was a $5 billion increase from earlier in the year.
On Tuesday the F.D.I.C. increased that estimate by more than 40 percent, to $100 billion in total losses — mostly over this year and next. That would be on top of the nearly $20 billion in losses to the fund last year, when the crisis began and 25 banks failed.
Officials said that as of this week, the fund, which began the year at more than $30 billion and had about $10 billion over the summer, would have a negative net worth.
The officials said that if nothing was done, the fund would be holding almost exclusively hard-to-sell real estate and other unmarketable assets by early next year. At its last report this summer, the fund had about $22 billion in cash and other marketable securities. As more banks have collapsed, most of its liquid assets have been exchanged for less marketable assets seized from the failed institutions, like foreclosed property.
Officials said that the plan disclosed Tuesday was less expensive than a direct loan from the banks, an idea that many banks supported, because no interest would have to be paid and the plan would not be voluntary. And it was preferable to a loan from the Treasury, which some lawmakers and industry executives supported, because even though it would be paid back by the industry, such a loan could be seen as yet another taxpayer bailout.
“It’s clear that the American people would prefer to see an end to policies that look to the federal balance sheet as a remedy for every problem,” said Sheila C. Bair, chairwoman of the F.D.I.C. “In choosing this path, it should be clear to the public that the industry will not simply tap the shoulder of the increasingly weary taxpayer.”
Regulators are permitting the banks to record the prepayments as an asset known as a “prepaid expense” until the time that the payments would ordinarily have been due.
In addition, beginning in 2011, the banks will face an increase in their annual assessments of 3 cents for every $100 in deposits. The healthiest banks now pay 12 to 16 cents on every $100 in deposits.
Created in 1933 to restore confidence and arrest a wave of bank runs that contributed to the Great Depression, the insurance fund now stands behind some $4.8 trillion in deposits. The insurance fund is financed by the industry and is backed by the United States. Officials have the ability to borrow $100 billion from the Treasury immediately, and up to $500 billion with the approval of the Treasury secretary and the Federal Reserve.
The plan proposed by the deposit insurance agency was a partial victory for industry executives and lobbyists who fought against the idea of another special assessment. Last May the government imposed an assessment of 5 cents for every $100 in deposits, on top of the regular premiums.
But some bank executives expressed concern about the increase in premiums in two years.
The premium increase was a surprise, said Edward L. Yingling, president of the American Bankers Association. “The industry agrees that this is a better alternative to what clearly would have been several special assessments, but this prepayment will decrease the ability to lend.”
The agency agreed to accept comment on the proposal for 30 days before deciding how to proceed. Troubled banks can seek a waiver from the prepayments.
There was a split in the industry about whether to seek a loan for the fund from the Treasury, as the fund had after the savings and loan crisis.
Some viewed it as a low-cost way of replenishing the fund, while others opposed it because of the fear that it would be seen as another taxpayer bailout and come with a new round of conditions on the banks in such areas as executive pay. Some executives also expressed concern that the proposal could limit the ability of banks to expand lending.
“This prepayment will be a short-term asset, like an investment, but particularly for banks with a high percentage of loans, the prepayment will mean they have less money to lend as it will be tied up in this asset,” Mr. Yingling said.
“There will and should be a discussion of whether it makes sense to use the Treasury line. Banks will pay the whole thing one way or another, but the line will not constrict lending as much in the short term.”
Ms. Bair said that the prepayment proposal would have little impact on the ability of most banks to continue their lending businesses, since the payments were a tiny fraction of the industry’s available assets. She also said that the banks did not face a significant liquidity problem now because of the many lending programs created by the Treasury and the Federal Reserve.
30 Killed in Southern Afghan Bus Explosion
30 Killed in Southern Afghan Bus Explosion
By ABDUL WAHEED WAFA and TAIMOOR SHAH
Copyright by The New York Times
Published: September 29, 2009
http://www.nytimes.com/2009/09/30/world/asia/30afghan.html?ref=global-home
KABUL, Afghanistan — An intercity bus crowded with passengers struck a roadside bomb in the contested southern province of Kandahar on Tuesday and exploded, killing 30 civilians and wounding 39 others, the Interior Ministry said.
The bus was traveling on the dangerous main road from Herat, a large city in the west, to the city of Kandahar. It was crossing an area lined with trees at 9 a.m. when it encountered a NATO roadblock run by soldiers clearing the road of roadside bombs. The bus was told to drive along the dirt culvert next to the road, but that was where the bomb was hidden, said Niaz Muhammad Sarhadi, the governor of Zhari, a nearby district.
The Interior Ministry said that 10 children, 7 women and 13 men were killed.
Mr. Sarhadi placed the death toll at 15, with 19 wounded, but said that some of the injuries were serious and that the death toll could rise.
There was no initial claim of responsibility for the attack, but officials blamed Taliban militants, who set improvised explosive devices in the area almost daily.
One survivor said that the explosion completely destroyed the bus, a main form of intercity transportation for Afghans.
“An explosion hit the bus. I don’t know what happened,” Lal Jan, a survivor, told The Associated Press at Kandahar’s hospital. “When I came to, I got out of the bus and saw that the bus was totally wrecked.”
The road is a well-traveled route for NATO and Afghan government military convoys, and civilian vehicles are often hit as well. On Monday, a civilian car struck a roadside bomb in the same district, Maiwand, and three civilians, including a woman, were killed.
By ABDUL WAHEED WAFA and TAIMOOR SHAH
Copyright by The New York Times
Published: September 29, 2009
http://www.nytimes.com/2009/09/30/world/asia/30afghan.html?ref=global-home
KABUL, Afghanistan — An intercity bus crowded with passengers struck a roadside bomb in the contested southern province of Kandahar on Tuesday and exploded, killing 30 civilians and wounding 39 others, the Interior Ministry said.
The bus was traveling on the dangerous main road from Herat, a large city in the west, to the city of Kandahar. It was crossing an area lined with trees at 9 a.m. when it encountered a NATO roadblock run by soldiers clearing the road of roadside bombs. The bus was told to drive along the dirt culvert next to the road, but that was where the bomb was hidden, said Niaz Muhammad Sarhadi, the governor of Zhari, a nearby district.
The Interior Ministry said that 10 children, 7 women and 13 men were killed.
Mr. Sarhadi placed the death toll at 15, with 19 wounded, but said that some of the injuries were serious and that the death toll could rise.
There was no initial claim of responsibility for the attack, but officials blamed Taliban militants, who set improvised explosive devices in the area almost daily.
One survivor said that the explosion completely destroyed the bus, a main form of intercity transportation for Afghans.
“An explosion hit the bus. I don’t know what happened,” Lal Jan, a survivor, told The Associated Press at Kandahar’s hospital. “When I came to, I got out of the bus and saw that the bus was totally wrecked.”
The road is a well-traveled route for NATO and Afghan government military convoys, and civilian vehicles are often hit as well. On Monday, a civilian car struck a roadside bomb in the same district, Maiwand, and three civilians, including a woman, were killed.
Death Toll Hits 240 in Philippine Flooding
Death Toll Hits 240 in Philippine Flooding
By CARLOS H. CONDE
copyright by The Associated Press
Published: September 29, 2009
http://www.nytimes.com/2009/09/30/world/asia/30phils.html?_r=1&ref=global-home
All Maximo Merioles Jr. could think about were his two children. As the floodwaters that had swamped his neighborhood came close to submerging him, he grabbed his two kids, ages 12 and 10, and swam toward another house, clambered up to the third floor, jumped between roofs and climbed down a wall to safety across the street.
Mr. Merioles’s heart sank Saturday as he watched not just the flood but also a raging fire eat up most of the houses in Tatalon, a slum area in Quezon City, one of the cities that make up Greater Manila.
As residents dealt with the aftermath of Tropical Storm Ketsana, the government was facing criticism on two fronts: Did it provide enough warning before the floods, and was it doing enough to help people recover?
To help with the recovery, the government on Monday appealed for international help as the death toll rose to at least 240.
The American Embassy deployed Navy personnel to help out in the rescue and relief operations and also promised $50,000 in immediate disaster aid.
“The system is overwhelmed, local government units are overwhelmed,” Anthony Golez, a spokesman of the National Disaster Coordinating Council, told reporters during a briefing on Monday. “Our assets and people are spread too thinly.”
In Tatalon, unlike the other areas that were ravaged by the storm, what the flood did not destroy, the fire did. Seven residents died in Tatalon, officials said.
Mr. Merioles and the others interviewed in his neighborhood said electrical power remained in their area even as the floodwaters rose above four feet. No one knows exactly how the fire started. “Either you die from the fire or from the flood,” said Mr. Merioles, a stocky electronics repairman.
The tropical storm arrived in the Philippines over the weekend, releasing the largest amount of rainfall in nearly half a century and flooding 80 percent of Greater Manila before moving on to Vietnam, where it has killed at least 23 people, The Associated Press reported Tuesday morning.
Nearly 2 million people in the Manila area were affected, including more than 100,000 who were displaced after the storm dumped 16.7 inches of rain in just 12 hours on Saturday.
In Pasig City, one of the hardest-hit suburbs near the heavily silted and polluted Pasig River, the floodwaters in many communities hardly decreased. “The water is not moving,” a tearful Nene Monfort, 71, told ABS-CBN television in a live interview. She said she and her family, who have been holed up on the second floor of their apartment, could not come down because of the water.
The Health Department warned Monday of a possible spread of infectious diseases, especially in the refugee centers of Manila, which number more than 200.
And as the affected residents tried to rebuild their lives, they were seeking answers as well.
Many, like Rene Anselmo, 57, a retired driver in Tatalon whose three-story house was burned down except for about 5 feet of browned concrete and singed wood, wanted to know “why there was no warning about a flood this big.”
The Philippine Atmospheric, Geophysical and Astronomical Services Administration, the government’s weather bureau, denied in local reports that it had been negligent in warning people, saying it had issued warnings as early as Thursday, even raising storm alert levels the next day.
In an attempt to help deal with the aftermath of the storm, President Gloria Macapagal Arroyo decided to open a portion of the grounds of the presidential palace to refugees. “The president has allowed the use of Malacanang itself, her own home, to be a center of relief operations,” said her press secretary, Cerge Remonde. He said the first family would be transferred to another area in the presidential compound.
The government also had declared a “state of calamity” in metropolitan Manila and 25 storm-hit provinces, including many that had not flooded before, allowing officials to use emergency funds for relief and rescue.
Mrs. Arroyo earlier announced that her government would not relent in its efforts to help those hurt by the storm.
Criticism of Mrs. Arroyo’s response could affect the presidential election, which is eight months away. The administration’s candidate is Defense Secretary Gilbert Teodoro, who also leads the National Disaster Coordinating Council.
In the narrow streets of Tatalon, residents spent Monday taking out burned trash, dumping it on the main street outside of the slum, where mounds of black debris had been piled, practically blocking the street. Filthy floodwaters snaked beneath the rubbish.
Zoraya Tera, a 39-year-old homemaker, spent hours scrubbing her floor tiles and cleaning up her burned utensils. “Nothing is left, as you can see, but I am glad that none of my children were hurt,” she said, gesturing at what remained of her home, which had nothing in it except the burned and now rusting galvanized iron roofs.
By CARLOS H. CONDE
copyright by The Associated Press
Published: September 29, 2009
http://www.nytimes.com/2009/09/30/world/asia/30phils.html?_r=1&ref=global-home
All Maximo Merioles Jr. could think about were his two children. As the floodwaters that had swamped his neighborhood came close to submerging him, he grabbed his two kids, ages 12 and 10, and swam toward another house, clambered up to the third floor, jumped between roofs and climbed down a wall to safety across the street.
Mr. Merioles’s heart sank Saturday as he watched not just the flood but also a raging fire eat up most of the houses in Tatalon, a slum area in Quezon City, one of the cities that make up Greater Manila.
As residents dealt with the aftermath of Tropical Storm Ketsana, the government was facing criticism on two fronts: Did it provide enough warning before the floods, and was it doing enough to help people recover?
To help with the recovery, the government on Monday appealed for international help as the death toll rose to at least 240.
The American Embassy deployed Navy personnel to help out in the rescue and relief operations and also promised $50,000 in immediate disaster aid.
“The system is overwhelmed, local government units are overwhelmed,” Anthony Golez, a spokesman of the National Disaster Coordinating Council, told reporters during a briefing on Monday. “Our assets and people are spread too thinly.”
In Tatalon, unlike the other areas that were ravaged by the storm, what the flood did not destroy, the fire did. Seven residents died in Tatalon, officials said.
Mr. Merioles and the others interviewed in his neighborhood said electrical power remained in their area even as the floodwaters rose above four feet. No one knows exactly how the fire started. “Either you die from the fire or from the flood,” said Mr. Merioles, a stocky electronics repairman.
The tropical storm arrived in the Philippines over the weekend, releasing the largest amount of rainfall in nearly half a century and flooding 80 percent of Greater Manila before moving on to Vietnam, where it has killed at least 23 people, The Associated Press reported Tuesday morning.
Nearly 2 million people in the Manila area were affected, including more than 100,000 who were displaced after the storm dumped 16.7 inches of rain in just 12 hours on Saturday.
In Pasig City, one of the hardest-hit suburbs near the heavily silted and polluted Pasig River, the floodwaters in many communities hardly decreased. “The water is not moving,” a tearful Nene Monfort, 71, told ABS-CBN television in a live interview. She said she and her family, who have been holed up on the second floor of their apartment, could not come down because of the water.
The Health Department warned Monday of a possible spread of infectious diseases, especially in the refugee centers of Manila, which number more than 200.
And as the affected residents tried to rebuild their lives, they were seeking answers as well.
Many, like Rene Anselmo, 57, a retired driver in Tatalon whose three-story house was burned down except for about 5 feet of browned concrete and singed wood, wanted to know “why there was no warning about a flood this big.”
The Philippine Atmospheric, Geophysical and Astronomical Services Administration, the government’s weather bureau, denied in local reports that it had been negligent in warning people, saying it had issued warnings as early as Thursday, even raising storm alert levels the next day.
In an attempt to help deal with the aftermath of the storm, President Gloria Macapagal Arroyo decided to open a portion of the grounds of the presidential palace to refugees. “The president has allowed the use of Malacanang itself, her own home, to be a center of relief operations,” said her press secretary, Cerge Remonde. He said the first family would be transferred to another area in the presidential compound.
The government also had declared a “state of calamity” in metropolitan Manila and 25 storm-hit provinces, including many that had not flooded before, allowing officials to use emergency funds for relief and rescue.
Mrs. Arroyo earlier announced that her government would not relent in its efforts to help those hurt by the storm.
Criticism of Mrs. Arroyo’s response could affect the presidential election, which is eight months away. The administration’s candidate is Defense Secretary Gilbert Teodoro, who also leads the National Disaster Coordinating Council.
In the narrow streets of Tatalon, residents spent Monday taking out burned trash, dumping it on the main street outside of the slum, where mounds of black debris had been piled, practically blocking the street. Filthy floodwaters snaked beneath the rubbish.
Zoraya Tera, a 39-year-old homemaker, spent hours scrubbing her floor tiles and cleaning up her burned utensils. “Nothing is left, as you can see, but I am glad that none of my children were hurt,” she said, gesturing at what remained of her home, which had nothing in it except the burned and now rusting galvanized iron roofs.
Big Merger Deals Signal Restored Confidence
Big Merger Deals Signal Restored Confidence
By ANDREW ROSS SORKIN
Copyright by The New York Times
Published: September 28, 2009
http://www.nytimes.com/2009/09/29/business/29sorkin.html?th=&adxnnl=1&emc=th&adxnnlx=1254240111-V1KRtF1L9XqfA7xisiCTPg
The corner office is getting a bit more bullish about the economy.
While investors have been bidding up shares in the stock market for months, many chief executives and boards had privately remained skittish about their own businesses — until recently.
In a signal that confidence — and perhaps a bit of executive swagger — may be returning to the business world, two large mergers were announced on Monday, adding to a flurry of deals in the last month. First, Abbott Laboratories, the drug maker, agreed to acquire a unit of Solvay of Belgium for $6.6 billion, and then Xerox agreed to buy Affiliated Computer Services, an outsourcer, for $6.4 billion.
Neither merger compares in size to the double-digit billion-dollar deals that took place just two years ago at the height of the buyout boom.
But taken in the context of what has been a merger drought — in the wake of the financial crisis, deal-making is still off by more than 50 percent from last year — the transactions suggest that the most senior ranks of corporate America may now have a more optimistic outlook on the economy than some people thought.
“Will you see us move with a lot of acquisitions over this next year? You betcha,” John Chambers, the chief executive of Cisco Systems, said in a recent meeting. “Especially if it plays out economically the way that I think.”
For nearly two years, mergers plunged along with the markets as executives grappled with trying to understand how best to survive. At this time in 2007, $1.28 trillion in takeovers in the United States had been announced; so far this year, only $491.8 billion have been announced, according to Thomson Reuters.
And with stock prices fluctuating sharply after falling for many months until the spring, buyers were anxious about overpaying and sellers were nervous about shortchanging themselves. But as the markets have rebounded and leveled off, companies are more confident about their prospects, so they are dipping their toes into the deal waters. The takeovers, in turn, helped lift the stock market on Monday, which had stalled recently.
“The psychology has changed. This is sign that things have stabilized,” said Boon Sim, Credit Suisse’s head of mergers and acquisitions for the Americas, who suggested that deals were a lagging indicator to the stock market. “I don’t think the floodgates are opening up,” he continued, “but C.E.O.’s are now beginning to say, ‘If I don’t buy it now, it’s only going to get more expensive in the next 12 or 18 months.’ ”
What Wall Street hasn’t seen, of course, is the return of the biggest buyers in recent years — the private equity firms that propelled much of the merger mania during the debt-fueled bubble.
And that may be good news. The big deals announced recently are strategic deals, in which one company buys another to make it an integral part of its business, and they require the buyer to take on mounds of new borrowing to pay for the acquisition.
In contrast, many of the takeovers for the last five years were based on little more than financial engineering, with lax lenders providing low-interest debt to help private equity firms buy companies that they often planned to resell quickly in hopes of pocketing a fast profit. That has left many companies struggling to make interest payments, making it harder for them to invest in new products or more efficient manufacturing methods.
A number of those takeovers are already underwater and some have turned sour. Just one example: Simmons, the mattress maker, was bought by the private equity firm Thomas H. Lee Partners, or THL, in 2003, largely with borrowed money. Last week, THL said that Simmons — whose immense debt burden from the takeover was hampering its prospects — would be put into bankruptcy proceedings and sold. But the sale price for Simmons is so low that bond investors will lose around $500 million.
At Xerox, Ursula M. Burns, the company’s chief executive, said that she pursued the deal for Affiliated Computer Services only because she finally felt more comfortable with the performance of her own business. “We’re confident that our base business will rebound when the economy does — and in Q2 saw the right trends in this direction,” she said. “So, all factors played to our favor. At the end of the day, in tough times, strong companies look to invest in their future.”
While the recent mergers may represent a positive sign for the economy, Alexander Roos, a partner at the Boston Consulting Group, is less inclined to believe that we are about to see a burst of activity. In a study to be published on Tuesday, he said, his analysis of a sample of companies in the Standard & Poor’s 500-stock index shows that about 20 percent are “predators,” ready to take on the risks of a deal, while another 20 percent are “prey.”
“We expect a window of opportunity offering attractive takeover prospects to open soon,” Mr. Roos said. “We have already seen some of our smarter clients making preparations in recent months.”
The greatest concentration of deal-making appears to be in the health care and technology sectors. Warner Chilcott made a $3.1 billion deal for Procter & Gamble’s drug business last month, for example, and Dell bought Perot Systems, a technology services company, for $3.9 billion. But deals are also being made in other sectors, like food; Kraft’s $16.7 billion unsolicited bid for Cadbury, which was rejected but remains a possibility, is the largest outstanding offer to date.
“If you’re healthy, it’s a great time to acquire inexpensively,” adds Ted Rouse, a head of Bain & Company’s global mergers and acquisitions practice. “But it’s an awful time for two weak companies to merge.”
While the return of corporate mergers may be a good sign for the economy, a bigger question may be whether it is such a good thing for companies. Most deals sound great at the time, but in the end, not all of them work out as well as planned.
Mr. Rouse said, “Before the recession, Bain’s research on M.&A. showed that approximately 55 percent of acquisitions failed to deliver expected shareholder returns after one year — worse than flipping a coin. The odds only get worse as the size of the acquisition increases and the target is further from the acquirer’s core business.”
Let’s hope the odds are better this time around.
The latest news on mergers and acquisitions can be found at nytimes.com/dealbook.
By ANDREW ROSS SORKIN
Copyright by The New York Times
Published: September 28, 2009
http://www.nytimes.com/2009/09/29/business/29sorkin.html?th=&adxnnl=1&emc=th&adxnnlx=1254240111-V1KRtF1L9XqfA7xisiCTPg
The corner office is getting a bit more bullish about the economy.
While investors have been bidding up shares in the stock market for months, many chief executives and boards had privately remained skittish about their own businesses — until recently.
In a signal that confidence — and perhaps a bit of executive swagger — may be returning to the business world, two large mergers were announced on Monday, adding to a flurry of deals in the last month. First, Abbott Laboratories, the drug maker, agreed to acquire a unit of Solvay of Belgium for $6.6 billion, and then Xerox agreed to buy Affiliated Computer Services, an outsourcer, for $6.4 billion.
Neither merger compares in size to the double-digit billion-dollar deals that took place just two years ago at the height of the buyout boom.
But taken in the context of what has been a merger drought — in the wake of the financial crisis, deal-making is still off by more than 50 percent from last year — the transactions suggest that the most senior ranks of corporate America may now have a more optimistic outlook on the economy than some people thought.
“Will you see us move with a lot of acquisitions over this next year? You betcha,” John Chambers, the chief executive of Cisco Systems, said in a recent meeting. “Especially if it plays out economically the way that I think.”
For nearly two years, mergers plunged along with the markets as executives grappled with trying to understand how best to survive. At this time in 2007, $1.28 trillion in takeovers in the United States had been announced; so far this year, only $491.8 billion have been announced, according to Thomson Reuters.
And with stock prices fluctuating sharply after falling for many months until the spring, buyers were anxious about overpaying and sellers were nervous about shortchanging themselves. But as the markets have rebounded and leveled off, companies are more confident about their prospects, so they are dipping their toes into the deal waters. The takeovers, in turn, helped lift the stock market on Monday, which had stalled recently.
“The psychology has changed. This is sign that things have stabilized,” said Boon Sim, Credit Suisse’s head of mergers and acquisitions for the Americas, who suggested that deals were a lagging indicator to the stock market. “I don’t think the floodgates are opening up,” he continued, “but C.E.O.’s are now beginning to say, ‘If I don’t buy it now, it’s only going to get more expensive in the next 12 or 18 months.’ ”
What Wall Street hasn’t seen, of course, is the return of the biggest buyers in recent years — the private equity firms that propelled much of the merger mania during the debt-fueled bubble.
And that may be good news. The big deals announced recently are strategic deals, in which one company buys another to make it an integral part of its business, and they require the buyer to take on mounds of new borrowing to pay for the acquisition.
In contrast, many of the takeovers for the last five years were based on little more than financial engineering, with lax lenders providing low-interest debt to help private equity firms buy companies that they often planned to resell quickly in hopes of pocketing a fast profit. That has left many companies struggling to make interest payments, making it harder for them to invest in new products or more efficient manufacturing methods.
A number of those takeovers are already underwater and some have turned sour. Just one example: Simmons, the mattress maker, was bought by the private equity firm Thomas H. Lee Partners, or THL, in 2003, largely with borrowed money. Last week, THL said that Simmons — whose immense debt burden from the takeover was hampering its prospects — would be put into bankruptcy proceedings and sold. But the sale price for Simmons is so low that bond investors will lose around $500 million.
At Xerox, Ursula M. Burns, the company’s chief executive, said that she pursued the deal for Affiliated Computer Services only because she finally felt more comfortable with the performance of her own business. “We’re confident that our base business will rebound when the economy does — and in Q2 saw the right trends in this direction,” she said. “So, all factors played to our favor. At the end of the day, in tough times, strong companies look to invest in their future.”
While the recent mergers may represent a positive sign for the economy, Alexander Roos, a partner at the Boston Consulting Group, is less inclined to believe that we are about to see a burst of activity. In a study to be published on Tuesday, he said, his analysis of a sample of companies in the Standard & Poor’s 500-stock index shows that about 20 percent are “predators,” ready to take on the risks of a deal, while another 20 percent are “prey.”
“We expect a window of opportunity offering attractive takeover prospects to open soon,” Mr. Roos said. “We have already seen some of our smarter clients making preparations in recent months.”
The greatest concentration of deal-making appears to be in the health care and technology sectors. Warner Chilcott made a $3.1 billion deal for Procter & Gamble’s drug business last month, for example, and Dell bought Perot Systems, a technology services company, for $3.9 billion. But deals are also being made in other sectors, like food; Kraft’s $16.7 billion unsolicited bid for Cadbury, which was rejected but remains a possibility, is the largest outstanding offer to date.
“If you’re healthy, it’s a great time to acquire inexpensively,” adds Ted Rouse, a head of Bain & Company’s global mergers and acquisitions practice. “But it’s an awful time for two weak companies to merge.”
While the return of corporate mergers may be a good sign for the economy, a bigger question may be whether it is such a good thing for companies. Most deals sound great at the time, but in the end, not all of them work out as well as planned.
Mr. Rouse said, “Before the recession, Bain’s research on M.&A. showed that approximately 55 percent of acquisitions failed to deliver expected shareholder returns after one year — worse than flipping a coin. The odds only get worse as the size of the acquisition increases and the target is further from the acquirer’s core business.”
Let’s hope the odds are better this time around.
The latest news on mergers and acquisitions can be found at nytimes.com/dealbook.
At German Chancellor’s Side, a New Political Power Broker Emerges
At German Chancellor’s Side, a New Political Power Broker Emerges
By NICHOLAS KULISH and JUDY DEMPSEY
Copyright by The New York Times
Published: September 28, 2009
http://www.nytimes.com/2009/09/29/world/europe/29germany.html?th&emc=th
BERLIN — The politician everyone was talking about in the German capital the morning after national elections was not Chancellor Angela Merkel, whose party won the most votes, but the small-party kingmaker set to solidify the chancellor’s hold on power. And soon, the rest of the world will become acquainted with the new leading figure, the Free Democrats’ Guido Westerwelle.
If longstanding German tradition holds, Mr. Westerwelle will be named vice chancellor and foreign minister in the new government, his reward for steering his free-market, pro-business party to its best result yet in a federal election.
The role of statesman, with the prospect of mingling with the likes of Secretary of State Hillary Rodham Clinton and France’s foreign minister, Bernard Kouchner, is one Mr. Westerwelle, 47, has spent the past several years preparing for. He has worked hard to transform his image from the fun-loving clown prince of politics, who once appeared on the German version of the reality show “Big Brother,” to that of a serious policy maker.
To judge by Sunday’s election, the operation was a success. Mr. Westerwelle’s Free Democrats emerged as the biggest winners of the day, watching their share of the vote rise by the largest amount of any party, to 14.6 percent, an increase of 4.7 percentage points over the previous election in 2005. The party rose even as Mrs. Merkel’s conservative bloc lost ground slightly with voters, pulling in just a third of the vote.
Mr. Westerwelle met with Mrs. Merkel on Monday as part of negotiations to form the anticipated new center-right government, a partnership that the chancellor had told voters she needed in order to repair the country’s economy. In a news conference, Mr. Westerwelle refused to discuss the division of top positions, including his own, saying, “It is about the right policies for our country and certainly not about these posts.”
He went on to emphasize his “very good relationship” with the chancellor. Indeed, Mr. Westerwelle, who is gay, came out in 2004 by bringing his partner to Mrs. Merkel’s birthday party, while she was still in the opposition and the year before she became chancellor.
Mrs. Merkel said that she expected the negotiations to move quickly and that she wanted the new government in place no later than Nov. 9, the 20th anniversary of the fall of the Berlin Wall, when heads of state from around the world are expected to visit for the commemoration. But just because the two parties want to govern together does not mean it will necessarily be easy to reconcile their proposals.
“Mr. Westerwelle will strike a hard bargain when it comes to tax reform,” said a prominent conservative legislator, who spoke on the condition of anonymity because of the delicacy of the negotiations over forming the new government.
The Free Democrats’ campaign platform called for more than $50 billion in tax cuts, more than twice what Mrs. Merkel’s Christian Democrats promised. Yet, even the more modest figure could be hard to achieve without deep and unpopular reductions in social spending; deficits have soared as a result of the economic crisis and the government stimulus plan meant to combat its effects.
For many of the postwar years the Free Democrats were a swing vote in a Parliament dominated by the country’s two major parties, the Christian Democrats and the Social Democrats. But the Free Democrats were out of power for the last 11 years, a stretch in the opposition that allowed the party to sharpen its stands for lower taxes and against bureaucratic red tape.
It also gave Mr. Westerwelle, the youngest leader in the history of the party, time to grow up. Before the 2002 election he set his sights on winning 18 percent of the vote, and to drive home the point he wore a pair of shoes with “18” emblazoned in the party’s trademark yellow on the soles. He also rode in a bright yellow bus he called the Guidomobile. The party fell far short of his target, earning itself just 7.4 percent of the vote and Mr. Westerwelle a reputation as a joker.
Mr. Westerwelle learned his lesson and cultivated a more serious image. His antics may have had a positive effect as well, broadening the party’s appeal beyond its traditional base among business owners by attracting younger professionals.
In addition to emphasizing the party’s trademark positions in favor of liberalizing the economy, Mr. Westerwelle also studied foreign policy, hoping to follow in the footsteps of Hans-Dietrich Genscher, a former party leader and current adviser whose two decades as foreign minister included German reunification.
“In the past few years, he has clearly been preparing himself for this role,” said Jan Techau, director of the Europe program at the German Council on Foreign Relations, where Mr. Westerwelle gave a lengthy foreign-policy address in May. But Mr. Techau described the appearance as cautious, emphasizing continuity in German foreign policy and reminiscent of the passive role for Germany favored by Mr. Westerwelle’s mentor, Mr. Genscher.
“Not living up to the country’s size and responsibility in the world is just not a sustainable foreign policy for Germany anymore,” Mr. Techau said. Although the Free Democrats have supported Germany’s participation in the NATO mission in Afghanistan, Mr. Westerwelle spoke out more strongly than Mrs. Merkel during the campaign about limiting the length of the deployment of the more than 4,000 German troops there.
While talking about nuclear weapons at his news conference on Monday, Mr. Westerwelle referred to “rearmament” when he clearly meant to say “disarmament,” and shortly afterward apologized for his exhaustion after a long election night.
By NICHOLAS KULISH and JUDY DEMPSEY
Copyright by The New York Times
Published: September 28, 2009
http://www.nytimes.com/2009/09/29/world/europe/29germany.html?th&emc=th
BERLIN — The politician everyone was talking about in the German capital the morning after national elections was not Chancellor Angela Merkel, whose party won the most votes, but the small-party kingmaker set to solidify the chancellor’s hold on power. And soon, the rest of the world will become acquainted with the new leading figure, the Free Democrats’ Guido Westerwelle.
If longstanding German tradition holds, Mr. Westerwelle will be named vice chancellor and foreign minister in the new government, his reward for steering his free-market, pro-business party to its best result yet in a federal election.
The role of statesman, with the prospect of mingling with the likes of Secretary of State Hillary Rodham Clinton and France’s foreign minister, Bernard Kouchner, is one Mr. Westerwelle, 47, has spent the past several years preparing for. He has worked hard to transform his image from the fun-loving clown prince of politics, who once appeared on the German version of the reality show “Big Brother,” to that of a serious policy maker.
To judge by Sunday’s election, the operation was a success. Mr. Westerwelle’s Free Democrats emerged as the biggest winners of the day, watching their share of the vote rise by the largest amount of any party, to 14.6 percent, an increase of 4.7 percentage points over the previous election in 2005. The party rose even as Mrs. Merkel’s conservative bloc lost ground slightly with voters, pulling in just a third of the vote.
Mr. Westerwelle met with Mrs. Merkel on Monday as part of negotiations to form the anticipated new center-right government, a partnership that the chancellor had told voters she needed in order to repair the country’s economy. In a news conference, Mr. Westerwelle refused to discuss the division of top positions, including his own, saying, “It is about the right policies for our country and certainly not about these posts.”
He went on to emphasize his “very good relationship” with the chancellor. Indeed, Mr. Westerwelle, who is gay, came out in 2004 by bringing his partner to Mrs. Merkel’s birthday party, while she was still in the opposition and the year before she became chancellor.
Mrs. Merkel said that she expected the negotiations to move quickly and that she wanted the new government in place no later than Nov. 9, the 20th anniversary of the fall of the Berlin Wall, when heads of state from around the world are expected to visit for the commemoration. But just because the two parties want to govern together does not mean it will necessarily be easy to reconcile their proposals.
“Mr. Westerwelle will strike a hard bargain when it comes to tax reform,” said a prominent conservative legislator, who spoke on the condition of anonymity because of the delicacy of the negotiations over forming the new government.
The Free Democrats’ campaign platform called for more than $50 billion in tax cuts, more than twice what Mrs. Merkel’s Christian Democrats promised. Yet, even the more modest figure could be hard to achieve without deep and unpopular reductions in social spending; deficits have soared as a result of the economic crisis and the government stimulus plan meant to combat its effects.
For many of the postwar years the Free Democrats were a swing vote in a Parliament dominated by the country’s two major parties, the Christian Democrats and the Social Democrats. But the Free Democrats were out of power for the last 11 years, a stretch in the opposition that allowed the party to sharpen its stands for lower taxes and against bureaucratic red tape.
It also gave Mr. Westerwelle, the youngest leader in the history of the party, time to grow up. Before the 2002 election he set his sights on winning 18 percent of the vote, and to drive home the point he wore a pair of shoes with “18” emblazoned in the party’s trademark yellow on the soles. He also rode in a bright yellow bus he called the Guidomobile. The party fell far short of his target, earning itself just 7.4 percent of the vote and Mr. Westerwelle a reputation as a joker.
Mr. Westerwelle learned his lesson and cultivated a more serious image. His antics may have had a positive effect as well, broadening the party’s appeal beyond its traditional base among business owners by attracting younger professionals.
In addition to emphasizing the party’s trademark positions in favor of liberalizing the economy, Mr. Westerwelle also studied foreign policy, hoping to follow in the footsteps of Hans-Dietrich Genscher, a former party leader and current adviser whose two decades as foreign minister included German reunification.
“In the past few years, he has clearly been preparing himself for this role,” said Jan Techau, director of the Europe program at the German Council on Foreign Relations, where Mr. Westerwelle gave a lengthy foreign-policy address in May. But Mr. Techau described the appearance as cautious, emphasizing continuity in German foreign policy and reminiscent of the passive role for Germany favored by Mr. Westerwelle’s mentor, Mr. Genscher.
“Not living up to the country’s size and responsibility in the world is just not a sustainable foreign policy for Germany anymore,” Mr. Techau said. Although the Free Democrats have supported Germany’s participation in the NATO mission in Afghanistan, Mr. Westerwelle spoke out more strongly than Mrs. Merkel during the campaign about limiting the length of the deployment of the more than 4,000 German troops there.
While talking about nuclear weapons at his news conference on Monday, Mr. Westerwelle referred to “rearmament” when he clearly meant to say “disarmament,” and shortly afterward apologized for his exhaustion after a long election night.
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