Newsletter 9-15-07

WEAKLY HUMERUS NEWS 06-05-10 AIMED AT YOUR FUNNY BONE

2010-06-05T10:01:00.001-07:00

WEAKLY HUMERUS NEWS 06-05-10
AIMED AT YOUR FUNNY BONE

TOP QUOTES OF THE WEEK

The sports world is still buzzing about Jim Joyce's mistake at first base
last night. It might be the most famous blown call in history. Or at least
since when Bill Clinton was talking on the phone in the Oval Office while
being serviced by Monica. (Janice Hough)

A New York judge dismissed a lawsuit against Tom Brady and Gisele Bundchen
that accused their bodyguards of shooting at some photographers during their
nuptials. Hmm. I didn't know they had a shotgun wedding. (RJ Currie)

No need for a big investigation into the gulf oil leak. From what I've read,
the whole system is rigged. (Marc Ragovin)

Signaling the end of PM Gordon Brown's authoritarian rule, Britain's new
government canceled a proposed plan that would have required Brits to carry
an ID card. Critics condemned the plan as too close to totalitarian regimes
like Nazi Germany… Soviet Russia… Arizona... (Bob Mills)

French and Dutch speaking Belgians are considering splitting the country
over their differences. People who are neutral on the subject are called
Belgian wafflers. (Jim Barach)

Rapper Snoop Dogg says he likes to wear a Toronto Maple Leafs jersey because
the hockey team's logo reminds him of a marijuana leaf. And in a related story,
the Snooper just awarded himself the Lady Bong Trophy. (Dwight Perry)

Souvenir-crazed fans snapped up 3,000 unused tickets from Roy Halladay's
perfect game — at face value — within four hours of the Florida Marlins
putting them up for sale. "All in a day's work," said the Marlins' GM,
P.T. Barnum. (Dwight Perry)

L. A. Angels' first baseman Kendry Morales is out for the season after teammates
celebrating his walk-away, game-winning home run, rushed from the dugout to greet
him at home plate and broke his leg. A pro-athlete hasn't been injured that badly
at home since Tiger Woods. (Bob Mills)

John Wooden passed away tonight at the age of 99. Or as Larry King said
"So tragically young!" (Janice Hough)

Jose Canseco says that he could've been a professional bowler. I don't know about
that--he's always had trouble staying out of the gutter. (Bill Littlejohn)

THE OIL SPILL

Why is BP taking so long to mop up the gulf oil spill? They've sent
the same people who clean the restrooms. (Alan Ray)

The gulf oil spill, now officially the worst in U. S. history. In fact, they're
calling this the biggest environmental disaster since the State of New Jersey,
(Jay Leno)

So now they're dumping golf balls into the Gulf of Mexico to plug up BP's leak.
And to think that all this time I've been preventing oil spills at golf courses
across the country. (Terry Etter)

The saddest part is the spill. But close is BP's choice of public-relations
theme song: "Fuels Rush in Where Anglers Fear to Tread." (Barry Henderson)

Filmmaker James Cameron, who made "Titanic" and "Avatar, " has joined in the
effort to find a way to plug the leak in the Gulf. He has no idea how to fix
the leak, but he thinks Leonardo DiCaprio will cause the rig to blow up in
the movie. (Jerry Perisho)

The good news is BP is going to give Louisiana fisherman 100% compensation
for their lost wages based on their tax returns. The bad news is Louisiana
fishermen haven't paid their taxes since the Civil War. (Jake Novak)

Computer models are showing the the Gulf oil spill reaching the U. S. east coast
and eventually making it to Europe. British Petroleum has now taken the Sherwin
Williams motto "We cover the earth". (Jim Barach)

Employees at a California medical marijuana facility have joined a union.
And management thought those people were listless, unmotivated and
unproductive before. (Jim Barach)

In a new video that is light on his usual threats but heavy on admiration,
Osama bin Laden admits that he is "professionally envious" of oil giant BP's
massive oil spill, saying that it puts his efforts to create destruction
and chaos to shame. (Andy Borowitz)

The weirdest thing about the BP spill is hearing all the Republican cries
for government intervention. Hey Alice, how do we get out of this rabbit
hole? (Will Durst)

The Department of Commerce said the economic damage to the Gulf of Mexico
will not likely be cleaned up by the end of the year. Novelty toymakers
are ready. This Christmas the singing plastic fish Billy Bass will perform
selections from Grease. (Argus Hamilton)

AL & TIPPER GORE

Bad news for Al Gore. Tipper's divorce attorney called Google to find out
how much half of the Internet is worth. (Paul Seaburn)

Al and Tipper Gore have split up after 40 years of marriage. He’ll no doubt
notice the environmental natural of the divorce trial. In court she is
expected to ask for a lot of green. (Alan Ray)

Al and Tipper Gore are splitting up after 40 years of marriage. Mrs. Gore
said: "Oh, I was aware of those accusations that Al was a 'tree hugger.'
I saw the smirks on people's faces, and I heard the snickering behind my
back. For the longest time I refused to believe it, but eventually the
evidence became overwhelming: the bark burns on his chest, the sap on his
hands, the leaves and twigs in his hair. I knew it was more than 'just
bringing in some firewood." (Bill Mihalic)

Al and Tipper Gore are separating after 40 years of marriage. Maybe they'll
work it out. Otherwise, Al, you'll have to polish your Nobel Prize yourself.
-- Assuming you get custody of it. -- It just won't seem right. Big Al Gore
without his faithful companion, Tipper. -- "Look! Up in the woods! It's a
moose... it's a bear... No, it's the Lone Tree Hugger!" (Joe Hickman)

PRESIDENT OBAMA

Today, President Obama flew to Louisiana to see the gulf cleanup effort
firsthand. And it was just like President Bush's trip to Louisiana, except
Obama actually landed. (Jimmy Fallon)

President Barack Obama enjoyed a long Memorial Day holiday weekend a the
family home in Chicago. It was the First Family's first sleepover at their
red-brick home in more than a year. That's all we know about it since
Republicans were not able to get Michelle to wear a wire. (Joe Hickman)

CONGRESS

House Minority Leader John Boehner wants Paul McCartney to apologize for his
comment upon receiving a Library of Congress award – "After the last eight
years, it's great to have a president who knows what a library is. " And to
be fair, I am sure Laura has told W. what a library is, he just hasn't been
in one. (Janice Hough)

THE COURTS

The Supreme Court decided in a 5-4 decision on Monday that criminal suspects
must tell police if they're invoking the right to remain silent. You can no
longer invoke your right to remain silent by remaining silent; you have to
talk to the police to protect your right to silence. Isn't that a little
like celebrating your right to be a vegetarian by eating a steak?
(Frank King)

THE STATES & LOCAL NEWS

Former Illinois Gov. Rod Blagojevich began his corruption trial in Chicago.
Several of the jurors, all registered voters, were actually still living.
(Jerry Perisho)

The Los Angeles City Council passed a resolution calling for the city to
boycott Arizona. They also ordered Universal Studios to destroy all prints
of "Raising Arizona" and "Flight of the Phoenix." Not to be outdone, the
Honolulu City Council will vote on whether to blow up the USS Arizona.
(Bob Mills)

An Ohio woman was surprised when she discovered a groundhog that had been making
noise under the hood of her car. When mechanics pulled it out, the groundhog saw
its shadow; that means 6 more weeks of accelerator pedal problems. (Jerry Perisho)

U.S. POLITICIANS

Sarah Palin has earned 12 million dollars in book and appearance fees since
quitting as governor of Alaska. She’s got her audience in the palm of her
hand. No, wait a minute, that’s her speech. (Alan Ray)

Sarah Palin built a 14-foot high wooden fence around her Alaska home because
an author who is writing a book about her moved in next door. But, rest easy,
because the wood had a knothole and she can still keep an eye on the Russians.
(Jerry Perisho)

The George W. book "Deciderisions" is now in correctorations. The book starts
when he's really drunk and ends when he'd really like to be. (Michael Feldman)

Hey, all you ladies out there who like to hang your laundry on the line,
Al Gore's available. (Bill Williams)

BUSINESS & LABOR

The Brooklyn Bridge is about to undergo a $500 million renovation.
Well, that should make it easier to sell. (Bill Mihalic)

General Motors announced Monday it is developing a much longer-running Chevy Volt.
The competition is fierce in clean-car technology. Ford announced they just invented
the world's first water-powered car, but it only runs on water from the Gulf of
Mexico. (Argus Hamilton)

A food investment firm has purchased Pabst Blue Ribbon beer for $250 million.
It would have only cost $150 million. But the new owners bought it at an AM/PM.
(Alan Ray)

BP says if "top kill" fails, they'll try something called the "junk shot."
Hey, worked last night for the Lakers. (Jay Leno)

A 36-year-old woman is suing United Airlines for leaving her asleep in her seat
for over three hours. I'm not sure why she's so upset; it doesn't seem to bother
Toronto Maple Leafs fans. (RJ Currie)

Plans are now underway to construct a 270-mile express line to ferry high-rollers
between Los Angeles and Las Vegas. The high-speed party train will feature a
special open-air "tanning car" that will cater to passengers making the return
trip without a shirt. (Bob Mills)

GREAT BRITAIN

Dogs in Britain are being trained to sniff out diabetes when their owners'
blood sugar drops. They're great at it, but only when diabetes is in your
crotch. (Jimmy Fallon)

EUROPE

An American adventurist strapped himself to a bunch of helium balloons and
floated from England to France. Immediately afterward, people in Mexico asked,
"Exactly how many balloons?" (Jimmy Fallon)

SCIENCE

A 60-year-old woman in China just gave birth to twins. She says she's going to
use cloth diapers because she finds the disposable ones a little uncomfortable.
(Jimmy Fallon)

SPORTS

The Los Angeles Lakers won the right on Saturday to play the Boston Celtics in
the NBA Finals. What a dream match-up. It's one of the great rivalries, like
the Yankees vs. Dodgers, Oklahoma vs. Texas and the State of Louisiana vs.
British Petroleum. (Argus Hamilton)

The offensively-challenged San Francisco Giants scored one run tonight in
11 innings, while the Philadelphia Phillies have been shut out five times
in the last ten games. What do they think this is, the World Cup? - The Giants
and Phillies have also actually both won 1-0 games in the past week. If these
two teams played each other, it might have to be decided by penalty kicks.
(Janice Hough)

On the possibility of freezing temperatures when the Meadowlands, N.J.,
hosts the 2014 Super Bowl: The halftime show will be performed by
Vanilla Ice. (Bill Littlejohn)

The Dodgers won a weird one at Chavez Ravine on Monday night when the
winning run scored in the bottom of the ninth — on a balk committed by
Arizona pitcher Esmerling Vasquez. The Diamondbacks didn't dispute the
call, thus saving second-base ump Tim Tschida the ignominy of being
labeled a balk-off homer. (Dwight Perry)

Three things I would go with if I had my choice as a tennis player:
3. Roger Federer's backhand;
2. Rafa Nadal's forehand; and
1. Maria Sharapova.
(RJ Currie)

It's only been 49 years since the Blackhawks last hoisted the NHL trophy.
It just seems longer. When my team last won the Stanley Cup, players didn't
wear helmets, goalies didn't wear masks. I think the puck was still made out
of wood." (Chicago native David Jacobson, the U. S. ambassador to Canada)

New York Knicks forward Wilson Chandler was in possession of a bag of
marijuana when cops stopped his car in New York. Chandler explained he
has a chronic problem that requires medical marijuana; he plays for
the Knicks. (Alex Kaseberg)

Germany, in case you missed it, staged its first national strip-poker
tournament in Hamburg last month. Flummoxed competitors couldn't decide
whether to go all-in or all-off. (Dwight Perry)

Diego Maradona's vowed to run nude through the streets of Buenos Aires
if Argentina wins the World Cup. If coaches are going to start running
naked, it's just as well Stan Van Gundy didn't get an NBA title.
(Brad Dickson)

Argentine soccer legend and coach Diego Maradonna reportedly ran over
a reporters leg with his car. Apparently he blamed it on the handbrake
of God. (RJ Currie)

ATHLETES

Kendry Morales of the Angels broke his leg at home plate celebrating
his game-winning grand slam against Seattle. Is that still considered
a walk-off home run? (RJ Currie)

The MVPs who have reigned the last two seasons in the National League,
NFL, NBA and NHL — Albert Pujols, Peyton Manning, LeBron James and
Alex Ovechkin — have one other thing in common, No championships won
in that time. (Jerry Crowe)

No offense to LeBron James, but isn't Simon Cowell the free agent
most in demand right now? (Bob Molinaro)

The Phillies’ Roy Halladay threw a perfect game against the Marlins.
Florida’s performance was like a date with Lady Gaga. No men reached
first base. (Alan Ray)

Phillies pitcher Roy Halladay pitched a perfect game against the
Florida Marlins. His next goal is to throw one against a Major
League team. (Jim Barach)

Perception is everything. Jason Heyward, with nine home runs and 35 RBI,
is having an amazing rookie season in Atlanta. Albert Pujols, with nine
home runs and 34 RBI, is having a horrible season in St. Louis.
(Steve Simmons)

Jose Canseco says that he could've been a professional bowler. I don't
know about that–he's always had trouble staying out of the gutter.
(Bill Littlejohn)

Giants pitcher Barry Zito was enjoying a drink at an upscale bar last week,
when a long-haired young man in scruffy attire approached and a restaurant
staffer interceded, telling the suspected interloper, "I'm sorry, please
don't bother Mr. Zito. No autographs tonight." Tim Lincecum must have
been floored. (Jerry Crowe)

Reliever George Sherrill says he injured his back — earning himself a spot
on the 15-day disabled list — while awkwardly climbing into bed so as to
avoid disturbing his wife. And he calls himself a Dodger? (Dwight Perry)

That faux see-through corset Venus Williams wore during her French Open
opener? Just think of it as a teddy bare. (Dwight Perry)

Some news sources called Flyer Chris Pronger a thief and even a burglar
for taking the puck after games one and two in Chicago. Personally,
I'd call him a puckpocket. (RJ Currie)

Lebron James told Larry King he is leaning toward Cleveland.
Most experts are inclined to disagree. (RJ Currie)

Umpire Jim Joyce blew a call and took away a perfect game from
Armando Galarraga. Oh well, nobody's prefect. (RJ Currie)

There was plenty of kerfuffle over umpire Joe West tossing White Soxs'
pitcher Mark Buehrle for arguing a balk. In the end, it was just a lot
hurler Buehrle hurly-burly. (RJ Currie)

New York Yankee Nick Swisher told reporters he is engaged to Gossip Girl
star Joanna Garcia. You'd have to score that a fielder's choice!
(RJ Currie)

ENTERTAINMENT

“Twilight Saga: Eclipse” premieres this month. High school senior Bella
must choose between a vampire and a werewolf. It used to be so simple
when it was just jocks and geeks. (Alan Ray)

ENTERTAINERS

Singer-actress Jennifer Hudson dieted her way from a size 16 to a 6,
the most amazing loss of useless flab since the Raiders cut JaMarcus
Russell. (Janice Hough)

Sir Paul McCartney played at the White House last night. He dedicated
the Beatles song "Michelle" to the First Lady. Isn't that lovely? And
then for Joe Biden, he played "Fool on the Hill." (Craig Ferguson)

Charlie Sheen will spend 30 days in jail on domestic assault charges.
He'll find life in the slammer is different from Hollywood. Someone's
big break usually involves bloodhounds. (Alan Ray)

Sarah Ferguson told "Inside Edition" she would love to appear on
"Dancing With the Stars. " And she said, if the price is right,
Prince Andrew can come along. (Jay Leno)

Reality TV star Heidi Montag said she had to split from her husband Spencer
Pratt just to have a chance to "get away from the lies". Heidi is absolutely
distraught; she sobbed so hard her forehead nearly moved. (Jerry Perisho)

OTHER CELEBRITIES

Lindsay Lohan was ordered to quit drinking by Judge Marsha Revel Tuesday.
Talk about a Hollywood ending. Lindsay's going to Texas to play a porn star
and make a fortune while the judge is going to lose her pension because
California is bankrupt. (Argus Hamilton)

Lindsay Lohan is concerned that the alcohol-monitoring bracelet on her
ankle can ruin the filming of her upcoming movie. Especially considering
she'll be playing a porn star and she's worried that the ankle bracelet
will keep getting caught on her earrings. (Pedro Bartes)

Maybe it's just me, but I don't remember asking Jesse James to come forward
and tell me his side of the story. That said, turns out he cheated on his
beautiful, Oscar winning, movie star wife, because he was abused as a kid.
And suffered brain damage? (Frank King)

THE MEDIA

Rush Limbaugh is getting married for the fourth time. This is shocking.
There are four women in American stupid enough to consider marrying Limbaugh?
- And with this fourth wife, it now means Limbaugh has had more wives than
our last three Democratic presidents COMBINED. (Janice Hough)

May brought lower ratings for Larry King at CNN. Apparently that 9:00 show time
is just way too late for his audience. (Jim Barach)

CNN news-thrush Campbell Brown, whose ratings this season have plummeted
40% from a year ago, has requested a release from her contract. Network
insiders say she was pushed over the edge when the CNN Promo Department
came up with a new theme for her that went "Um-um good, um-um good,
that's what Campbell Brown is... " (Bob Mills)

RELIGION

We have as a guest tonight, Archbishop Desmond Tutu. I'm going to ask the
question that's on everyone's mind: "As a bishop, do you always have to
move diagonally?" (Craig Ferguson)

HISTORY

Archaeologists have found the tomb of a 3300 year old mayor of Memphis, Egypt.
Campaign signage reveals the political ideology of the times. "Right to Bear
Spears. " (Alan Ray)

CULTURE & SEXUAL MORES

A growing number of teenage girls say they are using the rhythm method for
birth control. That's why there is also a growing number of teenage mothers.
(Jim Barach)

A Reader's Digest survey in Germany found that only 5% of Germans would choose
having sex over watching a German World Cup final game. Germans take soccer
over sex, food, laughter and every other human pleasure with the exception
of invading France. (Jerry Perisho)

Miss Ellie, a bug-eyed Chinese Crested Hairless dog whose pimples and
lolling tongue helped her win the 2009 World's Ugliest Dog title, has
died at age 17. The only thing uglier in the news this week was the
Blue Jays bullpen. (RJ Currie)

POLLS & SURVEYS

A study says that 40% of all teenagers have had sex at least once.
The other 60% just say they have. (Jim Barach)

According to the latest census survey, the number of people without
health insurance has dropped by two million. Duh, they're dead because
they didn't have health insurance. (Jay Leno)

Compiled by Stan Kegel
skegel@socal.rr.com

Credit cards reward the smartest users - Pay your bill monthly and gain more than a free loan

2010-06-05T08:09:00.000-07:00

Credit cards reward the smartest users - Pay your bill monthly and gain more than a free loan
By Jim Gallagher, McClatchy
Copyright © 2010, Chicago Tribune
June 6, 2010
http://www.chicagotribune.com/news/sc-cons-money-0603-credit-card-20100603-15,0,1012730.story

A few months back, I got airline tickets for $50. Here's how I did it.

Several banks and airlines were offering airline credit cards with a $50 annual fee. Sign up, spend $700 on the card, and they would give you 30,000 frequent-flier miles. That's more than enough for a one-way ticket anywhere in the United States, and a round trip if you plan far enough ahead.

I'll use my free flights, then I'll cancel the card before the next annual fee comes due.

Credit cards remain the best way to rob a bank, if you pay the bill in full every month. Do that, and the bank gives you an interest-free loan until the due date. To top that, many cards will throw in extra goodies or cold cash. They will pay you for the privilege of lending you money for free.

There are hundreds of rewards credit cards on the market. They're a fine deal, so long as you pay the bill in full every month.

If you carry a balance month to month, the freebies are much less important than landing a card with a low interest rate. The average card now charges 14 percent interest.

"The rewards you get will be eaten up by the APR (annual percentage rate)," said Bill Hardekopf of LowCards.com, a Web site that tracks credit card offers.

Cash-back cards

Some cards are generous, others aren't. The simplest way to sort it out is to opt for cold cash.

A decent cash-back card has no annual fee. It will rebate at least 1 percent of what you spend, plus more for specified purchases. The Chase Freedom card, for instance, gives 1 percent on all purchases, plus 5 percent on a list of other items that rotate by season.

"Anytime you can get 5 percent back, it's nothing to sneeze at," said Hardekopf.

If you have a Fidelity investment account, the no-annual-fee Fidelity American Express Card will add $100 to your account for every $5,000 you spend on the card, a pretty good offer.

Less generous cards use a tiered system for rebates. The Discover More card, for instance, pays only 0.25 percent until you've spent $1,500, then 0.5 percent until you hit $3,000 and 1 percent after that.

Non-cash rewards

Things get more complicated when you opt for a card with goodies other than cash.

Look at the payout ratio, said Greg McBride, a senior financial analyst at Bankrate.com, which tracks both bank lending and deposit rates. How many points do you get for a $1 purchase, and how many will you need for that official NASCAR Jeff Gordon jacket? (13,700 points on the NASCAR Racepoints Web site.)

Look at your spending pattern, said McBride. If you're driving a gas guzzler on a 50-mile daily commute, a gasoline credit card might look sweet. The no-annual-fee Exxon Mobil MasterCard, for instance, gives you a 15-cent-per-gallon rebate at Exxon and Mobil stations, plus between 0.5 and 2 percent on other eligible purchases.

Credit score impact

My tactic of taking the airline miles, then canceling the card? Hardekopf and McBride note that I might do some damage to my credit score.

When I cancel the card, I'll be lowering my available credit. Credit scores are based, in part, on the percent of available credit I'm using. Less credit can mean a lower score. Scores also count the amount of time I've held my accounts, and canceling a card counts against me.

Don't do it if you plan to borrow money in the next six to 12 months, said McBride. I don't, so I'm happy to be flying cheap.

German businesses could steer the country out of the eurozone

2010-06-05T07:59:00.000-07:00

German businesses could steer the country out of the eurozone
By Howard Schneider
Copyright by The Washington Post
Saturday, June 5, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/06/04/AR2010060404815.html?hpid=topnews

FRANKFURT -- Must Mattheus Schneider's ice cream shop bear responsibility for the future of Greece?

With the euro fighting a crisis that continues to push its value lower, that question about the willingness of German taxpayers and businesses to stand behind economically weaker nations with which they share the euro as a currency could determine whether the continent's decade-old monetary union survives its recent shock or begins to tatter.

Germany's political leadership has pledged the country's credit to back a bailout of Greece as well as a separate nearly trillion-dollar fund to help other countries, but the larger issue of shared responsibility within the eurozone remains to be joined -- and will be central to the future of an area considered one of the pillars of the global economy.

Sharing a currency with Greece is one thing. But sharing a future is another, and Germany's expanding commitment to the eurozone has many here wondering how their own financial plans -- Schneider hopes to turn his Dulce store into a franchised chain -- could be damaged if Europe's problems become too draining and drag down the local economy.

"Even if they ruin [the euro], Germany runs a stable country," said the young German entrepreneur, who said Germany has benefited from the euro so far but should be ready to pull out and reinstate the Deutschmark. "We'll always be able to get loans."

Approval of the bailout programs, coordinated with the International Monetary Fund, has given Greece breathing room to restructure its economy, but the euro had already dropped sharply over concerns that several eurozone governments had accumulated unsustainable levels of debt. Despite the rescue programs, the euro on Friday fell below 1.20 for the first time in four years amid continued concern about government debt and mistrust that eurozone countries will address the region's problems.

The currency union

A more foundational debate lies ahead over the structure of the currency union -- the degree to which the countries are responsible for one another, and the power that central institutions like the European Commission have to enforce common rules. The crisis over the euro began when Greece revealed that it had accumulated debts far beyond the level eurozone countries agree to meet when joining the currency group, a fact that prompted Germany in particular to argue that any bailout needed to be followed by more rigorous rules and better enforcement.

German Chancellor Angela Merkel and French President Nicolas Sarkozy, heads of the two largest and most influential eurozone nations, are set to meet next week to continue talks that could see eurozone countries asked to cede some powers, face investigative oversight by a central statistics agency, and encounter financial and political sanctions if they fail to meet spending and budget limits.

Angelos Pangratis, acting head of the European Union's delegation to the United States, said in a recent presentation that it was "naive" to think that countries like Greece and Germany could not co-exist in a common currency area and that there is broad confidence in the currency zone's survival. But he acknowledged that over the euro's first decade there had not been the "convergence of competitiveness" that eurozone architects thought would even out wages, growth rates and other key variables across the countries involved and help prevent problems like the one that occurred in Greece.

"When we created the euro, we knew there were two conditions," Pangratis said. "You need fiscal responsibility . . . and we must have a convergence of competitiveness."

Instead, the first years of the euro were marked by divergence. Some countries, particularly in the south of Europe, enjoyed lowered interest rates that fueled an economic boom, pushed up wages and contributed to asset and price bubbles that are now being painfully corrected. Some governments borrowed well beyond their means.

It was a risk identified early on.

"The euro is a currency without a foundation in a state," then-IMF managing director and future German president Horst Kohler said in 2001, two years after the euro's inception. That, he said, left a "question mark" over the future of the currency unless it could be "underpinned by greater political cohesion among member states."

Short of 'optimal'

On some fronts, the euro remains short of what economists would regard as an "optimal currency zone." In the United States for example, wide differences in wage and growth rates among states would prompt people to migrate from less prosperous areas, a fluid movement of labor aided by a common language and culture. The movement of labor is not as dynamic among the nations of the eurozone. Where the United States' large federal budget and common federal regulations can help even out economic differences among the states -- areas with large numbers of children from poor families, for example, would receive more in federal school lunch subsidies -- the European Union's central budget is tiny by comparison and not used in the same way.

It has taken a decade, but the implications of that design weakness are now on full display, from the budget cuts and possibility for social turbulence in Athens and Madrid, to the skepticism often encountered among Germans.

There is still a conviction here, for example, in a nation preoccupied with the dangers of inflation, that the original conversion from the Deutschmark to the euro led to a rise in price, a point that economic studies have refuted but that remains a point of anecdotal faith for people quick to recount how a candy bar that cost one and a half marks suddenly cost the equivalent of two marks after the euro was introduced.

In Athens, the focus is on outside powers -- a hazy cabal of the IMF, international bankers and the government in Berlin -- clamping down on the Greek government for what are perceived to be their own purposes. In Madrid, powerful labor groups have threatened a showdown over recent public wage cuts.

Few think the currency union will break up over such tensions. But it does mean that some long-standing issues may finally have to be addressed.

"Everybody knew the situation. Everybody participated. Everybody made money," Vassilis D. Kaskarelis, Greek ambassador to the United States, said in a recent talk to the Greater Washington Board of Trade. "Now it is time to pay the bills."

G20 drops support for fiscal stimulus

2010-06-05T07:52:00.000-07:00

G20 drops support for fiscal stimulus
By Chris Giles and Christian Oliver in Busan
Copyright The Financial Times Limited 2010
Published: June 5 2010 11:54 | Last updated: June 5 2010 11:54
http://www.ft.com/cms/s/0/786776b4-708f-11df-96ab-00144feabdc0.html

Finance ministers from the world’s leading economies ripped up their support for fiscal stimulus on Saturday, recognising that financial market concerns over sovereign debt had forced a much greater focus on deficit reduction.

The meeting of the Group of 20 finance ministers and central bank governors in Busan, South Korea, also dropped proposals for a global banking levy, instead giving countries leeway to do what they thought best for their domestic circumstances.

The communiqué of the meeting made it clear that the G20 no longer thought that expansionary fiscal policy was sustainable or effective in fostering an economic recovery because investors were no longer confident about some countries’ public finances. “The recent events highlight the importance of sustainable public finances and the need for our countries to put in place credible, growth-friendly measures, to deliver fiscal sustainability,” the communiqué stated.

“Those countries with serious fiscal challenges need to accelerate the pace of consolidation,” it added. “We welcome the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions”.

These words were in marked contrast to the G20’s previous communiqué from late April, which called for fiscal support to “be maintained until the recovery is firmly driven by the private sector and becomes more entrenched”.

After the meeting, finance ministers acknowledged that the landscape had changed. George Osborne, British chancellor, claimed credit for the change. The new words were a “significant success in getting endorsement from the G20 for … a significant change in tone in the language on fiscal sustainability”.

Many other finance ministers accepted market realities had changed the G20’s policy, Christine Lagarde, French finance minister, said: “There’s a large majority for whom redressing the public finances is priority number one. For a minority, it’s supporting growth”.

Even Dominique Strauss Kahn, managing director of the International Monetary Fund who championed fiscal stimulus since January 2008, recognised the world was suddenly different. Asked whether he felt comfortable with the change in tone from the G20, he replied: “Totally comfortable. I am not the champion of fiscal stimulus, but the champion of right fiscal policy”.

But there were concerns around the G20 that the rush to reduce budget deficits, necessary though officials now thought it was, would undermine the recovery in the near term.

In a letter to the rest of the G20, Tim Geithner, US Treasury secretary, argued: “Concerns about growth as Europe makes needed policy adjustments threaten to undercut the momentum of the recovery”.

Ministers from many countries stressed the need for structural reforms to boost the potential for private sector growth

In private, G20 officials said that the US had been the country most concerned about the new austerity drive and feared for the momentum for global growth. In the meetings it had been frank in the meeting in calling for China to revalue the renminbi and for Germany to boost domestic demand, officials said.

Mr Geithner, himself, was open about his fears in his letter to the G20. “Concerns about growth as Europe makes needed policy adjustments threaten to undercut the momentum of the recovery,” he wrote, adding that fiscal tightening won’t “succeed unless we are able to strengthen confidence in the global recovery.”

When discussing reforms to the financial system, the G20 found there was no consensus for a global levy on banks. The decision to allow countries to pursue their own domestic agendas on new taxes on banks was particularly pleasing for Canada, which has long opposed the idea.

Jim Flaherty, Canadian finance minister, said: “The debate on … bank levies has been a distraction form the core issues and it has been apparent again from out meetings that most of the G20 members do not support the concept of a universal levy”.

Instead, the G20 “recognis[ed] there is a range of policy approaches” and that countries could develop their own thinking, “taking into account individual country’s circumstances and options”.

For countries such as the US and UK still wanting to go ahead with unilateral banking levies, the G20 agreed that they should be devised within a set of principles to minimise the opportunities for banks to pick and choose between different jurisdictions depending on the levies introduced.

Why I should be the Next President of the USA

2010-06-05T07:50:00.000-07:00

Why I should be the Next President of the USA
By Carlos T Mock, MD
May 30, 2010

The Tea Party movement things that Sarah Palin should succeed president Obama as the 45th President of the United States. In my opinion my qualifications are superior to hers.

I know that Africa is a continent, not a country.

I read every morning, The Financial Times, The New York Times, The Washington Post, The Chicago Tribune, and The Chicago Sun-Times.

I know the difference between North and South Korea. The Korean War (1950–53) was the first major proxy war in the Cold War (1945–91), the prototype of the following sphere-of-influence wars such as the Vietnam War (1959–75). The Korean War established proxy war as one way that the nuclear superpowers indirectly conducted their rivalry in third-party countries. The NSC-68 Containment Policy extended the cold war from occupied Europe to the rest of the world. Fighting ended at the 38th parallel and the DMZ, a strip of land 248x4 km (155x2.5 mi), now divides the two countries—but neither of the Koreas officially ended the war.

I know that Africa is a continent, not a country.

I know that the Boston Tea Party was a revolt of Americans against the British Empire for taxation without representation—and had nothing to do with the size of our government.

I’ve actually been to Russia, which is better than seeing it from afar.

Ms Palin was elected to office—namely Governor of Alaska—but she abandoned her post as soon as she realized she could become a millionaire. She placed money over her constituency, and that is something I would never do.

There is one big area I can’t compete against her—for at 54, I don’t think I qualify as “hot.” If beauty is a qualification for the presidency of the United State, then I nominate Beyoncé; not only she is much more younger and beautiful than Ms. Palin—she can also sing and act. Besides, Beyoncé was born in Houston, Texas—and you can’t get more American than that.

Finally, I don’t exploit my family for political purposes—and I would NEVER allow my daughter to get pregnant before being married by a priest or minister.

There might be one problem, I was born in Puerto Rico—and in the midst of one of the most precipitous political crashes in the Mountain West, Sarah Palin made a mad dash into Boise on Friday, urging the election of a man who had plagiarized his campaign speech from Barack Obama, had been rebuked by the military for misusing the Marine uniform and had called the American territory of Puerto Rico a separate country.

Dr. Carlos T Mock is a native Puerto Rican who resides in Chicago, IL and Three Oaks, MI. He has published four books and is the GLBT Editor for Floricanto Press in Berkley, CA. He contributes columns regularly to Windy City Times in Chicago, Ambiente Magazine in Miami, Camp Newspaper in Kansas City. He's had several OP-Ed published at the Chicago Tribune. He can be reached at http://www.carlostmock.com/

Israel and the USA, A similar situation like Korea and China

2010-06-05T07:47:00.000-07:00

Israel and the USA, A similar situation like Korea and China
By Carlos T Mock, MD
June 2, 2010

The USA is demonstrating to its neighbors, and the world, that being the only superpower is not necessarily to be welcomed. Though it has become undeniable that its ally and client, Israel, raided naval vessels that killed nine people, many of them Turks, on an aid flotilla bound for Gaza, no direct condemnation by US Official has come forth.

When the U.N. Security Council Condemned ‘Acts’ in the Israeli Raid, the wording (influenced heavily by the US) seemed designed to dilute demands for condemnation of Israel, which argues that its soldiers acted in self-defense in response to violent resistance from passengers on board the vessels they intercepted. After the raid, Israel seized hundreds of activists as well as their ships.

Einat Wilf, a Labor Party member of Parliament who sits on the influential Foreign Affairs and Defense Committee, said that she had warned Mr. Barak and others well in advance that the flotilla was a public relations issue and should not be dealt with by military means. “This had nothing to do with security,” she said in an interview. “The armaments for Hamas were not coming from this flotilla.” It is well documented that the arms that are the supposed cause for the blockade are actually flowing freely through tunnels under the Egyptian border.

Israel’s deadly commando raid on Monday complicated President Obama’s efforts to move ahead on Middle East peace negotiations and introduced a new strain into an already tense relationship between the United States and Israel.

Prime Minister Benjamin Netanyahu of Israel canceled plans to travel to Washington on Tuesday to meet with Mr. Obama. The two men spoke by phone within hours of the raid, and the White House later released an account of the conversation, saying Mr. Obama had expressed “deep regret” at the loss of life and recognized “the importance of learning all the facts and circumstances” as soon as possible.

In the short term Israel’s behavior has damaged the United States. Watching the US defend the indefensible probably helped provoke the multiple worldwide demonstrations against the US and Israel.

An end to the crisis in the Middle East will require a more responsible approach by Mr. Obama. Abstaining from a Security Council resolution is not enough; the US must act decisively to restrain Israel from further provocations. The events of the past week are a sign that the US cannot continue to be seen as propping up a criminal client state and also be regarded as benign in its growing power. Sooner rather than later, it will have a choice to make.

Dr. Carlos T Mock is a native Puerto Rican who resides in Chicago, IL and Three Oaks, MI. He has published four books and is the GLBT Editor for Floricanto Press in Berkley, CA. He contributes columns regularly to Windy City Times in Chicago, Ambiente Magazine in Miami, Camp Newspaper in Kansas City. He can be reached at http://www.carlostmock.com/

Israeli Military Boards Gaza-Bound Aid Ship

2010-06-05T07:46:00.001-07:00

Israeli Military Boards Gaza-Bound Aid Ship
By ISABEL KERSHNER
Copyright by The New York Times
Published: June 5, 2010
http://www.nytimes.com/2010/06/06/world/middleeast/06flotilla.html?hpw

JERUSALEM — Days after a deadly confrontation at sea when Israeli commandos raided a flotilla trying to challenge the naval blockade of Gaza, an Irish-owned vessel carrying humanitarian supplies and a small group of pro-Palestinian activists was seized by Israeli forces off the coast of Gaza early Saturday, Israeli officials said.

The military said that Israeli forces pulled alongside the ship, the Rachel Corrie, just after noon and then boarded it from the sea. There were no resistance or injuries, and the military said the ship’s crew and passengers fully complied with the boarding.

On Friday, the Israeli and Irish governments reached an agreement to unload the vessel’s cargo at the port in Ashdod, in southern Israel, and transport it to Gaza — essentially the same deal Israel offered to the activists in the aid convoy that was attacked on Monday.

But Greta Berlin, a spokeswoman for the Free Gaza Movement, the principal organizer of the earlier flotilla, said that those on board had rejected that approach. “The whole point is to try to break the blockade,” Ms. Berlin said, speaking by telephone from Cyprus.

The rejection left open the possibility of another confrontation, though with only 11 passengers on board, 4 of them over 60 years old, and a crew of 8, there seemed to be less potential for violence. The passengers have said that any resistance will be peaceful.

“If they do come on board, we’ll be nice,” said Faizal Azumu, a passenger who answered a satellite telephone on board the ship on Friday. “We don’t want any problems.”

The director general of Israel’s Foreign Ministry, Yossi Gal, struck a conciliatory tone as well, saying in a statement: “We have no desire for a confrontation. We have no desire to board the ship. If the ship decides to sail to the port of Ashdod, then we will ensure its safe arrival and will not board it.”

The White House issued a statement late on Friday, urging that the ship sail to Ashdod “to ensure the safety of all involved.”

However, Israel’s ultranationalist foreign minister, Avigdor Lieberman, vowed in a television interview that the ship, the Rachel Corrie, named for a young American protester who was crushed to death by an Israeli army bulldozer in Gaza in 2003, would not be allowed to dock in Gaza. “We will stop the ship, and also any other ship that will try to harm Israeli sovereignty,” he told Channel 1. “There is no chance the Rachel Corrie will reach the coast of Gaza.”

Ireland’s foreign minister, Micheal Martin, said he had hoped the deal worked out with Israel would stand as “a useful precedent for future humanitarian shipments, pending the complete lifting of the blockade.”

But he added that he fully respected the passengers’ right to refuse the agreement “and to continue their protest action by seeking to sail to Gaza.”

The resumption of the ship’s voyage followed days of conflicting reports about the ship’s whereabouts and plans.

But organizers said on Friday evening that the 1,200-ton cargo ship was about 110 miles away from Gaza in international waters and was planning on turning toward the coast at dawn on Saturday.

Israel has led a land and sea blockade of the Palestinian enclave since Hamas, the Islamic militant group that Israel, the United States and the European Union view as a terrorist organization, seized full control of the territory three years ago. Under intense pressure on Thursday, the Israeli government said that it would explore new ways of facilitating the entry of civilian goods into Gaza.

Mr. Martin, the Irish foreign minister, said those on board the Rachel Corrie had indicated that they would accept inspection of their cargo at sea, prior to docking in Gaza, but that the Israelis rejected that proposal.

The Rachel Corrie was supposed to make up part of the last flotilla; it fell behind because of mechanical problems before it set out from Ireland. It is said to be loaded with construction materials, tons of paper and other supplies that are hard to come by in Gaza.

Among the passengers are Mairead Maguire, an Irish Nobel Peace laureate; Denis Halliday, a former United Nations assistant secretary general from Ireland; and Mohd Nizar bin Zakaria, a member of the Malaysian Parliament.

Israeli officials have strongly criticized the Free Gaza Movement, a group founded primarily by Palestinian advocates from California. “These people masquerade as human rights activists but they are nothing of the sort,” said Mark Regev, an Israeli government spokesman.

He said that they not only ignored Hamas attacks on Israeli civilians, “but even more conspicuously, they are silent about the Hamas regime’s appalling human rights record.” Last time a Free Gaza boat arrived in Gaza, he said, the activists “received medals from the Hamas government.”

In Gaza, too, there are mixed feelings about such aid missions. “I think they are wasting their time and ours,” said a Palestinian woman who asked not to be identified, fearing retribution from the Hamas authorities. “It won’t make a change in Israeli policy, only in our government’s policy.”

Ms. Berlin of Free Gaza said, “Hamas was democratically elected, whether we like it or not,” referring to the Palestinian legislative elections of 2006, in which Hamas defeated its main rival, Fatah.

Pelicans, Back From Brink of Extinction, Face Oil Threat

2010-06-05T07:42:00.000-07:00

Pelicans, Back From Brink of Extinction, Face Oil Threat
By JOHN COLLINS RUDOLF and LESLIE KAUFMAN
Copyright by The Associated Press
Published: June 4, 2010
http://www.nytimes.com/2010/06/05/us/05pelican.html?hp

FORT JACKSON, La. — For more than a decade, the hundreds of brown pelicans that nested among the mangrove shrubs on Queen Bess Island west of here were living proof that a species brought to the edge of extinction could come back and thrive.

The island was one of three sites in Louisiana where the large, long-billed birds were reintroduced after pesticides wiped them out in the state in the 1960s.

But on Thursday, 29 of the birds, their feathers so coated in thick brown sludge that their natural white and gray markings were totally obscured, were airlifted to a bird rehabilitation center in Fort Jackson, the latest victims of the Deepwater Horizon disaster. Another dozen were taken to other rescue centers.

Six more pelicans were brought here on Friday, and as visitors to the center looked on, the birds huddled together in makeshift plywood cages and, in their unnatural stillness, looked as if the gooey muck had frozen them solid. The 29 pelicans brought in Thursday were being treated in hot rooms by workers in protective clothing.

“The pelicans are in dire trouble,” said Doug Inkley, a senior scientist with the National Wildlife Federation, who worried that the oil spill could put an end to the bird’s recovery in Louisiana.

The images of oil-covered birds — pelicans, northern gannets, laughing gulls and others — are eerily reminiscent of the Exxon Valdez disaster 21 years ago, and have in recent days have become the most vivid symbol of the damage wrought by the hundreds of thousands of barrels of crude oil that have poured into the Gulf of Mexico since the Deepwater Horizon rig exploded April 20. Since the spill, 612 damaged birds had been cataloged as of Friday, most dead but some alive and drenched in oil, federal officials said.

Yet the brown pelican, because of its history of robust recovery in the face of extreme peril, has a special significance for the public.

The birds were once so common on the coastline here that they grace the state flag. They were frequent companions for fishermen, who shared their waters and admired their skill at spotting fish from afar and diving from great heights to scoop them up in their bills.

At the turn of the 20th century, observers estimated the brown pelican population in Louisiana at close to 50,000. But by 1961, no nesting pair could be spotted along the state’s entire coast, according to LaCoast, a Coast Guard Web site. Like another subspecies of the brown pelican found in California, the local birds had been hard hit by DDT and other pesticides, which acted to thin the shells of their eggs. The eggs were crushed when the adults sat on them. (DDT was banned in the United States in 1972.)

In 1968, Louisiana took birds from a surviving Florida colony and reintroduced them along the state’s southern coast in three spots. One was Queen Bess Island, which had been the site of one of the last breeding pairs before extinction, said Kerry St. Pé, program director of the nearby Barataria-Terrebonne National Estuary Program.

Still, the birds struggled, threatened this time by the loss of their habitat. The local wetlands, hurt by levees in the Mississippi that blocked sediment from flowing downstream and by canals cut by oil companies looking to lay pipe, were sinking into the gulf at an astonishing rate. Queen Bess was going under as well until 1990, when a coastal restoration project financed a rock barrier around the island, which stabilized it. The pelican colony began to flourish and the birds’ offspring helped repopulate the coastline, Mr. St. Pé said.

Last year, the birds were officially taken off the endangered species list. But the oil spill, experts said, could change that. Like all birds, pelicans are very sensitive to oil, said Melanie Driscoll, director of bird conservation for the National Audubon Society’s Louisiana Coastal Initiative. It prevents them from regulating their body temperature when it gets on their feathers, she said, and in Louisiana the pelicans are subject to overheating. The oil can also poison the fish the pelicans feed on and seep through the shells of pelican eggs, killing the embryos.

The potential for damage was frighteningly apparent at the rescue center set up here by the International Bird Rescue Research Center with BP and federal and state officials. All day Thursday, oiled birds, including the 29 brown pelicans, arrived at the makeshift veterinary emergency room built in a hangar on a former military base. They were carried from Coast Guard helicopters in dog kennels and cardboard boxes with air holes punched in them.

Most of the birds were so thoroughly coated in crude that they could not stand up. Some were stuck to the floor of their cages. Workers wiped off thick globs of oil with towels, then gave them fluids and fed them a fish slurry.

The pelicans were placed in plywood pens covered with blankets. The next morning, workers began to clean them using hot water and Dawn, a mild dish detergent.

So far, even the most heavily oiled pelicans have survived. Had they not been treated immediately, however, they would have almost certainly drowned or died of starvation or exposure, according to a veterinarian with the United States Fish and Wildlife Service.

The birds at the rehabilitation center, said Sharon Taylor, a veterinarian here, represent a lucky few — far more are certain to die in the wild.

“A lot of them will just disappear into the environment,” she said. “We will probably only find a very, very small percentage of what’s been impacted out there.”

Still, she worried that because there are so many large rookeries nearby, far more pelicans would soon be headed to the center.

“Tomorrow or tonight we could get a hundred pelicans, we could get a thousand pelicans,” Ms. Taylor said.

John Collins Rudolf reported from Fort Jackson, La., and Leslie Kaufman from New York.

Gay? Whatever, Dude

2010-06-05T07:34:00.000-07:00

Gay? Whatever, Dude
By CHARLES M. BLOW
Copyright by The New York Times
Published: June 4, 2010
http://www.nytimes.com/2010/06/05/opinion/05blow.html?th&emc=th

Last week, while many of us were distracted by the oil belching forth from the gulf floor and the president’s ham-handed attempts to demonstrate that he was sufficiently engaged and enraged, Gallup released a stunning, and little noticed, report on Americans’ evolving views of homosexuality. Allow me to enlighten:

1. For the first time, the percentage of Americans who perceive “gay and lesbian relations” as morally acceptable has crossed the 50 percent mark. (You have to love the fact that they still use the word “relations.” So quaint.)

2. Also for the first time, the percentage of men who hold that view is greater than the percentage of women who do.

3. This new alignment is being led by a dramatic change in attitudes among younger men, but older men’s perceptions also have eclipsed older women’s. While women’s views have stayed about the same over the past four years, the percentage of men ages 18 to 49 who perceived these “relations” as morally acceptable rose by 48 percent, and among men over 50, it rose by 26 percent.

I warned you: stunning.

There is no way to know for sure what’s driving such a radical change in men’s views on this issue because Gallup didn’t ask, but that doesn’t mean that we can’t speculate. To help me do so, I called Dr. Michael Kimmel, a professor of sociology at the State University of New York at Stony Brook and the author or editor of more than 20 books on men and masculinity, and Professor Ritch Savin-Williams, the chairman of human development at Cornell University and the author of seven books, most of which deal with adolescent development and same-sex attraction.

Here are three theories:

1. The contact hypothesis. As more men openly acknowledge that they are gay, it becomes harder for men who are not gay to discriminate against them. And as that group of openly gay men becomes more varied — including athletes, celebrities and soldiers — many of the old, derisive stereotypes lose their purchase. To that point, a Gallup poll released last May found that people who said they personally knew someone who was gay or lesbian were more likely to be accepting of gay men and lesbians in general and more supportive of their issues.

2. Men may be becoming more egalitarian in general. As Dr. Kimmel put it: “Men have gotten increasingly comfortable with the presence of, and relative equality of, ‘the other,’ and we’re becoming more accustomed to it. And most men are finding that it has not been a disaster.” The expanding sense of acceptance likely began with the feminist and civil rights movements and is now being extended to the gay rights movement. Dr. Kimmel continued, “The dire predictions for diversity have not only not come true, but, in fact, they’ve been proved the other way.”

3. Virulent homophobes are increasingly being exposed for engaging in homosexuality. Think Ted Haggard, the once fervent antigay preacher and former leader of the National Association of Evangelicals, and his male prostitute. (This week, Haggard announced that he was starting a new “inclusive” church open to “gay, straight, bi, tall, short,” but no same-sex marriages. Not “God’s ideal.” Sorry.) Or George Rekers, the founding member of the Family Research Council, and his rent boy/luggage handler. Last week, the council claimed that repealing “don’t ask, don’t tell” would lead to an explosion of “homosexual assaults” in which sleeping soldiers would be the victims of fondling and fellatio by gay predators. In fact, there is a growing body of research that supports the notion that homophobia in some men could be a reaction to their own homosexual impulses. Many heterosexual men see this, and they don’t want to be associated with it. It’s like being antigay is becoming the old gay. Not cool.

These sound plausible, but why aren’t women seeing the same enlightening effects as men? Professor Savin-Williams suggests that there may be a “ceiling effect,” that men are simply catching up to women, and there may be a level at which views top out. Interesting.

All of this is great news, but it doesn’t mean that all measures relating to acceptance of gay men and lesbians have changed to the same degree. People’s comfort with the “gay and lesbian” part of the equation is still greater than their comfort with the “relations” part — the idea versus the act — particularly when it comes to pairings of men.

As Professor Savin-Williams told me, there is still a higher aversive reaction to same-sex sexuality among men than among women.

For instance, in a February New York Times/CBS News poll, half of the respondents were asked if they favored letting “gay men and lesbians” serve in the military (which is still more than 85 percent male), and the other half were asked if they favored letting “homosexuals” serve. Those who got the “homosexual” question favored it at a rate that was 11 percentage points lower than those who got the “gay men and lesbians” question.

Part of the difference may be that “homosexual” is a bigger, more clinical word freighted with a lot of historical baggage. But just as likely is that the inclusion of the root word “sex” still raises an aversive response to the idea of, how shall I say, the architectural issues between two men. It is the point at which support for basic human rights cleaves from endorsement of behavior.

As for the aversion among men, it may be softening a bit. Professor Savin-Williams says that his current research reveals that the fastest-growing group along the sexuality continuum are men who self-identify as “mostly straight” as opposed to labels like “straight,” “gay” or “bisexual.” They acknowledge some level of attraction to other men even as they say that they probably wouldn’t act on it, but ... the right guy, the right day, a few beers and who knows. As the professor points out, you would never have heard that in years past.

All together now: stunning.

(I now return you to Day 46 of the oil spill where they finally may be making some progress.)

•

I invite you to join me on Facebook and follow me on Twitter, or e-mail me at chblow@nytimes.com.

New York Times Editorial: The Spill and Energy Bill

2010-06-05T07:31:00.000-07:00

New York Times Editorial: The Spill and Energy Bill
Copyright by The New York Times
Published: June 4, 2010
http://www.nytimes.com/2010/06/05/opinion/05sat1.html?th&emc=th

The nation’s political leaders have had a lot to say in recent years about America’s addiction to fossil fuels and the need to find cleaner, more climate-friendly alternatives. In recent weeks, they have had a lot to say about the Gulf of Mexico oil spill. On Wednesday, President Obama put them together.

In a speech at Carnegie Mellon University, he invoked the spill to pound on Congress about its duty to pass a comprehensive energy bill that addresses oil dependency and global warming. The House has passed such a bill, but a companion measure in the Senate languishes, hostage to solid Republican opposition, exaggerated fears about its costs and timidity on the part of the Democratic leadership. “I will work with anyone from either party to get this done,” he said.

Mr. Obama’s task is to follow up that vow with action. We are not optimistic that his implacable Republican opposition will work with him on anything. But perhaps the spreading nightmare on the waters of the gulf will get a few to break with the party line.

The Senate bill is far from perfect. It coddles the coal companies, and its provisions for off-shore drilling will now have to be revised or at least tightened up with multiple safeguards. But for the first time, the bill would set a price on carbon-dioxide emissions, which are now dumped without penalty into the atmosphere. This is an essential prerequisite for shifting private and public investment to cleaner energy sources.

The oil savings would be substantial. According to a new study by the Peter G. Peterson Institute for International Economics, the bill’s mandates for alternative fuels and more efficient vehicles would reduce oil imports one-third by 2035.

But instead of embracing this positive bill, the Senate is expected to vote soon on a measure that would move the country in exactly the wrong direction — a resolution sponsored by Lisa Murkowski, the Alaska Republican, that would undercut the government’s authority to regulate greenhouse gases and reduce the anticipated oil savings from the tough new fuel economy standards the White House announced last April.

As this page has noted before, persuading the Senate to act is not only a matter of leadership, but a matter of international obligation. At the Copenhagen climate conference in December, Mr. Obama committed the United States to a 17 percent reduction in greenhouse gases by 2020 — the minimum that scientists believe necessary to begin steering the world away from the worst impacts of a warming planet.

Delivering on that pledge is even more urgent now than it was then. As he demonstrated at Carnegie Mellon, Mr. Obama knows how to hit all the right notes rhetorically. Passing a comprehensive bill would be good for the economy, by creating new jobs; good for the environment, by reducing emissions; and good for national security, by reducing our dependence on unstable oil-producing countries. The president’s task now is to convert that rhetorical fervor into actual, filibuster-proof votes.

Tempting Area for Exaggeration Meets Tools of the YouTube Era

2010-06-05T07:27:00.000-07:00

Tempting Area for Exaggeration Meets Tools of the YouTube Era
By ADAM NAGOURNEY
Copyright by The Associated Press
Published: June 4, 2010
http://www.nytimes.com/2010/06/05/us/politics/05campaign.html?th&emc=th

WASHINGTON — It happened again. Another candidate for office is struggling to reconcile misleading statements he made about his record in the military. This time, it is Representative Mark Kirk, a Republican from Illinois running for the Senate, apologizing for misleading statements he made about, among other things, serving in the first Iraq war and in Kosovo.

“I simply misremembered it wrong,” he said, a remark that was blared across the front page of The Chicago Sun-Times on Friday. A few weeks ago, it was Richard Blumenthal, the Connecticut attorney general and Democratic candidate for Senate, trying to explain misstatements suggesting he had served in Vietnam.

This type of political behavior is hardly new. Over the years, a parade of politicians from both parties — John Kerry, Al Gore, Tom Harkin, George W. Bush, Bill Clinton and David Duke, to name a few — have had to account for what opponents portrayed as exaggerations or worse about their military service (or their attempts to avoid service altogether). Some of those candidates and many others have been called out for less-than-fully-truthful statements on countless other topics as well.

But the intensity of these latest skirmishes offers an insight into how the American political scene has changed. A common characteristic of politicians in search of votes — a propensity to puffery — has run head on into an aggressive new culture that subjects them to 24-hour flyspecking by opponents, bloggers, the mainstream media and regular citizens.

What is more, the rules of what is acceptable have grown murky since the days when Bruce F. Caputo, a Republican candidate for Senate from New York challenging Daniel Patrick Moynihan, was forced out after it was revealed that he had falsely claimed to have been drafted for Vietnam. (That information was leaked by a senior political operative for Senator Moynihan, Tim Russert.)

The most pressing question for Mr. Blumenthal and Mr. Kirk is how much water they are taking on. As both are learning, analysts said, the issue in many cases is not so much whether they served in battle in Vietnam or Iraq, but the credibility and character of the candidate.

Mr. Kirk has admitted to a number of errors and discrepancies related to his military service. In the last week, Mr. Kirk acknowledged that his official House Web site incorrectly stated in 2005 that he served “in Operation Iraqi Freedom” when he was actually serving stateside. The problem was found that year and corrected to say that he had served “during” the invasion of Iraq.

Mr. Kirk has often said he served in Iraq — which his campaign clarified that he did for two months in 2000 in Operation Northern Watch, which enforced the no-fly zone above Iraq. He also served twice in Afghanistan.

“Over the last generation, you’ve gone from people who were branded or identified with a party to races being much more about their character: Do voters trust them?” said Chris Lehane, a Democratic consultant who advised Mr. Gore when he dealt with of questions about exaggerating his service when he ran for president in 2000. “That’s one of the reasons that exaggerations have become a major part of a campaign. It is a way of telling whether you can trust something. It’s something that opposition researchers, opponents, journalists can grab on to raise questions about.

“You have far more scrutiny than in the past, no matter what anyone says about newspapers being on the demise,” Mr. Lehane said.

Polls suggest Mr. Blumenthal has not been dragged down since the questions were first raised in an article in The New York Times. But Mr. Kirk has been forced this week to go on an apology tour to deal with challenges about the credibility of what he has claimed about his military record. Officials in both parties said the continuing questions could damage the prospects of Mr. Kirk, a five-term congressman and intelligence officer in the Naval Reserve, in his challenge against Alexi Giannoulias, a Democrat who had seemed vulnerable because of ties to the banking industry.

Candidates are prone to embellishing things in their past (from academic records to marital history) but war service has always been a particularly tempting area for exaggeration. Having a distinguished military career is a powerful drawing card, going back to George Washington.

“More than half our presidential candidates have had military service of some kind,” said Jeremy M. Teigen, a professor of political science at Ramapo College in New Jersey, who is writing a book on military credentials and political campaigns. “And a not-so-small number of them have strategically emphasized that.”

If the intensive media scrutiny of today is a warning to candidates to watch what claims they are making, it also leaves them vulnerable to the unearthing of any past dissembling, given how much easier it is now to hunt down old appearances and records and make them public. Nuances — like as the definition of the word “serve” — can be problematic, as Mr. Blumenthal has discovered.

“The degree of difficulty of political exaggeration of any kind is directly correlated with the ease of research and the proliferation of sources,” said Bob Kerrey, a Vietnam veteran and former senator from Nebraska who ran for president in 1992. “It’s so much easier to find something I once said when I was trying to convince people I was taller than Bill Clinton than it would be today.”

“In the old days — meaning the last time I campaigned in ’94 — if I had something hot on my opponent, if I had something that was really juicy, I would have go the bars where the journalists were and try to get them to print it,” Mr. Kerrey said. “Not any more. I’d just have to post it on YouTube. It’s quicker. And it’s better for my liver.”

Mr. Lehane, who is known for his talents at directing operations to gather unfavorable information about an opponent from their campaign appearances — in the vernacular, it is known as tracking — said chronicling what a candidates says and does is much easier now.

“In 1992, when you wanted to track the candidate you had to send people out there with tape recorders, and try to get something you could use,” he said. “It was hard to get people close enough. It does seem that you used to get away with a lot more puffery than you can get away with now.”

Emma Graves Fitzsimmons contributed reporting.

Immigration Debate Defines Race in California

2010-06-05T07:23:00.000-07:00

Immigration Debate Defines Race in California
By ADAM NAGOURNEY
Copyright by The New York Times
Published: June 4, 2010
http://www.nytimes.com/2010/06/05/us/05calif.html?th&emc=th

IRVINE, Calif. — Meg Whitman was almost at the end of a 30-minute town hall-style meeting here, responding to questions about taxes and spending, schools and unemployment. But one topic had not come up, so Ms. Whitman, a Republican candidate for governor, raised it herself, serving up a stern attack against illegal immigration and a promise that she would protect California’s borders.

“I am 100 percent against amnesty,” Ms. Whitman proclaimed. “My Republican opponent says I’m for amnesty. That is absolutely not true.”

For almost a year, Ms. Whitman, the former chief executive of eBay, has campaigned on three issues: jobs, education and government spending. But as her contest for the Republican nomination for governor against Steve Poizner, the state insurance commissioner, enters its final days, she has found herself drawn into a loud and caustic argument over immigration policy. “It is the only issue,” said Stuart Stevens, Mr. Poizner’s chief campaign consultant.

The primary here on Tuesday will be the highest-stakes electoral contest since Arizona approved a tough immigration law, and that has allowed Mr. Poizner to reshape the campaign, focusing a series of stark attacks on Ms. Whitman. The extent to which immigration has, in the view of many Republicans, hijacked this contest has stirred worry that the nominee chosen next week will be weakened in the general election against Jerry Brown, a Democrat and former governor.

“There’s a difference between talking about a problem and trying to exploit the problem as a wedge issue to try to get scared white voters,” said Allan Hoffenblum, a Republican analyst here. “I’m not speaking as a lone wolf on this in the Republican Party. It’s concerning a lot of us.”

Hispanics are becoming increasingly influential in California politics. One in six voters this November is expected to be Hispanic — a proportion that is likely to grow in coming years — and Southern California has been at the forefront of efforts to boycott Arizona for enacting tough anti-immigrant legislation in late April.

In many ways, California’s primary race offers a worrisome preview of what many Republicans say are the political perils for the party nationally in being identified with tough immigration policies. Mr. Poizner has enthusiastically endorsed such policies in his campaign. His series of stark television advertisements portraying Ms. Whitman as an advocate of permissive immigration began three weeks ago.

The emphasis on immigration is striking in a state that is reeling from the economic downturn and saddled with what officials in both parties view as a dysfunctional government. At 12.5 percent, the unemployment rate here is far above the national average. The state has been hit hard by the foreclosure crisis, its public education system is a shambles, and disapproval of the Legislature and of Gov. Arnold Schwarzenegger, a Republican barred by term limits from seeking re-election, are at near-record highs. The election is playing out against the backdrop of the latest battle in Sacramento over proposed cuts in spending to balance the budget.

One strain on the state’s finances is providing social services to a large population of illegal immigrants, which is one reason the issue has political resonance. Still, it is hardly clear that the tough-on-immigrants stance has universal appeal among Republican voters; in the Central Valley, for instance, many farmers use undocumented farm workers.

A Los Angeles Times/U.S.C. poll published on Sunday showed Ms. Whitman leading Mr. Poizner by 53 percent to 29 percent; other polls taken last month, after Mr. Poizner began his advertising assault against Ms. Whitman, showed that he had significantly tightened the race, until she started pushing back.

In an interview, Ms. Whitman — who has been running advertisements promising to be “tough as nails” on illegal immigration — said that she thought voters were concerned about other things besides immigration, and that she was raising the issue only in response to what she asserted were Mr. Poizner’s distortions of her record. She said Mr. Poizner had hurt himself as a general election candidate because of the tenor of his attacks.

“I think he’s damaged in the general because he’s only talked about one issue,” Ms. Whitman said. “And I think that’s a big mistake.”

Mr. Poizner said that illegal immigration was “part and parcel of our message from the get-go” and that he always viewed it as the No. 1 issue for Republican primary voters, and a point of contrast with Ms. Whitman.

“It’s huge: everywhere I go, people burst out into applause when I start talking about it,” Mr. Poizner said after appearing at a town hall-style meeting in El Segundo flanked by bright red screens with white lettering proclaiming, “No Amnesty: Stop Illegal Immigration.”

“Our positions are just different,” he continued. “Meg Whitman opposes Arizona. I fully support it. In fact, I don’t see how you can be a Republican running for high office in the United States and be taken seriously if you oppose what’s going on in Arizona.”

Both candidates are independently wealthy and together have spent more than $100 million — about $80 million for Ms. Whitman, and $25 million for Mr. Poizner — which has guaranteed a wide audience for the back-and-forth volley of television advertisements, radio spots and mailers. The demonstrated willingness of Ms. Whitman and Mr. Poizner to tap their own political fortunes to win the governorship is one of the key reasons Republicans are hopeful about defeating Mr. Brown.

Even without immigration, candidates this primary season face a politically daunting task in trying to navigate an increasingly conservative Republican base and emerge as a viable candidate in the general election. Mark Baldassare, president and chief executive of the Public Policy Institute of California, a policy study and polling group, said that 75 percent of Republicans statewide disapproved of President Obama in a poll earlier last month, compared with 39 percent of all registered voters in California.

“The Republican primary voters are not representative of the overall mood of Californians,” Mr. Baldassare said. “This is really a unique slice of the electorate.”

One sign of this is the extent to which both Ms. Whitman and Mr. Poizner are critical of Mr. Schwarzenegger. Mr. Poizner said he would not want the governor to campaign with him should he win the nomination. “I think it would be better if he just stays out of the primary and the general election,” he said.

Ron Nehring, the chairman of the state Republican Party, said the severity of the economic problems facing California would overshadow the immigration stances taken by the Republican candidate during the primaries. “The Democrats are always trying to paint Republicans as anti-immigrant,” he said. “But the first, second, third and fourth issue in the race for governor is jobs and the economy.”

Ms. Whitman’s advisers said that if she won the nomination, she would move away from immigration to broaden her appeal. But Mr. Poizner said he would not change his campaign a bit.

“This is important for everyone to know: What you see is what you get,” he said. “The campaign I’m waging now in the primary is exactly the same campaign I’ll be waging in the general against Jerry Brown. I think it’s a myth that independents, Democrats, these groups that supposedly would object to my strong positions on illegal immigration — uh-uh.”

Obama to Name Retired General to Top Spy Post

2010-06-05T07:21:00.001-07:00

Obama to Name Retired General to Top Spy Post
By PETER BAKER and ERIC SCHMITT
Copyright by The Associated Press
Published: June 4, 2010
http://www.nytimes.com/2010/06/05/us/politics/05intel.html?th&emc=th

WASHINGTON — President Obama has picked Lt. Gen. James R. Clapper Jr. as director of national intelligence, tapping a retired officer with decades of experience to improve coordination of the nation’s sprawling spy apparatus amid increasing threats at home and escalating operations abroad.

Mr. Obama plans to announce his choice in the Rose Garden on Saturday, two weeks after forcing Adm. Dennis C. Blair out of the spymaster job, according to administration officials, who insisted on anonymity to disclose the decision before the formal ceremony.

The selection amounts to pushing the reset button for the president as he tries to recalibrate an intelligence structure that has undergone continued revamping since the debacle leading up to the Iraq war, yet by most accounts still lacks the cohesion necessary in an evolving war with terrorists. Even as intelligence agencies expand their role overseas with drone strikes in Pakistan and increased focus on Yemen and Somalia, they have faced a spate of attempted attacks in the United States.

General Clapper, 69, who retired in 1995 after 32 years in the Air Force, rose from a signals intelligence officer to undersecretary of defense for intelligence, overseeing all military spy operations. In picking him, the president found an intelligence veteran who clashed with Defense Secretary Donald H. Rumsfeld and was pushed out of office as a result, only to return to the Pentagon as a top lieutenant to Defense Secretary Robert M. Gates.

If confirmed by the Senate, General Clapper will be the fourth official since 2005 to oversee the nation’s 16 intelligence agencies, a job created in the aftermath of the Iraq intelligence failures. Some intelligence officials have portrayed the job as a bureaucratic nightmare. Essentially, it involves coordinating some very powerful intelligence chiefs, including the C.I.A. director, who have bigger budgets, their own power bases and access to administration officials and members of Congress.

But Mr. Obama concluded that General Clapper’s experience would enable him to fix a dysfunctional situation. “He has a mandate to work it better and that will require some changes,” said a senior administration official.

“He knows the inside of the business better than anybody I know,” said John J. Hamre, a former deputy defense secretary and now president of the Center for Strategic and International Studies. But General Clapper will have to figure out how to refashion the job created by Congress to be more effective. “You can’t administratively fix birth defects in legislation,” Mr. Hamre said.

General Clapper may face a fight to get confirmed. The choice generated consternation in the Senate, where some Democrats and Republicans complained that he is too closely aligned to the military, has resisted strengthening the office he has been selected for, and has not cultivated close ties on Capitol Hill.

“He has served honorably and with distinction for a long time, but he’s focused too much on Defense Department issues,” Senator Christopher Bond of Missouri, the ranking Republican on the intelligence committee, said in a telephone interview on Friday. “And I don’t believe that he’s been forthcoming and open with the Intelligence Committee.”

Senator Dianne Feinstein of California, the Democratic chairwoman of the intelligence committee, was traveling on Friday and unavailable for comment, her office said. But Ms. Feinstein also expressed reservations when General Clapper emerged as an early front-runner to succeed Mr. Blair last month, saying it would be better to appoint a civilian to the job. However, several leading candidates — including Mr. Hamre; Leon E. Panetta, the C.I.A. director; and former Senator Chuck Hagel of Nebraska — all made clear they were not interested.

Other senators said that General Clapper lacked a forceful enough personality and management style to assert control over the sprawling American intelligence apparatus.

“There are problems within the intelligence community that must be addressed in a very strong and direct way,” Senator Saxby Chambliss, a Georgia Republican on the committee, said through a spokeswoman. “I have real reservations about General Clapper being that person.”

But General Clapper has an independent streak and has not been afraid to challenge bosses in the past. When Congress was debating the creation of the director of national intelligence job, General Clapper was director of the National Geospatial-Intelligence Agency, the little-known part of the nation’s spy infrastructure that analyzes maps and secret satellite imagery. He told Congress that he would support transferring his agency from the Pentagon to the control of the new intelligence director.

That position contradicted the views of Mr. Rumsfeld, who eventually forced out General Clapper in 2006. But Mr. Rumsfeld was pushed out by President George W. Bush later that year and was replaced by Mr. Gates, who rehired the retired general for the Pentagon’s top intelligence job in 2007.

In 2008, General Clapper oversaw the dismantling of a controversial military intelligence office that lawmakers and civil liberties groups said was part of a Pentagon effort to expand into domestic spying. Mr. Rumsfeld created the unit, called the Counterintelligence Field Activity Office, after the Sept. 11, 2001, terrorist attacks to counter the operations of foreign intelligence services and terrorist groups in the United States and abroad.

But the secretive office came under sharp criticism in 2005 after it was revealed that it was managing a database that included information about antiwar protests planned at churches, schools and Quaker meeting halls. General Clapper ordered an end to the database, called Talon, and most of the office’s operations were merged into the military’s Defense Intelligence Agency, which General Clapper led from 1991 to 1995.

The director of national intelligence is supposed to oversee the nation’s separate spy agencies and serve as the president’s primary adviser on matters of intelligence. But in practice, the director’s authority has been murky, particularly since the vast majority of America’s annual intelligence budget of nearly $50 billion is out of his direct control because it goes to spy satellites and high-tech listening devices operated by the Pentagon.

It has also been unclear how much control the director has over the C.I.A., which has grown in power as it has taken on an expanded role in secret wars in Pakistan, Yemen and elsewhere.

In fact, General Clapper’s predecessor was seen as being on the losing end of internal battles with Mr. Panetta. over who would appoint station chiefs around the world. Mr. Blair had little chemistry with Mr. Obama, officials said, and the president criticized the coordination of intelligence sharing after the botched effort to blow up a Northwest Airlines passenger jet last Christmas.

The president decided to make a change and sat down with General Clapper in the Oval Office on May 5, when he asked the retired general for his views of the future of intelligence operations and the director’s job specifically, according to an administration official briefed on the session. General Clapper followed up with a letter about his vision that impressed the president, the official said. Mr. Blair resigned under pressure on May 20.

Those who know him say that General Clapper is expected to work smoothly with Mr. Panetta and John O. Brennan, Mr. Obama’s counterterrorism chief.

“Jim is a true intelligence professional,” said Gen. Michael V. Hayden, a former C.I.A. director.

Offshore Corporate Tax Havens: Why Are They Still Allowed?

2010-06-04T16:59:00.000-07:00

Offshore Corporate Tax Havens: Why Are They Still Allowed?
By Arianna Huffington
Copyright by The Huffington Post
Posted: June 1, 2010 06:34 PM
http://www.huffingtonpost.com/arianna-huffington/offshore-corporate-tax-ha_b_596753.html?ref=email_share

The bracing reality that America has two sets of rules -- one for the corporate class and another for the middle class -- has never been more indisputable.

The middle class, by and large, plays by the rules, then watches as its jobs disappear -- and the Senate takes a break instead of extending unemployment benefits. The corporate class games the system -- making sure its license to break the rules is built into the rules themselves.

One of the most glaring examples of this continues to be the ability of corporations to cheat the public out of tens of billions of dollars a year by using offshore tax havens. Indeed, it's estimated that companies and wealthy individuals funneling money through offshore tax havens are evading around $100 billion a year in taxes -- leaving the rest of us to pick up the tab. And with cash-strapped states all across the country cutting vital services to the bone, it's not like we don't need the money.

You want Exhibit A of two sets of rules? According to the White House, in 2004, the last year data on this was compiled, U.S. multinational corporations paid roughly $16 billion in taxes on $700 billion in foreign active earnings -- putting their tax rate at around 2.3 percent. Know many middle class Americans getting off that easy at tax time?

In December 2008, the Government Accounting Office reported that 83 of the 100 largest publicly-traded companies in the country -- including AT&T, Chevron, IBM, American Express, GE, Boeing, Dow, and AIG -- had subsidiaries in tax havens -- or, as the corporate class comically calls them, "financial privacy jurisdictions."

Even more egregiously, of those 83 companies, 74 received government contracts in 2007. GM, for instance, got more than $517 million from the government -- i.e. the taxpayers -- that year, while shielding profits in tax-friendly places like Bermuda and the Cayman Islands. And Boeing, which received over $23 billion in federal contracts that year, had 38 subsidiaries in tax havens, including six in Bermuda.

And while it's as easy as opening up an island P.O. Box, not every big company uses the dodge. For instance, Boeing's competitor Lockheed Martin had no offshore subsidiaries. But far too many do -- another GAO study found that over 18,000 companies are registered at a single address in the Cayman Islands, a country with no corporate or capital gains taxes.

America's big banks -- including those that pocketed billions from the taxpayers in bailout dollars -- seem particularly fond of the Cayman Islands. At the time of the GAO report, Morgan Stanley had 273 subsidiaries in tax havens, 158 of them in the Cayman Islands. Citigroup had 427, with 90 in the Caymans. Bank of America had 115, with 59 in the Caymans. Goldman Sachs had 29 offshore havens, including 15 in the Caymans. JPMorgan had 50, with seven in the Caymans. And Wells Fargo had 18, with nine in the Caymans.

Perhaps no company exemplifies the corporate class/middle class double standard more than KBR/Halliburton. The company got billions from U.S. taxpayers, then turned around and used a Cayman Island tax dodge to pump up its bottom line. As the Boston Globe's Farah Stockman reported, KBR, until 2007 a unit of Halliburton, "has avoided paying hundreds of millions of dollars in federal Medicare and Social Security taxes by hiring workers through shell companies based in this tropical tax haven."

In 2008, the company listed 10,500 Americans as being officially employed by two companies that, as Stockman wrote, "exist in a computer file on the fourth floor of a building on a palm-studded boulevard here in the Caribbean." Aside from the tax advantages, Stockman points out another benefit of this dodge: Americans who officially work for a company whose headquarters is a computer file in the Caymans are not eligible for unemployment insurance or other benefits when they get laid off -- something many of them found out the hard way.

This kind of sun-kissed thievery is nothing new. Indeed, back in 2002, to call attention to the outrage of the sleazy accounting trick, I wrote a column announcing I was thinking of moving my syndicated newspaper column to Bermuda:

I'll still live in America, earn my living here, and enjoy the protection, technology, infrastructure, and all the other myriad benefits of the land of the free and the home of the brave. I'm just changing my business address. Because if I do that, I won't have to pay for those benefits -- I'll get them for free!

Washington has been trying to address the issue for close to 50 years -- JFK gave it a go in 1961. But time and again Corporate America's game fixers -- aka lobbyists -- and water carriers in Congress have managed to keep the loopholes open.

The battle is once again afoot. On Friday, the House passed the American Jobs and Closing Tax Loopholes Act. The bill, in addition to extending unemployment benefits, clamps down on some of they ways corporations hide their income offshore to avoid paying U.S. taxes. Even though practically every House Republican voted against it, the bill passed 215 to 204.

The bill's passage in the Senate, however, remains in doubt, with lobbyists gearing up for a furious fight to make sure America's corporate class can continue to profitably enjoy the largess of government services and contracts without the responsibility of paying its fair share.

The bill is far from perfect -- it leaves open a number of loopholes and would only recoup a very small fraction of the $100 billion corporations and wealthy individuals are siphoning off from the U.S. Treasury. And it wouldn't ban companies using offshore tax havens from receiving government contracts, which is stunning given the hard times we are in and the populist groundswell at the way average Americans are getting the short end of the stick.

But the bill would end one of the more egregious examples of the double standard between the corporate class and the middle class, finally forcing hedge fund managers to pay taxes at the same rate as everybody else. As the law stands now, their income is considered "carried interest," and is accordingly taxed at the capital gains rate of 15 percent.

The issue was famously brought up in 2007 by Warren Buffett when he noted that his receptionist paid 30 percent of her income in taxes, while he paid only 17.7 percent on his taxable income of $46 million dollars.

As Robert Reich points out, the 25 most successful hedge fund managers earned $1 billion each. The top earner clocked in at $4 billion. And all of them paid taxes at about half the rate of Buffett's receptionist.

Closing this outrageous loophole would bring in close to $20 billion dollars in revenue -- money desperately needed at a time when teachers and nurses and firemen are being laid off all around the country.

Hedge fund lobbyists are currently hacking away at the Senate's resolve with, not surprisingly, some success. And it's not just Republicans who are willing to do their bidding, but a number of Democrats as well. Indeed, it was a Democrat -- Chuck Schumer -- who led the fight against closing the loophole in 2007.

"I don't know how members of Congress can return home and look an office manager, a nurse, a court clerk in the eye and say 'I chose hedge fund managers instead of you and your family'," said Lori Lodes of the SEIU.

Nicole Tichon, of the U.S. Public Interest Research Group, framed the debate in similar terms:

It's hard to imagine anyone campaigning on protecting hedge fund managers, Wall Street banks and companies that ship jobs and profits overseas. It's hard to imagine telling constituents that somehow they should continue to subsidize these industries. We're anxious to see whose side the Senate is on and what story they want to tell the American people.

Up until now, the story has been a familiar narrative of Two Americas, with one set of rules for those who can afford to hire a fleet of K Street lobbyists and a different set for everybody else. It's time to give this infuriating tale a different -- and far more just and satisfying -- ending.

AT&T's New iPhone Data Plans: Pros and Cons

2010-06-04T10:06:00.000-07:00

AT&T's New iPhone Data Plans: Pros and Cons
By Ian Paul
Copyright by PC World
Jun 4, 2010 11:02 am
http://www.pcworld.com/article/197992/atandts_new_iphone_data_plans_pros_and_cons.html

The discussion continues around AT&T's new tiered data plans for the iPhone, and whether AT&T's decision will significantly impact how new iPhone owners use their device.

If you haven't heard, AT&T will offer new iPhone users a choice of data plans starting Monday, June 7. New users will have to decide between a 200MB plan for $15/month or 2GB for $25. Any data usage above those limits will incur overage charges that have the potential to double your monthly data fees for the iPhone. Current iPhone user can keep their current unlimited plan or switch to a cheaper tiered data plan.

Here are four issues with AT&T's new plans, and a few pros and cons for each.

AT&T's New Data Plan Will Save You Money

Pro: Most users would probably save money under AT&T's new data plan. As AT&T pointed out recently, 200MB of data gives you the capability to send and receive 1000 e-mail messages (no attachments) and 150 e-mails with attachments, view 400 Web pages, post 50 photos on social media sites, and watch 20 minutes of streaming video.

If you also use a Wi-Fi connection for your device when you're at home, work or in range of an AT&T Wi-Fi hotspot (free access for AT&T customers), it gets even easier to survive on 200MB.

The New York Times' David Pogue says that he and his wife typically use 150MB of data per month combined on their iPhones. So AT&T's new data plans could mean big savings for Pogue. "Here I am, a power-using geek, and I could put both phones on the DataPlus plan and save $360 a year," Pogue writes.

Con: But as I pointed out recently, I use on average of 484MB of data a month, meaning I'd need AT&T's 2GB monthly plan. I'd still capitalize on savings, but I could save even more money if AT&T had a middle ground data plan between 200MB and 2GB, say a 500MB offering for $20. But why is there such a big gap between data plans?

To put this in perspective, AT&T's two data plans offer a choice between 200MB or 2048MB (2GB) per month. So for an extra $10 you get more than ten times the data under AT&T's new data scheme. Why such a huge disparity of data levels between the two plans? Is AT&T trying to keep its annual revenue high while simultaneously lowering customer service? Something just doesn't add up.

Most Plans Don't Offer Unlimited Data Anyway

Pro: AT&T is the only network to offer a truly unlimited data plan for the iPhone as most carriers cap their so-called unlimited plans at 5GB of data per month. In fact, AT&T imposes a 5GB cap on its other data plans including its Laptop Connect and Blackberry tethering plans.

The reality is that most users don't need unlimited data. AT&T's new data plans will allow most users to pay less, and bring their monthly billing in line with the amount of 3G data they actually use.

Con: If you're an avid iPhone user who is constantly downloading, tweeting, e-mailing, and streaming video and audio, then 200MB is probably not enough while 2GB is too much. So a good portion of people are saving only $5 per month on their plans, and may still have to keep tabs on how much data they are using.

The beauty of AT&T's unlimited plan was that most users would never have to worry about overage charges even on high usage months. That's not the case under AT&T's new tiered data plans.
AT&T Will Offer Tethering for the iPhone

Pro: AT&T is finally offering tethering a year after the rest of the developed world was offering it.

Con: AT&T's tethering scheme will be difficult to swallow for most users who want to add tethering to their service.

First of all, to get tethering when it launches this summer you have to abandon your unlimited plan on your current device and switch to a tiered data plan. Then, you'll have to pay AT&T's $20 monthly tethering fee, which doesn't even come with any extra data. You are literally paying for the right to tether and nothing more. In other words, AT&T's tethering fee is simply a convenience charge.
Usage Limits Will Kill Innovation

Pro: Some third-party application developers worry that monthly usage limits may make consumers wary of downloading and using applications, according to a report in the Wall Street Journal. Bart Decrem, CEO of Tapulous, told the Journal that AT&T's data plan "could dampen people's appetite for downloading apps and engaging with them over the cellular network."

If people stop freely using applications like they are today, this could force developers to reconsider creating useful and yet data-intensive apps.

Con: There are many ways to download applications including via a Wi-Fi application or your computer at home. It's not like 3G is your only download option. Even if you downloaded the occasional app over your 3G connection, you likely wouldn't have to worry about overage charges on a 2GB plan anyway.

As for interacting with the applications, the biggest concern would be for users of GPS and video streaming apps, and even then 2GB should be enough data for most people. Besides, as that same Journal article points out, restricting data usage could push developers to create apps that use data connectivity more efficiently.

So there you have it four points of view about AT&T's new data plans. What's your take iPhone users? Would AT&T's new data plans force you to rethink your data usage if you gave up your unlimited plan?

The Palestinians cannot be hammered into submission

2010-06-04T09:57:00.000-07:00

The Palestinians cannot be hammered into submission
By Philip Stephens
Copyright The Financial Times Limited 2010
Published: June 3 2010 21:11 | Last updated: June 3 2010 21:11
http://www.ft.com/cms/s/0/a3936062-6f3d-11df-9f43-00144feabdc0.html

Benjamin Netanyahu’s government sees the world through the prism of force. Only when Israel’s enemies have been crushed will it contemplate talking to them. Power has thus become the enemy rather than an instrument of peace. A rhetorical willingness to negotiate has been emptied of meaning.

This week’s attack on the flotilla of ships carrying humanitarian aid to Gaza fits a familiar pattern. The killing of nine activists by the commandos who boarded the Turkish-flagged lead ship was doubtless unintentional. But the nature of the raid testified to a deep contempt on the part of the Israeli administration for the norms of international behaviour.

The incident has brought back into focus a choice that the international community – above all the US and Europe – would rather put to one side. Israel’s friends can continue to wring their hands in half-condemnation of its military excesses while doing little to advance negotiations with the Palestinians. Or they can set out the terms of a settlement that would guarantee Israel its security and the Palestinians a state.

At first glance, the most startling thing about the assault on the aid convoy was that it was so badly bungled. Yet even that was not entirely surprising. The days when Israel’s military was lauded for precision as well as prowess have long passed. Recent wars in Lebanon and Gaza have been military failures and public relations disasters. The assassination in Dubai of a Hamas leader exposed the carelessness as much as the ruthlessness of Israel’s secret services.

The international outrage at this week’s incident has rightly focused attention on the blockade by which Israel has imprisoned 1.5m Palestinians in the crowded strip of land that is Gaza.

The suffering inflicted by this collective confinement has been well documented by the United Nations and by aid agencies. Palestinians are denied vital medical supplies as well as adequate food and water. An embargo on building materials means that neighbourhoods reduced to rubble during the 2008-09 invasion remain just that – rubble.

The blockade has left Israel in breach of yet another UN resolution and, even before this week, had severely damaged its most important regional relationship. Israel’s ties with Turkey long represented an important strategic bridge to the Muslim world. The bridge has been blown up by the deaths and injuries inflicted on Turkish citizens.

All this, of course, will have made it harder for the US and its allies to secure support in the UN Security Council for more sanctions against Iran. Mr Netanyahu says Tehran’s nuclear ambitions pose a mortal threat to the region. His treatment of Palestinians weakens efforts to curb the Iranian programme.

For what? The punishment of civilians in Gaza in the name of self-defence is nothing if not self-defeating. Its principal purpose is political – to show Mr Netanyahu’s domestic constituency that Hamas is being “punished” for its imprisonment of an Israeli soldier.

To the contrary, Hamas is strengthened by the siege. It continues to get weapons through the tunnels on the Egyptian side of the border. It has been gifted a stranglehold over the economy of Gaza and has seen its political legitimacy rise among Palestinians radicalised by their misery.

None of this is to side with those who want to wage war against Israel; rather it is to point out the consequences of Mr Netanyahu’s policy. To quote Hillary Clinton, the US secretary of state: the blockade is “unsustainable and unacceptable”. William Hague, Britain’s foreign secretary, tellingly has chosen the same phrase, arguing the restrictions are inimical to Israel’s security.

But wait, I hear Israeli officials say. The international community should recognise the distinction Israel makes between the Palestinian Authority on the West Bank and Hamas in Gaza. Mr Netanyahu would open talks tomorrow with Mahmoud Abbas, the Palestinian president. Hamas refuses to accept the existence of the state of Israel.

These things are true as far as they go. Mr Netanyahu has been dragged, albeit kicking and screaming, into signing up for a two-state solution. But talks are not the same as negotiations.

Mr Netanyahu’s refusal, in spite of intense pressure from the US administration, to halt the colonisation of the West Bank and East Jerusalem speaks to a mindset that views talks as a substitute for, rather than a path to, a peace accord. So too does the heavy emphasis he invariably places on the suffocating control Israel would exercise over any Palestinian state.

Barack Obama has persevered with the effort to get Mr Netanyahu and Mr Abbas to the table. Senator George Mitchell, the US special envoy, shuttles between the two sides in so-called proximity talks.

But the US administration has refused thus far publicly to acknowledge what its senior officials privately concede: that those elements of Hamas willing to forsake violence cannot be excluded from an eventual Middle East settlement.

For its part Mr Netanyahu seems indifferent to isolation – to the fact that by frustrating Israel’s friends it gives succour to its enemies. He appears oblivious to the reality that Israel is weakened by a reflex resort to force; and that his intransigence offers cover to those Palestinians who refuse to renounce violence.

The options of the US and Europe are limited in such circumstances, though they should certainly step up their demands that Israel respect international law. Beyond that, Mr Obama should test the intentions of Hamas – above all the willingness of its leadership to put aside violence. Ostracising Palestinian militants merely provides them with an excuse not to confront such choices.

Most importantly, Washington and its European allies must be ready to put before the UN the outlines of a peace settlement. There would be few surprises in such a document – the basic architecture of two states based around 1967 borders with a shared capital in Jerusalem has not changed in decades.

It is time, though, for Israel’s friends to set out the terms formally and to embed them in a UN resolution. I fear Mr Netanyahu is unlikely to grasp the damage done to Israel’s interests by its shoot-first policy. But there will come a time when Israel has a government that recognises the self-defeating futility of indiscriminate force.

philip.stephens@ft.com

More columns at www.ft.com/philipstephens

Google to hand over intercepted data

2010-06-04T09:53:00.000-07:00

Google to hand over intercepted data
By Maija Palmer and Lionel Barber in London
Copyright The Financial Times Limited 2010
Published: June 3 2010 23:04 | Last updated: June 3 2010 23:04
http://www.ft.com/cms/s/2/db664044-6f43-11df-9f43-00144feabdc0.html

Google will begin handing over to European regulators the rogue data it intercepted from private WiFi internet connections within the next two days, in an effort to defuse growing controversy over its latest privacy blunder.

Eric Schmidt, chief executive, said the world’s largest internet company would hand over information initially to the German, French and Spanish data protection authorities. Germany is considering a criminal investigation into the practice. Google faced a stand-off with Hamburg privacy authorities last week over whether it would be legal to hand over the rogue data. It now appears willing to reach a compromise.

The company will also publish the results of an external audit into the practice, in which cars photographing streets for Google’s Street View service ended up also collecting snippets of personal information from unsecured WiFi networks.

Mr Schmidt admitted he could not rule out the possibility that personal data such as bank account details were among the data collected.

“We screwed up. Let’s be very clear about that,” Mr Schmidt said. “If you are honest about your mistakes it is the best defence for it not happening again.”

Mr Schmidt also said the company would conduct an internal review into all its privacy practices, checking all of the codes related to collecting data. It will reveal the results of this within the next month.

There is also an internal investigation being conducted against the male software engineer responsible for the rogue code, which was in “clear violation” of Google’s rules.

Mr Schmidt believes transparency will help it regain user trust. However, he was adamant that the company culture, which allows engineers freedom to create new products and services, would not change.

The “20 per cent time” during which employees are allowed to pursue their own projects, for example, will remain in place and there is no plan for an overall audit of these schemes.

“It would be a terrible thing to put a chilling effect on creativity,” Mr Schmidt said.

He said it was not clear whether the rogue Street View code, which one of its engineers devised while driving around the Stanford University campus checking for WiFi connections, was a “20 per cent time” project. He is also convinced that Google’s mission to index all the world’s information is valid.

“You are better off having a company operating on a set of principles, that you can at least model, than a political process, which clearly does not produce rational outcomes,” Mr Schmidt said.

Google also faced privacy concerns over the launch of its Buzz social networking service earlier this year, and over a recent hacker attack on its computer systems. However, Mr Schmidt said data retained by Google was more secure than that kept by individuals and companies on their own computer systems.

US manufacturers cautious on recovery

2010-06-04T09:52:00.001-07:00

US manufacturers cautious on recovery
By Hal Weitzman in Chicago and Jeremy Lemer
Copyright The Financial Times Limited 2010
Published: June 3 2010 23:39 | Last updated: June 3 2010 23:39
http://www.ft.com/cms/s/0/5c0964e4-6f5b-11df-9f43-00144feabdc0.html

When Boeing, the world’s second biggest aircraft-maker, announced this year that it planned to increase production of its 777, 747 and 737 models ahead of schedule, it was a positive sign for global industrial demand.

Randy Tinseth, vice-president of marketing for Boeing’s commercial arm, deemed 2010 “the year of overall economic recovery” and said the company was anticipating greater customer demand for aircraft.

Yet, as it readies itself for the production increases, Boeing is not only holding off on hiring significant numbers of new employees, it is completing a job-cutting plan that will see the company shed more than 10,000 positions – the vast majority of them in the US.

As the US releases closely watched non-farm payroll figures on Friday, companies such as Boeing which are cutting jobs are likely to appear the exception. Economists expect the report to show that the US economy added more than 500,000 jobs in May, a sharp increase on the 290,000 jobs that were added in April.

While much of the rise relates to a one-off increase in hiring of census workers by the US government, the manufacturing sector is expected to add some 30,000 new jobs. Manufacturing has played a critical role in job creation as the recovery has started to establish itself more firmly in the US.

Since December 2009, the sector has helped lead the way for the broader economy, rebounding sharply and adding a little more than 100,000 jobs out of a total increase of about 573,000.

Yet if Boeing – one of the US’s biggest manufacturers and exporters – is being cautious, it suggests that the industrial sector may not be able to bear the job-creation expectations that have been thrust upon it.

“It is difficult to imagine the pace of downsizing slowing even further, considering that the economy, while recovering, is still in a relatively fragile state,” said John Challenger, chief executive officer of Challenger, Gray and Christmas, the placement company.

One factor that may restrain hiring in the manufacturing sector is greater productivity. Non-farm productivity rose at an annualised rate of 3.6 per cent in the first quarter, better than the 2.5 per cent increase most economists had expected. “Companies continue to squeeze quite a bit of output from only small increases in hours worked,” observed analysts at Goldman Sachs.

Boeing’s reluctance to wade into the hiring pool stems in part from productivity improvements resulting from capital investment and evolving production techniques, said Tim Healy, a company spokesman.

Other manufacturers have used the recession to reassess the global distribution of their workforce. Caterpillar, the world’s biggest manufacturer of earth-moving equipment, shed 19,000 full-time positions and 18,000 contract-worker jobs last year. This year, it has announced a plan to hire back 9,000 workers, but two-thirds of them will be outside the US, in markets such as Asia and Latin America, which have driven demand for its products.

As that experience suggests, much of manufacturing’s recent strength has been built on sales abroad. The export component of the Institute for Supply Management’s manufacturing index climbed to its highest reading in two decades in May. “This is good news for manufacturers since manufacturing dominates US exports [59 per cent] and more than a quarter of manufacturing employment is supported by exports,” said David Huether, chief economist at the National Association of Manufacturers.

However, the US export drive could be damped by contracting European demand and a possible slowdown in Chinese industrial demand.

Back in the US, some stimulus spending is starting to be exhausted, while the recently expired new homebuyers’ tax credit is expected to retard growth in new home sales.

Industrial hiring is starting again from a low base. Since the start of the recession, US manufacturers have cut more than 2m factory jobs. Many will never be replaced. Mr Huether believes that only 30 per cent will come back over the next six years. IHS Global Insight, a research company, predicts that perhaps half of the lost jobs may return.

But even if growth and job creation in manufacturing – in the US and elsewhere – slows somewhat, most economists expect the trend to continue. JP Morgan estimates global industrial production will grow at an annualised rate of 6 per cent in the next quarter.

Microsoft chief defends Windows’ future

2010-06-04T09:50:00.001-07:00

Microsoft chief defends Windows’ future
By Joseph Menn in Los Angeles
Copyright The Financial Times Limited 2010
Published: June 3 2010 20:17 | Last updated: June 3 2010 20:17
http://www.ft.com/cms/s/2/2660b22c-6f3b-11df-9f43-00144feabdc0.html

Steve Ballmer, chief executive of Microsoft, on Thursday gave a spirited defence of the software company’s strategy and the future of its Windows operating system, following an assertion from Steve Jobs earlier in the week that personal computers that run it are in permanent decline.

Responding to the declaration made on Tuesday by the Apple founder, that the PC era was drawing to a close, Mr Ballmer admitted that the world of computers was changing rapidly, but said there would continue to be general purpose computers for many years: “They will continue to be the mass populariser of things people want to do with their information.

“The PC as we know it will continue to morph,” Mr Ballmer said during an on-stage interview.

“Some will have a keyboard, some won’t have a keyboard.”

Mr Ballmer’s comments at the D: All Things Digital conference outside Los Angeles were delivered on the same stage where Mr Jobs struck a responsive chord among those attending when he contended that the iPad tablet computer, powerful smartphones and other devices would far surpass desktop and laptop PCs.

Mr Ballmer, who also conceded that Microsoft had “missed a cycle” on mobile phones, sought to broaden the definition of a PC to include tablets. He added that Windows would be increasingly modified and optimised for various functions and different types of hardware.

“To a man with a hammer, every problem looks like a nail,” he said. “We have our hammer [with Windows],” while Apple had its own hammer with the iPhone operating system that it was expanding to support the iPad.

In fact, he argued that Apple’s push for that operating system meant that its own Mac computer would fade away.

“It’s not about Mac and PC any more, it will be about the thing that replaces the Mac,” he said. “The race is on.”

Mr Ballmer said he was disappointed that his company’s software was only the fifth most popular for smartphones, but said the rapid changes in leadership in that industry meant that Microsoft had a good opportunity to come back.

The next mobile version of Windows is to be released for the holiday season, and Mr Ballmer said last month he would assume direct supervision of the company’s phone and entertainment divisions.

Mr Ballmer also took a swing at Google’s dual efforts to expand in phones with its Android operating system, and to more powerful devices with the nascent Chrome operating system.

“Having two things is not an aid” to developers, he said. “Make a bet, tell people what you believe in and go do it.”

G20 to delay tough bank regulations

2010-06-04T09:48:00.000-07:00

G20 to delay tough bank regulations
By Chris Giles in Busan
Copyright The Financial Times Limited 2010
Published: June 4 2010 12:59 | Last updated: June 4 2010 15:14
http://www.ft.com/cms/s/0/17d4ae9e-6fcb-11df-8fcf-00144feabdc0.html

Group of 20 finance ministers are set to delay the implementation of tougher regulations for the world’s banks as splits emerge over the scope of the new regulations.

Officials and ministers from the G20 group of industrialised nations, meeting in Busan, South Korea, acknowledged there were still big differences on the “Basel III” proposals that are due to be finalised by November. The disagreements cover the scale, scope and timing of the increases in capital and liquidity banks will be required to hold, as well as the leverage they will be allowed.

In response to the splits, the UK and the US are offering to delay the implementation of the Basel reforms in a bid to ensure that the principles do not get watered down.

Speaking on the sidelines of the G20 finance ministers meeting, George Osborne, the UK chancellor of the exchequer, said: “One of the things I will be pressing for is that the agreements that were reached last year on capital, leverage and liquidity are now concluded. We want an end to the uncertainty.”

An aide to the chancellor said the UK was adamant that there needed to be no dilution of the principle that common equity should form the basis of new capital rules and other forms of hybrid capital should not be allowed to count, under those new rules, as being the same.

But the aide added that if this was agreed, it would be possible to have a discussion over the transition period before banks were required to meet the new standards.

The UK’s position chimes with that of the US and Canada. Jim Flaherty, Canadian Finance minister, said: “Some would like a shorter period [of transition], some would like a longer period. I think that can be worked out over time”.

On Wednesday, Tim Geithner, US Treasury secretary, said: “It is perfectly reasonable to use transition periods to make it easier for countries to adjust to what we believe should be a substantially more demanding, more ambitious set of constraints on leverage”.

Christine Lagarde, French finance minister, denied that France is trying to delay the process and said she hoped the reforms would be completed on schedule. But hinting at the disagreements on issues of substance on the definition of capital, she added: “We have to do a quality technical appraisal on the subject that is too complicated to be rushed through.”

Some G20 officials privately complain that France and Germany are seeking to reopen arguments thought to be settled last year in a bid to dilute capital requirements for their banks by allowing them to include deferred tax assets and minority interests in tier one capital.

The Basel rules were originally expected to be phased in by the end of 2012, but sources familiar with the discussions said that the latest idea was that the new rules were likely to be put in place between 2014 and 2016.

Another G20 source said that the transition period did not matter much because once the new regulations were agreed, banks would come under enormous pressure to meet them quickly or explain why they could not, even if the formal transition was much longer.

The new rules were always going to be phased in and Nout Wellink, chairman of the Basel Committee on Banking Supervision, told the Financial Times last month that a longer-phase-in period might be needed to minimise disruption.

Banks are actively preparing to launch a large lobbying effort in the coming week to press their case for less stringent regulations, arguing that great economic harm would result from too stringent rules.

The banks’ analysis is not accepted by regulators with Stephen Cecchetti, the chief economist of the Bank for International Settlements, telling the FT last week that their “doomsday scenarios” were based on their assuming “the maximum impact of the maximum change with the minimum behavioural change”.

The splits within advanced countries about capital and liquidity requirements is repeated in the discussions over new levies on banks, which have been pushed back for lack of a consensus.

More countries are joining Canada in its rejection of the idea of a banking levy. Pranab Mukherjee, India’s finance minister, said: “Regulated mechanisms instead of taxing the banking system is better.”

Additional reporting by Christian Oliver in Busan

Worries over Hungary drive forint to one-year low

2010-06-04T09:46:00.000-07:00

Worries over Hungary drive forint to one-year low
By Neil Buckley, East Europe editor
Copyright The Financial Times Limited 2010
Published: June 4 2010 15:19 | Last updated: June 4 2010 15:19
http://www.ft.com/cms/s/0/467b07dc-6fe1-11df-8fcf-00144feabdc0.html

Hungary’s currency fell to a one-year low against the euro on Friday after a senior official warned for the second time in two days about the weakness of its economy and public finances.

The forint fell about 2 per cent after Peter Szijjarto, a spokesman for prime minister Viktor Orban, was quoted by news agencies as saying Hungary’s economy was in a grave situation and that a default was a possibility.

The currency extended its falls on Thursday following comments from Lajos Kosa, a vice-president of the ruling Fidesz party, that Hungary was in danger of suffering a Greek-style crisis.

Hungarian shares fell and spreads on five-year credit default swaps widened sharply after the new comments on Friday.

Investors were mystified by the signals coming from the Fidesz government, which is expected to unveil findings from a fact-finding committee on the state of the economy this weekend, followed by an economic action plan.

According to existing official figures, Hungary’s debt totalled 78 per cent of gross domestic product last year. That was little above the European Union average of 74 per cent and well below Greece’s three-digit total.

The Fidesz government, however, has called into question the previous administration’s fiscal figures and accused it of lying about the true state of the economy.

Mr Kosa’s remarks on Thursday, though they unsettled markets, were viewed by many as a verbal slip. But the refusal by the prime minister’s spokesman to distance himself from the earlier comments caused widespread consternation.

They came as investors were already anxious about the health of European banks and a weaker-than-expected US jobs report.

“The new [Hungarian] government needs to think a bit more clearly about communication with the market,” said Tim Ash, global head of emerging market research at Royal Bank of Scotland. “You simply cannot talk like this in these markets.”

The prime minister’s spokesman warned that Hungary’s budget deficit might be deeper than previously assumed, saying this year’s target of a budget deficit of 3.8 per cent of GDP was not credible.

China’s Military an Obstacle to Improving Relations, Gates Says

2010-06-04T09:44:00.001-07:00

China’s Military an Obstacle to Improving Relations, Gates Says
By THOM SHANKER
Copyright by The New York Times
Published: June 4, 2010
http://www.nytimes.com/2010/06/05/world/asia/05gates.html?hpw

WASHINGTON — China’s military is blocking efforts to improve ties with the United States that are growing more positive in other areas, particularly on political and economic issues, Defense Secretary Robert M. Gates said Friday.

“Nearly all of the aspects of the relationship between the United States and China are moving forward in a positive direction, with the sole exception of the military-to-military relationship,” Mr. Gates told reporters traveling with him to an Asian security conference in Singapore. He suggested that the military was out of step with the political leadership in Beijing.

Mr. Gates had also considered stopping in Beijing on this trip, making good on an invitation issued by Chinese military leaders who visited Washington last winter. But the invitation was canceled, or at least put on hold.

“We’d been hearing hints, in sort of sideline comments, that the visit was not likely to take place for some weeks,” Mr. Gates noted. “I’m disappointed only in the sense that I think that a more open dialogue with the Chinese about our military modernization programs, about our strategic view of the world, is a constructive and helpful thing in a relationship between two great nations.”

The Chinese military is especially outraged by a decision made early this year by the Obama administration to move forward with billions of dollars in arms sales to Taiwan, which China views as renegade province.

Mr. Gates is set to deliver the keynote address to the security conference on Saturday, and in previewing his comments, he noted, “As I’ll say in my speech, the Taiwan arms sales issue is far from new in this relationship.”

American arms sales to Taiwan approved by both the Bush and Obama administrations “were carefully calibrated to keep them on the defensive side,” Mr. Gates said.

He noted that those weapons deals had “not inhibited the development of the political and economic relationship.”

“If they want to single out the military side of the relationship as the place where they want to play this out, then so be it,” he said. “But it has not impeded the development of the relationship in other areas.”

Aubrey Belford contributed reporting from Singapore.

Japan Elects a New Premier, Fifth in Four Years

2010-06-04T09:42:00.000-07:00

Japan Elects a New Premier, Fifth in Four Years
By MARTIN FACKLER
Copyright by Reuters
Published: June 4, 2010
http://www.nytimes.com/2010/06/05/world/asia/05japan.html?hp

TOKYO — Naoto Kan, a plain-spoken finance minister with activist roots, was elected prime minister on Friday, making him the fifth Japanese leader in four years.

Mr. Kan, 63, won a vote in the lower house of Parliament and will now go through the formality of being appointed by Emperor Akihito.

Earlier Friday, hoping for a second chance to fulfill a historic election mandate for change, the governing Democratic Party selected Mr. Kan to succeed Yukio Hatoyama, who resigned on Wednesday over broken campaign pledges.

Mr. Kan faces an uphill task in trying to win back the public support that Mr. Hatoyama had squandered in months of indecision over the fate of an American military base. He must also help the party regain the momentum it had in August after winning a landslide election victory that ended a half-century of virtual one-party rule.

Known for his quick temper, Mr. Kan gained national attention in the mid-1990s when, as health minister, he exposed his own ministry’s use of blood tainted with H.I.V. In the Hatoyama administration, he also served as deputy prime minister and was a point man in the party’s push to rein in the secretive central ministries that have run Japan since World War II.

The cabinet resigned Friday morning to clear the way for the new prime minister to appoint a new cabinet.

Before Friday’s party vote, Mr. Kan vowed to refocus the party on its original goal of ending Japan’s two-decade stagnation. He said he would do this by tackling two of Japan’s most daunting problems, its anemic growth rates and ballooning public debt.

“I will carry on the torch of reviving Japan that the Democratic Party received from the people,” he said.

Touching on his predecessor’s difficulties, he said he would honor an agreement to relocate a United States Marine air base on Okinawa and work to rebuild trust between the allies. But he also said he would place equal emphasis on improving ties with China, with whom Japan now has larger trade relations.

In Friday’s party vote, Mr. Kan defeated Shinji Tarutoko, a relatively unknown legislator backed by the party’s shadowy power broker, Ichiro Ozawa. Mr. Kan won with 291 votes to Mr. Tarutoko’s 129.

Mr. Kan promised to move the party away from the sort of money politics that the scandal-tainted Mr. Ozawa had come to represent.

By choosing Mr. Kan, the party was apparently betting that his background as a former civil rights activist and veteran battler of Japan’s powerful bureaucrats would make him a more forceful leader than the indecisive and professorial Mr. Hatoyama.

Mr. Kan is the latest in what has been nearly a turnstile procession of prime ministers in recent years. Shinzo Abe served exactly one year, resigning under pressure in September 2007. He was succeeded by Yasuo Fukuda and then Taro Aso, each of whom served about one year. Mr. Hatoyama took office on Sept. 16, 2009.

New York Times Editorial: A Credible Investigation

2010-06-04T09:36:00.000-07:00

New York Times Editorial: A Credible Investigation
Copyright by The New York Times
Published: June 3, 2010
http://www.nytimes.com/2010/06/04/opinion/04fri3.html?th&emc=th

Israel’s government has decided to tough out the criticism of its attack this week on a six-ship flotilla trying to run the Gaza blockade. The story, and the anger, aren’t going away.

The news wires on Thursday were filled with pictures of grieving mourners as Turkey held funerals for 8 of the 9 activists killed on the lead ship. Some of the more than 600 activists from 42 countries, released from Israeli detention, are accusing Israel of a litany of abuses. Israel’s charges that its commandos were attacked and shot at by some of the ship’s passengers are being ignored by everyone except its most passionate defenders.

We still don’t know what happened on that ship. But we are sure that before things get even more out of control, the world — and Israel — needs an impartial international investigation. Instead of pressing for that, the Obama administration is encouraging Prime Minister Benjamin Netanyahu’s misguided belief that Israel can lead its own probe with international participation. That is not going to suffice.

Some Israeli officials are pointing to South Korea, which recently conducted an investigation, with the participation of five other countries, into the sinking of a South Korean warship. There is a big difference: Seoul was examining North Korea’s behavior not its own.

As Israel resists an independent inquiry, there are other parties eager to do their own investigations. The United Nations Human Rights Commission, whose 2009 probe of the Gaza war accused Israel and the Palestinian-faction Hamas of war crimes, has already announced its own probe of the flotilla debacle.

Israel needs to work with the United States to come up with a fair and independent investigatory body — and then cooperate fully. (It refused to cooperate with the Gaza war investigation that guaranteed that its side of the story wasn’t heard.) Our suggestion: Do it under the auspices of the so-called quartet — the United States, Russia, the European Union and the United Nations — that is already working on Middle East peace.

Until this incident is credibly investigated, there is little hope of moving forward with Israeli-Palestinian peace talks or efforts to curb Iran’s nuclear program.

New York Times Editorial: We Might Decide to Fly

2010-06-04T09:34:00.000-07:00

New York Times Editorial: We Might Decide to Fly
Copyright by The New York Times
Published: June 3, 2010
http://www.nytimes.com/2010/06/04/opinion/04fri1.html?th&emc=th

It would be nice if airlines would commit on their own to treat their passengers right: ensuring, at a minimum, that if you buy a ticket you get a seat and have a reasonable expectation of reaching your destination on time and with your luggage. In today’s world — where air travel is more of an ordeal than an adventure — this is, unfortunately, not the case.

The Obama administration’s new consumer protections for beleaguered airline passengers — including higher compensation for travelers bumped from oversold flights and prominent disclosure of all service fees — are much needed.

The new regulations, proposed on Wednesday, are a response to the many problems of modern air travel, including an enormous increase in the number of passengers bumped by airlines because of overbooked flights.

The Department of Transportation wants to raise the required payments to stranded passengers to a maximum of $1,300 — up from a maximum of $800 — depending on how long the wait was for another flight. Passengers who bought tickets with frequent-flier miles would be entitled to compensation. And airlines would have to inform passengers that they could receive cash — not just tickets on the same airline.

One of the biggest frustrations of travel is that airlines seem to intentionally keep passengers in the dark about pretty much everything. Airlines would now be required to advise passengers about flight delays or cancellations promptly and prominently advertise baggage fees. Airlines and air tour operators also would be banned from increasing the price of a ticket after a customer had paid for it. And carriers would be forced to include all these obligations in the legal contracts of carriage that govern the terms of the ticket purchase.

Airlines have not responded to the proposals, which the government wants to introduce in the fall, following a period of public consultation. The industry is likely to push back hard. Airlines complain that delays and other inconveniences are often not their fault but the result of inadequate airport infrastructure or other causes. They argue that regulations will only lead to increased prices and other unintended consequences.

These arguments should not stay regulators’ hands. It is true that many airlines are barely profitable. But the road to profitability should not be built on stranded passengers and crummy service. And the warnings about the unintended consequences of regulation should be taken with a large grain of salt.

For instance, airlines often dealt with airport congestion by keeping fully loaded flights sitting on the tarmac until they could get a take-off slot. In late April, a new rule went into effect that set a three-hour limit on the time airlines can keep passengers waiting on the tarmac before letting them get off. That same month, airlines’ punctuality rose, three-hour delays were virtually wiped out and despite airlines’ warnings that flight cancellations would rise, they plunged. This might be a coincidence, but we suspect not.

U.S. Adds Jobs in May, but Private Hiring Disappoints/A Jobless Rate Still Unaffected by New Hiring

2010-06-04T09:32:00.000-07:00

U.S. Adds Jobs in May, but Private Hiring Disappoints
By CHRISTINE HAUSER
Copyright by The The New York Times
Published: June 4, 2010
http://www.nytimes.com/2010/06/05/business/economy/05jobs.html?hp

Employers added 431,000 nonfarm jobs nationwide in May, the biggest increase in a single month in a decade, the Labor Department said Friday. But the bulk of the growth was in government jobs, driven by hiring for the 2010 census, and private-sector job growth was weak.

The unemployment rate fell to 9.7 percent nationwide, from 9.9 percent in April, the department said.

The figures for May represented the fifth consecutive month that payrolls have risen, but fell below analysts’ expectations that 540,000 jobs would be added to the economy. The shortfall sent stocks down sharply on Wall Street. Most of the private-sector gains were in manufacturing, but over all, the figures suggest that nongovernment hiring was weak.

Altogether, 411,000 of the jobs added were for census workers whose positions will disappear after the summer.

President Obama tried to put a positive spin on the jobs report, telling workers at a trucking company in Hyattsville, Md., that the addition of 431,000 new jobs in May demonstrated that the economy was “getting stronger by the day.”

Mr. Obama acknowledged that temporary workers for the Census Bureau accounted for many of the additional jobs, but he said that hiring in the private sector was also growing. He noted that there has been jobs growth for the last five months.

“These numbers do mean that we are moving in the right direction,” Mr. Obama said. But, he added: “There are going to be some ups and downs.”

In April, nonfarm payroll employment grew by 290,000, but the unemployment rate rose that month because of a surge in the labor force.

“The U.S. employment data was disappointing,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman, in a statement. Mr. Chandler noted that private-sector job creation, a crucial measure, reached only 41,000, compared with expectations for 180,000 and a three-month moving average of 155,600.

“The fact that the unemployment rate ticked down is not really good news,” he added, “as the decline in unemployment was not a function of more jobs but a reflection of people leaving the work force.”

The May figures suggest that the job market still has a long way to go. The economy has to add more than 100,000 jobs every month to absorb the growth in the working-age population. And they are joining a labor pool that is already swollen with 15 million Americans looking for work.

About eight million people have lost their jobs since the start of the recession in December 2007.

“These new data do not present a picture of a healthy private-sector growth, and nothing closely resembling the job growth needed to dig us out of our very deep hole,” Lawrence Mishel, the president of the Economic Policy Institute, said in a statement.

In addition, the quality of the jobs was important as well.

“You would need to be producing 150,000 to 200,000 jobs a month to be making a dent in this,” said Doug Roberts, chief investment strategist for Channel Capital Research.

“If you are getting people back to work but they are earning less, they are spending less,” Mr. Roberts said. “It does not affect the underlying condition.”

Economists are hoping that the recovery of the job market will lead to improved consumer spending, which accounts for 70 percent of the economy.

But there are issues of how sustainable the job growth is. The Labor Department report said that private-sector job growth was strongest in the temporary help and manufacturing sectors. There was a net gain of 31,000 temporary service jobs in May, meaning employers are not entirely convinced they want to commit to permanent hires. And the census positions are temporary.

Employment by all levels of government rose by 390,000 in May. Jobs with state and local governments, which are grappling with budget cuts and the prospect of job losses, decreased by 22,000 in May.

Analysts said that the figures for May showed how important government spending has been in supporting the domestic economy.

“Without the government, the total number of payrolls would have barely increased by enough to cover population growth,” said Guy LeBas, the chief fixed-income strategist for Janney Montgomery Scott, in a research note.

The new job figures suggest that there are still headwinds to face, some of them from abroad, as the economic recovery progresses.

One area of potential growth is in the manufacturing sector. Manufacturers are slowly making gains in their businesses and that could lead to an uptick in future hiring.

The Manufacturers Alliance/MAPI, a trade association, said this week that the sector was rebounding, based on low consumer inventories and strong gains in exports. Manufacturers are “bullish on job growth in a sector that is not known for job creation,” said Daniel J. Meckstroth, the group’s chief economist. “The supply-chain pipeline is filling with orders and manufacturing firms are reluctantly, but out of necessity, adding staff,” he said.

Investors have been watching the job figures for signs of health in the economic recovery. Corporate earnings for the first quarter have been generally stronger than expected, which raises hopes for more jobs. But there are still uncertainties from the European debt crisis hanging over the financial sector, and how that will affect credit availability. A further strengthening of the dollar could lead to export stagnation and hit the bottom line of companies that rely on sales abroad.

President Obama called for an extension of unemployment benefits, and Secretary of Labor Hilda L. Solis called on Congress to also extend health coverage.

“We continue to push for programs to help unemployed workers make it through this difficult time,” Ms. Solis said in a statement. “I call on Congress to extend the unemployment insurance and COBRA subsidy provisions in the Recovery Act through the end of the year.”

The Labor Department figures show that the number of those unemployed for a long time continued to grow. Almost 6.8 million had been out of work for more than six months in May, and the average length of time that people remained out of work grew to 34.4 weeks, up from 33 weeks in April. When that figure reached 31.2 weeks in March, it represented the longest period since 1948, when the government started to keep track of such records.

The so-called underemployment rate, however, fell to 16.6 percent in May from 17.1 percent in April. The rate includes people with jobs whose hours have been cut, and those who accepted part-time jobs because they could not full-time work. The rate was 16.9 percent in March.

That means 8.8 million people were working part-time in May who preferred full-time work, compared with 9.15 million in April.

Anthony Watler of Rosedale, Queens, might find himself in that category. This week Mr. Watler, 58, put on a fresh shirt and suit and went to a Suffolk County job fair to look for work as an accountant, a job he lost when he was laid off in 2008, earning $80,000 a year.

After working in a temporary part-time job, Mr. Watler went on unemployment in January and uses the $425 a month in benefits while drawing down from his retirement account to make monthly mortgage payments of $2,000.

He has searched for work on the Internet and gone on job interviews.

“I always feel hopeful,” Mr. Watler said. “Until I get home and a couple of weeks pass and I don’t hear anything.”

On Wednesday he filled out an application and left his résumé at the job fair. He was told by one company that it did not need an accountant now, but he said he was willing to do whatever that business or any other had to offer.

“I would accept anything that is above unemployment,” he said.

Helene Cooper contributed reporting.

A Jobless Rate Still Unaffected by New Hiring
By MOTOKO RICH
Copyright by The New York Times
Published: June 3, 2010
http://www.nytimes.com/2010/06/04/business/economy/04workers.html?th&emc=th

SCHAUMBURG, Ill. — After hemorrhaging jobs for months, the economy is finally starting to add them. Yet the unemployment rate is not really budging because of people like Regina Myles.

Ms. Myles, 51, has been out of work for three years. After a grueling job search yielded 150 interviews but no offers, she simply stopped looking last fall. Then this spring, with a $3,000 government-funded grant to help pay for a training course at a local beauty school in this Chicago suburb, she began applying for jobs online and in stores again.

“I just know if I am given this chance to finish this course I can make it,” Ms. Myles said after practicing a facial on a classmate at the International Skin Beauty Academy. “I feel like it is my time now.”

Millions of people became so discouraged during the brutal recession that they gave up the job search altogether. Some entered training programs to redirect careers; others focused on caring for family members. Some college graduates, despairing of their prospects, enrolled in graduate school, rather than hunt for jobs.

Now many of them are beginning to look for work again, encouraged by four consecutive months of job growth and reports of a strengthening economy. But the initial return to the labor force may prove dispiriting, since so many people are already chasing too few jobs.

Because the government does not count people as unemployed unless they say they are actively searching for work, many discouraged people have been hiding in the shadows.

Heidi Shierholz, an economist at the Economic Policy Institute in Washington, estimates about 2.4 million “missing workers” either left the labor force or did not enter it in the last 28 months. That is on top of the 15.3 million people who are officially counted as unemployed.

Although economists expect the jobs report scheduled for release on Friday to show that employers added perhaps half a million jobs in May, that kind of growth would have to be sustained for some time to absorb the backlog.

“The problem is if they come back into the labor force because they perceive that jobs are being offered again, but they come in at a faster rate than those jobs are really being offered,” said Ian Shepherdson, chief United States economist at High Frequency Economics.

In other words, just because it has rained for a few days does not mean the drought is over.

In April, those people who started looking again helped push the unemployment rate to 9.9 percent, from 9.7 percent in March and close to this recession’s peak of 10.1 percent last October.

If, as some economists predict, the unemployment rate edges up or remains stubbornly high, that could prove a political problem for the Obama administration heading into the fall midterm elections.

To a certain extent, the bad news is also the good news. The fact that people are looking for work again “is a vote of confidence in the overall economy,” said Ken Goldstein, an economist at the Conference Board.

Ms. Myles, who speaks in a low timbre and is quick to smile, is trying to remain optimistic during her renewed job hunt.

After a bitter divorce in 2007, she lost her job managing a tax preparation office that she ran with her ex-husband for eight years. To supplement $900-a-month alimony payments, she applied for everything from secretarial positions to fry cook at a McDonald’s. She tried for so many jobs online, she said, “I think my résumé is on YouTube at this point.”

Last fall, she thought she was finally close to getting hired when she was called back for a third interview for a clerical job at a pharmaceutical company.

When it did not work out, she hit bottom. For weeks, she sat at home, crying and wondering how she would pay her rapidly accumulating bills.

Around the holidays, a neighbor told her J. C. Penney was hiring, and Ms. Myles decided to dip her toe back into the job market. She still did not have any luck, but early this spring, she pulled together the application for a government grant to help pay for beauty school.

When she graduates in October, Ms. Myles expects her new skills will help her find a job. “People have a tendency to figure out a way to do our beauty products,” she said.

In the Chicago area, which lost 360,000 jobs — or about 8 percent of its jobs base from the beginning of 2008 through 2009, according to an analysis by Moody’s Analytics — those re-entering the market confront a sobering landscape.

At a job fair last week in Palatine, another Chicago suburb, Matt Landmeier, a recruiter for Just Energy, a local natural gas and electricity supplier, collected 110 résumés from a line of half-haggard, half-hopeful candidates. A majority told him they had been out of work a year or longer.

Recruiters and economists worry that those who quit the labor force for a while will have difficulty competing with younger workers or people who have been out of work for only a short period.

Even with a robust recovery that creates three or four million jobs in the next year, said Lawrence F. Katz, professor of economics at Harvard, “most of those jobs will go to new entrants and short-term unemployed people.”

That concern is not lost on Roman Landa, a former mortgage broker in Glenview, another Chicago suburb, who suspended his job search in frustration early this winter after applying for nearly 700 positions in three years.

Because he has been out of finance for so long, he fears it is getting harder to go up against younger workers. “It’s like a boxer who is closer to retirement thinking he is as good as he was when he was 20 years old,” he said.

Mr. Landa, 36, who stayed home with his six-year-old son for two months without looking for work, started searching again in April. He has a promising lead, but if he does not receive an offer soon, he plans to enlist in the Army. “I need to take care of my family,” he said.

In some industries, the outlook is improving enough for re-entrants to find jobs. In April, manufacturers added 44,000 jobs, the largest increase since 1998. In Rockford, a manufacturing outpost west of Chicago, Donald Ritter, who was laid off 14 months ago, recently found a temporary job operating a machine for a hydraulics company.

Mr. Ritter, a boyish 52, had stopped submitting applications in the fall, when the want ads dried up. “I was not applying for work because there was no work,” he said.

Last month, he noticed an advertisement for eight immediate openings at the hydraulics firm, and pounced. He started there a few weeks ago at $13 an hour, a significant cut from the nearly $20 he was making a year ago. “Essentially, I am just going to get caught up by the time I am supposed to retire,” he said.

Ms. Myles, too, is discouraged by job prospects that will barely cover her expenses. But on a recent afternoon, she was determined not to lose hope again.

After finishing classes at the beauty academy, she drove to a nearby strip mall and dropped into an outlet of Tuesday Morning, a retailer that sells closeout housewares. A manager directed her to a computer kiosk in the corner.

In response to the question “What are your hourly rate expectations?” Ms. Myles quipped, “$4,000 an hour?” but typed in $12.

Once she finishes beauty school, Ms. Myles figures that at the least, she can administer facials and wax treatments from home.

For now, she is on the hunt. After finishing at Tuesday Morning, she spotted a Barnes & Noble across the parking lot. “I think I’ll go apply there,” she said, and sped off.

Cap Is Collecting Oil, but Result of Effort Is Still Unclear

2010-06-04T09:29:00.000-07:00

Cap Is Collecting Oil, but Result of Effort Is Still Unclear
By MICHAEL COOPER, PETER BAKER and HENRY FOUNTAIN
Copyright by The New York Times
Published: June 4, 2010
http://www.nytimes.com/2010/06/05/us/politics/05obama.html?th&emc=th

NEW ORLEANS –The cap that has been placed over the leaking oil well a mile beneath the Gulf of Mexico has begun to collect some of the oil, officials said Friday, but it was not yet clear whether the latest attempt to contain the spill would succeed.

Adm. Thad W. Allen of the Coast Guard, who is commanding the federal response to the disaster, said some oil had been collected in the cap and was beginning to funnel up to the surface. But he noted that a great deal of oil was still escaping, by design, through vents in the cap that were intended to let oil out in order to keep cold Gulf water from rushing in and forming icy hydrates that could block the flow of oil to the surface.

So it will not be clear if the cap is sealed tightly enough to prevent large amounts of oil from continuing to pour into the Gulf until those vents are closed, Admiral Allen said. He said that current plans call for closing those vents on Friday.

“Progress is being made,” he said during a morning telephone briefing with reporters. But, given the up and down nature of past efforts to contain the disaster, he hastened to add, “I think we have to caution against over-optimism here.”

He said a rough estimate of current collection would be about 42,000 gallons a day.

The news came as President Obama prepared to make his third trip to the Gulf Friday to assess the situation and meet with officials responding to the crisis. Mr. Obama canceled his trip to Australia, Indonesia and Guam late Thursday night.

While the White House statement offered no reason for scratching the Asia trip this time, officials in recent days had grown increasingly convinced that it was untenable for the president to leave the country for a week with the oil spill still unchecked.

Mr. Obama telephoned Prime Minister Kevin Rudd of Australia and President Susilo Bambang Yudhoyono of Indonesia to tell them he could not come after all, the White House said in a statement issued at midnight.

“President Obama expressed his deep regret that he has to postpone his trip to Asia that was scheduled for later this month,” the statement said. “The president looked forward to rescheduling so that he can visit both countries soon.”

In the Gulf, officials reported making some headway in the latest effort to place a cap over the well that would funnel at least some of the oil and gas to a ship at the surface. Earlier Thursday, 20-foot-long shears were used to snip the damaged riser pipe at the wellhead, and technicians began to lower the cap over it.

Appearing on NBC’s Today show Friday, Doug Suttles, BP’s chief operating officer of exploration and production, said it will be later in the day before they know how much is being captured.

"There is flow coming up the pipe. Just now, I don’t know the exact rate," Mr. Suttles said.

Live video feeds from the sea bed appeared to show oil spewing from valves at the top of the cap, as planned. As oil gradually begins to flow up through a pipe to the drillship, these valves would be closed. “It’s looking hopeful,” a BP spokesman said.

Mr. Obama’s decision to cancel his Asia trip underscored the way the oil spill is forcing the White House to recalibrate plans for this summer. BP and the government have given up trying to plug the leak and are focusing now on siphoning or containing it until relief wells can be completed, perhaps by August. As a result, the president faces another two months in crisis management before he can even turn his focus exclusively to cleanup and recovery.

White House officials said they will not let the focus on the oil spill detract from the rest of the president’s economic, legislative and foreign agenda, pointing out that he still seems likely to sign financial regulation reform by next month, push through his Supreme Court nominee and win sanctions against Iran at the United Nations Security Council.

“The American people don’t elect somebody, I think, that they don’t believe can walk and chew gum at the same time,” Robert Gibbs, the White House press secretary, told reporters earlier Thursday. “Sometimes it feels like we walk and chew gum and juggle on a unicycle all at the same time. I get that.”

But, he added, “there’s a whole lot of people working on a whole lot of things in the White House, and we’re able to do more than several things at once.”

To get through the crisis without letting it detract from the rest of the president’s agenda, the White House plans to try to wall off those dealing with the spill from the rest of Mr. Obama’s team, particularly John Brennan, the homeland security adviser, and Carol Browner, the energy and climate adviser. The White House is counting on a strong jobs report on Friday to reassure Americans that its programs are bolstering the economy.

Yet the president’s time and energy are finite and every day devoted to the oil spill is one that he cannot focus as much of his own resources on other issues. The juggling of his schedule Friday showed the complexities in store for the White House over the next two months – the president will visit a commercial truck dealership and truck parts supplier in Maryland to highlight the jobs report in the morning, then fly to New Orleans to assess the latest efforts to combat the spill in the afternoon.

This was the second time Mr. Obama has scrubbed the trip to Australia and Indonesia. He was originally scheduled to travel there in March but canceled at the last minute to stay in Washington to lobby for passage of his health care legislation. He also had passed up a trip to Indonesia in connection with a regional summit meeting held in Singapore in November 2009.

The White House announced no date for rescheduling the Australia-Indonesia trip. But Julian Aldrin Pasha, the spokesman for the Indonesian president, told the financial newspaper Bisnis Indonesia that it had been rescheduled for November.

At a separate event on Thursday, Mr. Obama announced he will visit India in November.

The Australia-Indonesia trip is the most prominent example so far of what will have to be sacrificed on the president’s agenda as a result of the spill. While not the highest foreign policy priority, the trip was considered important by administration officials because Australia is one of America’s strongest allies and because Indonesia is the world’s most populous Muslim nation. Mr. Obama also spent several years of his youth in Indonesia.

In its statement, the White House signaled that it was not abandoning its allies: “President Obama underscored his commitment to our close alliance with Australia and our deepening partnership with Indonesia. He plans to hold full bilateral meetings with Prime Minister Rudd and President Yudhoyono on the margins of the G-20 meeting in Canada.” The Group of 20 major industrial nations will be meeting in Toronto in late June.

But Mr. Obama has called the spill his “highest priority” and the White House understands it will absorb a considerable portion of the president’s time this summer. The failure to stop the leak after more than six weeks has fed concern about the administration’s powerlessness in the face of this crisis, and the White House has been determined to show that it is fully engaged.

Earlier on Thursday, the White House announced that it had sent a $69 million bill to BP for the first installment of clean up costs. The White House has made a point of criticizing BP lately and the Justice Department has opened criminal investigation into what caused the April 20 explosion that ultimately sank the Deepwater Horizon rig, killed 11 workers and touched off the leak.

Mr. Obama, who has also been confronted by questions about his cool public reaction, said Thursday night that he is “furious at this entire situation” but does not show it because it does not accomplish anything.

“I would love to just spend a lot of my time venting and yelling at people,” he said on “Larry King Live” on CNN. “But that’s not the job I was hired to do. My job is to solve this problem and ultimately this isn’t about me and how angry I am. Ultimately, this is about the people down in the Gulf who are being impacted and what am I doing to make sure that they’re able to salvage their way of life.”

Michael Cooper reported from New Orleans, Peter Baker from Washington and Henry Fountain from New York.

In Leaked Lecture, Details of China’s News Cleanups

2010-06-04T09:27:00.000-07:00

In Leaked Lecture, Details of China’s News Cleanups
By ANDREW JACOBS
Copyright by THe Associated Press
Published: June 3, 2010
http://www.nytimes.com/2010/06/04/world/asia/04china.html?th&emc=th

BEIJING — As the nation held its collective breath, China’s first astronaut, Yang Liwei, floated back to the motherland, having orbited Earth 14 times in the Shenzhou 5, or Divine Capsule.

It was October 2003, and the national broadcaster CCTV carried live coverage of the momentous event, from Mr. Yang’s famous pleasantries uttered in space — “I feel good” — to the instant that workers opened the capsule door to reveal the pale but smiling face of a hero, offering irrefutable evidence that China’s maiden manned space voyage had gone off without a hitch.

Or had it?

In a lecture he gave to a group of journalism students last month, a top official at Xinhua, the state news agency, said that the mission was not so picture-perfect. The official, Xia Lin, described how a design flaw had exposed the astronaut to excessive G-force pressure during re-entry, splitting his lip and drenching his face in blood. Startled but undaunted by Mr. Yang’s appearance, the workers quickly mopped up the blood, strapped him back in his seat and shut the door. Then, with the cameras rolling, the cabin door swung open again, revealing an unblemished moment of triumph for all the world to see.

The content of Mr. Xia’s speech, transcribed and posted online by someone who attended the May 15 lecture at Tianjin Foreign Studies University, has become something of a sensation in recent days, providing the Chinese a rare insight into how their news is stage-managed for mass consumption.

Titled “Understanding Journalistic Protocols for Covering Breaking News,” the speech was intended to help budding journalists understand Xinhua’s dual mission: to give Chinese leaders a fast and accurate picture of current events and to deftly manipulate that picture for the public to ensure social harmony, and by extension, the Communist Party’s hold on power.

Officials at Xinhua and Tianjin Foreign Studies University did not return calls seeking comment, making it impossible to confirm details of the talk, but many of the points Mr. Xia made are borne out in Xinhua’s coverage of the events he discussed.

Although it does not mention the staging of the landing for the cameras, Mr. Yang’s autobiography, published this year, describes the injuries he suffered during the flight, including the cut to his lip caused by a microphone. He also says that the pressure from the infrasound resonance during takeoff was excruciating.

“All of my organs seemed to break into pieces,” he wrote.

Mr. Xia’s journalism lecture, accompanied by a PowerPoint demonstration, included other examples of Xinhua’s handiwork, most notably coverage of ethnic rioting in the far west of China last summer that left nearly 200 people dead.

According to the transcript, Mr. Xia explained how Xinhua concealed the true horror of the unrest, during which the victims were mostly Han Chinese, for fear that it would set off violence beyond Urumqi, the capital of the Xinjiang region. Uighur rioters burned bus passengers alive, he told the class, and they raped women and decapitated children.

“Under those circumstances, it would have exacerbated ethnic conflicts if more photos were released,” he said.

But Xinhua also has another purpose — intelligence gathering — and two days later the agency’s reporters sprang into action, leaving a government-organized media tour to sneak into a hospital to photograph the bodies of those slain during a wave of bloodletting by Han Chinese after the initial burst of unrest. Those deaths, he told the class, were reported to Beijing but did not make it into official news reports.

It was after receiving such unadulterated “internal reference news,” he said, that President Hu Jintao flew home early from a meeting to deal with the crisis.

Xiao Qiang, an adjunct professor at the University of California, Berkeley, who often lays bare details of elements of Beijing’s propaganda machine on the Web site China Digital Times, said the seeming frankness of Mr. Xia’s words reflected how unapologetic Xinhua was in its mission and its methods.

“He’s basically telling these students that journalism in China is a big show, it’s fabricated, but in the end it’s all justified for the higher purpose of stability,” Mr. Xiao said.

The practice of massaging the message has become more nuanced since the days when disfavored leaders were airbrushed out of group photos or details of a disaster — like the extent of the damage caused by the 1976 earthquake in Tangshan that claimed a quarter-million lives — could simply be kept from the public.

These days, Xinhua and the Communist Party’s propaganda department to which it reports have become far more sophisticated, but the challenges they face have also become more daunting in the Internet age. Although government censors still require China’s main news portals to carry Xinhua dispatches on delicate matters like street protests or official corruption, censorship is de facto far less comprehensive online than in traditional media.

Postings about Mr. Xia’s journalism lecture were quickly deleted, for instance, but new transcripts kept appearing. By late Thursday, at least 50 accounts came up in a Google search.

For Mr. Xiao, the fact that the original posting had appeared at all was encouraging and suggested that some Chinese journalism students were still idealistic.

“Perhaps it shows that at least one of these young students was shocked by what he heard,” he said.

Li Bibo and Zhang Jing contributed research.

Thousands in Turkey Mourn Victims of Israeli Raid/Israel Signals New Flexibility on Gaza Shipments

2010-06-04T09:20:00.000-07:00

Thousands in Turkey Mourn Victims of Israeli Raid
By SABRINA TAVERNISE
Copyright by The New York Times
Published: June 3, 2010
http://www.nytimes.com/2010/06/04/world/europe/04turkey.html?th&emc=th

ISTANBUL — It was a day of mourning for Turkey on Thursday, as a crowd of several thousand people streamed down a central boulevard here, bearing eight coffins draped in Turkish and Palestinian flags, one of them carrying an American citizen.

The outpouring came on the fourth day of a political crisis between Turkey and Israel that has dragged relations between the countries to their lowest point in history. The return of the activists from the flotilla raided by Israel on Monday defused the immediate crisis, but Turkish officials made it clear that it was not over.

“Israel risks losing its most important friend in the region if it doesn’t change its mentality,” said Turkey’s prime minister, Recep Tayyip Erdogan, according to news reports. He called the commando action, in which nine people were killed, “a historic mistake.”

It has been a startling series of events for Turkey, a NATO member and long one of Israel’s closest allies in the Muslim world. But Turkey’s leaders have grown increasingly at odds with Jerusalem over what they believe is an untenable policy in Gaza, a territory run by Hamas, which Israel sees as doctrinally committed to its destruction. Mr. Erdogan has become a sort of folk hero in the Arab world for his open challenges to the government of Prime Minister Benjamin Netanyahu.

The raid served to deepen that divide.

“There is now civilian blood between the two countries,” said Soli Ozel, a professor of international relations at Bilgi University in Istanbul. “The natural arc of relations will have to change.”

President Abdullah Gul said on NTV television, “Turkey will never forgive this attack.”

In Istanbul, where most of the more than 400 Turkish activists were flown early on Thursday morning, traffic clogged the streets as protesters marched next to green Volkswagen vans bearing the coffins, each marked with a name and a city of origin, followed by Gaza in parentheses, denoting solidarity. Marchers wore green headbands, the color of Islam, and peddlers sold Palestinian flags for $3.

“God is great,” mourners chanted in Arabic along with Turkish slogans saying, “Damn Israel” and “An eye for an eye, blood for blood, revenge, revenge.” A woman in a black T-shirt, jeans and sunglasses wore a green headband with the words, “We are all Palestinians now,” echoing statements made after the Sept. 11, 2001, attacks in the United States in which Europeans proclaimed that they were “all Americans now.”

Among the dead was a young man with dual American and Turkish citizenship, Turkish and American officials said. He was identified as Furkan Dogan, a 19-year-old who was born in Troy, N.Y., and lived there as a small child, but later moved back to Turkey. His brother, Mustafa, told the Turkish news media that he was “clean-hearted with a happy face.”

In Washington, Secretary of State Hillary Rodham Clinton said that American officials had spoken to the family to express condolences and offer consular services, and that two other Americans had been wounded in the raid and a subsequent protest, The Associated Press reported. She repeated an earlier call for Israel to “conduct a prompt, impartial, credible and transparent investigation that conforms to international standards.” The United Nations has called for a full international inquiry into the raid, but on Thursday, Israeli officials rejected that demand, news reports said.

The Cihan news agency reported that Mr. Dogan died from bullet wounds to his head and chest, but a spokesman for Turkey’s Foreign Ministry could not confirm that. All nine deaths were caused by bullet wounds, the Turkish authorities said.

“We didn’t expect him to come back like this,” said Mr. Dogan’s brother, who was quoted in Zaman, a Turkish daily newspaper. “However, we were not sorry to hear that he fell like a martyr.”

Martyr is a word usually reserved for Turkish soldiers who die in battle, but has been used repeatedly to describe the dead in the flotilla raid, giving the word a new, Islamist meaning that not all Turks are comfortable with. “They are dragging this county into Middle Eastern quicksand,” said Oray Egin, a columnist with the Turkish daily Aksam. “Gaza is not an emotional issue for me.”

Activists who had returned marched along with the crowd, linking arms with friends and supporters and basking in what people here saw as a heroes’ homecoming. Recep Goker, 51, who had struggled with the soldiers who boarded the ship, was stopped by a tall man in a white pressed shirt, who said he was from Gaza. “You did so good,” the man said. “You are our heroes.”

Mr. Goker said that the Turkish group that led the flotilla was planning another voyage in December, and that he would be part of it. “We will not stop before the embargo is over,” said Mr. Goker, who had a purple bruise on his arm where a plastic bullet had hit him. “We will be the winners, and Israel the loser.”

The Israeli Foreign Ministry said Thursday that all the activists had been deported except for seven who were hospitalized and recovering from injuries, as well as the wife of one of the wounded and two others who had been held up for reasons relating to documentation.

Sebnem Arsu contributed reporting.

Israel Signals New Flexibility on Gaza Shipments
By ISABEL KERSHNER
Copyright by The New York Times
Published: June 3, 2010
http://www.nytimes.com/2010/06/04/world/middleeast/04flotilla.html?th&emc=th

JERUSALEM — While still insisting that its blockade of Gaza is essential to its security, the Israeli government is now shifting its position, “exploring new ways” of allowing goods to reach the coastal enclave, an Israeli official said Thursday.

Describing the latest thinking within the government on the condition of anonymity, because he was not authorized to discuss it publicly, the official said Israel was determined to have every ship heading to Gaza inspected to prevent the smuggling of rockets and other weapons. But at the same time, he said, the government wanted to facilitate the entry of civilian goods.

The government’s new flexibility follows a week of unrelenting international outrage over Israel’s commando raid on a flotilla of pro-Palestinian activists, which left nine dead, and reports that senior officials in the Obama administration were calling for a “new approach” in Gaza and had concluded that the blockade was untenable.

President Obama added to the pressure on Israel in an interview with Larry King that was broadcast Thursday night. While declining to condemn the raid, he said, “What’s important right now is that we break out of the current impasse, use this tragedy as an opportunity so that we figure out how we meet Israel’s security concerns, but at the same time start opening up opportunity for Palestinians.”

Israel’s Channel 2 television news reported on Thursday that Prime Minister Benjamin Netanyahu had proposed to Tony Blair, the international envoy of the so-called quartet of Middle East peacemakers, that an international naval force inspect future aid ships bound for Gaza.

Mr. Netanyahu met with Mr. Blair on Thursday, but there was no immediate confirmation from Mr. Netanyahu’s office or from Mr. Blair’s that such a proposal had been discussed.

Since the raid on Monday, Israeli officials have staunchly defended the blockade of Gaza, saying it is needed to prevent Hamas, the militant Islamic group that rules the territory, from receiving shipments of rockets, missiles and other arms. Mr. Netanyahu said Thursday that giving ships unfettered access to the enclave was the equivalent of having “an Iranian port in Gaza.”

Earlier on Thursday, a senior Israeli security official, also speaking on the condition of anonymity, said that Israel had shown flexibility “all the time” regarding supplies allowed through the land crossings.

But he reiterated the longstanding Israeli position that if Hamas wants real change, “they can release Gilad Shalit,” the Israeli soldier captured in a raid and taken to Gaza in 2006, as well as recognize Israel’s right to exist and renounce violence.

Gaza has been under an Israeli-led blockade since Hamas took full control of the territory in 2007. Israel, the United States and the European Union consider Hamas a terrorist organization.

The diplomatic developments were accompanied by reports on Thursday that one of the nine people killed in the raid on the flotilla this week was a 19-year-old United States citizen of Turkish descent who had lived most of his life in Turkey, officials in Turkey and Washington said.

Hundreds of activists, many of them Turks, were flown to Turkey overnight. They had been detained when the Israeli Navy towed the ships to shore on Monday. Israel said it had released all the detainees without pressing charges, part of an effort to prevent further diplomatic damage.

But as processions of coffins bearing some of the dead wound through a devout neighborhood of Istanbul on Thursday, accompanied by thousands of Turkish mourners, public anger in Turkey seemed undiminished.

A new potential confrontation seemed to be avoided Thursday with word that another ship bound for Gaza with pro-Palestinian activists was being delayed. The 1,200-ton cargo ship, named the Rachel Corrie for an American protester who was crushed by an Israeli Army bulldozer in Gaza in 2003, was waiting “somewhere in the Mediterranean,” according to Hedy Epstein, 85, a Holocaust survivor and prominent member of the Free Gaza Movement, one of the main organizers of the last flotilla.

Although the group was keeping the whereabouts of the Rachel Corrie vague, Ms. Epstein, speaking by telephone from Cyprus, said it would not be approaching Gaza this weekend, as originally expected. CNN reported Thursday that the voyage was being delayed while the ship was fitted with greater video and satellite transmission capabilities.

Israel said Thursday that seven activists remained in Israeli hospitals, not yet well enough to travel. The Australian wife of one of the wounded, also an Australian citizen, had asked to stay behind.

The deaths occurred during a violent confrontation on a Turkish-flagged liner carrying 600 passengers. After it seized the ships, Israel said it would deliver the goods that the activists had been trying to take to Gaza.

But the Hamas authorities were not allowing supplies from the ships to enter Gaza on Thursday, said Maj. Guy Inbar, a spokesman for the Israeli authority responsible for the crossings. About 30 truckloads had been unloaded from the ships, he said.

Ahmed al-Kurd, the minister of social affairs in the Hamas government, said that first, “Israel has to release all hostages,” referring to the flotilla activists.

In addition, Mr. Kurd said that it was up to Turkey to decide on “the mechanism to distribute or to handle the aid,” whether through international or Turkish organizations, and that the aid must arrive complete.

Sabrina Tavernise contributed reporting from Istanbul, and Fares Akram from Gaza.

Another Torrent BP Works to Stem: Its C.E.O.

2010-06-04T09:18:00.000-07:00

Another Torrent BP Works to Stem: Its C.E.O.
By JAD MOUAWAD and CLIFFORD KRAUSS
Copyright by The Associated Press
Published: June 3, 2010
http://www.nytimes.com/2010/06/04/us/04image.html?th&emc=th

BP, already bedeviled by an out-of-control well spewing millions of gallons of oil into the Gulf of Mexico, now finds itself with one more problem: Tony Hayward, its gaffe-prone chief executive.

Mr. Hayward on YouTube, pledging, “We will make this right.”

Among his memorable lines: The spill is not going to cause big problems because the gulf “is a very big ocean” and “the environmental impact of this disaster is likely to have been very, very modest.” And this week, he apologized to the families of 11 men who died on the rig for having said, “You know, I’d like my life back.”

But rather than receiving a limited public role, Mr. Hayward, a geologist who has led the company for three years, has become even more the public face of the company. On Thursday, BP began showing a new television ad in which Mr. Hayward, speaking directly into a camera, pledges to spare no effort to clean up the spill.

It ends with a heartfelt promise: “We will get it done. We will make this right.” (The same day, in an interview published in The Financial Times, he said, “What is undoubtedly true is that we did not have the tools you would want in your tool kit.”)

Instead of reassuring the public, critics say, Mr. Hayward has turned into a day-after-day reminder of BP’s public relations missteps in responding to the crisis, which began six weeks ago and looks likely to continue well into the summer.

Mr. Hayward and the company have repeatedly played down the size of the spill, the company’s own role in the April 20 explosion of the Deepwater Horizon, and the environmental damage that has occurred. At the same time, they have projected a tone of unrelenting optimism despite repeated failures to plug the well.

The chief executive’s tendency to utter provocative statements has prompted a surge of criticism from politicians, bloggers and television pundits, who took particular offense at the “I’d like my life back” comment.

But Mr. Hayward, an earnest-looking man with cherubic red cheeks and a soft British accent, remains ever present in BP’s response efforts.

One Louisiana congressman, Charlie Melancon, has started a petition campaign calling on BP’s board of directors to fire Mr. Hayward, and financial analysts are increasingly predicting that he will get the boot before the crisis is over.

“People want to know someone is in charge, that the right person is there, but someone who says the stuff that Hayward has said doesn’t engender confidence,” said Sydney Finkelstein, a professor of strategy and leadership at Dartmouth University’s Tuck School of Business. “We understand he is overwhelmed, but that also might suggest he’s not the right man for the job.”

Robert Wine, a BP spokesman, said that Mr. Hayward “has the full support of the board, and he is very much at the heart of the response managing everything we are doing.”

Mr. Hayward, 53, ascended to the top job when his predecessor, John Browne, resigned after a personal scandal and a series of major accidents. Mr. Hayward promised to refocus the company culture on safety.

Much is at stake for BP, the top oil and gas producer in the United States and the largest deepwater operator in the Gulf of Mexico. The company has already spent about $1 billion to deal with the accident, and it faces billions of dollars in additional damage claims and government penalties, with the liability growing every day that the leak continues. In addition, the Justice Department, an independent panel and numerous Congressional committees are investigating the company.

Shareholders are worried about the cost to the company, based in London, whose stock has fallen about 35 percent since the explosion.

To be sure, BP is facing an unprecedented technological and engineering challenge, battling formidable odds in trying to plug a damaged oil well in the darkness and pressure found 5,000 feet below the ocean surface. After several efforts to stop the oil flow failed, the company is now seeking to install a temporary dome to capture most of the spilled oil until it can drill two relief wells.

Those relief wells, which would be used to inject cement into the damaged well to permanently kill it, are not expected to be completed before August, and the environmental damage would linger well after that — which means that the company and Mr. Hayward face a public relations crisis that will last for many months.

The company has enlisted the help of the Brunswick Group, a public relations and crisis management firm, to deal with the accident. It has dedicated the home page of its Web site, BP.com, to the crisis and taken out full-page advertisements in major newspapers.

BP has also hired a new head of media relations in the United States, Anne Womack Kolton, who worked at Brunswick and is a former aide to Vice President Dick Cheney and Energy Department spokeswoman.

In Washington, BP has become a toxic political symbol that is a target on all fronts, even as it is seeking to work with the government get out of its current predicament.

Before the spill, BP had maintained a low profile in Washington relative to other companies, with its lobbying work and political contributions usually trailing other oil-and-gas giants like Exxon Mobil, Chevron and Conoco Phillips. Unlike many other companies with federal interests, BP kept most of its lobbying work in-house, although it had retained several prominent Washington lobbyists, including Ken Duberstein and Tony Podesta, to make its case on issues including tax incentives for gas production and climate control regulations.

From the start, BP promised to be transparent about the spill. But the company has wavered between providing information to the public and strictly limiting it. For example, it resisted for weeks putting up a live video feed of the underwater spill, agreeing to it only after intense pressure from Congress. The company has consistently refused to use widely used scientific techniques to measure the spill, saying it was focused on shutting down the well.

Administration officials and Congressional leaders have accused BP of hiding the true dimensions of the leak for financial reasons. Carol M. Browner, the White House energy and environment adviser, has noted that BP has a “vested financial interest” in minimizing the size of the leak because the fines the company will eventually pay will in part be based on the amount of oil that has escaped.

BP and the government initially estimated the well was leaking 1,000 barrels a day. But since then, government scientists have come up with a new and much larger rate of 12,000 to 19,000 barrels a day.

“They have tried to control the message, including controlling facts, because they have a direct financial interest in this,” said David Pettit, a senior lawyer with Natural Resources Defense Council. “The government is letting BP clean up their own crime scene. On TV cop shows, they don’t do that.”

Perhaps trying to tamp down the outcry over his own comments, Mr. Hayward’s remarks to reporters on Thursday in Houston were more tame. He promised that the company would clean up every drop of oil and “restore the shoreline to its original state.”

The chief executive added: “We will be here for a very long time. We realize this is just the beginning.”

Jad Mouawad reported from New York and Clifford Krauss from Houston. Eric Lichtblau contributed reporting from Washington and Stuart Elliott from New York.

Skype for iPhone now supports 3G, but free ride's ending

2010-06-03T20:05:00.000-07:00

Skype for iPhone now supports 3G, but free ride's ending
By Ben Patterson
Copyright by Yahoo News
June 3, 2010
http://news.yahoo.com/s/ytech_gadg/ytech_gadg_tc2393

The latest version of Skype for the iPhone will at last let you make Skype calls over AT&T's 3G network — meaning free voice calls for everyone, right? Not so fast, say Skype execs. Charges for free-for-now Skype-to-Skype calls are coming, and don't forget that AT&T is ditching its unlimited data plans.

Version 2.0 of the Skype iPhone app came out Sunday, supporting the long-awaited ability to place Skype calls over AT&T's 3G data network. Under pressure from federal regulators, AT&T had actually given the green light to Skype calls last year, but the Skype app itself only worked over Wi-Fi until just now.

What's so special about Skype calls over 3G? Theoretically, it means you can bypass AT&T's voice network altogether — even when you're out of Wi-Fi range — letting you place unlimited voice calls with fellow Skype users for the low price of nothing. You can also call landlines and non-Skype users worldwide (about 30 countries are included) for about 2 cents a minute. (I use the for-pay Skype service over Wi-Fi all the time because of the terrible AT&T reception in my Brooklyn apartment.)

In practical terms, the iPhone Skype app has some limitations, though. It still doesn't support the iPhone's "push notification" feature, which pops up an alert for an app that isn't currently running — like, say, an incoming Skype call. That's the bad news. The good news is that Skype will be able to warn you of incoming calls once the new multitasking iPhone 4.0 software arrives this summer (possibly even next week).

But Skype's killer feature — free Skype-to-Skype calling — is going away sooner rather than later, at least as far as the iPhone and AT&T's 3G network is concerned. Skype has announced that it will offer free Skype-to-Skype 3G calls only "until the end of 2010," after which it will start charging a "small monthly fee." How small? No word yet. (Skype-to-Skype calls over Wi-Fi will still be free.)

Not only is the free ride ending for 3G Skype-to-Skype calls, there's also the little wrinkle of AT&T's bombshell announcement that it's phasing out its unlimited 3G data plans, starting June 7. New customers will pay $25 a month for 2GB of data, or $15 a month for 200MB, plus any overage charges ($10 for an extra GB in the case of the 2GB plan, or $15 for another 200MB for the 200MB option). If you currently have an unlimited, $30-a-month 3G plan through AT&T, you'll be grandfathered in.

So AT&T subscribers who end up with new capped data plans will find that 3G Skype calls eat into their monthly data allowances, and overage fees will loom if you're an inveterate Chatty Cathy.

Theoretically, anyway. What's the reality? How much data does a typical 3G Skype call consume?

The Skype support site covers this issue in a relatively roundabout way, estimating that if you have 20 Skype contacts, log on for 90 minutes a day, engage in 25 daily minutes of Skype text chat, and make 20 minutes of Skype calls (whether that's 20 minutes a day or a month isn't clear; I'm inclined to think it's the latter), you'll burn through "just under 1MB" of data a month.

That sounded a little low to me, so I conducted my own experiment. I reset my iPhone's data usage statistics, fired up Skype and called Moviefone for 10 minutes, occasionally tapping a number key to keep the call going. (No, I didn't do a lot of chatting on the call; I'm not much of a talker anyway, but the Moviefone guy was nattering away the entire time.)

When 10 minutes were up, I hung up and checked my 3G usage statistics: 388KB upstream, 1.8MB downstream, for a total of about 2.2MB.

So using those numbers, if I were to call Moviefone for 450 minutes a month (that's my monthly allotment of AT&T voice minutes, only a fraction of which I ever use), I'd use up close to 100MB, or half of the data allowed under AT&T's $15/month 200MB plan.

How big a problem that is depends, of course, on your monthly calling habits. If you're like me and you make maybe 30 minutes of Skype calls a month, no big deal. But if you're planning to hold lengthy daily conference calls over 3G via Skype, well ... Skype might not be much of a bargain anymore.

What do you think? Do Skype's plans for iPhone fees, combined with AT&T's new capped data plans, drain most of the appeal out of the free-for-now calling service? Or will you keep using Skype despite the upcoming fees and data caps?

• Reuters: Nearly 5 million downloaded Skype iPhone 3G app
• Skype: How much data does Skype on my mobile use?

Receive Free UPI Newsletter Kirk apologizes for military embellishment/"The Iraqi Air Defense Network was shooting at us"

2010-06-03T19:56:00.000-07:00

Kirk apologizes for military embellishment
© 2010 United Press International, Inc.
Published: June 3, 2010 at 7:52 PM
http://www.upi.com/Top_News/US/2010/06/03/Kirk-apologizes-for-military-embellishment/UPI-68361275609156/hment

CHICAGO, June 3 (UPI) -- Mark Kirk, the Republican congressman running for U.S. Senate in Illinois, apologized Thursday for misstatements about his military record.

In a meeting with the Chicago Tribune editorial board, Kirk blamed most of the errors on an effort to convert military terminology into "civilian-speak." He promised to release his military fitness reports.

Kirk is running against Democratic state Treasurer Alexi Giannoulias for the seat formerly held by President Obama. A longtime member of the Navy Reserve, he has continued to serve active-duty deployments while in Congress.

His military record came into question when he acknowledged he had not been named Navy intelligence officer of the year while in Kosovo. His unit, based in Italy, was awarded a citation by a professional group that same year.

He has since admitted other embellishments, including suggesting wrongly he participated in Operation Desert Storm and that he had come under fire during a reconnaissance mission.

"I am sorry, absolutely," Kirk said. "You should speak with utter precision. You should stand on the documented military record. In public discourse, for high office, you should make sure that there is a degree of complete rigorous precession."

Mark Kirk - "The Iraqi Air Defense Network was shooting at us" http://www.youtube.com/watch?v=AeFf4JNx3tc&feature=player_embedded

What's Next for You and Your Doctors - Worried health care reform will cause you to wait for treatment? Don't be.

2010-06-03T09:00:00.000-07:00

What's Next for You and Your Doctors - Worried health care reform will cause you to wait for treatment? Don't be.
by: Mary A. Fischer
Copyright by AARP The Magazine
July/August 2010 issue
http://www.aarp.org/health/health-care-reform/info-05-2010/whats-next-for-you-and-your-doctors.html

In late March, Ruth Kevess-Cohen, M.D., noticed a change in her patients. Usually they came to her Silver Spring, Maryland, office asking about their blood sugar levels or blood pressure. Now they had a new concern: Should they be worried about the new health care reform law? Would they still be able to get in to see her? Would they still get the same treatment for their diabetes or high blood pressure? “It’s on everyone’s mind,” says Cohen, an internist who specializes in geriatric medicine.

Much has been written about how health care reform will affect patients. But very little has been written about its impact on providers—and how that will affect you. Fortunately, for people over 50, the news is mostly good. “I’m telling my patients not to worry,” says Cohen. “The changes at this point do not affect the personal relationships between patients and their doctors. Patients can see their same doctors as before, doctors will continue to refer them for tests and to specialists as before, and patients can still get their prescriptions at their local pharmacy or through mail order.”

Here are the provisions of the bill most likely to affect you and your physicians—and advice on how to ensure you get the best care possible.

1. Seeing your doctor—when you want to

One of health care reform’s greatest achievements is its guarantee of health coverage for 32 million uninsured Americans. The benefit for those 50 and older who don’t have health coverage now because of preexisting conditions or economic hardship is that you will be able to see a doctor when you need to, without fear of paying exorbitant costs for routine medical care. The new law bans private insurers from dropping people who get sick, from turning away those who have preexisting conditions, and from setting lifetime caps on benefits. It also provides subsidies for low-income Americans so they can purchase private health insurance, it expands Medicaid (state-run health insurance programs for the poor), and it allows adult children to remain on their parents’ health insurance plans until age 26.

All of these guarantees do come with a challenge, though. Whereas those who currently have a primary care physician will be able to see him or her as before, those who do not presently have access to a doctor may find themselves on a waiting list. That’s because there are parts of the country where primary care physicians are already in short supply, and the new law will bring millions of additional patients into the system. The American Academy of Family Physicians predicts a shortfall of roughly 40,000 primary care doctors over the next decade as medical students are increasingly drawn to the higher pay and better hours of specialties such as surgery or radiology.

What’s more: “The issue of access is not just about the number of patients; it’s about making our delivery system more efficient and productive,” says Michael Newman, M.D., who has an internal medicine practice in Washington, D.C. “We want to make sure everyone gets the care he or she needs, but that doesn’t mean a physician has to be the one who provides all the care. We can take the burden off physicians by using more nurse practitioners and physician assistants, and other caregivers who can better deal with the management of chronic diseases, education, compliance, prevention, etc.”

Recognizing the growing need for access, legislators included in the new law bonus payments for primary care physicians as well as expanded community-health centers and forgiveness of tuition loans as incentives to medical students to pursue primary care careers.

Massachusetts’s experience also provides some reassurance. When the state approved universal health care in 2006, there was a backlog of new patients, plus long wait times to see a primary care physician. “Yes, we have a shortage of doctors, but now everything has settled down and everyone is getting better care,” says Mario Motta, M.D., president of the Massachusetts Medical Society, the statewide professional organization of physicians. In 2008 the state approved unprecedented financial incentives that made primary care careers more attractive to new physicians and nurses. Class sizes were expanded at the University of Massachusetts Medical School, and tuition was waived for students who agreed to work as primary care doctors in the state for four years after they finished training. Today about 96 percent of the state’s population is insured—the highest rate in the nation.

Patients themselves can play an important role in ensuring access. “They should be proactive and establish a relationship with a doctor before they get sick,” says David Reuben, M.D., chief of Geriatric Medicine at UCLA. “Planning your health care is no different than any other investment you make for the future. You want a primary care physician who knows you and your health issues, and can guide your care, including referrals to specialists when appropriate.”

2. Seeing a specialist—when you need to

Specialists currently dominate the medical field—roughly 70 percent of medical residents become orthopedists, gastroenterologists, or some other specialists—so patient access to them has been less of a problem than access to a primary care physician. That’s not likely to change anytime soon. “Getting into a hospital to have surgery is not going to be a problem, because our medical profession is overwhelmingly made up of interventionists like surgeons,” says Paul Torrens, M.D., professor of Health Services at the UCLA School of Public Health.

As health care reform takes hold, however, specialty care itself may change. “We’re going to see changes in how specialty care is provided, by online or telephone consultations, or by the primary care doctor consulting with a specialist without the specialist actually seeing the patient,” Reuben says. “In some managed care organizations this is happening now.”

Telemedicine, as this type of consultation is called, is often used to determine whether a patient in a remote or underserved region of the country needs to see a specialist. In urban centers where specialists are plentiful, though, seeing a specialist will be part of routine medical care, much as it is now.

To further reduce the demands on the system, specialists and patients alike will need to become more responsible about evaluation and treatment. “We have this notion that we should have unlimited access to medical care and all manner of tests,” says Newman. “But are they always really necessary? We need to provide appropriate tests. It’s not a matter of rationing; rather it is doing what’s appropriate and necessary for the care of the patient.”

3. More time with your pharmacist

Another big plus that health care reform delivers: to better monitor medications and their interactions (which sicken thousands every year), pharmacists will receive funding to help patients manage their medications. “Patients will be able to sit down with their pharmacist to see if there should be changes or reductions in their medication regimen,” explains Dennee Frey, Pharm.D., a pharmacist and medication-management consultant for Partners in Care Foundation in San Fernando, California.

Last December, Frey’s own mother experienced the miscommunication common in medication prescribing. After suffering a ministroke, her mother was released from the hospital with a list of medicines to take. “Two of the medications were wrong and had been discontinued by her other doctors,” explains Frey. “Luckily, my mother had me to ask the right questions. As pharmacists, we’ve been waiting and hoping for these changes.”

4. Closing the doughnut hole

One of the law’s biggest accomplishments for those on Medicare is its eventual closure of a huge loophole in prescription-drug coverage, known colloquially as the doughnut hole. In 2010, Medicare pays 75 percent of covered prescription-drug costs until the total drug costs (including the deductible and copays) reach $2,830. After that, patients fall into the doughnut hole—or coverage gap—and must pay the full cost of prescription drugs until their total out-of-pocket costs reach $4,550, when coverage kicks in again.

In the past, when internist Cohen’s Medicare patients fell into the doughnut hole, many stopped taking their medications because they couldn’t afford them anymore. To help them, she would prescribe a different medication or scrounge the shelves in her office for free samples. “But that was very disruptive to my patients,” she says. “The changes in the law are a big improvement.”

Under the law more than 3 million older adults who fall into the coverage gap will get a $250 rebate this year. The law provides for a 50 percent discount on brand-name drugs in 2011, and a smaller break on generics, until the doughnut hole is closed by 2020.

5. Better coordination of your health care

To improve efficiency and care coordination, the new law offers funding for such pilot programs as “accountable care” and “medical homes.” Under the medical-home model pioneered in Vermont, for instance, physicians are paid extra for coordinating care for their patients. They also receive bonuses if a patient’s health improves based on quality-of-care guidelines. The goal of the program is to help patients—especially those with chronic illnesses—stay healthy enough to avoid hospital stays and expensive treatments, saving money in the long run.

Similarly, Medicare-funded accountable-care organizations will be established over the next 18 months to ease transitions between hospital and home, and will influence how medical teams, as well as hospitals, operate. “Medicare will be making hospitals responsible for the costs of patient readmission,” says Albert Siu, M.D., chair of Geriatrics at New York City’s Mount Sinai School of Medicine, “so we’re making a variety of efforts to improve and coordinate patients’ care as they leave the hospital.” These include coaching patients and family members through the transition process and having a health professional act as a link between hospital and home.

6. Changes to Medicare and Medicare Advantage

Under the new law the roughly 34 million adults who receive traditional Medicare benefits will see their coverage enhanced, as they’ll be eligible for annual checkups and cancer screenings free of charge beginning in January 2011.

An additional 11.4 million Americans over 65 receive their Medicare-covered health care through private health insurance plans known as Medicare Advantage. Today the federal government pays private insurers to manage these programs—14 percent more per person than they pay for the traditional Medicare fee-for-service plans—and, in turn, insurers offer additional coverage such as prescription drugs and dental and vision care. The new health reform law will reduce—but not eliminate—the additional payments to Medicare Advantage plans. Consumers may see some benefits—such as free gym memberships and eyeglasses—adjusted, as the law cuts $136 billion from Advantage programs. Medicare Advantage plans cannot, however, by law, cut guaranteed Medicare benefits.

In sort, the new law should improve and ensure continuity of patient care. Reuben has studied the provisions of the bill and says, “There is nothing I’ve read in the law that will adversely affect my patients. Nothing.”

David Souter vs. the Antonin Scalias

2010-06-03T05:55:00.000-07:00

David Souter vs. the Antonin Scalias
By E.J. Dionne Jr.
Copyright by The Washington Post
Thursday, June 3, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/06/02/AR2010060203496.html

It should become the philosophical shot heard 'round the country. In a remarkable speech that received far too little attention, former Supreme Court justice David Souter took direct aim at the conservatives' favorite theory of judging.

Souter's verdict: It "has only a tenuous connection to reality."

At issue is "originalism," an approach to reading the Constitution whose seeming precision has given conservatives a polemical advantage over the liberals' "living Constitution" idea that appears to let judges say our founding document means whatever they want it to mean.

Justice Antonin Scalia, the court's leading orginalist, summarized his opponents' attitude toward the Constitution with four words: "You know, it morphs."

Now, thanks to Souter's commencement address at Harvard last week, Scalia's critics have fighting words of their own. Souter, who did not mention Scalia by name, underscored "how egregiously it misses the point to think of judges in constitutional cases as just sitting there reading constitutional phrases fairly and looking at reported facts objectively to produce their judgments."

The problem is not only that "constitutions have a lot of general language in them in order to be useful as constitutions," but also that the U.S. Constitution "contains values that may very well exist in tension with each other, not in harmony."

This means that "hard cases are hard because the Constitution gives no simple rule of decision for the cases in which one of the values is truly at odds with another."

Souter attacked the fatal flaw of originalism -- which he relabeled the "fair reading model" -- by suggesting that it would have led the Supreme Court in 1954 not to its Brown v. Board of Education decision overturning legal segregation but to an affirmation of the 1896 Plessy v. Ferguson ruling upholding "separate but equal" public facilities.

"For those whose exclusive norm of constitutional judging is merely fair reading of language applied to facts objectively viewed, Brown must either be flat-out wrong or a very mystifying decision," Souter said.

"The language of the Constitution's guarantee of equal protection of the laws did not change between 1896 and 1954, and it would be very hard to say that the obvious facts on which Plessy was based had changed," Souter argued. "Actually, the best clue to the difference between the cases is the dates they were decided, which I think lead to the explanation for their divergent results."

Yes, the Supreme Court changed because the nation's understanding of race changed.

Souter notes that "the members of the court in the Plessy case remembered the day when human slavery was the law in much of the land. To that generation, the formal equality of an identical railroad car meant enormous progress. But the generation in power in 1954 looked at enforced separation without the revolting background of slavery. . . . "

"Did the judges of 1954 cross some limit of legitimacy into lawmaking by stating a conclusion that you will not find written in the Constitution?" Souter asked rhetorically. "Was it activism to act based on the current meaning of facts that at a purely objective level were about the same as Plessy's facts 60 years before?"

Obviously, Souter doesn't think so. But while conservative scholars such as Michael McConnell have constructed ingenious arguments to show how originalism could accommodate Brown, it's hard to see judges guided by that doctrine reaching as boldly as the 1954 Warren court did.

Contrast Souter's view with Scalia's mocking reference to those who "think the Constitution is some exhortation to give effect to the most fundamental values of the society as those values change from year to year." Well, between 1896 and 1954, they did change.

The core problem with originalism is that it overlooks what the historian Gordon Wood has observed about the Founders' work: that it is exceedingly difficult to discern the "true meaning" of the Constitution since it is the product "not of closet philosophizing but of contentious political polemics."

As a result, "many of our most cherished principles of constitutionalism associated with the Founding were in fact created inadvertently." The historian Joseph Ellis offered a parallel argument in The Post last month.

Souter is right to say that "the Constitution embodies the desire of the American people, like most people, to have things both ways. We want order and security, and we want liberty. And we want not only liberty but equality as well."

Because these desires clash, courts are "forced to choose between them, between one constitutional good thing and another one." Souter's view admits that this is what judges do. Originalists pretend they're not choosing. Which approach is the more trustworthy?

ejdionne@washpost.com

BP ‘not prepared’ for deep-water spill

2010-06-03T05:50:00.000-07:00

BP ‘not prepared’ for deep-water spill
By Ed Crooks in Houston
Copyright The Financial Times Limited 2010
Published: June 2 2010 16:20 | Last updated: June 3 2010 08:55
http://www.ft.com/cms/s/0/e1e0e21c-6e53-11df-ab79-00144feabdc0.html

BP did not have all the equipment needed to stop the leak from its Macondo well in the Gulf of Mexico in the aftermath of the explosion on an oil rig six weeks ago, the UK company’s chief executive admitted.

Speaking to the Financial Times in Houston as engineers worked on their latest bid to trap the escaping oil, Tony Hayward said BP was looking for new ways to manage “low-probability, high-impact” risks such as the Deepwater Horizon oil rig accident.

That bid suffered a temporary setback on Wednesday when a saw was stuck during a risky operation to sever the leaking pipe.

“What is undoubtedly true is that we did not have the tools you would want in your tool-kit,” Mr Hayward said. He accepted it was “an entirely fair criticism” to say the company had not been fully prepared for a deep-water oil leak.

The containment effort on the surface, he said, had been “very successful” in keeping oil away from the coast. “Considering how big this has been, very little has got away from us,” Mr Hayward said. But in trying to plug the leak, BP had been reaching for many of the same techniques used to control the Ixtoc 1 blow-out in the Gulf of Mexico 31 years ago.

“After the Exxon Valdez spill in 1989, the industry created the Marine Spill Response Corporation to contain oil on the surface... The issue will be to create the same sub-sea response capability,” he explained.

With BP and the rest of the industry threatened with being shut out of the deep waters of the Gulf, the most promising US region for oil development, Mr Hayward argued that reform could justify continued drilling in those challenging areas.

The gas blow-out that caused an explosion on the rig on April 20 that killed 11 men had been a “one in a million” chance, Mr Hayward said, but that risk had to be cut to a “one in a billion or one in a trillion” chance.

Analysts believe the disaster could cost BP $20bn (£13.7bn) in clean-up costs, compensation, damages and fines, and has done incalculable harm to the company’s position in the US.

BP said on Thursday that it had agreed to fund the construction of six sections of a proposed barrier off Louisiana. It will fund the estimated $360m it will cost to construct the six sections.

US officials now say the slick is approaching Florida’s shoreline, with the National Oceanic and Atmospheric Administration projecting that oil could hit the Panhandle within days.

Charlie Crist, governor of Florida, on Wednesday described the slick as “disturbing and disgusting” he added: “I was briefed on Memorial Day [Monday] about the oil being 80 miles offshore and then today I hear it’s seven miles offshore.”

BP believes that on the Deepwater Horizon rig there were seven separate problems that could have contributed to the accident, including failures of the cement in the well, the tests run on the well, and the blow-out preventer, intended to stop releases of oil and gas.

Those failures could have involved a number of different companies besides BP, including Transocean, which owned and operated the rig, Halliburton, which cemented the well, and Cameron International, which made the blow-out preventer.

BP was in overall control, but responsibility for safety was shared. That model may have to change, said Mr Hayward.

Political pressure on BP from Washington increased further, with two senior senators, Charles Schumer and Ron Wyd, calling on the company to suspend any plans to pay dividends. In a letter to Mr Hayward, the senators wrote that it would be “unfathomable” for BP to pay a dividend to shareholders before the total cost of BP’s oil spill clean-up was calculated.

Shares in BP, which have fallen sharply since the spill, gained 2.2 per cent to 439.1p in early London trading on Thursday.

Lawmakers move to toughen ‘Volcker rule’

2010-06-03T05:49:00.001-07:00

Lawmakers move to toughen ‘Volcker rule’
By Tom Braithwaite in New York
Copyright The Financial Times Limited 2010
Published: June 2 2010 23:10 | Last updated: June 3 2010 01:35
http://www.ft.com/cms/s/0/f2df5792-6e8a-11df-ad16-00144feabdc0.html

William Dudley, president of the New York Fed, whose post Congress wants to confirm in future

Congressional negotiators are moving to toughen financial reform legislation, raising the chances that banks will face a strict ban on proprietary trading and a new conflict of interest rule, people involved in the deliberations say.

Lawmakers return from recess next week to merge bills passed by the House of Representatives and Senate, and a proposal – opposed by banks – to toughen a ban on proprietary trading and stop them from betting against products they sell to customers has re-emerged during preparatory work.

The provision, sponsored by Jeff Merkley and Carl Levin, two Democratic senators, would toughen the “Volcker rule”, which bans banks from trading for their own account or owning hedge funds and private equity firms, but gives regulators time to study the rule and modify it. “That is a very wishy-washy way to approach the issue,” Mr Merkley said.

Mr Levin said even though the Treasury would “probably...want as much power as they can get to...modify [the bill]”, he thought Congress should write a strong final version.

“Merkley-Levin in general is very much alive,” Mr Levin said. “The proprietary trading provisions from a legislative perspective are very much in the mix.”

Others involved agreed with that assessment and said the proposal could be used to replace a provision by Senator Blanche Lincoln that would force banks to spin off swaps desks.

That is opposed by the Federal Reserve, the Federal Deposit Insurance Corporation and the industry, which argue it would prevent legitimate hedging activity, but it has emerged as a totem of liberal Democratic members of Congress.

In a blow to the Fed, people familiar with the preparatory talks say that the central bank is failing to persuade members of Congress to eradicate a provision in the Senate bill that gives the president the power to nominate candidates to head the New York Fed, which takes the lead in overseeing Wall Street.

Central bank officials argue the change would amount to blatant politicisation but even Fed supporters have said they are unwilling to go out on a limb to try to kill the provision.

In addition to proprietary trading, the Merkley-Levin amendment adds a new conflict of interest rule to stop banks taking a contrary position in the market to a client, with an exception for market making and hedging.

Saving Israel From Itself

2010-06-03T05:42:00.000-07:00

Saving Israel From Itself
By NICHOLAS D. KRISTOF
Copyright by The New York Times
Published: June 2, 2010
http://www.nytimes.com/2010/06/03/opinion/03kristof.html?th&emc=th

When reports first circulated on Twitter of a deadly attack by Israeli commandos on the Gaza flotilla, I didn’t forward them because they seemed implausible. I thought: Israel wouldn’t be so obtuse as to use lethal force on self-described peace activists in international waters with scores of reporters watching.

Ah, but it turned out that Israel could be so obtuse after all. It shot itself in the foot, blasting American toes as well, and undermined all of its longer-term strategic objectives.

Abba Eban, the former Israeli statesman, is famously reported to have said in 1973: “The Arabs never miss an opportunity to miss an opportunity.” The quotation resonated because it was largely true.

Palestinians were locked for years into a self-defeating dynamic of violence and self-pity that led to terrorism and intransigence. Feeling misunderstood, they shrugged at global opinion and lashed back wherever they could, undermining their own cause.

Yet now, as a rabbi noted on my Facebook page, it is Israel that never misses an opportunity to miss an opportunity.

Israel under Prime Minister Benjamin Netanyahu seems locked in a self- defeating dynamic in which it feels misunderstood and gives up on international opinion. It lashes out with force in ways that undermine its own interests. It is on a path that could eventually be catastrophic.

There’s no question that Israel faces existential threats. That should make its leaders focused above all on two things: an Arab-Israeli treaty and pressure on Iran to drop its nuclear program.

These aren’t easy, and a Palestinian-Israeli deal may be impossible for the time being. But Israel could freeze all settlements and take other steps that would make a deal more likely. We already know what the final deal would look like — a two-state solution and terms resembling the “Clinton parameters” that Bill Clinton proposed in 2000.

Israel could also cultivate Turkey, a central player in the effort to press Iran. Instead, Israel’s storming of a Turkish-flagged vessel in international waters was a huge setback to efforts to win new sanctions on Iran. One big winner in this week’s fiasco was the Iranian regime.

Israel is also antagonizing its support base in the United States, which is critical to protect it from those existential threats.

Peter Beinart wrote a powerful article in the most recent New York Review of Books exploring the way young Jews in America feel much less identification with Israel than their elders did. Mr. Beinart noted that even the student Senate at Brandeis University, which has strong Jewish ties, rejected a resolution commemorating the 60th anniversary of Israel.

One basic problem, Mr. Beinart said, is that the Zionist movement has become increasingly conservative politically. “For several decades,” he writes, “the Jewish establishment has asked American Jews to check their liberalism at Zionism’s door, and now, to their horror, they are finding that many young Jews have checked their Zionism instead.”

Israel’s hard-line policies are depleting America’s international political capital as well as its own. Gen. David Petraeus noted two months ago that the perception that the United States favors Israel breeds anti-Americanism and bolsters Al Qaeda. The chief of Mossad, Meir Dagan, was quoted in the Israeli press as making the point more succinctly: “Israel is gradually turning from an asset to the United States to a burden.”

For many Israelis, all this seems profoundly unfair. Israel is a thriving democracy that withdrew from Gaza but is still threatened by missiles from north and south alike. So Israel and its hard-core supporters tend to dismiss outside criticism as inherently unfair and anti-Semitic, and embrace unilateral solutions based on force. As the newspaper Haaretz suggested, Israel is now “lost at sea.”

How do we change this dynamic? One necessary step is a major investigation of what happened. Another is a quick end to the blockade of Gaza, by Egypt as well as Israel. The blockade has failed to topple Hamas, failed to recover the captured soldier Gilad Shalit, and failed to keep rockets out of Gaza.

When you visit Gaza, you see that the siege has accomplished nothing — except to devastate the lives of 1.5 million ordinary Gazans. Gisha, an Israeli human rights organization, has compiled a list of goods that Israel typically blocks from Gaza: notebooks, blank paper, writing utensils, coriander, chocolate, fishing rods, and countless more. That’s not security; that’s a travesty.

President Obama needs to find his voice and push hard for an end to the Gaza blockade. He needs to talk sense to Israel and encourage it to back away from its plans to intercept other flotillas now headed for Gaza — that would be a catastrophe for Israel and America alike.

Above all, he needs to nudge Israel away from its tendency to shoot itself in the foot, and us along with it.

•

I invite you to visit my blog, On the Ground. Please also join me on Facebook, watch my YouTube videos and follow me on Twitter.

Heaviest Users of Phone Data Will Pay More

2010-06-03T05:36:00.000-07:00

Heaviest Users of Phone Data Will Pay More
By MATT RICHTEL
Copyright by Bloomberg News
Published: June 2, 2010
http://www.nytimes.com/2010/06/03/technology/03phone.html?th&emc=th

They spend hours watching video on their phones, downloading songs, browsing the Web, sending photos to friends and generally using mobile devices as full-fledged computers. They are the data hogs.

On Wednesday, AT&T pulled away the trough. And other wireless carriers could do the same.

AT&T said it would no longer offer an unlimited data plan to new users of iPhones and other smartphones. The decision, industry analysts said, could signal a shift away from an era in which American wireless carriers sought to attract customers with simple, all-you-can-eat pricing plans for data.

The trouble for AT&T was that a fraction of users — fewer than 2 percent — made such heavy use of the network that they slowed it down for everyone else.

Starting on Monday, AT&T will offer tiered pricing. People will pay based on what they use, which the company says is fairer to everyone.

Instead of paying $30 a month for unlimited data, new customers will be given the option of paying $15 a month for 200 megabytes, or $25 for 2 gigabytes, with added charges for greater use. AT&T estimates that the more expensive plan will cover 1,000 minutes of video, 400 song downloads or a million one-page e-mail messages. Those who want to keep their existing unlimited plans can do so.

Analysts said AT&T’s move could have ripple effects on other wireless carriers and, eventually, a growing segment of the population that has begun gorging on data using their phones.

“The free lunch for the ultra-heavy data user has been taken off the menu,” said Roger Entner, a telecommunications industry analyst with the Nielsen Company. “The new generation of heavy users is going to pay according to what they use.”

With a new generation of advanced phones, mobile data use has exploded. In April this year, 57.1 million mobile subscribers in the United States had unlimited data plans, a 57 percent increase from a year earlier, according to comScore, a research group.

The wireless carriers have generally benefited from the growth. Last year, they took in $41.5 billion in revenue from data use, compared with $8.5 billion in 2005, according to CTIA, the industry’s trade association.

Home Internet users are sucking up more data too, of course. But analysts say providers of home access are unlikely to drop unlimited plans anytime soon. One big difference is that those companies can more easily add capacity than mobile carriers, which must license scarce and expensive spectrum from the government.

When wireless customers take “unlimited” literally, analysts say, those plans rapidly become money losers for the companies.

The problem is not unique to AT&T, but it has suffered more than its competitors because of the data demands of iPhone users. They use on average a third more data than the typical smartphone owner, Mr. Entner noted.

“The biggest data pigs in the world are the iPhone guys,” said Edward Snyder, an analyst with Charter Equity Research.

Mr. Snyder and other analysts said the iPhone, which is now available exclusively from AT&T in the United States and has helped it attract millions of consumers, is likely to be offered by other carriers as soon as next year. When that happens, Mr. Snyder said, AT&T could face an exodus of customers who have been unhappy with the performance of its network, and it might be hoping that the new data plans would attract lighter users.

AT&T said the changes would mean lower prices even for people who might think they could easily burn through 2 gigabytes. “It’s a stupefying amount of data,” said Mark Siegel, a spokesman for AT&T. He said 65 percent of the company’s smartphone customers tend to use less than 200 megabytes a month, and 98 percent averaged less than 2 gigabytes.

Customers will be able to monitor their data use on AT&T’s Web site and with cellphone applications, and the company will send alerts when they near their quota. Going over that quota will mean an additional charge — $10 for an extra gigabyte for those on the more expensive plan.

In another approach, T-Mobile in April said customers on its 5-gigabyte data plan would have their access speed slowed when they went over their allotment, instead of paying more.

Verizon Wireless, which declined to comment on its future pricing plans, offers an unlimited plan for $30 a month. Ken Dulaney, an analyst with Gartner, said he expected Verizon to try to capitalize on AT&T’s move, at least at first.

“I suspect we’ll see Verizon putting out Southwest Airlines-style ads saying, ‘Our bags still fly free,’ ” he said. But he agreed with other analysts that Verizon would eventually join not just AT&T but most other carriers around the world that, for years, have charged on the basis of use.

Mike Lapchick, an AT&T customer in Chicago, said that he tended to use his iPhone mostly for e-mail, and that he would probably see his data bill drop in half to $15.

But Mr. Lapchick, who is the chief executive of a company that makes software used by Internet retailers to allow consumers to zoom in on product images, has another concern. As unlimited data plans go away, it could prompt cellphone users to watch their intake.

“If people are watching their data plans more closely, it’s going to cut into the investments we made in the company in the last 18 months,” he said.

In other words, he had planned for a world filled with data hogs.

Opponents of Abortion Advance Cause at State Level

2010-06-03T05:34:00.000-07:00

Opponents of Abortion Advance Cause at State Level
By JOHN LELAND
Copyright by The Associated Press
Published: June 2, 2010
http://www.nytimes.com/2010/06/03/health/policy/03abortion.html?th&emc=th

At least 11 states have passed laws this year regulating or restricting abortion, giving opponents of abortion what partisans on both sides of the issue say is an unusually high number of victories. In four additional states, bills have passed at least one house of the legislature.

In a flurry of activity last week, Gov. Haley Barbour of Mississippi signed a bill barring insurers from covering abortion in the new insurance exchanges called for under the federal health care overhaul, and the Oklahoma Legislature overrode a veto by Gov. Brad Henry of a bill requiring doctors who perform abortions to answer 38 questions about each procedure, including the women’s reasons for ending their pregnancies.

It was the third abortion measure this session on which the Legislature overrode a veto by Mr. Henry.

At least 13 other states have introduced or passed similar legislation this year. The new laws range from an Arizona ban on coverage of abortion in the state employees’ health plan to a ban in Nebraska on all abortions after 20 weeks, on the grounds that the fetus at that stage can feel pain.

Fetal pain is a subject of debate in the medical community, and the United States Supreme Court has recognized the government’s right to ban abortions only after a fetus becomes viable, which is more than a month later.

“The right-to-life folks are seeing just how far they can push things,” said Joseph W. Dellapenna, a law professor at Villanova University and the author of “Dispelling the Myths of Abortion History.” Professor Dellapenna said it was “almost a certainty” that one of the laws would end up in front of the Supreme Court, where Justice Sonia Sotomayor’s views on abortion are untested, as are those of Elena Kagan, President Obama’s new court nominee.

“It could turn out they can push things a lot farther than people think,” he said. “Or, it could not.”

While opponents of abortion rights hope ultimately to overturn Roe v. Wade, the Supreme Court decision that guarantees a woman’s right to an abortion, they have made the most impact at the state level, where laws passed in one state often appear in other legislatures in subsequent years. State laws also have the potential for national consequences by setting off court battles that challenge or limit the scope of Roe.

“Ninety percent of pro-life legislation happens at the states,” said Daniel S. McConchie, vice president for government affairs at Americans United for Life, which opposes abortion. “While Congress is the main focus of attention for so many people in the country, state legislatures have greatest impact on daily lives, and life-related legislation is no exception.”

Much of this year’s legislation arose from a 2007 United States Supreme Court decision upholding a federal ban on a late-term procedure that critics call partial-birth abortion, which gave lawmakers greater leeway to restrict abortion.

About 370 state bills regulating abortion were introduced in 2010, compared with about 350 in each of the previous five years, and 250 a year in the early 1990s, according to the Guttmacher Institute, a research organization that supports abortion rights. At least 24 of this year’s bills have passed, and the final total may reach the high of 2005, when states passed 34 laws, said Elizabeth Nash, a public policy associate at the institute.

More significant than the number of bills introduced are the number and nature of those that passed, partisans on both sides agree.

“What’s different is that bills of serious consequence have actually passed,” said Nancy Northrup, president of the Center for Reproductive Rights, who characterized the volume of legislation as “an avalanche.” Already the center has brought suits to challenge six laws, more than in any other year since the 1990s.

Tennessee, which had not passed restrictions on abortion since 2003, passed two laws, one banning coverage of abortion in health insurance exchanges. The other requires clinics to post signs stating it is illegal to coerce a woman to have an abortion; 11 other states introduced similar legislation.

“This is a good year as far as victories,” said Mary Spaulding Balch, director of state legislation for the National Right to Life Committee, who named several states, including Arizona, Missouri and Tennessee, that are now more open to restrictive laws. “I do get the impression that the climate is friendlier.”

Eighteen states passed or introduced bills requiring counseling before abortions, according to the Guttmacher Institute.

Arizona, where Janet Napolitano vetoed abortion restrictions as governor, passed four laws this year under Jan Brewer, who became governor in 2009 after Ms. Napolitano resigned to become the secretary of homeland security. The four include restrictions on coverage under health insurance exchanges, state employee insurance and Medicaid, and call for stricter reporting requirements for doctors who perform abortions.

Oklahoma passed seven laws, three over vetoes by the governor, including one requiring a woman to undergo an ultrasound and listen to a detailed description of the fetus before an abortion. The law requires that the ultrasound screen be visible to the woman, though she may avert her eyes. Another new law prevents parents from suing doctors for not revealing fetal abnormalities during pregnancy. An eighth measure drew the governor’s fourth veto last week; the Legislature adjourned on Friday without addressing it.

The ultrasound law “takes the burden away from the mother of having to request to see it,” Ms. Balch said. “That’s significant, because the harder you make it for the mother to view it, she’s not going to view it. Many women regret their abortions afterward, and that’s from looking later at an ultrasound.”

Opponents say the law requires an unnecessary medical procedure and takes away women’s right to make decisions for themselves. A state judge suspended the law after a legal challenge.

Lawsuits are likely to be filed against Nebraska’s law banning abortion after 20 weeks. “That’s pretty clearly designed to mount a challenge to women’s right to choose in the second trimester,” which the Supreme Court has recognized, said Ted Miller, a spokesman for Naral Pro-Choice America, a national advocacy organization. “It’s a whole new standard.”

State Senator Mike Flood of Nebraska said he conceived the legislation after hearing public remarks by LeRoy Carhart, an abortion provider in Bellvue, Neb., who said he hoped to continue the work of George Tiller, the Kansas doctor who was murdered a year ago and who provided late-term abortions for women from all over the country.

“I was obviously troubled by his intention to perform those types of abortions,” Mr. Flood said. “My immediate thought was those should be illegal in Nebraska.”

After some research he came upon the idea of banning abortion once a fetus can feel pain, though much of the medical community says that this does not happen before the third trimester, about 28 weeks.

In Utah, after a pregnant 17-year-old paid a man $150 to beat her in an effort to induce a miscarriage, legislators passed a law that would allow a woman in such circumstances to be charged with homicide. Ms. Balch of the National Right to Life Committee said her organization did not support that law because it penalized the woman, “and we don’t support that at all.” Similar legislation was introduced in two other states.

Over all, abortions in America have been falling since 1990. In recent years, according to research by the Guttmacher Institute, they have been increasingly concentrated among poor women, whose rates have gone up even as the overall national rate has declined.

Chicago Tribune Editorial: Pants on Fire Award

2010-06-02T11:16:00.000-07:00

Chicago Tribune Editorial: Pants on Fire Award
Copyright © 2010, Chicago Tribune
6:55 p.m. CDT, June 1, 2010
http://www.chicagotribune.com/news/opinion/editorials/ct-edit-kirk-20100601,0,7271126.story

The Vice Admiral Rufus L. Taylor Award recognizes "the exceptional achievements of an outstanding Naval Intelligence career professional." It's a big deal. U.S. Rep. Mark Kirk, a 21-year Navy reservist, can list it proudly on his resume.

Instead, the Republican candidate for U.S. Senate has diminished the award — and himself — by misrepresenting it as an even bigger deal: The U.S. Navy's Intelligence Officer of the Year.

The Taylor award is presented by the National Military Intelligence Association, a professional group. In 2000, it was given to Kirk's Intelligence Division Electronic Attack Wing, based in Aviano, Italy. The unit was honored for its combat service during the Kosovo conflict in 1999.

Kirk has never won the Intelligence Officer of the Year, awarded annually by top Navy officials. But he has made that claim for more than a decade — in speeches, in campaign materials submitted to the Tribune and other news organizations and in the biography.

Now that he's been called on this fib, Kirk wants to shrug it off as little more than a typo.

"Upon a recent review of my records, I found that an award listed in my official biography was misidentified as 'Intelligence Officer of the Year,' " he wrote last week on his blog. He didn't mention that the review was prompted by a Washington Post reporter's questions, which were prompted by a call from Kirk's Democratic rival, Illinois Treasurer Alexi Giannoulias.

Kirk acknowledged that his boast wasn't "legally precise," and quickly corrected the bio. But that didn't stop Giannoulias from crowing about it at a Memorial Day veterans parade in Arlington Heights. Kirk fired back by pointing out that the only uniform Giannoulias ever wore was for a Greek basketball team. "When I was serving in Afghanistan, he was making loans to convicted felons and mobsters," Kirk said, for about the thousandth time.

This is not Kirk's finest moment. It reflects the hubris he shows from time to time. We'd like to hear the congressman acknowledge that the award listed on his bio was inflated, not "misidentified." We'd like to hear him say he's sorry. But no.

"Let's be clear: I misstated the name of an award that I actually received for service that I actually performed in a conflict where I actually served," Kirk said.

Let's be clear: Kirk claimed the U.S. Navy had named him its top intelligence officer when in fact he'd shared in an award presented to his entire unit by an outside organization. He knows the difference. The public does, too.

Kirk's embellishment doesn't rise to the level of Democratic Senate hopeful Dick Blumenthal of Connecticut, who likes to talk as if he did time in Vietnam. A Marine reservist, Blumenthal never left the U.S. Closer to home, Calumet Park Mayor Joseph DuPar falsely claimed in a campaign flier that he'd received the Medal of Honor, the military's highest decoration, for his Army service in Vietnam.

Kirk's campaign Web site features a photo of the candidate in Navy flight gear and notes that he deployed to Afghanistan in December 2008, becoming the first House member since 1942 to serve in an imminent danger zone. His military record includes service during conflicts in Afghanistan, Iraq, Haiti and Bosnia, the Navy and Marine Corps Commendation Medal and yes, that Rufus L. Taylor award.

"I think he's got an honorable record," Giannoulias said. "I don't know why he feels the need to embellish the record and not tell the truth."

Neither do we.

Chicago Sun Times Editorial: Kirk's trying to dodge blame for false claims
Copyright by The Chicago Sun Times
June 2, 2010
http://www.suntimes.com/news/commentary/2342376,CST-EDT-edit02.article

If you're a politician who pumps up your military record, you should admit it, beg for forgiveness and move on as best you can.
But, please, don't insult the public by pretending your exaggerations were all honest errors.

Once -- maybe.

More than once -- not a chance.

This, unfortunately, is a lesson Republican Senate candidate Mark Kirk has not learned.

Kirk, who has served 21 years in the Naval Reserve, is getting hammered -- deservedly so -- for making himself out to be the combat vet and James Bond he never was.

But rather than taking full responsibility for several false claims, he's blaming everything and everyone from a faulty memory to his Democratic opponent, Alexi Giannoulias.

People do make mistakes. But so many embellishments over so many years can't be explained away as inadvertent slipups:

• Kirk and his staff have long claimed he was named the U.S. Navy's intelligence officer of the year. At a 2002 House committee hearing, C-SPAN recorded him saying, "I was the Navy's intelligence officer of the year." A Web video for his Senate campaign made the same claim until last week.

Not true. The Washington Post reported Sunday that the Rufus Taylor Intelligence Unit of the Year award for 1999 was given to Kirk's unit -- not to him personally.

Kirk's spokesman said, "We found the award was misidentified and corrected the name," but the Post said the website was corrected only after the newspaper began inquiries.

• Kirk further said on a video, "I command the war room of the Pentagon."

He does? As part of his Naval Reserve duty, Kirk works weekends as a deputy intelligence director at the war room -- officially known as the National Military Command Center -- but the commander usually is a one-star general.

• Kirk's congressional website bragged, until last week, of his "combat service in Kosovo."

Not true. Kirk did not serve in combat in Kosovo.

• Kirk claimed on his website in 2005 to be "the only member of Congress to serve in Operation Iraqi Freedom," according to the blog Nitpicker. He also claimed, referring to Afghanistan, to be the first representative in Congress who is a reservist to be deployed to "an imminent danger area" since World War II.

An exaggeration. Kirk served during Operation Iraqi Freedom, as his corrected website now says, and though he went to Afghanistan, he technically never was deployed there.

As someone who was accused of embellishing his credentials as early as 2000, Kirk should know that all such claims can, will and should be checked out. In American politics, military service is like a platinum credit card.

Just two weeks ago, Connecticut's Democratic Senate candidate, Richard Blumenthal, got caught claiming he had served in Vietnam. Blumenthal had served in the Marine Reserves during the war, but never left the United States.

Blumenthal, predictably, admitted guilt to only "totally unintentional" errors.

Why is it that every time a politician makes an "unintentionally" false claim about his military record he stumbles up -- not down -- the ladder? Nobody who was a colonel ever says he was a corporal.

Mark Kirk likes to present himself as a moderate Republican who, if elected to the Senate, would be adept at reaching across the aisle to work with Democrats.

But to do so, his word must be his bond.

The voters of Illinois have reason to doubt.

GetEQUAL co-founder arrested at Obama event

2010-06-02T11:03:00.000-07:00

GetEQUAL co-founder arrested at Obama event
by Rex Wockner
Copyright by Rex Wockner and Windy City Times
2010-06-02
http://www.windycitymediagroup.com/gay/lesbian/news/ARTICLE.php?AID=26755

GetEQUAL co-founder Kip Williams was arrested for shouting at President Barack Obama in San Francisco on May 25.
Obama was speaking at a fundraiser for U.S. Sen. Barbara Boxer at the Fairmont Hotel.

Williams said he yelled at Obama because the latest plans for Don't Ask, Don't Tell repeal are inadequate.

"The solution now being discussed to repeal Don't Ask, Don't Tell is an empty half measure and, even if passed, it will allow discharges of lesbian and gay service members to continue indefinitely," Williams said in an interview.

" ( The current plan ) has shifted responsibility off of Congress' back and onto the president, the secretary of defense and the chairman of the Joint Chiefs of Staff," he said. "This bill is Congress saying: 'Whenever you all decide you're ready to end Don't Ask, Don't Tell, we're cool with it. You don't have to check in with us again.'"

"It is a repeal of the law," Williams said, "but the policy and practice ( of DADT ) doesn't have to be phased out until ( Defense Secretary ) Robert Gates decides he's ready to do it. There's nothing binding, there's no timeline, and it will not end the discharge of lesbian and gay service members now."

Williams said he believes the plan unfolded the way it has because Gates is "the real holdup ... the only real opposition."

Williams was cited for disturbing the peace and then released.

"It was the first time I've done something like that by myself," he said. "I was close enough to see Obama's face. I worked so hard on his campaign and I still believe in him and I support him and I wish I didn't have to have that exchange with him and I saw the anger on his face when I started speaking, but I'm angry too, and I can't be silent."

Obama responded to the disruption.

"It's good to see you again," the president said to Williams. "I have to say, you know, I saw this guy down in L.A. at a Barbara Boxer event about a month and a half ago and I would—two points I want to make: Number one, he should—I hate to say this—but he really should, like, buy a ticket to—if he wants to demonstrate—buy a ticket to a guy who doesn't support his point of view, and then you can yell as much as you want there. The other point is, maybe he didn't read the newspapers because we are working with Congress as we speak to roll back Don't Ask, Don't Tell. I actually think he does read the newspapers because he wasn't as—his heart didn't seem in it. He said, 'Do it ( repeal DADT ) faster.' It's like, c'mon, man, I'm dealing, I'm dealing with Congress here. It takes a little bit of time."

In a press statement earlier in the day, GetEQUAL co-founder Robin McGehee set the stage for Williams' heckling.

"After a year and a half of mostly inaction, the White House has offered our community a compromise that is movement forward on repeal, but unfortunately not nearly enough for those service members—some who stood handcuffed with us and faced arrest beside us at the White House—living under the shadow of this outdated, immoral law," she said. "Together, our collective voice has moved the White House from a place of absence to involvement. However, we didn't invest ourselves to this cause, nor spend nights under arrest in a jail cell for a compromise. President Obama, we won't stop until you stop the immoral firing of our brothers and sisters in the military so that their integrity is restored, their jobs are secured and their families are recognized."

Leading Don't Ask, Don't Tell activist Lt. Dan Choi, who has been arrested twice recently for handcuffing himself to the White House fence, also is dissatisfied with the latest plans.

"My question still remains, and I've yet to find anyone who signed off on yesterday's compromise able to give me a direct answer to, 'When exactly will the discharges stop?'" Choi said May 25. "Until the President signs the papers that fully and immediately end the firing of patriotic, gay and lesbian service members, then there is no cause for celebration and no reason to trumpet mission accomplished for a job not yet done."

"We've heard a lot of talk about how this compromise can work politically, but on the day this passes Congress, no one has been able to explain how this will have any impact at all on those of us serving in uniform," Choi said. "Unfortunately, we have been handed an imperfect, 11th hour compromise."

In a May 25 analysis piece, Advocate reporter Kerry Eleveld, who is covering the developments closely, seemed to affirm the activists' concerns. She said the "compromise" plan facing congressional votes this week would not end DADT until "some indefinite point in the future."

DADT would continue until a Department of Defense study is completed in December and until Gates, Obama and Joint Chiefs of Staff Chairman Michael Mullen "certify that repeal can proceed," Eleveld said.

US pending home sales jump in April

2010-06-02T10:59:00.000-07:00

US pending home sales jump in April
By Simone Baribeau in New York
Copyright The Financial Times Limited 2010
Published: June 2 2010 15:55 | Last updated: June 2 2010 15:55
http://www.ft.com/cms/s/0/1d843dee-6e4c-11df-ab79-00144feabdc0.html

Pending home sales in the US jumped 6 per cent in April as homebuyers took advantage of a popular tax credit ahead of its April 30 expiration.

The jump in pending sales, defined as those that have been signed but not closed, came after two months of strong gains, according to data released on Wednesday from the National Association of Realtors. Pending sales are 22.4 per cent higher than their levels a year ago. The north-east saw a particularly strong monthly jump, with sales rising almost 30 per cent in April.

The sales are now close to their cyclical highs of October 2009, just before the initial planned expiry of the homebuyer tax credit. The credit, which was worth up to $8,000, expired at the end of April, but can be used for a home sale that was signed by April 30, as long as it closes before the end of June.

Some analysts worry that the summer will be a repeat of the period after the housing credit was originally scheduled to end. Sales, which had risen more than 30 per cent in a seven-month period, slid almost 20 per cent in 3 months.

“Overall, now that the government’s artificial prop has been removed, it is only a matter of time before the underlying weakness of the housing market becomes uncomfortably clear,” said Paul Dales, an economist for Capital Economics, who expects a “double-dip” in housing activity to start in May.

Housing prices, whose collapse sparked the financial crisis, had shown signs of strengthening amid government supports. But last month, prices extended their declines as the end of the homebuyer credit drew near. Prices, which more than doubled from 2000 to their 2006 high, have subsequently fallen more than 30 per cent, but remain 3 per cent above their cyclical low.

Sales of previously owned homes jumped 7.6 per cent in April, one of its strongest monthly gains on record, according to separate NAR data released earlier this month.

Hayward urges oil industry rethink

2010-06-02T10:56:00.000-07:00

Hayward urges oil industry rethink
By Ed Crooks in Houston
Copyright The Financial Times Limited 2010
Published: June 2 2010 16:20 | Last updated: June 2 2010 16:20
http://www.ft.com/cms/s/0/e1e0e21c-6e53-11df-ab79-00144feabdc0.html

The oil industry and BP need to “change the paradigm” for how they operate in order to continue developing hard-to-reach resources in deep water, the company’s chief executive has said.

Tony Hayward also admitted that the company had not had all the equipment it needed to control its leaking Macondo well in the Gulf of Mexico, which has created the largest ever offshore oil spill in the US.

With BP and the rest of the industry threatened with being shut out of the deep waters of the Gulf, the most promising region in the US for oil development, Mr Hayward argued that the industry could reform itself to justify continued drilling in those challenging areas.

Speaking to the Financial Times in Houston as engineers worked on their latest bid to trap the escaping oil, he said BP was looking for new ways to manage “low-probability, high-impact” risks like the Deepwater Horizon accident.

The gas blow-out that caused a fatal explosion on the rig on April 20 and created the oil leak had been a “one in a million” chance, Mr Hayward said, but that risk had to be cut to “one in a billion or one in a trillion.”

Analysts believe the disaster could cost BP $20bn in clean-up costs, compensation, damages and fines, and has done incalculable damage to the company’s position in the US.

Mr Hayward said the industry needed to cut the risk of accidents, and to increase its capability to deal with leaks on the sea bed in a mile or more of water.

Reducing the risk of accidents could mean redefining the relationships between the companies involved in drilling a well.

BP believes that on the Deepwater Horizon there were seven separate problems that could have contributed to the accident, including failures of the cement in the well, the tests run on the well, and the blow-out preventer, intended to stop releases of oil and gas.

Those failures could have involved a number of different companies besides BP, including Transocean, which owned and operated the rig, Halliburton, which cemented the well, and Cameron International, which manufactured the blow-out preventer.

BP was in overall control of the project, but responsibility for safety was shared. That model, according to Mr Hayward, may have to change.

“We have been driving safe and reliable operations through the company within the existing industry paradigm,” he said. “What this causes us to question is whether that paradigm is right for the future.”

It was possible, he added, that in future BP could operate its own rigs working in deep water.

“This is not about BP and Transocean,” he said. “Transocean are a very very good drilling contractor… But we have to ask how much further we can drive the risk down.”

Mr Hayward also accepted it was “an entirely fair criticism” to say that the company had not been fully prepared for a deep water oil leak.

The containment effort on the surface, he said, had been “very successful” in keeping oil away from the coast. “Considering how big this has been, very little has got away from us,” he said.

However, BP had not had ready any equipment or even ideas for stopping the leak. It has been reaching for many of the same techniques used to control the Ixtoc 1 blow-out in the Gulf of Mexico 31 years ago.

“What is undoubtedly true is that we did not have the tools you would want in your tool-kit,” Mr Hayward said.

“After the Exxon Valdez spill in 1989, the industry created the Marine Spill Response Corporation to contain oil on the surface…. The issue will be to create the same sub-sea response capability.”

With BP’s hopes of future growth in the US riding on deep water development, it will be vital for Mr Hayward that the administration ultimately accepts that those reforms will be enough to allow drilling to continue.

U.S. Proposes Rules on Airline Tickets and Fees

2010-06-02T10:52:00.000-07:00

U.S. Proposes Rules on Airline Tickets and Fees
Copyright By THE ASSOCIATED PRESS
Published: June 2, 2010
http://www.nytimes.com/2010/06/03/business/03air.html?hp

WASHINGTON (AP) — Airline passengers would receive as much as $1,300 for being bumped from a flight and would have 24 hours to cancel reservations without penalty under a series of consumer measures proposed Wednesday by the Obama administration.

Currently, airlines must pay up to $800.

The new rule would also require airlines to fully and prominently disclose baggage fees as well as refunds and expense reimbursement when bags are not delivered on time, provide special notice any time baggage fees are increased and notify passengers buying tickets whether they must pay to check up to two bags.

Price increases after a ticket is purchased would also be prohibited under the proposal. Airlines would also have to give passengers timely notice of flight status changes.

The proposal would extend to foreign airlines a three-hour limit on the time airlines can keep passengers waiting on airport tarmacs. The three-hour limit went into effect for American carriers in April.

Currently, airlines may limit compensation to $400 for involuntary bumping passengers if the carrier arranges substitute transportation scheduled to arrive at the passenger’s destination one to two hours after the passenger’s original scheduled arrival for domestic flights, or one to four hours for international flights.

They limit compensation to $800 if the substitute transportation is scheduled to arrive more than two hours later for domestic flights, or more than four hours later for international flights.

The proposed rule would increase the limits to $650 and $1,300, respectively, and adjust those limits for inflation every two years.

”This administration believes consumers are entitled to strong and effective protections when they fly,” the Transportation secretary, Ray LaHood, said.

While acknowledging the financially troubled condition of the airline industry, Mr. LaHood said he believed airlines could factor the new rules into their schedules without causing disruptions in service.

James May, president of the Air Transport Association, which represents major carriers, said airlines would evaluate the proposals “with a focus on minimizing potential passenger inconvenience.”

Interested parties have up to 60 days to submit comments to the Transportation Department. Mr. LaHood estimated the new rules would go into effect some time this fall.

Latest Effort to Stop Oil Flow Hits a Snag

2010-06-02T10:49:00.000-07:00

Latest Effort to Stop Oil Flow Hits a Snag
By CAMPBELL ROBERTSON and JOSEPH BERGER
Copyright by Reuters
Published: June 2, 2010
http://www.nytimes.com/2010/06/03/us/03spill.html?hp

HOUMA, La. — The latest attempt to contain the oil gushing into the Gulf of Mexico hit a snag Wednesday when a diamond-tipped saw operated by an underwater robot got stuck in the riser pipe it was intended to slice off, federal officials said.

The snared saw set back efforts to seal the stricken well that, since a drilling rig explosion on April 20, has been spewing thousands of gallons of oil into the gulf and fouling beaches, shellfish and birds on the coasts of Louisiana, Alabama and Mississippi. But Adm. Thad Allen of the Coast Guard, who is commanding the federal response to the oil spill, said the necessary cut will be made, either by the temporarily snared saw or by another saw brought in to replace it. Once the cut is made, a containment dome can be lowered into place to capture most of the oil flow and send it up to a tanker on the surface.

“I don’t think the issue is whether or not we can make the second cut,” Admiral Allen said at a press conference here. “It’s about how fine we can make it, how smooth we can make it.”

He cautioned again, however, that this so-called cut-and-cap effort could increase the flow of oil by as much as 20 percent until the containment dome is snugly in place.

The effort to stem the flow of oil was proceeding as the Obama administration began a civil and criminal investigation into the spill, a deepening crisis that threatens to define President Obama’s second year in office. Mr. Obama is expected to address the latest developments Wednesday afternoon in remarks at Carnegie-Mellon University in Pittsburgh.

In excerpts of a draft of those remarks released by the White House, the president said “the time has come, once and for all, for this nation to embrace a clean energy future,” that includes more energy efficient cars and homes, more nuclear power plants, and roll backs of tax breaks to oil companies. The gulf disaster, he said, “may prove to be the result of human error — or corporations taking dangerous short cuts that compromised safety,” but the nation “must acknowledge that there are inherent risks to drilling four miles beneath the surface of the Earth, risks that are bound to increase the harder oil extraction becomes.”

Attorney General Eric H. Holder Jr. said in New Orleans on Tuesday that he planned to “prosecute to the fullest extent of the law” any person or entity that the Justice Department determines has broken the law in connection with the oil spill. BP, the London-based oil giant, will be trying to reassure investors that the cost of cleaning up the oil spill is manageable and will not have an impact on dividends, British news media reported. Tony Hayward, BP’s chief executive, is expected to tell investors that the cost, estimated at $1 billion, can be absorbed by cash generated from its operation around the world.

“If our current efforts were to fail and we have to wait for the relief wells to be drilled and had six months of cleanup, we estimate the cost at $3 billion,” Mr. Hayward told The Daily Mail. He noted that cost would be offset by the company’s strong performance, which should generate cash flows of $7.5 to $8 billion.

On Wall Street Tuesday, the Dow Jones industrial average fell 120 points shortly after Mr. Holder’s announcement, as energy stocks tumbled; BP lost 15 percent of its market value during the day’s trading. But on Wednesday, BP and the broader index both traded higher in the morning.

BP and government officials said flatly for the first time on Tuesday that they had abandoned any further plans to try to plug the well, and would instead try to siphon the leaking oil and gas to the surface until relief wells can stop the flow, which probably could not be achieved before late August.

The current strategy is to fit a containment cap over the leak and funnel oil up through a riser pipe to a ship on the surface. For this procedure to work, the original riser, the pipe that once ran from the wellhead up to the drilling rig and now lies broken and snaking along the sea floor, must be sheared off.

One cut has already been made in the riser, farther from the wellhead, to alleviate pressure. But another cut needs to be made at the point where the riser leaves the blowout preventer, the stack of valves sitting on the wellhead whose failure created what is now regarded by federal officials as the largest environmental disaster in modern America history.

The effectiveness of the procedure depends on how closely that cut can be made. The more water that mixes with the oil as it flows out of the cut pipe, the more likely it will be that ice crystals will form, blocking the flow. A closer cut would allow a cap to fit snugly over the leak, keeping the influx of frigid water to a minimum.

Campbell Robertson reported from Houma and Joseph Berger from New York.

The Really Creepy People Behind the Libertarian-Inspired Billionaire Sea Castles - The stinking rich are planning billion-dollar luxury liners that ke

2010-06-02T10:43:00.000-07:00

The Really Creepy People Behind the Libertarian-Inspired Billionaire Sea Castles - The stinking rich are planning billion-dollar luxury liners that keep the land-based Americans they've plundered at a safe distance.
By Mark Ames
Copyright by AlterNet
June 2, 2010
http://www.alternet.org/story/147058/the_really_creepy_people_behind_the_libertarian-inspired_billionaire_sea_castles?page=entire

What happens when Americans plunder America and leave it broken, destitute and seething mad? Where do these fabulously wealthy Americans go with their loot, if America isn't a safe, secure, or even desirable place to spend their riches? What if they lose faith in their gated communities, because those plush gated communities are surrounded by millions of pissed-off Americans stripped of their entitlements, and who now want in?

We finally have the answer, and you're not going to like it: a new fleet of castles that float in the oceans. The super-wealthy are already building their first floating castle, a billion-dollar-plus luxury liner that offers permanent multimillion-dollar housing with the best protection of all: moats made of oceans, keeping the land-based Americans they've plundered at a safe distance.

The first such floating castle has been christened the "Utopia"--the South Korean firm Samsung has been contracted to build the $1.1 billion ship, due to be launched in 2013. Already orders are coming in to buy one of the Utopia's 200 or so mansions for sale--which range in price from about $4 million for the smallest condos to over $26 million for 6,600 square-foot "estates." The largest mansion is a whopping 40,000 square feet, and sells for $160 million.

It's the first of its kind to offer permanent housing units to buyers, and there'll be plenty on board the Utopia for the global elite inhabitants to keep themselves entertained: an outdoor movie theater, casino, miniature golf course, nightclubs, restaurants, shops, and a water park for the elites' heirs (featuring a "Lazy River," rock-climbing wall and water slides). At nearly 1,000 feet, the Utopia is almost as long as a nuclear-powered Nimitz-class aircraft carrier.

The floating castle is a longtime dream of libertarian oligarchs -- a place where they can live their lives in peace free from the teeming masses of starving losers and indebted parasites and their tax demands. Since they’ve grown so rich off of America, they have enough spare change to fund projects like the Seasteading Institute, run by Milton Friedman's grandson, Patri Friedman, and financed by the bizarre right-wing PayPal founder, Peter Thiel. It couldn't have come a moment sooner for Milton Friedman's grandson, who was best known until recently for running a grotesque advice blog for married swingers, PUA4LTR (Pick Up Advice For Long-Term Relationships). Actually, Patri Friedman ran that pick-up advice blog with his wife--the two of them are apparent big-time cyber-swingers, apparently--posting blog entries saying things like "Why Should Husbands Become PUAs? Because otherwise, your wife will talk like those wives on the blog My Husband Is Annoying."

Both Thiel and Milton Friedman's grandson see democracy as the enemy--last year, Thiel wrote "I no longer believe that freedom and democracy are compatible" at about the same time that Milton Friedman's grandson proclaimed, "Democracy is not the answer." Both published their anti-democracy proclamations in the same billionaire-Koch-family-funded outlet, Cato Unbound, one of the oldest billionaire-fed libertarian welfare dispensaries. Friedman's answer for Thiel's democracy problem is to build offshore libertarian pod-fortresses where the libertarian way rules. It's probably better for everyone if Milton Friedman's grandson and Peter Thiel leave us forever for their libertarian ocean lair--Thiel believes that America went down the tubes ever since it gave women the right to vote, and he was outed as the sponsor of accused felon James O'Keefe's smear videos that brought ACORN to ruin.

While Thiel and Friedman are busy cooking up their libertarian dystopia, the Frontier Group investment firm -- an offshoot of the Carlyle Group -- has already entered the realization phase with the Utopia floating castle. Frontier Group, was founded by some of the same big names from the notorious Carlyle Group--the private equity firm that brought together right-wing oligarchs like George H. W. Bush and other top American officials with their billionaire pals in Saudi Arabia like the Bin Laden family, who together raked in enormous profits thanks to the War on Terror that their kids Dubya and Osama launched.

While neither Bush nor the Bin Ladens are principals in the Frontier Group, its founding director, Frank Carlucci, is a name they know well, and you should too. Carlucci ran the Carlyle Group as its chairman from 1989 through 2005, right around the time that the wars started going undeniably bad, and floating castles started to look like a viable plan. But Carlucci's past is much weirder and scarier than most of us care to know: whether it's his strangely timed appearances in some of the ugliest assassinations and coups in modern history, or serving as Carter's number two man in the CIA, and Ronald Reagan's Secretary of Defense, if Frank Carlucci (nicknamed "Creepy Carlucci" and "Spooky Frank") is the founding director of a firm that's building floating castles, it's a bad sign for those of us left behind.

I'll get into Carlucci's partners in the Frontier Group in a moment, but first, let's reacquaint ourselves with Frank Carlucci. From an early age, Carlucci learned the importance of getting to know the right people in the right places. He studied at Princeton in the mid-1950s, where as luck should have it, Carlucci roomed with Donald Rumsfeld. Both Carlucci and Rumsfeld shared a passion for Greco-Roman wrestling at Princeton, and both went on to serve in the Navy after Princeton. Their paths would split and merge several times over the next few decades, even as they remained close personal friends throughout their lives. In the late 1950s, Carlucci briefly served as an executive at a lingerie manufacturer, Jantzen (the Victoria's Secret of its day), but quickly left to join the State Department.

At age 30 Carlucci was named vice consul of the U.S. embassy in the Congo--just in time for the colony's independence from Belgium. Of all the European colonies in Africa, Congo suffered perhaps the worst, at least that we know about: the Belgians exterminated up to 10 million Congolese between 1885 and 1908, and introduced the now-widespread punishment of hacking off Africans' forearms to scare everyone into submission. All of this was done in order to strip the Congo of its lucrative rubber, ivory, and later, precious metals, as quickly as possible, and send the riches back to Belgium.

Naturally the Belgians didn't want to let go of their colony, so they held out until 1960, when the Congo finally was granted independence and democratic elections. Unfortunately for the Congo, America didn't like way they voted--so two months after Patrice Lumumba was elected president, he was overthrown in a CIA-backed coup, taken out into the jungle, murdered, chopped into little pieces with a hacksaw, and then dissolved in sulfuric acid. Carlucci has been accused of green-lighting Lumumba's assassination by multiple investigative reporters.

The dictator who replaced Lumumba was a CIA asset named Joseph Mobutu--the notorious dictator who brought the Congo to ruin after embezzling more than any dictator in Africa. Mobutu was finally deposed in 1997, but the wars since then have claimed roughly six million lives, the bloodiest conflicts since World War II.

After his success in Congo, it was all uphill for Carlucci: he moved to the Brazil embassy just in time for the military coup in 1964, then went to Washington to serve as deputy to his buddy Donald Rumsfeld in Nixon's Office of Economic Opportunity, where the young Dick Cheney was making his name. The first thing they did upon taking control of the OEO was conduct a purge of "subversives" firing up to a quarter of the staff. In 1974, Carlucci was named ambassador to Portugal just in time for the overthrow of the dictatorship--Carlucci saw to it that the communists who led the overthrow were themselves overthrown by IMF-friendly "moderate" socialists, and a few years later, he was back in Washington serving as the number two man in the CIA under Carter.

Once that agency was sufficiently gutted, he moved on to other forms of destruction: In 1974, Carlucci was named ambassador to Portugal just in time for the overthrow of the dictatorship--Carlucci saw to it that the Communists who led the overthrow were themselves overthrown by IMF-friendly "moderate" socialists, and a few years later, he was back in Washington DC serving as the number two man in the CIA under Carter. In 1981, Reagan named him deputy Defense Secretary; Carlucci left in 1983 to head up Sears World Trade, a trading company involved in shady arms deals that was once described by Fortune magazine as a front for US intelligence ops. Once that collapsed, Carlucci moved back to the Reagan Administration as National Security Advisor and then Defense Secretary.

In 1989, Carlucci left to become chairman of the fledging Carlyle Group, which subsequently morphed into the monster we remember it by: using its highly paid A-list of public officials to lobby big government for lucrative contracts, profiting off of privatized rest stops and unnecessary arms contracts, leaving the public to foot the bill while guys like Carlucci run around preaching the benefits of private enterprise.

Carlucci may be the scariest of the Frontier Group bunch building the floating castles, but he's among his kind. Other Carlyle Group directors who joined Carlucci at Frontier include David Robb, who headed up Carlyle's investments in defense and aerospace; Sanford McDonnell, the former CEO of McDonnell Douglass and onetime head of the Boy Scouts of America; and Norman Augustine, another ex-president of the Boy Scouts, another Princeton alum, and former board director at the scandal-plagued Riggs bank.

Riggs bank became one of those dark unsolved mysteries of the Bush-Cheney War on Terror. After the attacks on 9/11, the FBI discovered that Saudi government officials used accounts at Riggs bank to wire funds to at least two known associates of the Saudi hijackers who crashed Flight 77 into the Pentagon. Riggs was also implicated in the Britain-Saudi $3 billion bribery scandal, in which British Aerospace bribes were wired through Riggs accounts to Saudi officials in return for lucrative contracts. One of Riggs bank's top executives was Jonathan Bush, the brother of George H. W. Bush, after Riggs bought out Jonathan Bush's bank in 1997, and appointed him as a director. In 2005, with Riggs embroiled in investigations and scandals--Riggs pled guilty to money laundering Augusto Pinochet's stolen funds, and the funds of various Equatorial Guinea officials-- it was taken over by PNC bank, with the approval of Fed Chair Alan Greenspan. Even after the Washington Post revealed that Riggs' billionaire chairman flew Greenspan's wife, MSNBC anchor Andrea Mitchell, on the company jet.

But the weirdest of all the Frontier Group directors has to be founding director Danny Pang. Last year, the Wall Street Journal reported that Pang embezzled hundreds of millions of dollars from his private equity firm PEMGroup. Pang claimed he was investing money in "Dead Peasants Insurance" (life insurance policies for people considered likely to die), but in secret, Pang confided to PEMGroup's ex-president that he ran it as a Ponzi scheme. That sparked a fresh FBI investigation into Danny Pang's crimes--which led back to the unsolved murder of his wife, Janie Louise Pang, a 33-year-old ex-stripper who was shot to death execution style in their Irvine, California home in 1997, the same year Pang was accused of embezzling three million dollars from another fund he worked at. There was plenty of reason to suspect Danny Pang of murdering his wife: he beat her so often (breaking her nose on one occasion) that police were called in on at least four occasions before her murder. She'd had him tailed by a private detective who discovered Danny holding hands with another woman shortly before she was murdered. Danny had known ties to the Taiwanese Triad mob, he took the fifth and refused to cooperate in the murder trial, and reportedly threatened Janie's friends after her murder, demanding to know what Janie told them about his business activities.

Here is a description of the actual murder, from the L.A. Times:

According to the family maid and two of Pang's children, a clean-cut man with a pencil-thin mustache arrived at the door asking for her husband. The pair talked casually for a couple of minutes, until the man drew a semiautomatic pistol. Pang began running and the maid, terrified, spirited Pang's children out the back door. Within minutes, the killer caught up with Pang, who tried to hide in her bedroom closet. The killer fired several .380-caliber rounds and left her to bleed to death as she lay in a fetal position.

Somehow, the trial ended with a hung jury, and Danny Pang went on to join Frank Carlucci and the Boy Scouts presidents to start building the world's first billion-dollar floating castle to spirit away all that stolen money in luxury. But Pang was apparently too careless for them. He was outted last spring in the Wall Street Journal, and in September 2009, Danny Pang was found dead of unknown causes in his Newport Beach home.

After a three-month investigation, Pang's death was ruled a suicide:

John C. Hiserodt, a private forensic pathologist in Cypress, Calif., reviewed the toxicology report released by the coroner. He said it showed that Mr. Pang had roughly five times the typical fatal levels of both oxycodone and hydrocodone in his blood, plus the equivalent still in his stomach of about 30 oxycodone pills of 10 milligrams apiece. "You don't get this level of drug accidentally," he said. "It's pretty clearly a suicide."

Meanwhile, plans to launch the Utopia are moving ahead on schedule.

New York Times Editorial: Speaking Up to Stay Silent

2010-06-02T10:40:00.000-07:00

New York Times Editorial: Speaking Up to Stay Silent
Copyright by The New York Times
Published: June 1, 2010
http://www.nytimes.com/2010/06/02/opinion/02wed2.html?th&emc=th

The Miranda warnings remind suspects of their right to remain silent but were never particularly clear on what happens when a suspect actually stays silent. Can the police question the suspect? If so, can they do they so for just a few minutes or as long as they want?

A five-justice majority on the Supreme Court addressed the issue in an opinion on Tuesday, but it did not provide much clarity. This was not a burning issue crying out for the court’s attention, and the justices left so many crucial questions unanswered that it is hard to see how they protected the rights of suspects who do not read complex court decisions.

The court’s 5-to-4 opinion in the case of Berghuis v. Thompkins said that a suspect who wants the police to stop an interrogation must explicitly invoke the right to remain silent. Otherwise, Justice Anthony Kennedy wrote for the majority, the questioning can continue.

Though the court did not address the issue, there must be limits to that questioning. In this case, Van Chester Thompkins Jr., a murder suspect, was read his rights, and the Southfield, Mich., police interrogated him for nearly three hours until he made a one-word statement that was used to help convict him.

The dissenting justices, led by Justice Sonia Sotomayor, are correct in saying that the majority is essentially rewriting an essential aspect of the Miranda system without admitting it, following the Roberts court’s disturbing pattern of stealthily overturning precedents.

As Justice Sotomayor points out, the original Miranda decision said the police cannot presume a suspect has waived the rights of the Fifth Amendment simply because he or she is silent. A lengthy interrogation that eventually results in a confession, the Miranda decision says, usually means the confession was coerced.

The problem is that the piece of Miranda at issue did not provide clear guidance for police departments. Some departments will not question a suspect without an explicit waiver of his or her Miranda rights; some set time limits on questioning; others, like the one in Southfield, will go as long as they want.

The American Civil Liberties Union says there should have been no questioning in this case because Mr. Thompkins refused to sign a form indicating he understood his rights. That seems to give police officers too little leeway in questioning a suspect; Mr. Thompkins was told that anything he said could be used against him, and he demonstrated an understanding of his rights.

But a three-hour interrogation is too long and too coercive. If the court really wanted to bring clarity to a murky issue, it should have gone further. In cases where a suspect does not explicitly invoke the right to remain silent, the court should have set a time limit on how long the police can continue questioning.

Alternatively, the court could have explicitly changed the Miranda warnings by having police officers tell suspects that they have to verbally invoke their rights. This court’s majority has not been particularly friendly to Miranda, and if it really felt some tinkering was needed, it should have done a much better job of helping suspects know and understand their rights.

New York Times Editorial: Israel and the Blockade

2010-06-02T10:38:00.000-07:00

New York Times Editorial: Israel and the Blockade
Copyright by The New York Times
Published: June 1, 2010
http://www.nytimes.com/2010/06/02/opinion/02wed1.html?th&emc=th

The supporters of the Gaza-bound aid flotilla had more than humanitarian intentions. The Gaza Freedom March made its motives clear in a statement before Monday’s deadly confrontation: “A violent response from Israel will breathe new life into the Palestine solidarity movement, drawing attention to the blockade.”

There can be no excuse for the way that Israel completely mishandled the incident. A commando raid on the lead, Turkish-flagged ship left nine activists dead and has opened Israel to a torrent of criticism.

This is a grievous, self-inflicted wound. It has damaged Israel’s ties with Turkey, once its closest ally in the Muslim world; given the Hamas-led government in Gaza a huge propaganda boost; and complicated peace talks with the Palestinian Authority in the West Bank.

It also has made it much tougher for the Obama administration to persuade the United Nations Security Council to put new sanctions on Iran’s nuclear program — which Israeli officials insist is their top priority.

The questions raised by the confrontation — and there are many — demand an immediate and objective international investigation.

Why did Israel, which has blocked some ships but allowed others to pass, decide to take a stand now? Did it make a real effort to find a compromise with Turkey, which sanctioned the flotilla? Israel has a right to stop weapons from going into Gaza, but there has been no suggestion that the ships were carrying a large cache.

Was boarding, especially in the dark, the only means of stopping the ships? What happened once Israeli forces got on board? The Israeli Defense Forces have distributed a video showing that the commandos were attacked. Why weren’t they better prepared to defend themselves without using lethal force?

There is a bigger question that Israel — and the United States — must be asking: Is the blockade working? Is it weakening Hamas? Or just punishing Gaza’s 1.4 million residents — and diverting attention away from abuses by Hamas, including its shelling of Israeli cities and its refusal to accept Israel’s right to exist?

At this point, it should be clear that the blockade is unjust and against Israel’s long-term security.

After Hamas seized control of the Gaza Strip in 2007, Israel — with Egypt’s help — imposed a blockade on many goods and most people going into and out of the territory. The goal was to quickly turn residents against their new government. Three years later, Hamas is still in charge — and the blockade has become an excuse for any and all of the government’s failures.

The situation in Gaza is grim. Eight out of 10 people depend on international aid agencies to survive. Basic foodstuffs are available, but medical supplies and construction materials are severely lacking. The desperation could be seen on Tuesday when Egypt lifted the blockade and several thousand Gazans rushed the border but were later sent home after police officers said they did not know when the crossing would be opened.

On Tuesday, President Obama expressed his “deep regret” over the flotilla incident. He is doing Israel no favors with such a tepid response. Prime Minister Benjamin Netanyahu has shown time and again that he prefers bullying and confrontation over diplomacy. Washington needs to make clear to him just how dangerous and counterproductive that approach is.

Mr. Obama needs to state clearly that the Israeli attack was unacceptable and back an impartial international investigation. The United States should also join the other permanent members of the United Nations Security Council — Britain, France, Russia and China — in urging Israel to permanently lift the blockade.

That would lessen the suffering of the people in Gaza. And it would give the United States more credibility as it presses both Israelis and the Palestinian president, Mahmoud Abbas, to negotiate a peace deal.

Steve Jobs Muses on All Things Apple

2010-06-02T10:35:00.000-07:00

Steve Jobs Muses on All Things Apple
By MIGUEL HELFT
Copyright by The New York Times
June 2, 2010, 12:04 am
http://bits.blogs.nytimes.com/2010/06/02/steve-jobs-muses-on-all-things-apple/?th&emc=th

For Steven P. Jobs, the chief executive of Apple, the timing of his public appearance at the D8 conference could not have been better. Last week, Apple surpassed Microsoft to become the world’s most valuable technology company. A little more than a decade ago, Apple was struggling for its life, and many tech pundits were predicting its demise.

So Mr. Jobs’s wide-ranging interview with the conference hosts, Walt Mossberg and Kara Swisher, began, appropriately, with a softball question: How did it feel to stand at the top of the technology heap?

“For those of us who have been in the industry a long time, it is surreal,” Mr. Jobs said. “But it doesn’t matter very much. It is not what’s important. It is not why any of our customers buy our products. I think it is good for us to keep that in mind. But it is a little surreal.”

Mr. Jobs then hit on all the news that has involved Apple recently — the iPhone prototype found in the bar, the war over Flash with Adobe, the suicides at the Chinese contract manufacturer Foxconn, AT&T’s network problems, the rivalry with Google and more. He didn’t make any news or announce any new products or partners, but he delivered some interesting tidbits. Perhaps most significantly, he said Apple has no plans to get rid of Google’s search and maps services on the iPhone or iPad.

“We have some Google properties on our phone,” Mr. Jobs said. “Just because we are competing with somebody doesn’t mean you have to be rude.”

Mr. Jobs also appeared to pour cold water on reports that Apple was about to unveil a new version of Apple TV, saying the digital television business was plagued with a series of problems, including challenges in distributing new products. “That’s why when we said Apple TV is a hobby, that’s why we used that phrase,” he said.

Mr. Jobs was far more circumspect when he was asked whether there might soon be an iPhone running on a network other than AT&T’s in the United States. Mr. Jobs bit his lip as he appeared to think how to answer. “There might be,” he said. After he was pressed about when that might happen, he added: “The future is long. I can’t talk about that stuff.” Speculation has been building that Apple may soon unveil a phone running on Verizon Wireless.

Mr. Jobs said he didn’t set out to have a war with Adobe over Flash, the Web technology that Apple has refused to include on the iPhone and on the iPad. And he said the success of Apple’s products suggests that consumers are doing fine without it.

“We didn’t start off to have a war with Flash,” he said. Mr. Jobs said Apple simply made a technical decision not to invest in a technology that the company believes will decline as others, like HTML5, will rise to replace it. “It wasn’t until we shipped the iPad that Adobe started to raise a stink about it,” he said. “We didn’t raise a stink about it. We weren’t trying to have a fight. We just decided not to use one of their products in our platform.”

When pressed on whether the absence of Flash was bad for consumers, he answered that consumers appeared to have spoken with their wallets. “If the market tells us we are making the wrong choices, we listen to the market.” Mr. Jobs said Apple has made a technological bet that Flash is not necessary, and that customers, in essence, pay Apple to make such choices and deliver good products. “If we succeed, they’ll buy them, and if we don’t, they won’t,” he said. “People seem to be liking the iPad. We sold one every 3 seconds since we launched them.”

Mr. Jobs also predicted that the ongoing shift in technology away from the PC and toward mobile devices will continue. But rather than disappear, the PC will become a niche product, he said. Mr. Jobs compared the role of the PC, the workhorse of computing for the past three decades, with that of the truck, when America was primarily an agrarian nation. “All cars were trucks because that’s what you needed on the farm,” he said. Now trucks are one in 25 to 30 vehicles sold, he said. “PCs are going to be like trucks. They will still be around.” He added, “This transformation is going to make some people uneasy.”

Mr. Jobs said he believed that the iPad would offer new opportunities for content creators, and especially for news organizations, to charge readers for their products. He advised media companies to price products low, just as Apple did with songs on iTunes. “As one of the largest sellers of content on the Internet today, Apple’s lesson is price it aggressively and go for volume,” he said. “I believe people are willing to pay content. I believe it in music. I believe it in media. And I believe in it in news content.”

Mr. Jobs said he was concerned about the rash of suicides at Foxconn, the manufacturer that supplies Apple, but said the factory was not a “sweatshop,” and noted that Apple is “over there trying to understand what is happening.”

And he said he believed that a lot of the problems with making calls on AT&T’s network with the iPhone will be resolved before the end of summer.

Mr. Jobs, who is still gaunt, was not asked about his health problems and did not discuss them. But at one point during the interview, he said, “The last few years have reminded me that life is fragile.”

H.P. Will Cut 9,000 Jobs as It Streamlines Its Data Centers

2010-06-02T10:32:00.001-07:00

H.P. Will Cut 9,000 Jobs as It Streamlines Its Data Centers
By CLAIRE CAIN MILLER
Copyright by The Associated Press
Published: June 1, 2010
http://www.nytimes.com/2010/06/02/technology/02hewlett.html?th&emc=th

SAN FRANCISCO — Hewlett-Packard announced Tuesday that it would cut 9,000 jobs and take a charge of about $1 billion over several years, as it consolidates and automates data centers.

During the same time period, H.P. will hire 6,000 new workers in sales and service delivery positions, said Jane McMillian, an H.P. spokeswoman.

Under Mark V. Hurd, H.P.’s chief executive, the company has shaved costs by regularly cutting large numbers of staff. In 2005, Mr. Hurd cut 15,300 jobs, in part by consolidating the data centers running the company’s own operations.

In 2008, after H.P. acquired Electronic Data Systems, it cut 7.5 percent of the company, or 25,000 people, and reduced the salaries of others by 20 percent in some cases. In May 2009, H.P. announced that it would cut 6,420 people.

H.P. said it would invest $1 billion in its enterprise services business and that the modernized data centers would enable its customers to run their businesses more efficiently from those data centers. The company has folded its recent acquisition of E.D.S. into its enterprise services division, which runs the business operations for clients.

“When we’re talking about this new era, it’s all really to enhance the client experience and to make them more effective so that they can grow their business,” Ms. McMillian said.

In the most recent quarter, ended April 30, the division recorded revenue of $8.7 billion. Though it has not been growing quickly of late, the company has been devoting resources to expanding the business because the profit margins are much higher than in its core business of making PCs. The division had a 15.9 percent profit margin compared with the PC division’s margin of 4.6 percent.

The company positioned the changes as the natural next step after buying E.D.S., the computer services company. “Over the past 20 months, we focused on integrating E.D.S. and improving profitability,” Tom Iannotti, senior vice president and general manager of the division, said in a statement. “Now that the integration is largely complete, we have identified significant opportunities to grow and scale the business.”

Mark Fabbi, a vice president and analyst at Gartner, compared Hewlett’s data center division to factory floor during the Industrial Revolution. “In the Industrial Revolution, they put things on an assembly line and didn’t need those jobs anymore,” he said. “This is the same thing applied to H-P, a hundred years later.”

The company said it would record about half of the $1 billion charge in the third quarter and the rest by the end of fiscal 2013. The layoffs and $1 billion charge will result in savings of $500 million to $700 million a year, the company said.

In April, H.P. announced that it planned to acquire Palm, the maker of the Pre and Pixi smartphones, for $1.2 billion.

After Flotilla Raid, U.S. Is Torn Between Allies

2010-06-02T10:30:00.000-07:00

After Flotilla Raid, U.S. Is Torn Between Allies
By MARK LANDLER
Copyright by The New York Times
Published: June 1, 2010
http://www.nytimes.com/2010/06/02/world/middleeast/02policy.html?th&emc=th

WASHINGTON — Struggling to navigate a bitter split between two important allies, the Obama administration on Tuesday tried to placate an outraged Turkish government while refusing to condemn Israel for its deadly raid on a flotilla of aid ships bound for Gaza.

President Obama telephoned Prime Minister Recep Tayyip Erdogan of Turkey to express his “deep condolences” for the deaths of Turkish citizens in clashes with Israeli soldiers on the ship, the White House said. He told Mr. Erdogan that the United States was pushing Israel to return their bodies, as well as 300 Turks who were taken from the ship and being held in Israel.

Mr. Obama called for a “credible, impartial and transparent investigation of the facts surrounding this tragedy,” the White House said. Secretary of State Hillary Rodham Clinton said such an investigation could include international participation, something the Israelis said they opposed.

It is far from clear that these efforts will mollify Turkey, which accused Israel of state-sponsored terrorism and likened the psychological impact of the raid to the Sept. 11, 2001, terrorist attacks in the United States. “No one should think we will keep quiet in the face of this,” Mr. Erdogan declared during a visit to Chile.

The deep rift between Israel and Turkey, which had cultivated close ties, puts the Obama administration in a tough spot on two of its most pressing foreign-policy issues: the Middle East and Iran.

The United States does not want to abandon Israel, which has been subjected to international opprobrium since the raid. The administration is desperate to keep alive indirect peace negotiations between the Israelis and Palestinians brokered by its special envoy, George J. Mitchell.

But it also does not want to alienate Turkey, which is playing an increasingly vocal role on the world stage. Relations were already tender after the United States threw cold water on a Turkish and Brazilian effort to resolve the impasse over Iran’s nuclear program. Turkish officials complain that they negotiated the deal with the encouragement and agreement of the administration.

“Turkey and Israel are both good friends of the United States, and we are working with both to deal with the aftermath of the tragic incident,” Mrs. Clinton told reporters at the State Department after meeting with Turkey’s foreign minister, Ahmet Davutoglu.

She conferred with Mr. Davutoglu for more than two hours, rearranging her schedule. Mr. Obama’s national security adviser, Gen. James L. Jones, went to see him at his hotel before Mr. Obama called Mr. Erdogan.

Earlier in the day, Mr. Davutoglu harshly criticized the cautious American response to the raid, saying: “We expect full solidarity with us. It should not seem like a choice between Turkey and Israel. It should be a choice between right and wrong, between legal and illegal.”

He complained that the United States had delayed and watered down the United Nations Security Council statement on Israel, which condemned the actions on the ship rather than Israel itself.

Mr. Davutoglu demanded that Israel apologize for the attack, release the detained passengers, return the bodies of the dead, agree to an independent investigation and lift its blockade of Gaza. He said Turkey was prepared to go back to the United Nations for further action against Israel.

Israel, which defended the actions of its soldiers as a legitimate response to armed attacks by those on the ship, said it could not release the 300 passengers more quickly because they were illegal aliens and had to be held for at least 42 hours under Israeli law. Israel was also questioning 20 to 30 people who it says were directly involved in clashes with the soldiers.

“We’re going to do our best to heal the wounds with the Turks,” said Michael B. Oren, Israel’s ambassador to the United States, who also met with General Jones and other White House officials.

But Mr. Oren said Israeli authorities had asked Turkey to divert the flotilla to the Israeli port of Ashdod to avoid a confrontation with Israeli forces. He said Israel would have unloaded the cargo of construction material and humanitarian aid and arranged for it to be shipped to Gaza.

Mr. Oren said the Israelis would undertake their own investigation, but he resisted calls for international involvement. Israel has been leery of international investigations since the Goldstone report, which faulted Israel for excessive force in its military strike on Gaza in 2008.

More recently, the South Korean government has won praise for an investigation into the torpedoing of one of its warships, which was aided by the United States, Australia, Sweden and other countries. The report found that a North Korea submarine fired the torpedo.

“The Israelis have traditional and well-founded concerns about international investigations,” said a senior administration official, speaking on the condition of anonymity. “But everyone recognizes that for an investigation to be credible, others have to be able to vouch for the results.”

The flotilla case seems likely to harden Turkey’s skepticism about a United Nations resolution on Iran. Imposing more sanctions now, Mr. Davutoglu said, would only precipitate a confrontation with Iran in a few months, one that would be even riskier because of the broader tensions.

Asked what the best policy toward Iran is, he said, “Diplomacy, diplomacy, diplomacy and more diplomacy.”

Ethan Bronner contributed reporting.

Japan’s Premier Will Quit as Approval Plummets

2010-06-02T10:28:00.000-07:00

Japan’s Premier Will Quit as Approval Plummets
By MARTIN FACKLER
Copyright by The New York Times
Published: June 1, 2010
http://www.nytimes.com/2010/06/02/world/asia/02japan.html?th&emc=th

SEOUL, South Korea — Prime Minister Yukio Hatoyama of Japan, who swept into power last year with bold promises to revamp the country, then faltered over broken campaign pledges to remove an American base from Okinawa, announced Wednesday that he would step down.

Mr. Hatoyama faced growing pressure to quit, eight months after taking office, amid criticism that he had squandered an electoral mandate to change Japan’s sclerotic postwar political order.

Since taking office in September, he had come to be seen as an indecisive leader. This image was reinforced by his wavering and eventual backtracking on the base issue, which set off huge demonstrations on Okinawa and drove his approval ratings below 25 percent.

Calls had been rising within his Democratic Party for him to step aside before elections on July 11 that are seen as a referendum on the party’s first year in power.

“Unfortunately, the politics of the ruling party did not find reflection in the hearts of the people,” Mr. Hatoyama told an emergency meeting of Democratic lawmakers, broadcast live on television. “It is regrettable that the people were gradually unwilling to listen to us.”

Mr. Hatoyama is the fourth Japanese prime minister to resign in four years, which is likely to renew soul-searching about Japan’s inability to produce an effective leader and to feed concerns that political paralysis is preventing Japan from reversing a nearly two-decade-long economic decline. Mr. Hatoyama, who was teary-eyed as he announced his departure, was also following the common Japanese practice of leaders’ resigning to take responsibility for failure.

His resignation will not force a change in government, because the Democrats still hold a commanding majority in Parliament’s Lower House, which chooses the prime minister. But it will be a damaging blow to a party that had taken power in a landslide election victory that ended more than a half-century of nearly unbroken one-party control.

Mr. Hatoyama took power with vows to challenge the bureaucracy’s grip on postwar governing and revive Japan’s economy. Instead, his inexperienced government appeared to become consumed by the issue of the Okinawa base and a series of investigations into the political financing of Mr. Hatoyama and his backer in the party, Ichiro Ozawa.

Mr. Hatoyama said Wednesday that Mr. Ozawa, the Democratic Party’s secretary general and its shadowy power broker, would also resign. Japan’s public broadcaster, NHK, said the party would meet Friday to choose a new prime minister. Candidates include party veterans Naoto Kan, the finance minister, and Foreign Minister Katsuya Okada.

The contention over the American base, which dragged on for months, was emblematic of Mr. Hatoyama’s inability to make up his mind, or follow through on ambitious campaign promises.

The Democrats failed to deliver on a number of pledges, from eliminating highway tolls to finding enough savings from cutting waste to finance new subsidies like cash allowances for families with children. Instead, the spending ended up raising concerns that Japan’s ballooning deficit could one day lead to a Greek-style financial collapse.

Mr. Hatoyama had been expected to be a diplomatic personality who would be able to build consensus among the members of his ideologically broad party. He had appeared to be naturally suited to the job, as a political blue blood who hailed from one of Japan’s most powerful families. His grandfather had been a founding member of the Liberal Democratic Party, whose long grip on power Mr. Hatoyama’s Democrats ended last summer.

He was critic of American-style globalization, and talked of transforming Japan’s public works-driven politics into something closer to a European-style social welfare state. During the election campaign, he had drawn attention by pledging to end Japan’s postwar dependence on the United States, and to build closer ties with China and the rest of Asia. His vow to build a more equal partnership with Washington was symbolized by his pledge to move the United States Marine Air Station Futenma and its noisy helicopters off Okinawa, or out of Japan altogether.

In the end, it was the base, and a prolonged dispute with Washington, that proved Mr. Hatoyama’s undoing.

Japan’s public did not support altering the military alliance with the United States at a time when neighboring North Korea was testing nuclear weapons, and an increasingly assertive China was sending warships on training exercises near Japanese islands.

M. Amedeo Tumolillo contributed reporting from New York City.

U.S. Opens Criminal Inquiry Into Oil Spill

2010-06-02T10:24:00.000-07:00

U.S. Opens Criminal Inquiry Into Oil Spill
By HELENE COOPER and PETER BAKER
Copyright by The New York Times
Published: June 1, 2010
http://www.nytimes.com/2010/06/02/us/02spill.html?th&emc=th

WASHINGTON — The Obama administration said Tuesday that it had begun civil and criminal investigations into the massive oil spill in the Gulf of Mexico, as the deepening crisis threatened to define President Obama’s second year in office.

Attorney General Eric H. Holder Jr. said in New Orleans that he planned to “prosecute to the fullest extent of the law” any person or entity that the Justice Department determines has broken the law in connection with the oil spill. On Wall Street, the Dow Jones industrial average fell 120 points shortly after Mr. Holder’s announcement as energy stocks tumbled on expectations of the federal investigations. BP lost 15 percent of its market value during the day’s trading.

BP and government officials said flatly for the first time that they had abandoned any further plans to try to plug the well, and would instead try to siphon the leaking oil and gas to the surface until relief wells can stop the flow, most likely not before August.

Mr. Holder’s comments, which echoed those of Mr. Obama earlier in the day in the Rose Garden, reflected deepening frustration within the administration at the inability to stop the spill, along with wide concern that the government and the president appear increasingly impotent as oil laps at the shorelines of Louisiana, and now Alabama and Mississippi.

One person briefed on the inquiry said it was in an early stage and that no subpoenas had been issued yet to BP, the owner of the well. It was unclear whether any had gone to Transocean, which leased the Deepwater Horizon, the nine-year-old drilling rig that exploded and sank in April, to BP; Cameron, the company that manufactured a “blowout preventer” that failed to function after the explosion; or Halliburton, which performed drilling services like cementing.

Administration officials said they were reviewing violations of the Clean Water Act, which carries criminal and civil penalties and fines; the Oil Pollution Act of 1990, which can be used to hold parties responsible for cleanup costs; the Migratory Bird Treaty Act and the Endangered Species Act, which provide penalties for injury and death of wildlife.

“BP will cooperate with any inquiry that the Department of Justice undertakes, just as we are doing in response to the other inquiries that already are ongoing," the company said in a statement.

Having abandoned the attempt to plug the gushing well, BP and the government moved ahead on the latest plan, to contain the oil and gas as it flows from the floor of the gulf and siphon it to the surface. BP prepared to sever the pipe that once connected the well to the surface and is now snaking along the sea floor from the wellhead. That pipe, called a riser, had been attached to a blowout preventer, a stack of valves sitting on top of the well.

Removing the pipe could increase the flow of oil into the gulf until response crews can complete the next phase of the operation, affixing a cap to the remaining stub of the riser at the blowout preventer and siphoning the leaking oil into the cap through a new riser and up to a ship on the surface.

The more confrontational tone from Washington underscored concerns within the administration about the long-term effect of the oil spill, not only environmentally, economically and politically, but on the national psyche as well.

Like no other, the topic of the oil spill now dominates the national conversation. Early comparisons to Hurricane Katrina have dissolved into comparisons to the hostage crisis with Iran — an episode that spanned 444 days and beleaguered the presidency of Jimmy Carter. The spill has kept Mr. Obama from focusing attention on other issues, like creating jobs and carrying out the new health care law, at a time when polls suggest that public trust in government is declining and when his party is fighting to retain control of Congress.

“It’s an interesting disaster because it’s one that doesn’t stop — it’s as if Katrina sat on top of New Orleans for six weeks without going away,” said George Haddow, a disaster management consultant from New Orleans who was a senior Federal Emergency Management Agency official under President Bill Clinton.

Tuesday amounted to the administration’s most intensive effort yet to show that it is doing everything possible to respond and to hold BP and the other companies accountable. Robert Gibbs, the White House press secretary, said Mr. Obama has been “enraged at the time that it’s taken” to stop the leak.

“I’ve seen rage from him,” Mr. Gibbs said, describing the president’s “clenched jaw” at meetings. Mr. Gibbs added that the White House did not think BP “was forthcoming on what the impact would be of cutting the riser off.”

For Mr. Obama, part of the problem has been that the solution to the BP disaster is at its heart an engineering problem, and one the government has already acknowledged it is in no position to fix on its own. Former Attorney General William P. Barr said the administration’s move to investigate risked looking like political damage control while chilling cooperation with the company at the time it is needed most.

“The Department of Justice has to be very careful about using criminal prosecution to respond to political pressure,” Mr. Barr, who ran the department from 1991 to 1993, said in an interview. But Mr. Obama said Tuesday that “we have an obligation to determine what went wrong.” He appeared after meeting with the two men he has appointed to lead an inquiry into the spill — former Senator Bob Graham of Florida, a Democrat, and a former Environmental Protection Agency administrator, William Reilly, a Republican.

During the meeting in the Oval Office, the president was adamant that the government and the industry had to find a way to make offshore drilling safe because the nation needs the oil, and stressed to Mr. Reilly and Mr. Graham that that was part of their charge, according to people familiar with the meeting.

The decision to try to siphon off the leaking oil came after the failed “top kill” procedure, in which heavy drilling mud was pumped at up to 80 barrels a minute into the well in hopes of overcoming the pressure of surging oil and gas. But, response teams were never able to drive the mud far enough down in the well to overcome the oil, said Doug Suttles, BP’s chief operating officer for exploration and production, in an interview during a helicopter ride over coastal areas.

Officials suspect that the mud could have been escaping from the well far below the ocean floor, possibly through a rupture disk, a built-in weak point in the steel pipe that lines the well.

This concern is what led officials to decide to end attempts to plug the well, Mr. Suttles said. If the well were capped — such as by a new blowout preventer — the resulting pressure could force oil out through a flaw in the well, and another leak could sprout on the ocean floor.

Mr. Suttles said he expected the cap being readied this week would be able to siphon off the “vast majority” of the oil, though not all of it, and that subsea dispersants would be still be needed.

The challenges facing the maneuver are similar to the problems that bedeviled the 98-ton containment dome which was lowered over one of the leaks several weeks ago. That dome failed when hydrates — icelike crystals of gas and water — formed at the dome’s opening and prevented oil from escaping. The cap-and-riser system is designed to fit fairly snugly to reduce the influx of water, and methanol and heated water will be used to further reduce the chances that hydrates form.

John M. Broder and Charlie Savage contributed reporting from Washington, Robbie Brown from New Orleans and Campbell Robertson from Port Fourchon, La.

U.S. Stocks Falter; Nasdaq Breaches 200-Day Line

2010-06-01T15:13:00.000-07:00

U.S. Stocks Falter; Nasdaq Breaches 200-Day Line
By VINCENT MAO
Copyright by THE INVESTOR'S BUSINESS DAILY
June 1, 2010, 05:08 PM ET
http://www.investors.com/NewsAndAnalysis/Article/535891/201006012208/US-Stocks-Falter-Nasdaq-Breaches-200-Day-Line.aspx

June got off to a gloomy start, as stocks stumbled in a seesaw session Tuesday. Worries over Europe's debt crisis, China's economic growth and tension between Israel and Lebanon offset better-than-expected domestic economic data.

The NYSE composite dropped 1.9%, hurt by oil and steel issues. The S&P 500 and Dow lost 1.7% and 1.1%, respectively. Meanwhile, the Nasdaq fell 1.5% and closed back under its 200-day moving average. Volume fell on both exchanges.

Acme Packet (APKT) reversed from a new record high and dropped 6% in over twice its average trade. The stock had been holding tough during the correction.

Sirona Dental Systems (SIRO) shed 6% in heavy trading. But the stock eased off its worst levels after support at its 200-day moving average.

Perrigo (PRGO) dropped 5% in brisk volume and closed back under its 200-day moving average. The stock is working on a new base, but recent price action has been wide and loose.

On the upside, ev3 (EVVV) gapped up and bolted 17% on takeover news. Covidien (COV) agreed to buy the medical gear maker for $2.6 billion in cash, or $22.50 a share. That marks a premium of nearly 19% over Friday's close.

After the close, Collective Brands (PSS) tumbled 9% after reporting Q1 sales below analysts estimates.

Data on pending home sales and vehicle sales will be out Wednesday. Medical Action (MDCI) also reports earnings Wednesday.

U.S. Stocks Close Near Lows

BY VINCENT MAO

Stocks swayed from losses to gains before ultimately finishing lower on a late sell-off Tuesday.

The NYSE composite dropped 1.9%, the S&P 500 1.7%, the Nasdaq 1.5% and the Dow 1.1%. According to preliminary data, volume rose on both major exchanges.

The late selling came after a report said Israeli warplanes had come under fire from Lebanon.

Energy and steel-related industry groups were the worst performers. Defensive industries such as food and beverage companies, rose.

U.S. Stocks Waver In Late Trade

BY VINCENT MAO

Stocks continued to trade without much direction late Tuesday.

The Dow and Nasdaq rose 0.4% and 0.1%, respectively. The NYSE composite fell 0.3% and the S&P 500 0.2%. Volume was tracking higher on the NYSE and a tad lower on the Nasdaq.

Apple (AAPL) climbed 3% on news that sales of its iPad have topped 2 million units since hitting U.S. store shelves April 3. The tablet device went on sale in a number of overseas markets Friday.

McCain Circulates Service Chiefs Letter Urging Congress to Hold Off on DADT Repeal Vote, While Mullen Stresses 'Moral Courage'/Top officer talks chang

2010-06-01T09:35:00.000-07:00

McCain Circulates Service Chiefs Letter Urging Congress to Hold Off on DADT Repeal Vote, While Mullen Stresses 'Moral Courage'
Copyright by Towleroad
June 1, 2010
http://www.towleroad.com/2010/05/mullen.html

Joint Chiefs Chair Mike Mullen made a veiled reference to "Don't Ask, Don't Tell" in a speech to graduating Air Force cadets. At least that's how the AP is interpreting it.

Said Mullen:
"Few things are more important to an organization than people who have the moral courage to question the direction in which the organization is going — and then the strength of character to support whatever final decisions are made."

Mccain Meanwhile, several of the Service Chiefs have issued a letter to Congress today, distributed by Senator John McCain (R-AZ), The Hill reports:

...the chiefs of the Army, Navy, Air Force and Marines urged Congress to hold off voting until the study is done.

“I believe it is important, a matter of keeping faith with those currently serving in the Armed Forces, that the Secretary of Defense commissioned review be completed before there is any legislation to repeal the DA/DT law," wrote Gen. Norton A. Schwartz, Chief of Staff of the Air Force.

That position was echoed in separate letters from Army Chief of Staff Gen. George Casey, Navy Chief of Staff Adm. Gary Roughead, and Commandant of the Marine Corps. Gen. James T. Conway.

“I also believe that repealing the law before the completion of the review will be seen by the men and women of the Army as a reversal of our commitment to hear their views before moving forward," Casey wrote.

And now seems like a good time to recall Mullen's powerful statement against the military gay ban at "Don't Ask, Don't Tell" hearings in February.

Top officer talks change as gay ban vote nears
By KRISTEN WYATT (AP) – 5 days ago
Copyright © 2010 The Associated Press
http://www.google.com/hostednews/ap/article/ALeqM5gO1CkBTvEmlL-47kgdQgkIHd6sFAD9FUMSR00

AIR FORCE ACADEMY, Colo. — The nation's top uniformed military officer told graduating Air Force Academy cadets they need to support a changing military as Congress nears a vote on repealing the military's ban on openly gay servicemembers.

Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, talked to 1,001 graduating cadets at the academy on Wednesday.

The Senate Armed Services Committee plans to vote Thursday on overturning the ban.

Mullen didn't speak directly about the "don't ask, don't tell" policy that appears to be nearing an end. But he spoke broadly about change in the military.

"Few things are more important to an organization than people who have the moral courage to question the direction in which the organization is going — and then the strength of character to support whatever final decisions are made," Mullen said.

The White House has said Mullen is on board with the repeal of the ban.

Later in the day, Mullen was headed to nearby Peterson Air Force Base outside Colorado Springs to take questions from servicemembers.

The bill in Congress would overturn the "don't ask, don't tell" policy but still allow the military to decide when and how to implement any changes to accommodate the new policy.

Defense Secretary Robert Gates has said he agrees that the ban should be lifted, but he wants time to complete a wide-ranging study on how to do so without causing turmoil.

Mullen stressed loyalty to the new 2nd lieutenants who graduated from the Air Force Academy. But he said it "must never be blind."

Mullen also praised young people for continuing to choose military careers despite ongoing wars.

"We have been a nation at war for nearly half your young lives," Mullen noted.

He urged the new officers to be open to working with foreign military officers to achieve common goals and said he recently "sat cross-legged ... with tribal leaders in Afghanistan."

"Respect cannot be gained in a PowerPoint slide," Mullen said.

John McCain: Filibuster to Stop ‘Don’t Ask, Don’t Tell’ Repeal?
by Eve Conant
May 27, 2010
Copyright by Newsweek
http://www.newsweek.com/blogs/the-gaggle/2010/05/27/john-mccain-filibuster-to-stop-don-t-ask-don-t-tell-repeal-.html

Gay-rights advocates are not yet celebrating what—by all indications—appears to be imminent action on the Hill to move toward a repeal of “don’t ask, don’t tell.”

Why? Because some lawmakers are threatening to support a filibuster of the defense authorization bill (where the repeal language may be added) when it comes up for a vote, expected to take place late June or early July.
Some gay advocates—on background, and on the Web—are reporting that McCain has asked for the vote to be held in open session. Roll Call’s Kathleen Hunter reports that McCain said he would “without a doubt” support a filibuster if the bill goes to the floor with repeal language. “ ‘I’ll do everything in my power,’ the Arizona Republican said, citing letters from the four service chiefs urging Congress not to act before a Pentagon review of the policy is complete. ‘I’m going to do everything I can to support the men and women of the military and to fight what is clearly a political agenda.’ ” (McCain, however, appears to have stopped short of saying he would call for a filibuster, only that he would support one). Hunter reported that Republican Sen. Roger Wicker also said he would support a filibuster.

McCain is facing a fierce reelection fight in Arizona against Tea Party favorite opponent J. D. Hayworth, who has accused him in ads of being “a conservative actor” who only pretends to support conservative causes.

McCain has said in the past that he would support a repeal if military leaders first endorsed the change, and in February Defense Secretary Robert Gates and Joint Chiefs of Staff chairman Adm. Mike Mullen told senators they supported President Obama’s pledge to seek a congressional repeal of the 1993 policy. Yet McCain said he was “disappointed” in the testimony and an aide said it represented only personal opinion. (McCain’s family has also expressed their personal opinion on gay rights; both wife Cindy and daughter Meghan have appeared in ads to support gay-equality issues.)

On Wednesday, McCain circulated a letter on the Hill from the Joint Chiefs of Staff opposing the “don’t ask, don’t tell” compromise, and Gates has only offered a lukewarm endorsement of the repeal compromise, fuel for McCain’s argument that the military is not fully behind the congressional action.

DADT: Compromise, Faith and Full Equality/DADT: Muddy Waters

2010-06-01T09:26:00.000-07:00

DADT: Compromise, Faith and Full Equality
by David Mixner
Copyright by David Mixner
May 25 2010
http://www.davidmixner.com/2010/05/dadt-compromise-faith-and-full-equality.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DavidMixnerCom+%28DavidMixner.com%29

RainbowFlag "Compromise" is a word that is so complex that even the dictionary has a problem defining it. On one hand it is defined by Merriam-Webster as "a settlement of differences by arbitration or by consent...". The second definition is "a concession to something derogatory or prejudicial - a - of principles." Even the great minds of our century have struggled with the concept with opinions ranging from "a consensus of wise people to make progress" to "bending ones principles needlessly." Most often the concept of compromise demands agreement from the public and those that have continued with dissent are relegated to a fringe community of thought.

Even those thinkers from the past from whom we seek knowledge have differences of opinion on compromise. Edmund Burke wrote, "All government, indeed every human benefit and enjoyment, every virtue, and every prudent act, is founded on compromise and barter." Then you have Mr. Gilbert Chesterton, the turn of the last century author, wit and social critic who said, "Compromise used to mean that a half of loaf is better than no bread. Among modern statesmen it really seems to mean that half a loaf; is better than a whole loaf."

The importance of understanding compromise is not some abstract principle as we debate the newly proposed legislation regarding "Don't Ask, Don't Tell." Unless we understand the complexities of what is taking place we will quickly become rigid in who is reasonable and who is not. The concept of full equality must not be lost in the rush to reach consensus but neither must we refuse to take advantage of a step in the right direction. To immediately label those who have labored to reach some agreement for this Congressional session as 'sell-outs' demeans the work of well-meaning people. On the other hand, to ignore legitimate and powerful concerns of substantive people by brushing them aside with "you can never please those people, they will always be unreasonable" is to kill thought and debate. Neither of these responses serve justice and equality.

So let's take a look at what is being proposed and attempt to retrieve what is good and be vigilant on legitimate and powerful concerns as we proceed into the next year.

First and foremost, this does not end "Don't Tell, Don't Tell" now.

Second, the LGBT community would be very foolish indeed not to realize that the constant pressure generated by our community and its allies have forced the President, Congressional leaders and community leaders to the table to seek solutions. Secretary of Defense Gates' letter was supposed to seal the debate for this year. Because our community refused to accept that as an option we have forced those who are timid to find some courage. After all, courage is just a lack of options.

Third, we might have an opportunity to remove Congress from the food chain. If we can remove the legislative barrier as a factor than that is some progress. Such action would removed an important obstacle in the struggle for freedom. There is no question that Congressional action that would have given full equality to our brave LGBT service members should have taken place instead of this compromise. However, clearly that is not going to happen. Nevertheless, we should at least take Congress out of the equation if we have the opportunity.

Fourth, make absolutely no mistake about this fact: this compromise at this point does not protect our LGBT service members. They are still left totally exposed. Unless the President issues a 'stop-loss' order or an action by the Secretary of Defense, it is likely that those charged today will be forced out and others will continue to face persecution until further action is taken. The current policy will continue until at least after the study is completed and signed off by the President, Secretary of Defense and Chairman of the Joint Chief of Staff. If they cannot reach consensus on the results of the study then "Don't Ask, Don't Tell" will continue to be the law of the land. The removing of Congress as a factor with this compromise is extremely conditional with a number of 'if's' and 'but's.'

Fifth, there is simply no timeline for when full equality will be mandated. Yes, the offensive study is scheduled to be concluded by December 1st. However, the conclusion of that study could state that the military needs a year to two to implement the results. This would mean the current policy could proceed for a period of undefined time. Of course, the President could at that point issue a 'stop-loss' order until the implementation is completed. Don't forget the President could also do that today.

Sixth, with the removal of any non-discrimination language from the compromise, we could leave our soldiers in real limbo concerning their rights, benefits and privileges. Exactly what will be the new guidelines once this legislation is passed? What are our service members rights? Do the provisions of the compromise let stand "Don't Ask, Don't Tell" until further action next year?

In the end, it is apparent that as a community we are being asked to proceed with "total faith" in the President and his willingness to take decisive action next winter. This compromise gives us no guarantees, doesn't end current discrimination and leaves hoping for the best in others. " Faith" is going to be tough for many people since some of us remember how in 1993 "Don't Ask, Don't Tell" was touted as a major compromise and progress. Yes, it is wrong to live in the shadow of the past since it is 18 years later and it is a different world. However it is also wrong to ignore the lessons of our history - which tell us that most times when we have been asked to have "faith", we have been given darkness.

Ironically, even this compromise might have trouble passing as the Republicans have insisted that "Don't Ask, Don't Tell" should be maintained as the policy. As a community, we should do everything in our power to seek improvements in this compromise because we are clearly not going to achieve any more than that this session. Asking important questions and raising legitimate concerns are a moral necessity.

I am hungry for full equality. For a hungry person some bread is better than no bread. However it is impossible to fully enjoy that meal if you have no idea if there is any more bread coming tomorrow. Living without freedom does strange things to a person; it changes them forever. Our decision makers should never forget that partial freedom is totally and completely unacceptable. We won't rest until we have full equality and freedom. The desire for full equality doesn't mean we aren't pleased with steps toward progress. It simply means there is no such thing as a partially free person.

Wise and thoughtful minds are required now, not a lot of noise, patting on the backs, celebration and confetti. We can work for the best today while continuing the fight for tomorrow.

DADT: Muddy Waters
by David Mixner
Copyright by David Mixner
May 26 2010
http://www.davidmixner.com/2010/05/dadt-muddy-waters.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DavidMixnerCom+%28DavidMixner.com%29

On Monday the issue was pretty clear cut. Senators and House members were working overtime to achieve an all out appeal of "Don't Ask, Don't Tell." The proposal then was to prohibit discrimination against the LGBT community within the military. New polls surfaced showing that 78% of the American people support lifting the ban. The White House was silent on repudiating Secretary Gates' attempt at derailing our progress but we were moving forward anyway.

On Tuesday the entire situation is filled with muddy waters. Throughout the day there were calls back and forth attempting to understand the compromise. Everyone wants to believe but no one could point out what we won in the compromise. Instead of an all out repeal, we now have this complex piece of legislation filled with 'if's', 'buts' and 'maybe's.' The discrimination section against LGBT soldiers was removed, DADT would remain in effect until next year at least and even then there were no mandates, timelines or protections for us.

So suddenly overnight we are expected to switch from a strategy of all out repeal to one that is much less attractive and filled with loopholes. Now explain again what we gained? Over and over again I have been told we now have the President endorsing the legislation and this increases our chances with the compromise. Could not have the President joined 78% of the American people and supported full repeal? Is there something here I am missing?

Believe me I want to believe this is good for us and that at least some progress is being made but as each hour passes, it grows darker and more difficult. No one can give a clear answer on what we gain through this strategy. Certainly Congress keeps its oar in the water until the report is done. DADT is not repealed until the report is done. There is no mandate or timeline for after the report is done. All day long I have made calls asking for clarification and shockingly they don't even have good sound bites down. Everyone has a different answer for what we gain.

Let's go back to Monday

Washington Post Editorial: The flotilla fiasco

2010-06-01T07:42:00.000-07:00

Washington Post Editorial: The flotilla fiasco
Copyright by The Washington Post
Tuesday, June 1, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/05/31/AR2010053103160.html

THE ISRAELI commandos who landed on the deck of the Turkish ferry Mavi Marmara off the coast of the Gaza Strip early Monday were totally unprepared for what they encountered: dozens of militants who swarmed around them with knives and iron bars. The result was a bloody battle in which at least nine passengers were killed -- and a diplomatic debacle for the government of Binyamin Netanyahu. Though the investigations to come will find many to blame, it's already clear that Israel's response to the pro-Palestinian flotilla was both misguided and badly executed.

We have no sympathy for the motives of the participants in the flotilla -- a motley collection that included European sympathizers with the Palestinian cause, Israeli Arab leaders and Turkish Islamic activists. Israel says that some of the organizers have ties to Hamas and al-Qaeda. What's plain is that the group's nominal purpose, delivering "humanitarian" supplies to Gaza, was secondary to the aim of provoking a confrontation. The flotilla turned down an Israeli offer to unload the six boats and deliver the goods to Gaza by truck; it ignored repeated warnings that it would not be allowed to reach Gaza. Its spokesmen said they would insist on "breaking Israel's siege," as one of them put it.

Yet the threat to Israel was political rather than military. So far there's been no indication the boats carried missiles or other arms for Hamas. Mr. Netanyahu's aim should have been to prevent the militants from creating the incident they were hoping for. Allowing the boats to dock in Gaza, as Israel had done before, would have been better than sending military commandos to intercept them. The fact that the soldiers who roped down from helicopters to the lead Turkish ferry were unprepared to subdue its passengers without using lethal force only compounded the error.

Israel will now endure days, if not months, of condemnations by its many enemies. Middle East peace talks are at risk again, as are Israel's once-strong relations with Turkey. What was to have been a conciliatory meeting between Mr. Netanyahu and President Obama Tuesday has been cancelled. The White House has been properly cautious so far in responding to the incident; it should be careful to distinguish itself in the coming days from the anti-Israeli chorus. U.S. diplomacy should aim at ensuring that the inevitable calls for an international investigation do not lead to another one-sided setup like the United Nations' Goldstone commission, whose report on Israel's 2008 invasion of Gaza has become another weapon in the international campaign to de-legitimize the Jewish state.

As for Mr. Netanyahu, the only road to recovery from this disaster lies in embracing, once and for all, credible steps to create conditions for a Palestinian state. A good start would be easing restrictions on both Gaza and the West Bank, once the reactions to Monday's events subside. Mr. Netanyahu also needs to broaden his government to include pro-peace parties; one of his main problems is cabinet hawks who have made Israeli diplomacy an oxymoron. The prime minister is in a deepening hole; his only way out is to move to the center.

Despite U.S. deficit concerns, investors still pour money into Treasury bonds

2010-06-01T07:37:00.000-07:00

Despite U.S. deficit concerns, investors still pour money into Treasury bonds
By Neil Irwin
Copyright by The Washington Post
Tuesday, June 1, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/05/31/AR2010053103456.html?hpid=topnews

The U.S. government debt is rising inexorably, according to the conventional wisdom in Washington, and the political system is too paralyzed to take unpopular actions to rein it in. Privately, many policymakers take it as a given that the situation will change only when the nation faces a Greek-style fiscal crisis.

But apparently nobody told the people who lend the U.S. government money. On Friday, they were willing to hand over their cash to the Treasury for 10 years for 3.3 percent interest, a level so low it implies they consider the United States among the safest investments in the world. Collectively, those investors -- think mutual funds, pension funds and foreign central banks -- could lose hundreds of billions of dollars if they're mistaken and the United States has a debt crisis.

It is the Beltway vs. the bond market, and they can't both be right.

Perceptions inside the Beltway rest on this idea: Although the current large budget deficit is caused mainly by the weak economy and a short-term economic stimulus that will soon expire, in the longer run the government faces a vast unfunded burden, particularly tied to Medicare and Medicaid.

The mix of spending cuts and tax increases that could close the gap are wildly unpopular. With the threat of a filibuster in the Senate hanging over anything remotely controversial, a bipartisan budget accord seems unlikely. And many Republicans have declared they will not vote for a package that includes a tax increase under any circumstance.

This situation led Moody's, the debt-rating firm, to state in March that the U.S. government is nearer to being at risk of losing its Aaa credit rating and that maintaining the rating might require adjustments to tax and spending policy "of a magnitude that, in some cases, will test social cohesion."

Given those realities, the widespread view in Washington is that serious efforts at reducing the deficit will come only when a crisis moment, such as steeply higher borrowing rates, forces the issue.

"You can talk about the deficit until you're blue in the face, but we'll only get political traction on meaningful deficit reduction when there is economic pain being caused by the deficit in the form of inflation or high interest rates or both," said Bruce Bartlett, a Treasury Department official in the George H.W. Bush administration who recently wrote an article predicting that the U.S. government will be downgraded in less than a decade.

In effect, lending money to the U.S. government is like lending to a couple that is spending way beyond its means, and in which the wife refuses to take a second job to increase income and the husband refuses to spend less. No responsible banker in the world would make that loan, but banks and other global investors feel rather differently about U.S. Treasury bonds.

Among economic commentators, there have been rumblings that the debt crisis that started in Greece and increasingly affects such other Western European countries as Spain and Ireland could eventually spread into a crisis of confidence in United States government debt.

So far, the opposite has happened.

The financial crisis and recession drove Treasury borrowing rates to all-time lows -- and in recent weeks, the European debt crisis, rather than make investors fear for the safety of their Treasury bonds, has instead led to an influx of money into the United States, driving rates down further.

On Wednesday, for example, the government borrowed $42 billion in five-year debt for 2.13 percent. During the 1990s, that rate averaged 6.3 percent.

So what are bond market investors thinking? They are looking around the world in search of a safe place to park cash, and the United States seems like the safest -- or perhaps the least unsafe.

Western Europe has weaker economies than the United States, more lavish social welfare benefits, a fragmented political system and a currency union that might not make it out of the current crisis intact. Japan has an older and slower-growing population, and its economy has been stagnant for most of the past two decades. (It also has very low borrowing rates, reflecting in part high rates of savings among its citizens.) Beacons of stability such as Australia, Canada and Switzerland are too small to handle the trillions of dollars in global savings that investors are looking to park.

In the United States, meanwhile, the economy is beginning to grow. There are few signs of inflation, and the Federal Reserve is likely to keep the short-term rates it targets very low for some time.

While long-term interest rates are low by historical standards, they are much higher than short-term borrowing rates, which are essentially zero, a phenomenon known as a steep yield curve. That means that investors feel well-compensated for tying their money up for years.

Moreover, the dollar and Treasury bonds have a status as the safe port in the storm whenever the global economy or financial system looks shaky. Bond investors assume that relationship continues. And many global investors' returns are measured in dollars, so they have extra incentive to have exposures to U.S.-based debt.

And fundamentally, bond buyers discount the risk of a catastrophic fiscal calamity in the United States, noting that the U.S. government has proved able to make hard-but-necessary decisions when it must, such as the passage of the $700 billion bank bailout in 2008 and a deficit-reduction package in 1990.

"It may take longer than anyone likes, but we have a history of getting the message," said Dan Shackelford, who manages the New Income Fund, a bond mutual fund, at T. Rowe Price. "We have come close to hitting the crisis point before, but somehow the government has been able to respond."

In other words, we might not know how, or when, but eventually the U.S. political system is sufficiently strong to make the hard, necessary choices.

But market sentiment can turn on a dime, as the Greek government and former Lehman Brothers executives can attest, so the big question remains whether major action on the budget deficit will come before Treasury bond rates rise significantly.

"There is a tendency for markets to ignore certain things for long periods of time, then suddenly notice them all of a sudden," Bartlett said.

Obama administration officials are aware of the risk of an abrupt change in perception among bond investors. A spike in Treasury borrowing rates could slow or stop the economic recovery and make the deficit problem even worse by increasing the government's costs to roll over its debt.

Thus, the administration has attempted to signal to the bond market that it is attuned to reining in the budget deficit in the years ahead, even as it argues for higher spending in the near term to support the economy. The president's proposal this year to freeze non-defense discretionary spending for three years is one such signal.

And it is uncertain exactly how growing concern about U.S. government debt would be reflected in financial markets. Before the impact of high budget deficits shows up in interest rates on Treasury bonds, it might show up in the form of a lower stock market and higher borrowing costs for private enterprises.

"Markets never price big surprises," said Robert H. Dugger, managing partner of Hanover Investment Group in Alexandria. "That's why they're big surprises."

Financial Times Editorial Comment: Israel is lost at sea

2010-06-01T07:31:00.000-07:00

Financial Times Editorial Comment: Israel is lost at sea
Copyright The Financial Times Limited 2010
Published: May 31 2010 19:12 | Last updated: May 31 2010 19:12
http://www.ft.com/cms/s/0/cab86fe0-6cde-11df-91c8-00144feab49a.html

With Monday’s brazen act of piracy, Israel dealt a blow to the legitimacy of its own struggle. The killing of activists aboard the captured ships sent Israel’s way of defending its security, which it was already imperative to return within the bounds of international law, hurtling into lawlessness.

Israel claims the activists had links with extremist groups and that some attacked Israeli soldiers with knives and sticks (and in some accounts the odd light firearm). Even if true, this would not justify the illegal capture of civilian ships carrying humanitarian aid in international waters, let alone the use of deadly force.

Outrageous as this behaviour was, the true outrage is the illegal blockade of Gaza that it enforced. Since the January 2009 Gaza war, which exposed Israel’s determination to destroy Hamas’s capabilities regardless of the cost to innocent Palestinians, Israel and Egypt have colluded to prevent the enclave’s reconstruction. According to the United Nations, three-quarters of the damage has not been repaired and 60 per cent of homes do not have enough food.

The ostensible goal is to weaken Hamas, the Muslim Brotherhood offshoot that rules Gaza (and whose Egyptian incarnation is Hosni Mubarak’s only real opposition). But the blockade aimed at crushing it, besides the illegal collective punishment it implies, only shores up Hamas’s support. If Israel and Egypt wanted to turn Gaza into a mafia-run statelet, they could hardly do better than sever any alternatives to Hamas’s smuggling network, leaving the population even more at its mercy.

Hamas engages in terrorism and fires occasional rockets into Israel, but it is an example of that rarest of Middle Eastern species: a popularly elected government. It has also signed up to the 2002 comprehensive peace offer by the Arab League and the Organisation of the Islamic Conference. If this is a bluff, it is one Israel has yet to call. That is what this is ultimately about. Israel’s government has been pretending it is ready to negotiate for peace, but that there is no one to negotiate with on the other side. The attack on the blockade-busters lays bare the country’s slide into contempt for international law, intolerance of dissent and wilful sabotage of viable representation for Palestinians.

Israel has always known the importance of its conduct being judged legal by the world’s leading powers. Those powers – in the body of the Quartet and the UN Security Council – must now make clear it has gone too far.

Obama’s opportunity to move US beyond oil

2010-06-01T07:28:00.000-07:00

Obama’s opportunity to move US beyond oil
By Edward Luce in Washington
Copyright The Financial Times Limited 2010
Published: May 31 2010 23:48 | Last updated: May 31 2010 23:48
http://www.ft.com/cms/s/0/921fa7cc-6d04-11df-921a-00144feab49a.html

God forbid the cameras catch Barack Obama playing golf. Almost inevitably, the US president in the past few days has been forced to take full “buck stops with me” ownership of the oil spill crisis as its enormity has unfolded.

That means Mr Obama is effectively on a wartime footing until the leak is plugged – an event that could be as far away as August following the failure of the “top kill” on Saturday. It also means that any display of insouciance on his part will be punished at twice the speed and twice as hard as it otherwise would. Indeed, Mr Obama is already being pilloried for events that have not yet happened.

At the weekend, Arianna Huffington, the liberal blogger, dubbed Mr Obama a “nowhere man” in advance of an event he will host in the White House on Wednesday to honour Sir Paul McCartney, the former Beatle. The moniker, of course, was meant to capture Mr Obama’s allegedly half-hearted engagement with the oil spill crisis in spite of his strong protestations to the contrary.

Others have revived the comparison between Mr Obama and Mr Spock, the Star Trek Vulcan, whose capacity to reason is matched only by his incapacity to feel. It is hard to imagine any other president emulating Mr Obama’s facility with the complex techniques required to contain and plug a deep sea oil leak.

Phrases such as “blowout preventer”, “skimmers”, “controlled burns” and “dispersant” trip off the presidential tongue. But Mr Obama’s critics, a large number of whom appear to be on the left, would prefer to hear more righteousness in his tone. The implication is that the more anger Mr Obama conveys in public, the more effective he will be at containing the disaster.

More ominously for Mr Obama, who in spite of sharing a rising portion of the blame for the disaster with BP still has far higher approval ratings than either the Republican party or his own Democratic allies on Capitol Hill, unflattering comparisons with former president Jimmy Carter are starting to resurface.

Specifically, there is a growing parallel with Mr Carter’s Iranian hostage crisis, which sank his presidency and his place in history. Then, like now, Mr Carter was required to make promises that he simply had no means to guarantee – to ensure the return home of the US hostages unharmed.

Then, like now, the network news channels reminded viewers daily of that unfulfilled White House pledge: “Iranian Hostage Crisis: Day 100”. In the past three days, most US cable and network news channels have adopted a similar drumbeat. We are now in: “Oil Spill: Day 43”.

The more that number mounts, and the closer we approach the mid-Atlantic hurricane season, which could add another horrifying dimension to what is already the US’s worst environmental disaster, the more Mr Obama will be pressed to do something radical. Mr Carter caved in to such pressure when he launched the hopeless rescue attempt, which crashed in the Iranian desert.

Mr Obama is already under pressure to “just do something” – even if it sometimes seems it is merely to give the impression of doing something. At the weekend, Colin Powell, the former secretary of state and supporter of Mr Obama, even suggested applying what sounded like the wartime “Powell doctrine” of defeating your enemy with overwhelming force.

Without specifying what precisely he had in mind, Gen Powell urged Mr Obama to launch a “comprehensive total attack” on the spill with “decisive force”. But as Mike Mullen, the chairman of the joint chiefs of staff, hinted on Monday, militarising the response would raise expectations beyond the capacity of the US military to meet them. Incarcerate all BP personnel, perhaps? Nuke the well?

There is another avenue available. While straining every sinew to contain this disaster, Mr Obama could seize the chance to overhaul America’s energy debate.

As Mr Obama himself has made plain, every crisis is an opportunity. This summer may well be his best to move the US towards a future in which oil is a thing of the past. We know Vulcans are intelligent. But are they creative?

China property risk is worse than in US

2010-06-01T07:26:00.000-07:00

China property risk is worse than in US
By Geoff Dyer in Beijing
Copyright The Financial Times Limited 2010
Published: May 31 2010 20:08 | Last updated: May 31 2010 20:08
http://www.ft.com/cms/s/0/d6b8f8d8-6ce2-11df-91c8-00144feab49a.html

The problems in China’s housing market are more severe than those in the US before the financial crisis because they combine a potential bubble with the risk of social discontent, according to an adviser to the Chinese central bank.

Li Daokui, a professor at Tsinghua University and a member of the Chinese central bank’s monetary policy committee, said recent government measures to cool the property market needed to be part of a long-term push to bring high housing prices under control.

He added that there were still signs that the economy was overheating and recommended modest increases in interest rates and the level of the currency.

“The housing market problem in China is actually much, much more fundamental, much bigger than the housing market problem in the US and UK before your financial crisis,” he said in an interview. “It is more than [just] a bubble problem.”

He was speaking ahead of Monday’s announcement by the State Council that it had approved a plan to reform real estate taxes, the clearest indication yet that the government will for the first time impose an annual tax on some residential housing in order to rein in rising prices. The news sent shares in China down 2.4 per cent.

The unusually forthright comments from Mr Li contrast with the growing view among economists that the crisis in Europe will lead China to avoid further measures to tighten policy, including currency appreciation.

Wen Jiabao, Chinese premier, reinforced that impression on Monday when he said it was too early for big economies to withdraw stimulus measures.

“The debt crisis in some European countries may impede Europe’s economic recovery,” he said in Tokyo. “China will make sure it maintains a sense of crisis.”

Mr Li said the high cost of housing could hamper future growth by slowing urbanisation. Rising prices were also a potential political flashpoint, especially among younger people who felt locked out of the property market.

“When prices go up, many people, especially young people, become very anxious,” he said. “It is a social problem.”

In spite of the sharp slowdown in property sales and the troubles in Europe, he said economic activity was still too strong. “China is running the risk or is on the verge of overheating,” he said. Although he added: “I would say the situation is not out of control.”

As well as calling for modest increases in deposit rates, which are negative in real terms, he said a gradual appreciation in the currency would help companies prepare for when the renminbi was considerably stronger.

Apple sells 2m iPads in two months

2010-06-01T07:25:00.000-07:00

Apple sells 2m iPads in two months
By Joseph Menn in San Francisco
Copyright The Financial Times Limited 2010
Published: May 31 2010 20:56 | Last updated: May 31 2010 20:56
http://www.ft.com/cms/s/2/6c5dad54-6ceb-11df-91c8-00144feab49a.html

A strong international debut for Apple ’s iPad had lifted sales of the tablet computer to 2m since its US launch two months ago, the company said, a rate exceeding the most recent public figures for its flagship Mac laptop and desktop computers.

Monday’s disclosure followed three full days of sales in the UK, Germany, Japan and six other nations. It showed that the Silicon Valley company has taken advantage of the anticipation and long queues in many countries in spite of supply limitations in the US.

Analysts who projected sales of 1.5m units for the quarter ending in June might revise their projections upwards on Tuesday, providing a possible further boost to Apple’s stock market value.

The sales debut has been stronger than that for the original iPhone, which took more than two months to reach 1m. But analysts said it had fallen short of the iPhone 3G, which came out in 2008 and sold about 3m units in the first month.

Apple last week eclipsed Microsoft in market capitalisation, becoming the most valuable technology group in the world.

In the quarter that ended in March, Apple sold 2.94m Macs, or just below 1m a month.

But Macs are intended to perform essential household and business tasks, while the iPad is a small luxury device aimed at consuming digital media.

The figures suggest the company has succeeded in creating a category of device between traditional personal computers and smartphones.

Apple sells more than 6m iPhones and iPods each month.

Apple delayed the iPad launch overseas by weeks because of short supply, then shifted most of its inventory to those new markets, leaving many shelves bare in the US after the initial rush.

Apple

FT In depth: Despite the successful iPad launch, Apple still faces its difficulties

Apple had announced 1m sales in the US alone in the 28 days after it became available there on April 3 for a starting price of $499. It took another 31 days to sell the second million units, implying a fall-off in the US not quite compensated for by the international shipments.

Apple did not break out the number of sales by country or by model. In the US, the less expensive Wifi-only versions have proved more popular, but anecdotal evidence over the weekend suggested stronger international performance for the type of iPad that remains connected to the internet with data-transmission plans from telecoms carriers.

Analysts said last week that the iPad, like the iPhone before it, should do as well in overseas markets as it does domestically and perhaps better, since more telecom carriers support the new device than for the iPhone at its debut.

Bullish Apple supporters on Wall Street had predicted the company was on target, with internal estimates that it could sell 10m iPads a year. With 1m changing hands every month, Apple could surpass that target if more new markets show similar strong demand and the drop-off from early orders is modest.Nine more countries will get the iPad in July.

Google ditches Windows on security concerns

2010-06-01T07:22:00.000-07:00

Google ditches Windows on security concerns
By David Gelles and Richard Waters in San Francisco
Copyright The Financial Times Limited 2010
Published: May 31 2010 23:26 | Last updated: May 31 2010 23:26
http://www.ft.com/cms/s/2/d2f3f04e-6ccf-11df-91c8-00144feab49a.html

Google is phasing out the internal use of Microsoft’s ubiquitous Windows operating system because of security concerns, according to several Google employees.

The directive to move to other operating systems began in earnest in January, after Google’s Chinese operations were hacked, and could effectively end the use of Windows at Google, which employs more than 10,000 workers internationally.

“We’re not doing any more Windows. It is a security effort,” said one Google employee.

“Many people have been moved away from [Windows] PCs, mostly towards Mac OS, following the China hacking attacks,” said another.

New hires are now given the option of using Apple’s Mac computers or PCs running the Linux operating system. “Linux is open source and we feel good about it,” said one employee. “Microsoft we don’t feel so good about.”

In early January, some new hires were still being allowed to install Windows on their laptops, but it was not an option for their desktop computers. Google would not comment on its current policy.

Windows is known for being more vulnerable to attacks by hackers and more susceptible to computer viruses than other operating systems. The greater number of attacks on Windows has much to do with its prevalence, which has made it a bigger target for attackers.

Employees wanting to stay on Windows required clearance from “quite senior levels”, one employee said. “Getting a new Windows machine now requires CIO approval,” said another employee.

In addition to being a semi-formal policy, employees themselves have grown more concerned about security since the China attacks. “Particularly since the China scare, a lot of people here are using Macs for security,” said one employee.

Employees said it was also an effort to run the company on Google’s own products, including its forthcoming Chrome OS, which will compete with Windows. “A lot of it is an effort to run things on Google product,” the employee said. “They want to run things on Chrome.”

The hacking in China hastened the move. “Before the security, there was a directive by the company to try to run things on Google products,” said the employee. “It was a long time coming.”

The move created mild discontent among some Google employees, appreciative of the choice in operating systems granted to them - an unusual feature in large companies. But many employees were relieved they could still use Macs and Linux. “It would have made more people upset if they banned Macs rather than Windows,” he added.

Google and Microsoft compete on many fronts, from search, to web-based email, to operating systems.

While Google is the clear leader in search, Windows remains the most popular operating system in the world by a large margin, with various versions accounting for more than 80 per cent of installations, according to research firm Net Applications.

Eurozone jobless rise to highest level in decade

2010-06-01T07:20:00.000-07:00

Eurozone jobless rise to highest level in decade
By Stanley Pignal in Brussels
Copyright The Financial Times Limited 2010
Published: June 1 2010 11:49 | Last updated: June 1 2010 11:49
http://www.ft.com/cms/s/0/9c55d4e8-6d61-11df-bde2-00144feabdc0.html

Unemployment continued to rise in the eurozone in April, to 10.1 per cent, the highest level of joblessness in more than a decade.

Policymakers had hoped that unemployment had reached a plateau at March’s 10.0 per cent level, where it had stayed for two months before April’s modest rise.

Unemployment in the 16 countries that use the euro is now at its highest level since before the inception of the European single currency in 1999, according to seasonally-adjusted data from the European Union’s statistical arm.

Youth unemployment breached the 20 per cent mark, up from 19.9 per cent in March. It is now once again above 40 per cent in Spain.

Joblessness is a lagging indicator, and economists warn that it is likely to peak well after the economy starts recovering, probably at a level closer to 10.5 per cent.

But extensive labour market measures used to soften the impact of the downturn – in particular short-work schemes that encouraged companies to cut working hours instead of making employees redundant – may result in erratic recovery in employment levels, economists believe.

However, Germany and the Netherlands, two of the biggest users of such schemes, were the only eurozone economies to experience a fall in unemployment in April.

Furthermore, early data from Germany for the month of May points to a further reduction in joblessness, down 0.1 points to 7.7 per cent, the lowest level since December 2008, according to the Federal Labour Agency.

The Dutch and German reduction highlighted a familiar chasm in recent European economic data, between “core” eurozone economies that are performing well and the so-called “peripheral” economies that continue to struggle.

Portugal, Ireland, Italy and Spain all had rises in unemployment in April – with Greece no longer submitting monthly data for inclusion in the survey. All of these countries, except Italy, are well above the 10 per cent level. France and four other eurozone states were flat.

“The eurozone headline figure masks considerable divergence between member states,” said Martin van Vliet, economist at ING. “The growing divergence is a major complicating factor for the European Central Bank’s ‘one size fits all’ monetary policy, which focuses on average economic conditions in the eurozone.”

Forecasts on unemployment levels in coming months are mixed. Optimists highlight that eurozone businesses now say they are more likely to hire than fire workers, and that the depreciating euro makes it likely that exports – and recruiting – will increase.

Pessimists say economic growth levels are too low to sustain job creation, which will not change until consumer confidence recovers.

Another EU survey out on Tuesday showed that if anything, consumers were getting gloomier because of the euro debt crisis and planned fiscal retrenchment in many countries.

So You Still Want to Choose Your Senator?

2010-06-01T07:19:00.000-07:00

So You Still Want to Choose Your Senator?
By DAVID FIRESTONE
Copyright by The New York Times
Published: May 31, 2010
http://www.nytimes.com/2010/06/01/opinion/01tue4.html?ref=opinion

Few members of the Tea Party have endorsed Rand Paul’s misgivings about the Civil Rights Act of 1964, but a surprising number are calling for the repeal of an older piece of transformative legislation: the 17th Amendment. If you don’t have the Constitution on your smartphone, that’s the one adopted in 1913 that provides for direct popular election of United States senators.

Allowing Americans to choose their own senators seems so obvious that it is hard to remember that the nation’s founders didn’t really trust voters with the job. The people were given the right to elect House members. But senators were supposed to be a check on popular rowdiness and factionalism. They were appointed by state legislatures, filled with men of property and stature.

A modern appreciation of democracy — not to mention a clear-eyed appraisal of today’s dysfunctional state legislatures — should make the idea unthinkable. But many Tea Party members and their political candidates are thinking it anyway, convinced that returning to the pre-17th Amendment system would reduce the power of the federal government and enhance state rights.

Senate candidates have to raise so much money to run that they become beholden to special interests, party members say. They argue that state legislators would not be as compromised and would choose senators who truly put their state’s needs first.

Around the country, Tea Party affiliates and some candidates have been pressing for repeal — though there also has been a lot of hasty backtracking by politicians once the voters realized the implications. In Idaho, two candidates in last month’s Republican primary for the First District House seat said they favored repeal, including the winner, Raul Labrador. Steve Stivers, the Republican candidate in an Ohio Congressional race, said he wanted to repeal the amendment, until his Democratic opponent, Representative Mary Jo Kilroy, made an issue of it, after which he seemed to back off.

Utah, the only state that refused to ratify the amendment, remains a particular hotbed of prelapsarian sentiment. Tim Bridgewater, who ousted Senator Robert Bennett of Utah as the Republican candidate in that race, blasts the 17th Amendment on his Web site: “We traded senators who represent rights of states for senators who represent the rights of special interest groups.”

The Utah State Senate, which seems to have been fuming at the loss of its power for the last 97 years, approved a bill in March reminding the political parties that they are welcome to consult with legislators when choosing candidates for the United States Senate, especially in regard to their feelings about states’ rights and federalism.

Fortunately, repeal will never happen. Still, there is something bracing in the eccentric quest of these advocates, who may know their constitutional history better than most Americans.

To Madison, Hamilton and most of the other authors of the Constitution, allowing states to appoint the Senate was the linchpin of the entire federalist system and the real reason there are two houses of Congress. It may be true that appointed senators, accountable only to state legislators, would never approve of many useful federal mandates designed to put the national interest above local parochialism — including everything from the minimum wage to the new health care reform law.

Not enough Americans vote. But, fortunately, almost all like the idea that they can, a thoroughly modern sentiment that will confine this elitist notion to the fringes. That means Tea Partiers who are infuriated by the health care law and everything else now going on in Washington can no longer look to James Madison for a bailout. Their best remedy is the one they seem to spurn: a vote at the ballot box.

Summer of Full Flights and High Fares

2010-06-01T07:06:00.000-07:00

Summer of Full Flights and High Fares
By JANE L. LEVERE
Copyright by The New York Times
Published: May 31, 2010
http://www.nytimes.com/2010/06/01/business/01summer.html?th&emc=th

This is not going to be a good summer for air travelers.

They face a potential combination of crowded flights, high fares and labor disruptions. And that does not even consider the possibility of more canceled flights because of new penalties for airlines that encounter long tarmac delays or the potential of continued disruption in Europe from the volcano ash drifting from Iceland.

Demand for business and leisure travel is expected to be stronger this summer than last, which means travelers will be fighting for seats that have been reduced significantly during the recession.

According to an analysis of first- and business-class travel in the first quarter by the International Air Transport Association, the trade group for the airline industry, the number of passengers traveling in these classes was 7.6 percent higher than in the period a year earlier. The number of passengers in economy was up 7.4 percent in the same period.

Growth in all classes of service is “being driven by business travel, rather than leisure,” the group’s analysis said. “As business confidence and world trade have turned up sharply, business travelers have returned. Consumer confidence has not recovered in the same way as business confidence.”

Major corporate travel agencies in the United States are also reporting strong growth in flying by business travelers. Dale Eastlund, senior director of the consulting group of Carlson Wagonlit Travel, the corporate travel management company, said airline bookings by North American corporate customers were up 15 percent in the first quarter, compared with the same period in 2009.

Michael Steiner, executive vice president of Ovation Corporate Travel in New York, said the number of airline transactions by Ovation’s corporate customers was 22.5 percent higher in the first four months of 2010, compared with the same period in 2009, while the number of airline transactions by its leisure customers was up 39 percent.

These double-digit increases in demand are in no way being matched by similar increases in the number of seats. The Air Transport Association, the trade group of the American airline industry, said domestic capacity will be only 0.2 percent higher this summer than last, while capacity on international routes will be up 6.6 percent.

“Seats will be limited,” said Michael Derchin, airline analyst for CRT Capital Group in Stamford, Conn. “It’s going to be a more difficult travel experience for business people, with 90 percent load factors in the peaks.”

The inevitable outcome of limited seats and stronger demand will be higher fares, at least compared with the greatly depressed levels of 2009.

Business- and first-class fares are up 10 percent globally from their “low point in mid-2009, but they’re still a lot lower than they were prerecession,” said Brian Pearce, chief economist of the international airline industry group. “It indicates the development of a relative shortage of seats.”

From January to April, the average ticket price booked by a corporate customer of Ovation Travel climbed 16.2 percent, Mr. Steiner said.

Mathias Eichelberger, director of airline relations for Egencia, the corporate travel division of Expedia, agreed that fares were rising. “There are going to be very full flights with high prices, especially on trans-Atlantic routes,” he said. “I think leisure travel on the trans-Atlantic is going to come back stronger, with a stronger dollar and overall consumer confidence.”

Another result of more crowded flights could be a dearth of desirable seats, like those on aisles or in exit rows.

“Flights are going to be full,” Mr. Eastlund warned. “In many instances, business travelers will end up in the middle seat.”

And upgrades, which have not been plentiful recently — at Ovation Travel, for example, business traveler upgrades plummeted 21 percent from January to April — are expected to be even scarcer during the peak summer months.

“It will be much more challenging to get upgraded, because of the lack of capacity and the high number of frequent fliers,” Mr. Eastlund said.

Disruption in flying is also possible this summer because of labor problems. Already, British Airways has been dealing with on-again, off-again strikes by its cabin crew, while the management of American Airlines is preparing for a possible strike by its flight attendants.

The volcano in Iceland could also create further disruptions for travelers. Jennifer Wilson-Buttigieg, co-president and co-owner of Valerie Wilson Travel, a corporate travel company in New York, said she was advising clients with connecting flights in any city in Europe “to build in a few extra hours for connecting time.”

The Transportation Department’s new regulations governing tarmac delays could wreak further havoc with air travel this summer because of the potential for thunderstorm delays, some experts say. Under the new rules, the government has said it will fine carriers in the United States as much as $27,500 for each passenger if they keep people on domestic flights waiting for more than three hours on the tarmac without letting them get off.

“I guess airlines will err on the side of caution” if they are considering canceling a flight, Mr. Derchin said, adding that the result could be “more cancellations than normal.” And if capacity is tight, it could be hard to rebook passengers from canceled flights.

To make business air travel as manageable as possible, corporate travel executives suggest booking as far in advance as possible to get the lowest fares and best seats available, and developing a backup plan in case of delays.

They also point out that some frequent American travelers can use automated kiosks to pass through United States customs as part of the Global Entry program. The executives note, too, that the Transportation Security Administration runs a Black Diamond program at many of the major airports that designates security lanes for travelers familiar with the agency’s rules.

There is usually an alternative to air travel “if the potential for disruption is too great,” said Henry H. Harteveldt, travel analyst for Forrester Research. “Take the train, drive or turn to technology.” That way, he said, business travelers can avoid “the hassle factor and not compete for overhead bin space with families.”

Owners Stop Paying Mortgages, and Stop Fretting

2010-06-01T07:01:00.000-07:00

Owners Stop Paying Mortgages, and Stop Fretting
By DAVID STREITFELD
Copyright by The New York Times
Published: May 31, 2010
http://www.nytimes.com/2010/06/01/business/01nopay.html?th=&adxnnl=1&emc=th&adxnnlx=1275400827-oWVodUTbD3jlUhnexGcXyw

ST. PETERSBURG, Fla. — For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life — something they did not want but are in no hurry to get out of.

Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino.

“Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.”

A growing number of the people whose homes are in foreclosure are refusing to slink away in shame. They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero. They use the money they save to get back on their feet or just get by.

This type of modification does not beg for a lender’s permission but is delivered as an ultimatum: Force me out if you can. Any moral qualms are overshadowed by a conviction that the banks created the crisis by snookering homeowners with loans that got them in over their heads.

“I tried to explain my situation to the lender, but they wouldn’t help,” said Mr. Pemberton’s mother, Wendy Pemberton, herself in foreclosure on a small house a few blocks away from her son’s. She stopped paying her mortgage two years ago after a bout with lung cancer. “They’re all crooks.”

Foreclosure procedures have been initiated against 1.7 million of the nation’s households. The pace of resolving these problem loans is slow and getting slower because of legal challenges, foreclosure moratoriums, government pressure to offer modifications and the inability of the lenders to cope with so many souring mortgages.

The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics.

While there are no firm figures on how many households are following the Pemberton-Reboyras path of passive resistance, real estate agents and other experts say the number of overextended borrowers taking the “free rent” approach is on the rise.

There is no question, though, that for some borrowers in default, foreclosure is only a theoretical threat for a long time.

More than 650,000 households had not paid in 18 months, LPS calculated earlier this year. With 19 percent of those homes, the lender had not even begun to take action to repossess the property — double the rate of a year earlier.

In some states, including California and Texas, lenders can pursue foreclosures outside of the courts. With the lender in control, the pace can be brisk. But in Florida, New York and 19 other states, judicial foreclosure is the rule, which slows the process substantially.

In Pinellas and Pasco counties, which include St. Petersburg and the suburbs to the north, there are 34,000 open foreclosure cases, said J. Thomas McGrady, chief judge of the Pinellas-Pasco Circuit. Ten years ago, the average was about 4,000. “The volume is killing us,” Judge McGrady said.

Mr. Pemberton and Ms. Reboyras decided to stop paying because their business, which restores attics that have been invaded by pests, was on the verge of failing. Scrambling to get by, their credit already shot, they had little to lose.

“We could pay the mortgage company way more than the house is worth and starve to death,” said Mr. Pemberton, 43. “Or we could pay ourselves so our business could sustain us and people who work for us over a long period of time. It may sound very horrible, but it comes down to a self-preservation thing.”

They used the $1,837 a month that they were not paying their lender to publicize A Plus Restorations, first with print ads, then local television. Word apparently got around, because the business is recovering.

The couple owe $280,000 on the house, where they live with Ms. Reboyras’s two daughters, their two dogs and a very round pet raccoon named Roxanne. The house is worth less than half that amount — which they say would be their starting point in future negotiations with their lender.

“If they took the house from us, that’s all they would end up getting for it anyway,” said Ms. Reboyras, 46.

One reason the house is worth so much less than the debt is because of the real estate crash. But the couple also refinanced at the height of the market, taking out cash to buy a truck they used as a contest prize for their hired animal trappers.

It was a stupid move by their lender, according to Mr. Pemberton. “They went outside their own guidelines on debt to income,” he said. “And when they did, they put themselves in jeopardy.”

His mother, Wendy Pemberton, who has been cutting hair at the same barber shop for 30 years, has been in default since spring 2008. Mrs. Pemberton, 68, refinanced several times during the boom but says she benefited only once, when she got enough money for a new roof. The other times, she said, unscrupulous salesmen promised her lower rates but simply charged her high fees.

Even without the burden of paying $938 a month for her decaying house, Mrs. Pemberton is having a tough time. Most of her customers are senior citizens who pay only $8 for a cut, and they are spacing out their visits.

“The longer I’m in foreclosure, the better,” she said.

In Florida, the average property spends 518 days in foreclosure, second only to New York’s 561 days. Defense attorneys stress they can keep this number high.

Both generations of Pembertons have hired a local lawyer, Mark P. Stopa. He sends out letters — 1,700 in a recent week — to Floridians who have had a foreclosure suit filed against them by a lender.

Even if you have “no defenses,” the form letter says, “you may be able to keep living in your home for weeks, months or even years without paying your mortgage.”

About 10 new clients a week sign up, according to Mr. Stopa, who says he now has 350 clients in foreclosure, each of whom pays $1,500 a year for a maximum of six hours of attorney time. “I just do as much as needs to be done to force the bank to prove its case,” Mr. Stopa said.

Many mortgages were sold by the original lender, a circumstance that homeowners’ lawyers try to exploit by asking them to prove they own the loan. In Mrs. Pemberton’s case, Mr. Stopa filed a motion to dismiss on March 17, 2009, and the case has not moved since then. He filed a similar motion in her son’s case last December.

From the lenders’ standpoint, people who stay in their homes without paying the mortgage or actively trying to work out some other solution, like selling it, are “milking the process,” said Kyle Lundstedt, managing director of Lender Processing Service’s analytics group. LPS provides technology, services and data to the mortgage industry.

These “free riders” are “the unintended and unfortunate consequence” of lenders struggling to work out a solution, Mr. Lundstedt said. “These people are playing a dangerous game. There are processes in many states to go after folks who have substantial assets postforeclosure.”

But for borrowers like Jim Tsiogas, the benefits of not paying now outweigh any worries about the future.

“I stopped paying in August 2008,” said Mr. Tsiogas, who is in foreclosure on his house and two rental properties. “I told the lady at the bank, ‘I can’t afford $2,500. I can only afford $1,300.’ ”

Mr. Tsiogas, who lives on the coast south of St. Petersburg, blames his lenders for being unwilling to help when the crash began and his properties needed shoring up.

Their attitude seems to have changed since he went into foreclosure. Now their letters say things like “we’re willing to work with you.” But Mr. Tsiogas feels little urge to respond.

“I need another year,” he said, “and I’m going to be pretty comfortable.”