Life in OUR America, The Livyjr Files Volume 7 Options

[Livyjr]

"Pressure mounts on Gov. Spitzer to quit"

By MICHAEL GORMLEY, Associated Press Writer

11 March 2008

ALBANY, N.Y. - With pressure mounting to resign Tuesday over a call-girl scandal, Gov. Eliot Spitzer found himself with few friends and lots of powerful enemies, many of whom regard him as a sanctimonious bully who got what was coming to him.

Republicans began talking impeachment, and few if any fellow Democrats were willing to defend him.

A death watch of sorts began at the state Capitol, where whispers of "What have you heard?" echoed through nearly every hallway of the ornate, 109-year-old building.

While Spitzer and his family remained secluded in their Fifth Avenue apartment, insiders said the governor was still trying to decide how to proceed.

Options included quitting as early as Tuesday afternoon, or waiting to use resignation as a bargaining chip with federal prosecutors to avoid indictment.

Democrats privately floated another option, telling The Associated Press that Spitzer was considering what was almost unthinkable immediately after Monday's bombshell apology: hanging on.

"If the public is fine, he'll stay," said a Democrat who spoke on condition of anonymity because of the sensitivity of the subject.

Still, Spitzer's enemies were emboldened, and some of his friends went from shock to outrage.

"Particularly because of the reform platform on which he was elected governor, his ability to govern the state of New York and execute his duties as governor have been irreparably damaged," said Citizens Union, a good-government group that supported the crusading attorney general for governor in 2006 and provided critical support in his effort to reform Albany.

"It is our strong belief that it is now impossible for him to fulfill his responsibilities as governor."

"Accordingly, Citizens Union urges him to resign as governor."

The scandal erupted Monday, when allegations surfaced that Spitzer, a 48-year-old married man with three teenage daughters, spent thousands of dollars on a call girl named Kristen at a Washington hotel on the night before Valentine's Day.

The case started when banks noticed frequent cash transfers from several accounts and filed suspicious activity reports with the Internal Revenue Service, a law enforcement official told the AP.

The accounts were traced back to Spitzer, prompting public corruption investigators to open an inquiry.

The investigation also found evidence that Spitzer was a repeat customer with the Emperors Club VIP, a high-end call-girl service, the official said.

In court papers, Spitzer was identified only as "Client 9," according to another law enforcement official who also spoke on condition of anonymity because the investigation is still going on.

The governor has not been charged, and prosecutors would not comment on the case.

A Spitzer spokesman said the governor has retained a large New York City law firm.

In Albany, Democratic Lt. Gov. David Paterson, who would become governor if Spitzer resigned, was talking to legislative leaders about a possible transition.

On Wall Street, where Spitzer built his reputation as a crusader against shady practices and overly generous compensation, cheers and laughter erupted Monday from the trading floor when news broke of his potential ruin.

Many in the financial industry had long complained that the man known as "Mr. Clean" and the "Sheriff of Wall Street" was abusive and insulting, that he went after them with holier-than-thou zeal, and that he was just trying to make headlines and advance his political career.

"The irony and the hypocrisy is almost too good to be true," said Bryn Dolan, a fundraiser who works with many Wall Street employees.

"If he had any shame, he would've already resigned."

Reporters, government workers and the public milled around the state Capitol on Tuesday, waiting for any developments.

News vans lined up around the building, and camera operators sat next to their tripods on the front lawn waiting for something to happen.

The official Democratic line was to give Spitzer time to decide.

"On every level — the human level, the governmental level — this is not the time to speculate and guess at the outcome," said Democratic state Assemblyman Richard Brodsky.

"There's too much at stake."

But privately, several Democrats in the Legislature and in the administration said resignation appeared inevitable.

"He's weighing the rest of his life," one Democratic official said sadly.

Meanwhile, the Republicans Spitzer fought with for a year struck harder.

"The trust of the people has been violated and we've become a laughingstock," said state Sen. Martin Golden, a Brooklyn Republican.

"It has the potential ability of throwing us into a major crisis, but we won't let it happen."

Assembly Republican leader James Tedisco warned that if Spitzer did not resign within 48 hours, he would call for impeachment.

But any impeachment would face a difficult road in the Democrat-controlled Assembly, where articles impeachment would require a majority vote to go to a trial.

A trial would be decided by a combined vote of the full Senate, which has a slim GOP majority, and the Court of Appeals.

Tedisco was an early target of Spitzer's abrasive and uncompromising style in Albany.

In a private call, an angry Spitzer once described himself to Tedisco as a "steamroller" — he attached a profanity for emphasis — and warned: "I'll roll over you and anybody else."

There were times, too, when Spitzer visited individual legislative districts to impugn by name lawmakers who defied him, a breach of etiquette even by New York's bare-knuckle standards.

It was a legislative version of the name-calling he used against Wall Street targets for years as attorney general.

So when the news about Spitzer's disgrace hit Wall Street, many were delighted to see him get his comeuppance.

"It's great that he's going to take a fall for what is essentially a minor thing," NYSE employee Greg Longworth said outside Harry's at Hanover Square, a favorite Wall Street drinking hole.

"He was such a stuffed shirt, and it turns out he was doing the same thing."
___

AP writers Valerie Bauman and Michael Virtanen in Albany, and Vinnee Tong in New York contributed to this report.

[Livyjr]

"China inflation highest in nearly 12 yrs"

By JOE McDONALD, Associated Press

Last updated: 2:24 a.m., Tuesday, March 11, 2008

BEIJING -- Soaring food costs drove China's inflation to its highest level in nearly 12 years in February, according to data reported Tuesday, raising the risk of unrest as communist leaders prepare for the Beijing Olympics.

The 8.7 percent rise in the consumer price index over last February exceeded forecasts and raised the likelihood of interest rate hikes or emergency steps by Chinese leaders, who already have imposed price controls on food.

Communist leaders worry about a political backlash if soaring prices erode rising living standards.

Bouts of high inflation in the 1980s and '90s sparked protests, a scenario they want to avoid amid global scrutiny of China ahead of August's Summer Games.

Inflation was driven by a 23.3 percent jump in food costs, according to the National Statistics Bureau.

Such rises are especially worrisome to Chinese leaders because they hit the country's poor majority hard.

"I'm concerned that there will be demonstrations."

"The government must recognize this," said Robert Broadfoot, managing director of Political and Economic Risk Consultancy Ltd. in Hong Kong.

Food price inflation "hits poor Chinese a lot harder than Chinese who have benefited from the economic boom," Broadfoot said.

"When people already are marginal and just can't pay, they're going to demonstrate."

Economists say inflation should stay high possibly as late as May before it begins to ebb.

"China will find it difficult to meet the target inflation rate of 4.8 percent for the full year," Jing Ulrich, JP Morgan's chairwoman of China equities, said in a report to clients.

February inflation was China's highest since May 1996, when prices rose 8.9 percent, according to Goldman Sachs.

Overall inflation was up sharply from January's percent 7.1 percent rate.

Economists had forecast a rate closer to 8 percent.

Beijing has raised interest rates repeatedly and is trying to boost food production to ease inflation pressure amid a boom that saw economic growth rise to 11.4 percent last year.

Those efforts were hampered when the worst snowstorms to hit China in five decades blanketed the south in January and early February.

The snows wrecked crops, killed farm animals and paralyzed shipping.

Shortages of meat and vegetables caused prices to soar in snow-hit areas.

Prices began to climb in mid-2007 due mostly to shortages of pork, China's staple meat, and grain.

But government data also show pressure for across-the-board price rises is increasing as factories and households compete for resources.

Inflation should "remain high at elevated levels in the near term even after the temporary weather-related impact dissipates," Goldman economists Yu Song and Hong Liang said in a report to clients.

They said they expect Beijing to respond by raising interest rates, tightening controls on bank lending and allowing China's currency, the yuan, to rise faster in value.

That could help to cool inflation by narrowing China's swollen trade surplus and reducing the amount of cash flooding into the economy.

Among consumer goods, pork prices shot up 63.4 percent in February compared with the year-earlier period, while fresh vegetables were up 46 percent and cooking oil 41 percent, according to the statistics bureau.

In an attempt to control inflation, regulators froze prices of gasoline, electricity and other basic goods in September.

In January, food processors were ordered to get approval for any price hikes.

Fertilizer prices have been frozen to protect farmers.

Subsidies to farmers have been increased to encourage them to raise more pigs.

Curbs have been imposed on grain exports to increase supplies available on domestic markets.

Inflation for non-food consumer goods was still low in February, with prices up 1.6 percent from the year-earlier month, figures showed.

But wholesale data reported earlier show pressure for price rises in other areas is growing.

The cost of basic oil products jumped 37.5 percent jump in February while that for steel products was up 29.6 percent, the statistics bureau said Monday.

Food-related raw materials rose 11 percent.

Rising prices for iron ore, grain and other raw materials will squeeze Chinese companies' profits, raising doubts about their growth prospects, said JP Morgan's Ulrich.

"The beneficiaries of higher inflation remain the resource suppliers -- many of which are outside China," she said.

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On the 'Net:

National Statistics Bureau (in Chinese): http://www.stats.gov.cn

[Livyjr]

"Ancient graves found in Greece"

Mon Mar 10, 8:47 PM ET

ATHENS, Greece - Greek workers discovered around 1,000 graves, some filled with ancient treasures, while excavating for a subway system in the historic city of Thessaloniki, the state archaeological authority said Monday.

Some of the graves, which dated from the first century B.C. to the 5th century A.D., contained jewelry, coins and various pieces of art, the Greek archaeological service said in a statement.

Thessaloniki was founded around 315 B.C. and flourished during the Roman and Byzantine eras.

Today it is the Mediterranean country's second largest city.

Most of the graves — 886 — were just east of the city center in what was the eastern cemetery during Roman and Byzantine times.

Those graves ranged from traces of wooden coffins left in simple holes in the ground, to marble enclosures in five-room family mausoleums.

A separate group of 94 graves were found near the city's train station, in what was once part of the city's western cemetery.

More findings were expected as digging for the Thessaloniki metro continues.

Digging started in 2006 and the first 13 stations are expected to be done by the end of 2012.

A 10-station extension to the west and east has been announced.

[Livyjr]

"Fallon resigns as Mideast military chief"

Associated Press

Last updated: 4:43 p.m., Tuesday, March 11, 2008

WASHINGTON -- The top U.S. military commander for the Middle East resigned Tuesday amid speculation about a rift over U.S. policy in Iran.

Defense Secretary Robert Gates said that Adm. William J. Fallon, whose area of responsibility includes Iraq, had asked for permission to retire and that Gates agreed.

Gates said the decision, effective March 31, was entirely Fallon's and that Gates believed it was "the right thing to do."

Fallon was the subject of an article published last week in Esquire magazine that portrayed him as opposed to President Bush's Iran policy.

It described Fallon as a lone voice against taking military action to stop the Iranian nuclear program.

"Recent press reports suggesting a disconnect between my views and the president's policy objectives have become a distraction at a critical time and hamper efforts in the Centcom region," Fallon, who is traveling in Iraq, said in a statement issued by his U.S. headquarters in Tampa, Fla.

"And although I don't believe there have ever been any differences about the objectives of our policy in the Central Command area of responsibility, the simple perception that there is makes it difficult for me to effectively serve America's interests there," he said.

President Bush praised Fallon in a statement.

"During his tenure at Centcom, Admiral Fallon's job has been to help ensure that America's military forces are ready to meet the threats of an often-troubled region of the world, and he deserves considerable credit for progress that has been made there, especially in Iraq and Afghanistan," Bush said.

Gates announced that Fallon's top deputy, Army Lt. Gen. Martin Dempsey, will take over temporarily when Fallon leaves.

A permanent successor, requiring nomination by the president and confirmation by the Senate, might not be designated in the near term.

Dempsey could be elevated to Central Command chief, although he already has been selected to become the top U.S. Army general in Europe.

Among other possible candidates for the post -- considered one of the most important in the U.S. military -- is Army Lt. Gen. Stanley McChrystal, who had just been named to a top post on the Joint Chiefs of Staff and who had been commander of U.S. special operations forces in Iraq.

Another possibility is Army Lt. Gen. Peter Chiarelli, who serves as Gates' senior military assistant and is a former senior commander in Iraq.

Gates described as "ridiculous" any notion that Fallon's departure signals the United States is planning to go to war with Iran.

And he said "there is a misperception" that Fallon disagrees with the administration's approach to Iran.

"I don't think there were differences at all," Gates added.

He said he believed Fallon was fully supportive of the administration's policy on dealing with Iran through diplomatic and economic pressures.

Fallon, 63, a veteran of the Vietnam War and a former vice chief of naval operations, has had a 41-year Navy career.

He took the Central Command post on March 16, 2007, succeeding Army Gen. John Abizaid, who retired.

Fallon previously served as commander of U.S. Pacific Command.

Gates called Fallon a very able military strategist and said his advice will be missed at the Pentagon.

"I think this is a cumulative kind of thing," said Gates, speaking of the circumstances leading up to Fallon's decision.

"It isn't the result of any one article or any one issue."

[Livyjr]

"Spitzer tripped up on laws he enforced"

By SAMANTHA GROSS and DEVLIN BARRETT, Associated Press

Last updated: 6:23 p.m., Tuesday, March 11, 2008

NEW YORK -- Eliot Spitzer knew how to catch bad guys by following the money.

As attorney general, he once broke up a call-girl ring and locked up 18 people on corruption, money-laundering and prostitution charges.

He ruthlessly investigated the pay packages of Wall Street executives and was so familiar with shady financial maneuvers that he rose to become the top racketeering prosecutor in Manhattan.

But in the end, it appears that Spitzer may have been done in by the same behavior he built a career out of prosecuting.

In fact, it seems he was tripped up by some of the very financial accounting methods he used so successfully against multibillion-dollar Wall Street firms.

For one thing, the governor initially drew the attention of federal investigators because of cash payments to an account operated by a call-girl ring, according to a law enforcement official who spoke on condition of because of the sensitivity of the case.

Banks are required to file Suspicious Activity Reports to the government whenever they observe something they fear may be a crime.

In court papers, Client 9 -- identified by another law enforcement official as Spitzer -- hurried to get more than $4,000 in cash to pay a call girl at a Washington hotel.

That kind of activity, repeated over time, is just the kind of thing that would set off alarm bells with a bank's compliance officer, who is trained to be on the lookout for what is called structuring or "smurfing" -- a pattern of transactions aimed at hiding the nature or purpose of certain money.

Spitzer of all people should have known that, said Miami-based lawyer Gregory Baldwin, credited with coining the term "smurfing" in the 1980s as a federal prosecutor.

"I think he's done enough cases where he's charged money laundering that he would know exactly what kind of information you get from the banks."

"It's such a perfect example of what goes around, comes around," he said.

By the time the scandal broke this week, Spitzer's financial transactions had been monitored, his phone calls had been caught on tape, and his actions had been scrutinized by federal prosecutors.

It could have been straight out of the Spitzer prosecution playbook.

Whether Spitzer thought he was smarter than the feds because of his own professional experience is, for now at least, a matter for psychologists to speculate on.

As New York attorney general, Spitzer was also familiar with how to bust up a prostitution ring.

Spitzer proudly announced on April 8, 2004, that authorities had arrested 18 people on promoting prostitution and related charges -- including money laundering and falsifying business records -- in an investigation of escort services in New York.

"This was a sophisticated and lucrative operation with a multitiered management structure," Spitzer said at the time.

"It was, however, nothing more than a prostitution ring, and now its owners and operators will be held accountable."

In the 2004 probe, investigators used wiretaps and other surveillance to build their case, said Vincent Romano, who defended the man accused of running the ring.

Prosecutors also charged some of the defendants with enterprise corruption -- a charge carrying heavier penalties than simple prostitution.

No charges were brought against the ring's customers, just those accused of working for or running the service.

"It was a big splash."

"They had the perp walk."

"He caused a lot of embarrassment to a lot of people in the case to his benefit."

"What he put their families through at the time, he's probably experiencing now: the level of embarrassment and ridicule," Romano said.

"He's got this overzealous, mean-spirited prosecution, but behind closed doors in another state, he's doing the identical thing that he's accusing others of doing," he added.

"And the other irony of it is that you've made a career off of a wiretap, and your demise is by the same prosecutorial tool."

The investigation that could spell Spitzer's ruin found that Client 9 was apparently a repeat customer with the Emperors Club VIP, a lucrative prostitution service where some call girls pulled in $5,500 an hour.

The governor has not been charged, and prosecutors would not comment on the case.

A person familiar with the investigation told The Associated Press that the probe began with a referral from banks to an Internal Revenue Service office on Long Island about suspicious transactions involving accounts ultimately traced to Spitzer.

The IRS studied the records and then referred the case to federal prosecutors in October.

It was then assigned to the public corruption unit of the federal prosecutor's office in Manhattan.

The precise details of what set off alarm bells for federal authorities are still unclear.

But authorities believe Spitzer may have spent tens of thousands of dollars, apparently transferring only personal funds -- not campaign contributions or state taxpayer dollars -- between accounts to pay for the prostitute service, according to a law enforcement official who spoke on condition of anonymity.

Another official said the amount could be as much as $80,000.

A half-million or so times every year, banks alert the federal government that a suspicious transaction has occurred.

Although the public sometimes thinks it requires a transfer of $10,000 or more to attract attention, banks can label transactions suspicious even if they involve far less money, said Walter Pagano, a former IRS agent who has testified in court on white-collar crime.

Spitzer might have tried to keep his transfers below the $10,000 threshold, underestimating the scrutiny that banks give to lesser amounts.

Spitzer prosecuted cases in New York for two decades before becoming governor.

From 1986 to 1992, he was an assistant district attorney in Manhattan.

While there, he rose to become chief of the labor racketeering unit.

While attorney general, he also went up against two men he accused of using their tour company to promote "sex tourism" in the Philippines and Thailand --first suing them in civil court and then bringing criminal charges.

One defense attorney on the case said it was politically motivated.

"He prosecuted a couple of little guys who were easy targets when he was running for governor," Daniel Hochheiser said.

"The whole situation is marked by irony, hypocrisy and self-righteousness."

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Associated Press Writer Devlin Barrett contributed to this report from Washington and AP Writer Larry Neumeister contributed from New York.

[Livyjr]

TIME MAGAZINE CRUSADER OF THE YEAR!

Spitzer of all people should have known that, said Miami-based lawyer Gregory Baldwin, credited with coining the term "smurfing" in the 1980s as a federal prosecutor.

"I think he's done enough cases where he's charged money laundering that he would know exactly what kind of information you get from the banks."

"It's such a perfect example of what goes around, comes around," he said.

And so

[Livyjr]

"Stocks boom on Fed's bank booster"

By JOE BEL BRUNO and MADLEN READ, Associated Press

Last updated: 7:13 p.m., Tuesday, March 11, 2008

NEW YORK -- The Fed promised a $200 billion booster shot for ailing markets -- and Wall Street answered with its biggest bounce in more than five years.

The Dow Jones industrials shot up more than 416 points, the biggest single-day point gain since July 2002, after the Federal Reserve announced the move as part of a worldwide effort to help struggling banks and mortgage providers.

Hoping to ease the credit crisis, the Fed -- acting with the European Central Bank, the Bank of Canada and the Swiss National Bank -- agreed to loan investment banks money in exchange for debt, including slumping mortgage-backed securities.

The idea is to create a market for assets that investors have recently been too scared to buy.

That freeze in demand had sent asset values plunging and caused huge losses for some of the world's biggest banks.

After a series of hefty losses in stocks, the market hopes the central banks' decision Tuesday might be more effective than previous moves -- like rate cuts, which had led to initial stock pops that later fizzled.

"It's not just a rate cut."

"I think it's a very creative way to do financing," said Anthony Conroy, managing director and head trader for BNY ConvergEx Group.

"It shows the Fed is willing to do things that are a little out-of-the-box to shore up credit issues."

"I really think they went to the heart of the issue."

Investors certainly seemed to like it: The Dow rose 416.66, or 3.6 percent, to 12,156.81.

It was the biggest point jump in the Dow since a 447-point rise on July 29, 2002, and its widest one-day percentage gain since March 2003.

The Dow had lost more than 500 points in the past three sessions and is still down about 2,000 points from its October 2007 record high.

Broader stock indicators also soared.

The Standard & Poor's 500 index rose 47.28, or 3.7 percent, to 1,320.65, while the Nasdaq composite index surged 86.42, or about 4 percent, to 2,255.76.

It was the S&P's biggest point gain since April 5, 2001, and the Nasdaq's biggest since May 8, 2002.

The latest step by the central banks was seen as a direct lifeline to investment banks, which previously couldn't borrow beyond already established Fed liquidity plans.

The plan basically allows Wall Street's biggest institutions to put up troubled assets as collateral for loans, use the new capital to make money in the market, and then pay back the loan up to 28 days later.

Though eventually banks would be forced to take the troubled mortgage-backed debt back on their books, the plan still takes short-term pressure off them.

Many of these banks will release first-quarter earnings reports next week.

"The big problem has been the financials, and this helps supply money directly to the banks and may take some of the need for aggressive rate cutting off the table," said Peter Dunay, chief investment strategist at Meridian Equity Partners.

"The Fed is basically going to take the bad loans off the banks' books, and the market seems to be loving that idea."

The Fed may have avoided dramatically slashing interest rates again when it meets next week.

Economists remain concerned about the unrelenting rise in oil prices and the dollar's weakness, which contribute to inflation -- and cutting rates only adds to those pressures.

Government bond prices fell as stocks rallied.

The yield on the 10-year Treasury note, which moves opposite its price, spiked to 3.60 percent from 3.46 percent late Monday.

Financial sector stocks, many of which have dipped to multiyear lows in recent days on liquidity concerns, led the market higher Tuesday.

Citigroup Inc. rose $1.42, or 7.2 percent, to $21.11, Washington Mutual Inc. rose $1.72, or 17 percent, to $11.76, and Bank of America Corp. rose $1.33, or 3.8 percent, to $36.64.

Morgan Stanley rose $4.19, or 10.9 percent, to $42.49, Lehman Brothers rose $3.33, or 7.8 percent, to $46.31, and Merrill Lynch rose $2.76, or 6.4 percent, to $45.60.

Bear Stearns Cos. rebounded from losses to rise 67 cents to $62.97, even after an analyst said the No. 5 U.S. investment bank might need to sell itself, or layoff more staff, to stay afloat.

The cost to insure Bear Stearns bonds has been spiking to all-time highs.

A spokesman for Bear Stearns didn't immediately return telephone calls.

The Fed's announcement overshadowed a report from the Commerce Department that showed the United States' trade deficit grew larger in January.

The latest snapshot of the economy showed that the trade gap increased to $58.2 billion -- the highest since November.

The primary reason behind the widening trade deficit is high oil prices.

Crude rose as high as $109.72 in premarket trading on the New York Mercantile Exchange before ending at a new settlement record of $108.75.

The weak dollar has contributed to oil's rally from $87 a barrel in January.

Gold prices rose, while the dollar edged up against most other major currencies.

The only sector posting major losses Tuesday was health care, which has been strong in recent months.

WellPoint Inc. fell after Goldman Sachs trimmed its ratings in the managed care sector to neutral from attractive.

The investment bank singled out WellPoint's performance amid pricing pressures.

The stock plunged $18.66, or 28 percent, to $47.26.

Google Inc. shares spiked after European Union regulators cleared the Internet company's $3.1 billion bid for online ad tracker DoubleClick.

Shares of Google rose $26.22, or 6.3 percent, to $439.84.

The Russell 2000 index of smaller companies rose 29.84, or 4.63 percent, to 673.81.

Advancing issues surpassed decliners by more than 5-to-1 on the New York Stock Exchange.

Consolidated volume came to 5.17 billion shares, up sharply from 4.15 billion shares Monday.

Stocks overseas rebounded.

Japan's Nikkei 225 stock average rose 1.01 percent, while Hong Kong's market closed up 1.28 percent higher.

Britain's FTSE-100 rose 1.7 percent, Germany was up 2.01 percent, and France added 1.61 percent.

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On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

[Livyjr]

"Gas prices rise to new national record"

By JOHN WILEN, Associated Press

Last updated: 3:55 p.m., Tuesday, March 11, 2008

NEW YORK -- The cost of filling up the family car climbed to a record high Tuesday, adding to the challenges consumers already face with falling home values and rising food prices.

Gas prices at the pump rose overnight to a record national average of $3.2272 a gallon, according to AAA and the Oil Price Information Service.

That's a tad higher than the previous record of $3.2265, set last May.

Soaring gas prices worsen the financial plight of consumers already suffering through a downturn in the housing market that has sharply reduced home prices in many markets and limited Americans' ability to tap home equity for spending.

Food prices are also on the rise, partly due to rising fuel costs.

"I used to think three bucks a gallon was all I'd pay, but I keep filling up," said Joe Gowans while gassing his Acura SUV in San Francisco one recent afternoon.

"You have to use it."

A year ago, rising demand and a string of refinery outages had raised concerns about supplies.

Now, the record price of crude oil is the culprit, propelling gas higher although supplies are at 15-year highs.

On Tuesday, light sweet crude for April delivery surged to a new trading record of $109.72 on the New York Mercantile Exchange before retreating after the Energy Department and International Energy Agency cut crude consumption forecasts for this year.

Futures settled 85 cents higher at $108.75 a barrel, a new record.

Where gas and oil go from here is anybody's guess.

Many analysts expect prices to moderate, while others predict oil could keep rising to $120 a barrel, or higher.

And with demand for gas expected to rise as warm weather arrives, analysts say pump prices could spike as high as $3.75 a gallon, regardless of what happens with oil prices.

The Energy Department on Tuesday raised its forecast of how high prices will rise this spring by a dime to $3.50 a gallon.

"I've got to say, if they ever go up to $3.50, that would be the point where I'd feel angry," said Alex Magby, a Morrisville, Pa., resident who was filling up his tank near his New Jersey restaurant job one recent afternoon.

"I'd feel cheated at that point."

High prices are painful to New York cab drivers like Brandis Younge, who spends $35 to $40 on gas each day.

"Before it skyrocketed, I used to pay $25," Younge said.

Still, because gas is so expensive, analysts expect demand for fuel will rise more slowly this spring and summer than in previous years.

Nationwide demand for gasoline is off by about 1 percent over the last 6 weeks, a trend analysts expect to accelerate if prices keep rising.

"We don't go visit family as much," said Steve Bagosy, of Pocono, Pa., while gassing up a company car in Manhattan Tuesday.

"Just try to stay local."

The effect can be seen in states such as California, where prices are consistently 30 cents higher than the national average.

Last November, the latest month for which data is available, demand for gasoline fell by 3.7 percent from the previous year in California as prices soared past $3.40 a gallon.

"It evokes a real reaction in demand destruction above $3.25 a gallon," said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service in Wall, N.J.

Prices have already passed the $4 mark at many stations nationwide.

But Kloza thinks slower demand growth will prevent the national average from rising that high.

High gas prices may actually help some companies that rely on tourism.

Carl Wilgus, executive director of the Pocono Mountains Visitors Bureau, said the number of skiers visiting the Pennsylvania ski region this winter was up, despite gas prices holding steady above $3 for most of that time.

In part, that's because many people plan vacations closer to home when fuel is so expensive, he said, giving up a trip to Florida in favor of a ski vacation an hour away, he said.

"We'll definitely lose some visitation, but hopefully we'll gain some from the folks who hope to stay closer to home," Wilgus said.

The price of gassing a recreational vehicle may induce some to look for campgrounds closer to home this summer.

At $3.50 a gallon, a 100-gallon Winnebago Destination RV will cost $350 to fill, $27 more than right now, and $96 more than a year ago.

Analysts believe oil's underlying supply and demand fundamentals do not support such high prices, and argue that crude's rise in recent months is mostly due to the falling dollar.

Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is weak.

The Energy Department and IEA, an energy consultant to western, industrialized nations, raised more concerns about the economic slowdown's impact on oil consumption Tuesday when both forecasters cut U.S. demand growth forecasts, but said strong demand overseas will keep prices elevated this year.

In other Nymex trading Tuesday, April heating oil futures rose 2.23 cents to settle at $2.9957 a gallon while April gasoline futures rose 1.12 cents to settle at $2.7261 a gallon.

April natural gas futures fell 2.4 cents to settle at $10 per 1,000 cubic feet on the Nymex.

In London, April Brent crude futures rose $1.09 to settle at $105.25 a barrel on the ICE Futures exchange.

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AP Business Writers Tali Arbel in New York and Jordan Robertson in San Francisco contributed to this report.

[Livyjr]

"Fed's loan rescue sparks big stock rally"

By JEANNINE AVERSA, Associated Press

Last updated: 5:12 p.m., Tuesday, March 11, 2008

WASHINGTON -- Staring at spreading financial dangers, the Federal Reserve announced a rescue package Tuesday that would pour as much as $200 billion into banks and investment houses and allow them to put up risky home-loan packages as collateral.

Wall Street rebounded with its biggest rally since 2002 -- and hoped the Fed had even more cards to play.

The Federal Reserve's maneuver, coordinated with central banks overseas, was its latest effort to stem the global credit crisis and severe housing woes that threaten to bury the United States in its first recession since 2001.

Fed Chairman Ben Bernanke and his colleagues have been stretching for new and imaginative ways to confront the situation.

They are hoping to bring relief where it is sorely needed: in the market for mortgage securities.

Home loan financing has become much harder to get as nervous lenders have hunkered down.

"It is a highly significant move."

"The Fed is innovating in a way that is going to push liquidity directly into the mortgage markets, where it is most needed," said David Jones, president of DJM Advisors.

On Wall Street, the Fed's action propelled stocks upward.

The Dow Jones industrials jumped 416.66 points -- the biggest one-day point gain since July 29, 2002.

Traders will be looking for still more action.

Recent stock rallies have been followed by renewed selloffs by investors who believe the economy is still headed for recession, if it isn't there already.

Assuming Tuesday's action helps to stabilize turbulent financial markets, that could reduce the chances that the Fed will order a deep, three-quarters of a percentage point cut in its key interest rate next week to further encourage lending and other economic activity.

An increasing number of economists now believe the Fed is more likely to cut rates by a half-point, though that could newly roil Wall Street.

The Federal Reserve announced it would allow squeezed financial institutions -- including big investment houses and banks -- to borrow up to $200 billion in super-safe Treasury securities by using some of their more risky investments as collateral.

The Fed announced the creation of a new Term Securities Lending Facility (TSLF) to provide financial institutions with 28-day loans of Treasury securities, rather than overnight loans.

The institutions would pledge other securities -- including federal agency residential-mortgage-backed securities, such as those of mortgage giants Fannie Mae and Freddie Mac -- as collateral for the loans.

Fed officials said it's the first time they'll be accepting mortgage-backed securities through this type of lending program.

"Firms that were having difficulty financing their mortgage positions have been thrown a lifeline," said Stephen Stanley, chief economist at RBS Greenwich Capital.

By allowing financial institutions to put up mortgage-backed securities -- for which there's little market appetite -- in return for safe securities that are in high demand, the Fed hopes to take pressure off financial companies and make them more inclined to lend to individuals and to businesses.

If the effort works, it should in time help to keep home loan rates down, especially on those backed by Fannie Mae and Freddie Mac, which are the few remaining sources of mortgage financing as credit has increasing dried up elsewhere, said Mark Zandi, chief economist at Moody's Economy.com.

The housing meltdown -- leading to sagging home prices and record-high foreclosures -- has caused financial institutes to rack up huge losses in bad mortgage investments.

Fannie Mae and Freddie Mac recently reported fourth-quarter losses totaling $6.1 billion and predicted multibillion-dollar losses throughout this year, amplifying concerns about their stability.

Prices also have plunged recently for the billions of dollars of mortgage securities that Fannie Mae and Freddie Mac guarantee, package and sell to investors as supply has outstripped demand.

The Fed's move comes as banks and other financial institutions face cash crunches.

"Pressures in some of these markets have recently increased again," the Fed said in a statement.

"We all continue to work together and will take appropriate steps to address those liquidity pressures."

The other banks involved are the Bank of Canada, the Bank of England, the European Central Bank and the Swiss National Bank.

The loans of Treasury securities would be made available through weekly auctions, beginning on March 27.

For now, up to $200 billion of Treasury securities is envisioned being made available.

Fed officials, however, didn't rule out additional operations of this sort down the road.

Next steps?

Some economists said the Fed might move to accept an even wider array of collateral for the auctions.

"This will not turn the economy around or fix all the problems in the markets but it should reduce the liquidity issue, at least for now," said Ian Shepherdson, chief economist at High Frequency Economics.

White House press secretary Dana Perino said President Bush welcomed the latest step and "has full confidence in Ben Bernanke at the Fed."

Since December, the Federal Reserve has been making short-term loans of cash available to banks through a new auction setup.

With the latest bank auction results announced Tuesday, the Fed has now made $210 billion available to squeezed banks in hopes it will help them to continue lending to individuals and companies.

Separately, the Fed also on Tuesday said it has authorized increases in existing programs called "swap lines" with the European Central Bank and the Swiss National Bank

"These arrangements will now provide dollars in amounts of up to $30 billion and $6 billion to the ECB and the SNB respectively," the Fed said, extending the term of these swap lines through Sept. 30.

The European Central Bank, in conjunction with the Fed, said it would offer U.S. dollars to euro money markets of up to $15 billion.

It took similar action in December and January.

The Frankfurt-based central bank for the 15 countries that use the euro said it has been working closely with other central banks.

A meltdown in the housing and credit markets has made banks and other financial institutions reluctant to lend to each other, causing a cash crunch.

Financial companies racked up multibillion-dollar losses as investments in mortgage-backed securities soured with the housing market's bust.

Problems first started in the market for subprime mortgages-- those made to people with blemished credit histories.

However, troubles have spread to other areas.

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AP Business Writer Matt Moore in Frankfurt, Germany, and Associated Press Writer Harry Dunphy in Washington contributed to this report.

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"Deficit widens as oil prices hit record"

By JEANNINE AVERSA, Associated Press

Last updated: 6:12 p.m., Tuesday, March 11, 2008

WASHINGTON -- The U.S. trade deficit grew larger in January as imports -- including crude-oil prices -- zoomed to all-time highs.

The latest snapshot of trade activity, reported by the Commerce Department on Tuesday, showed the country's trade gap increased to $58.2 billion.

That was up from a trade shortfall of $57.9 billion in December and was the highest since November.

Imports of goods and services climbed to a record high of $206.4 billion in January.

The United States' voracious appetite for imported crude oil, where prices skyrocketed to the loftiest on record, figured into the increasing demand for overall imports.

The trade gap widened even as exports of U.S.-made goods and services totaled a record high of $148.2 billion in January.

The declining value of the U.S. dollar relative to other currencies such as the euro, is helping to make U.S.-made goods cheaper and thus more attractive to foreign buyers.

Economists were expecting the trade deficit in January to be a bit larger -- growing to around $59 billion.

Still, rising energy prices are aggravating the nation's trade situation.

The average price of imported crude oil soared to a record $84.09 a barrel in January.

That pushed the country's imported crude-oil bill to an all-time high of $27.1 billion in January.

The country's trade deficit with oil producing nations, including Saudi Arabia, Venezuela and Nigeria, grew to $15.5 billion in January, up from $12.6 billion in December.

Oil prices on Tuesday closed at a new record high of $108.75 a barrel.

"The surge in oil prices to well above $100 (a barrel) will ensure that the oil deficit keeps widening in coming months," said Nigel Gault, chief economist at Global Insight.

On Wall Street, however, stocks staged a huge rally as a new effort by the Federal Reserve to help relieve a worsening credit crisis buoyed investors.

The Dow Jones industrials jumped 416.66 points -- its biggest one-day point gain since July 29, 2002.

Meanwhile, the United States' politically sensitive trade deficit with China widened to $20.3 billion in January, up from $18.8 billion in the previous month.

The Bush administration says free-trade policies that also make it easier for U.S. companies to do business in other countries is the best way to deal with the country's trade deficits.

"Congress needs to vote on the completed free-trade agreements with Colombia, Panama and South Korea to open these markets and level the playing field for U.S. exporters," said U.S. Trade Representative Susan Schwab.

Democrats, however, blame the president's trade policies for the trade gap and the loss of millions of U.S. factory jobs as U.S. companies move production to low-wage countries such as China.

Trade tensions with China over the last few years have intensified on a number of fronts.

Beijing's currency policies have strained relationships.

So have the recalls of Chinese-made goods -- from toys with lead paint to defective tires and tainted toothpaste -- which have raised questions about the safety of Chinese goods flowing into the United States.

Critics contend China is engaging in what they believe are unfair trade practices such as keeping the value of its currency artificially low against the dollar.

That makes Chinese-made goods less expensive to U.S. buyers and makes U.S.-made goods more expensive in China.

The administration has been prodding China to do more to let its currency rise in value.

The U.S. trade deficit with Japan decreased slightly to $6.592 billion in January, from $6.593 billion in December.

The trade deficit with Canada, however, increased to $5.9 billion, up from $4.7 billion.

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"Treasurys fall as Fed ramps up liquidity"

By LESLIE WINES, Associated Press

Last updated: 5:42 p.m., Tuesday, March 11, 2008

NEW YORK -- Treasury prices sold off sharply Tuesday after the Federal Reserve and other major central banks unveiled a plan to offer up to $200 billion in Treasurys to cash-starved financial institutions.

The liquidity effort, called the Term Securities Lending Facility, is the latest central bank program designed to provide necessary operating capital to banks and keep financial markets in order.

Defaults on bad mortgages and other credit assets have caused a liquidity crunch that has hurt lending, rattled nervous global markets and strained an already slowing economy.

The new program will offer Treasury bills to primary dealers through four-week auctions, a marked change from a current program that operates only on an overnight basis.

In essence these auctions, to be held weekly, will provide one-month loans to the major investment firms that work with the Fed and recently have struggled to function with declining liquidity.

The program will accept a broad range of collateral, including federal agency debt and mortgage-backed securities of Fannie Mae and Freddie Mac.

This should be a major boon to financial markets which in recent sessions have recoiled from many forms of mortgage debt, a development that forced such firms as Carlyle Capital Corp to miss margin calls on mortgage debt.

Although the $200 billion on offer will be in the form of Treasurys, government bond prices slipped badly as investors for the moment hunted for investments with more promising profit potential.

The news sparked a massive stocks rally and brought relief to the badly battered dollar.

The benchmark 10-year Treasury note fell 1 8/32 to 99 7/32 with a yield of 3.60 percent, up from 3.46 percent late Monday, according to BGCantor Market Data.

Prices and yields move in opposite directions.

The 30-year long bond lost 1 1/32 to 97 15/32 with a yield of 4.53 percent, down from 4.47 percent.

The 2-year note gave up 18/32 to 100 17/32 with a yield of 1.73 percent, up from 1.49 percent.

After-hours trade had some impact on yields.

At 5:30 p.m. Eastern time, the 10-year yield remained at 3.60 percent, but the 30-year yield fell to 4.52 percent and the 2-year yield rose to 1.74 percent.

The yield on the 3-month note shot up to 1.49 percent from 1.32 percent Monday as the discount rate advanced to 1.46 percent from 1.30 percent.

There were mixed views as to how well the new auction process will work.

Merrill Lynch & Co. Inc. Economist David Rosenberg cautioned in a research note, "the size of the auctions, while sizable in terms of the Fed's balance sheet, are actually fairly small in light of the overall credit situation and in no way does this solve -- or is intended to solve -- the massive writedowns and losses in the banking sector that are ongoing in this cycle."

However, Action Economics Chief Economist Mike Englund said the purpose of the auctions is just to create suitable trading conditions for mortgage-backed debt that investors have been afraid to trade.

In recent months, a near-dearth of buyers has made it almost impossible to determine accurate prices for many mortgage assets.

But the auctions should revive the market for mortgage-backed securities and provide a pricing mechanism, he said.

The new auction program also shows that the Fed and other central banks are determined to find ways to boost liquidity beyond the conventional tactic of cutting interest rates.

The Fed is working in concert with the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank.

The Fed is scheduled to hold a monetary policy meeting next Tuesday.

Prior to the auction announcement, investors had expected a rate reduction of up to 0.75 percentage point.

However, Ian Shepherdson, chief U.S. economist at High Frequency Economics, said such a large rate cut is less likely now that the new program exists.

The Fed may be looking for ways to avoid further drastic rate cuts in the Fed funds target rate, currently at 3 percent.

This is because the rate cuts, along with a vigorous commodities rally, are blamed for unloosening a brisker rate of inflation in the economy.

On Tuesday crude for April jumped to a new record price of $109.72 a barrel in New York trade, indicating the commodities rally has yet to crest.

Separately, the Commerce Department reported that the nation's trade gap widened a bit in January, after higher oil prices reduced the impact of stronger U.S. exports.

The trade gap rose 0.6 percent to $58.2 billion in the first month of the year.

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"Gold rises on Fed liquidity boost"

By STEVENSON JACOBS, Associated Press

Last updated: 5:22 p.m., Tuesday, March 11, 2008

NEW YORK -- Gold prices rose modestly Tuesday after the Federal Reserve announced it would inject $200 billion into the financial system to help ease a global credit crunch.

Silver and copper fell.

Other commodities traded mostly higher, with crude oil hitting a new record above $109 and agriculture futures staging a broad rally.

The Fed's move Tuesday was a coordinated effort with other central banks to provide more relief to strained financial institutions around the globe.

The Fed said it would make up to $200 billion in Treasury securities available to banks and big Wall Street investment houses, a move that propelled stocks higher on Wall Street and helped the struggling dollar gain a little muscle against the euro.

The Fed action also highlighted recessionary signs in the U.S. economy that have fed uneasiness among investors and boosted their appetite for hard assets like gold, which is considered a safe haven in times of economic uncertainty and rising inflation.

"The Fed's move was definitely aimed at trying to minimize the recessionary effects that we've been seeing."

"It hasn't had a huge impact on gold but it's made people ask 'How bad are things really?'," said Carlos Sanchez, a precious metals analyst at CPM Group in New York.

Gold for April delivery gained $4.20 to settle at $976 an ounce on the New York Mercantile Exchange, after earlier rising as high as $987.80.

The metal has gained 15 percent this year and rose 31 percent in 2007.

Gold has been hovering near the $1,000 mark for days but has so far been unable to breach the psychologically important milestone despite a tumbling dollar and crude oil's record-setting rally.

"There may be some psychological resistance to $1,000," Sanchez said.

"A lot of people are saying 'When it hits $1,000, that's when I'm going to sell.'"

"That doesn't mean it's not going to break above $1,000 because all the factors that have been supportive of gold are continuing."

Other precious metals fell Tuesday.

Silver for May delivery lost 2.2 cents to settle at $19.763 on the Nymex, while May copper shed 9.5 cents to settle at $3.7855 a pound.

In energy markets, crude oil continued its upward trek, rising to a new trading record after the International Energy Agency cut its forecasts for crude consumption this year.

Light, sweet crude for April delivery surged to a new trading record of $109.72 a barrel on the Nymex before pulling back slightly to settle 85 cents higher at $108.75 a barrel, also a record.

Other energy futures also rose Tuesday.

April heating oil futures rose 2.23 cents to settle at $2.9957 a gallon while April gasoline futures rose 1.12 cents to settle at $2.7261 a gallon.

Meanwhile, agriculture markets traded higher, with wheat rising to the daily allowed limit on expectations of dwindling stockpiles and growing global demand.

Wheat for May delivery rose the 60-cent daily limit to settle at $12.23 a bushel on the Chicago Board of Trade.

Other agriculture futures also rose.

May corn added 6.75 cents to settle at $5.725 a bushel on the CBOT, while May soybeans climbed 1.25 cents to settle at $14.0775 a bushel.

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"Carlyle execs in talks to salvage fund"

By CHRISTOPHER S. RUGABER, Associated Press

Last updated: 4:53 p.m., Tuesday, March 11, 2008

WASHINGTON -- The Carlyle Group's founders are talking to creditors about how to prevent liquidation of a distressed London-based affiliate invested in mortgage-backed securities, a spokesman said Tuesday.

Top Carlyle executives are negotiating with major U.S. banks in an effort to prevent the fire sale of $16 billion in securities held by the Carlyle Capital Corp. Ltd., a publicly traded fund.

Carlyle Capital's troubles have amplified fears that billions of dollars of depressed mortgage-backed holdings will flood the market, further reducing their value.

It was invested in $22 billion in mortgage-backed securities whose value has recently plunged amid seized up credit markets.

The firm's talks with creditors are "very fluid ... nothing has been decided," Chris Ullman, a spokesman for Carlyle, said Tuesday.

Washington-based Carlyle Group provided the fund with a $150 million line of credit late last month.

Providing additional credit is one option available, Ullman said.

Another option would be for Carlyle's co-founders -- David Rubenstein, William Conway and Daniel D'Aniello -- to inject their own capital into the fund.

Two founders of Kohlberg Kravis Roberts & Co. invested some of their own money last fall when a similar fund they had set up ran into trouble.

Citing unnamed sources, The Washington Post reported Tuesday that Carlyle's founders are considering investing their own cash.

Ullman declined comment on that assertion.

However, he added, resolving the situation "is a top priority for them."

Rubenstein and Conway participated in the negotiations with creditors on Monday, he confirmed.

More than a year ago, Carlyle borrowed over $20 billion from at least a dozen banks and financial services firms, including Bank of America Corp., Citigroup Inc., and Merrill Lynch & Co. Inc., to invest in AAA-rated mortgage-backed securities issued by housing agencies Fannie Mae and Freddie Mac.

Under repurchase agreements, Carlyle Capital pledged the mortgage-backed securities as collateral for the loans.

But the value of the securities plummeted as U.S. home prices fell and foreclosures surged, prompting the banks to notify Carlyle that a capital infusion was necessary to offset the sharp decline in the fund's value.

The development rocked financial markets last week after the fund didn't satisfy calls from four of seven creditors for additional capital.

The fund said late Monday that banks had already sold $700 million of its securities, on top of $5 billion that were previously sold.

Carlyle Capital is seeking to modify the terms of the fund's loans to prevent the liquidation of the remaining $16 billion of assets.

Carlyle Capital Corp. is one of 55 funds managed by the Washington-based Carlyle Group, one of the largest private equity firms in the world with $76 billion in assets.

Carlyle Capital is registered in the United Kingdom but managed by New York-based executives.

It was the first Carlyle fund to go public, at $19 a share in July on the Euronext exchange in Amsterdam.

The fund's shares plunged 21 percent to $3.95 apiece Tuesday after regulators lifted a trading halt imposed Thursday.

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"Gold prices push consumers to sell"

By DAVE CARPENTER, Associated Press

Last updated: 1:04 p.m., Tuesday, March 11, 2008

CHICAGO -- A new kind of gold rush is unfolding at jewelry store and pawn shop counters -- featuring not prospectors, but consumers.

White-collar workers, retirees and many others have been digging through jewelry boxes and safety deposit boxes to cash in as gold prices flirt with $1,000 an ounce.

Coins, old wedding rings, necklaces given by ex-boyfriends, hand-me-down gold pieces -- everything is fair game when it brings this kind of profit.

Shop owners across the country are marveling about the phenomenon they say began in the latter part of 2007 and accelerated through the winter, reflecting torrid gold demand like none had ever seen.

There are even gold parties, where people gather to sell their jewelry.

"Everybody's trying to sell," said Richard Rozhko, owner of a jewelry store on the northern edge of Chicago.

"People are trying to cash out because they don't believe that gold's going to go higher than $1,000 or $1,200" an ounce.

Rachel Weingarten, a New Yorker with a self-described obsession with "shiny trinkets," didn't need to sell but couldn't resist the chance when she saw prices soar like an overinflated tech stock.

"When I saw the prices going through the roof, I saw it as an amazing opportunity to rid myself of jewelry that no longer suits my taste or status," said Weingarten, a marketing consultant.

"It's also been a lot of fun to get cash for stuff that is broken or just really ugly or just takes up room in my drawers."

Royal Pawn Shop, a 75-year-old business within earshot of the rattle of passing El trains in Chicago's South Loop, has display cases sporting fancy gold rings, bracelets and watches along with racks holding hundreds of pawned fur coats.

It also has more office workers as customers these days -- mostly sellers, not buyers, bringing in gold chains and rings.

"It's stuff that's lying around the house, so they figure: Why not make money from it?" said co-owner Wayne Cohen.

"The price of gold is so ridiculously high that they'd be stupid not to get rid of it."

Others are selling to help cope with tough times in an economic slowdown.

Three miles across town, Division Gold store owner John Vela recounted housewives coming in to pawn treasured items from their jewelry boxes and numerous clients saying they need money to pay their property tax bills and take care of other rising financial obligations.

"I have mortgage brokers, real estate agents, retail shop owners."

"They're nervous, you can see the stress on their faces," he said.

"Many haven't been to a pawn shop before -- they want to know how it works."

"Some don't want to let go of their gold."

"(But) gold is cash to them."

Silver also is stirring customers to sell more, with prices having more than tripled from $6 per troy ounce two years ago to over $20.

The stories are similar elsewhere.

At Gold Star Pawn Shop in Eastlake, Ohio, where the Cleveland-area economy is suffering, manager Marc Berman said people come in regularly with broken gold chains, rings with marks on them and scrap gold to get more money in their pockets.

"I think it's more about gas prices than anything else," he said.

"People are bringing in anything to try to get money to put a few gallons in the tank."

Some seniors come in monthly to pawn gold items in order to make it through until their next Social Security checks arrive, Berman said.

The clientele at Palace Pawnbrokers in downtown San Diego has gone more upscale as gold prices have soared.

Owner Jeff Bernard said it's a mixture of those who seem to need the money more than ever and those who want it.

"It's a combination of many factors -- the state of the economy, the price of a gallon of unleaded gas going for $3.60 here," he said.

"People are saying 'We've just got to do something.'"

"With gold knocking on the $1,000 door, they can actually pay off a bill, do something significant with it."

One woman recently lugged a safety deposit box full of old wedding rings, chains and gaudy 14-karat jewelry from the 1970s in to Scott Goldstein's Super Pawn shop in Round Lake Beach, Ill.

Others have arrived carrying shoeboxes full of jewelry, and a 92-year-old man brought in 80 gold coins.

Customers have brought in as much as 40 ounces of gold to sell, he said.

"It's people going through hard times AND the crazy prices," Goldstein said of the crush that began there after Christmas.

"With all the foreclosures nowadays, you hear people more and more saying 'I've got a mortgage to pay.'"

Midge Elias watched prices rise for months until she finally gave in to the temptation and walked into a Manhattan coin shop with two mounted Liberty Walking gold pieces she'd once worn on long chains.

She left with a check for $1,150.

"It felt like a little gift," Elias said.

"Of course, there's always the possibility of gold going way higher."

"But hey, those are the risks."

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"Not all are risk-averse"

By RACHEL BECK, Associated Press

Last updated: 12:13 p.m., Tuesday, March 11, 2008

NEW YORK -- Not all investors today are running away from risk amid the financial market turmoil.

There's a flood of money flowing into companies with no earnings or assets to speak of.

So-called "blank check" companies, founded by some of Wall Street's marquee names, are the hottest sector for stock offerings this year.

Major stock exchanges are clamoring to list these investment shells that use their IPO proceeds to acquire other businesses.

Investing in these companies is a blind bet, whether you're a big institution or a small shareholder.

Their success hinges on whether management can make deal in a specified time and the company bought is a solid investment.

Some have worked, like the deal for clothing retailer American Apparel.

But let's not kid ourselves: These companies favor the executives who are running them.

The risks aren't deterring investors.

Of the 19 U.S. IPOs this year, these special-purpose acquisition companies, or SPACs, account for 12 of them, raising more than $3.4 billion, according to industry tracker SPAC Analytics.

In 2007, SPACs were almost a quarter of all IPOs, a dramatic rise from the one public offering for a SPAC back in 2003.

Behind some of SPACs are big name investors, like activist investor Nelson Peltz and billionaire Ronald Perelman, who is best known for owning cosmetics giant Revlon.

Major investment banks such as Citigroup, Credit Suisse and Lehman Brothers are underwriting the deals.

That's raising the profile of SPACs in the marketplace.

It also helps that they work like private-equity funds for the masses, giving small investors access to dealmaking that they don't generally have.

SPACs also have been largely spared from the credit crisis because don't initially need to access debt to finance their acquisitions.

To get into a SPAC, investors purchase the stock at the IPO or after.

Their investments are then earmarked to be used for one big acquisition that typically must be completed in about 18 to 24 months after the IPO.

Once management picks a target, shareholder approval is required.

If investors vote it down, or if management can't find a suitable acquisition target, the company is dissolved and investors largely get their money back.

"Investors are taking a significant risk because they are investing in a company without any idea of what will be acquired," said Wayne State University assistant professor of law Steven Davidoff.

Thanks to scandals involving SPACs two decades ago -- when executives defrauded investors, which essentially led to SPACs disappearing from the marketplace in the early 1990s -- there are better protections in place for shareholders.

Most importantly, shareholders' money is put in escrow until an acquisition is made or the company dissolved.

But that doesn't mean investors are entitled to get back every last cent.

Companies often deduct the costs for seeking an acquisition from the pool of investor money.

SPACs also don't have to be transparent.

Marathon Acquisition Corp. last month said that it had picked a target, but declined to disclose what it was.

It also said it could take up to Aug. 30 to close the deal.

Once a deal is done, another question arises: Can management run the company it bought?

Some might not have incentive since they've already made their big money already: SPAC managers typically get shares at discounted prices.

Despite the risks, stock exchanges want a piece of this fast-growing, lucrative pie.

The 66 companies that listed last year raised some $12 billion, according to SPAC Analytics, and the American Stock Exchange is where most of the action happened.

Now Nasdaq Stock Market and the New York Stock Exchange are seeking permission from the Securities and Exchange Commission for the ability to list.

Nasdaq's senior vice president Bob McCooey calls past problems regarding SPACs "ancient history" and notes that the Nasdaq is trying diminish risk by tightening its listing standards, including requiring a majority of independent directors to sign off on acquisitions, too.

It's too soon to tell if most SPACs live up to the current hype.

A few big-name deals have claimed much of the attention in recent years, but 74 of the 156 that have come to market are still searching for an acquisition, according to SPAC Analytics.

Thirteen have been liquidated, and the remaining have announced an acquisition target or have completed an acquisition.

Some investors may be willing to wait things out since SPAC shares are holding up better than the overall stock market.

In the last six months, they've lost 1.47 percent versus about an 11 percent decline in the Standard & Poor's 500 index, according to Dealogic.

The trouble with that gamble is there aren't any clues about how it will pay off.

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Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck(at)ap.org

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"Officials say Spitzer spent tens of thousands of dollars _ maybe $80,000 _ on call-girl ring"

By MICHAEL GORMLEY, Associated Press

Last updated: 7:42 p.m., Tuesday, March 11, 2008

ALBANY -- With pressure mounting on Gov. Eliot Spitzer to resign over a call-girl scandal, investigators said Tuesday he was clearly a repeat customer who spent tens of thousands of dollars -- perhaps as much as $80,000 -- with the high-priced prostitution service over an extended period of time.

Spitzer and his family, meanwhile, remained secluded in their Fifth Avenue apartment, while Republicans began talking impeachment, and few if any fellow Democrats came forward to defend him.

A death watch of sorts began at the state Capitol, where whispers of "What have you heard?" echoed through nearly every hallway of the ornate, 109-year-old building.

On Monday, when the scandal broke, prosecutors said in court papers that Spitzer had been caught on a wiretap spending $4,300 with the Emperors Club VIP call-girl service, with some of the money going toward a night with a prostitute named Kristen, and the rest to be used as credit toward future trysts.

The papers also suggested that Spitzer had done this before.

Speaking on condition of anonymity, a law enforcement official said Tuesday that Spitzer, in fact, had spent tens of thousands of dollars with the Emperors Club.

Another official said the amount could be as high as $80,000.

But it was not clear over what period of time that was spent.

Still another law enforcement official said investigators found that during the tryst with Kristen on the night before Valentine's Day, Spitzer used two rooms at the Mayflower Hotel in Washington -- one for himself, the other for the prostitute.

Sometime around 10 p.m., Spitzer sneaked away from his security detail and made his way to the room where she was waiting, the official said.

The three officials spoke on condition of anonymity because of the sensitivity of the case.

In the court papers, an Emperors Club employee was quoted as telling Kristen that Client 9 -- Spitzer, according to investigators -- "would ask you to do things that ... you might not think were safe," and Kristen responded by saying:

"I have a way of dealing with that."

"... I'd be, like, listen, dude, you really want the sex?"

A law enforcement official said Tuesdsay the discussion had to do with Spitzer's preference not to wear a condom and the call-girl's insistence that he use one.

Spitzer's vast personal wealth would have made it easy for him to spend thousands of dollars on prostitutes.

The scion of a wealthy Manhattan real estate developer, Spitzer reported $1.9 million in income to the IRS in 2006.

Meanwhile, Albany insiders on Tuesday said the governor was still trying to decide how to proceed.

Options included quitting immediately, or waiting to use resignation as a bargaining chip with federal prosecutors to avoid indictment.

Democrats privately floated another option, telling The Associated Press that Spitzer was considering what was almost unthinkable immediately after Monday's bombshell apology: hanging on.

"If the public is fine, he'll stay," said a Democrat who spoke on condition of anonymity because of the sensitivity of the subject.

Still, Spitzer's many enemies from Albany and Wall Street were emboldened, and some of his friends went from shock to outrage.

"Particularly because of the reform platform on which he was elected governor, his ability to govern the state of New York and execute his duties as governor have been irreparably damaged," said Citizens Union, a good-government group that supported the crusading attorney general for governor in 2006 and provided critical support in his effort to reform Albany.

"It is our strong belief that it is now impossible for him to fulfill his responsibilities as governor."

"Accordingly, Citizens Union urges him to resign as governor."

The case against Spitzer, a 48-year-old married man with three teenage daughters, started when banks noticed frequent cash transfers from several accounts and filed suspicious-activity reports with the Internal Revenue Service, a law enforcement official told the AP.

The accounts were traced back to Spitzer, prompting public corruption investigators to open an inquiry.

The governor has not been charged, and prosecutors would not comment on the case.

Michele Hirshman, Spitzer's former deputy attorney general and now a member of the high-powered New York law firm of Paul, Weiss, Rifkind Wharton & Garrison, has been retained to represent the governor.

In Albany, Democratic Lt. Gov. David Paterson, who would become governor if Spitzer resigned, was talking to legislative leaders about a possible transition.

Reporters, government workers and the public milled around the state Capitol on Tuesday, waiting for any developments.

News vans lined up around the building, and camera operators sat next to their tripods on the front lawn waiting for something to happen.

Assembly Republican leader James Tedisco warned that if Spitzer did not resign within 48 hours, he would call for impeachment.

But any impeachment would face a difficult road in the Democrat-controlled Assembly, where articles impeachment would require a majority vote to go to a trial.

A trial would be decided by a combined vote of the full Senate, which has a slim GOP majority, and the Court of Appeals.

Tedisco was an early target of Spitzer's abrasive and uncompromising style in Albany.

In a private call, an angry Spitzer once described himself to Tedisco as a "steamroller" -- he attached a profanity for emphasis -- and warned: "I'll roll over you and anybody else."

Privately, several Democrats in the Legislature and in the administration said resignation appeared inevitable.

"He's weighing the rest of his life," one Democratic official said sadly.

Late Tuesday, freshman Rep. Kirsten Gillibrand became the first Democratic member of New York's congressional delegation to mention resignation.

"This is very grave and sad news," she said.

"If these serious allegations are true, the governor will have no choice but to resign."

But more than a day after the scandal broke, Sen. Hillary Rodham Clinton and other senior Democrats in the delegation had yet to call on Spitzer to quit.

On Wall Street, where Spitzer built his reputation as a crusader against shady practices and overly generous compensation, cheers and laughter erupted Monday from the trading floor when news broke of his potential ruin.

Many in the financial industry had long complained that the man known as "Mr. Clean" and the "Sheriff of Wall Street" was a sanctimonious bully who was just trying to advance his political career.

Many Wall Streeters were delighted to see him get his comeuppance.

"The irony and the hypocrisy is almost too good to be true," said Bryn Dolan, a fundraiser who works with many Wall Street employees.

"If he had any shame, he would've already resigned."

------

AP writers Valerie Bauman and Michael Virtanen in Albany, and Vinnee Tong in New York contributed to this report.

[Snuffysmith]

A Trip Down Memory Lane:

http://wiredispatch.com/news/?id=80423
FACTBOX-Iraq war, the notable quotes

REUTERS
Reuters North American News Service

Mar 11, 2008 04:56 EST

March 11 (Reuters) - Following are notable quotes from before and after the U.S. invasion of Iraq in March 2003.


* July 11, 2002 - "Support for Saddam, including within his military organisation, will collapse after the first whiff of gunpowder." - Richard Perle, then Pentagon Defense Policy Board chairman.

* Sept. 19, 2002 - "I hereby declare before you that Iraq is clear of all nuclear, chemical and biological weapons." - Saddam Hussein in message to U.N. General Assembly.

* Nov. 14, 2002 - "The Gulf War in the 1990s lasted five days on the ground. I can't tell you if the use of force in Iraq today would last five days, or five weeks or five months. But it certainly isn't going to last any longer than that." - Then Secretary of Defense Donald Rumsfeld.

* Jan. 20, 2003 - "His regime has large, unaccounted for stockpiles of chemical and biological weapons, including VX, sarin, mustard gas, anthrax, botulism and possibly smallpox. And he has an active programme to acquire and develop nuclear weapons." - Rumsfeld.

* March 16, 2003 - "I think things have gotten so bad inside Iraq, from the standpoint of the Iraqi people, my belief is we will, in fact, be greeted as liberators." - U.S. Vice President Dick Cheney to U.S. television network NBC.

* March 20, 2003 - "The criminal little Bush has committed a crime against humanity." - Saddam, on first day of invasion.

* April 10, 2003 - "Saddam Hussein is now taking his rightful place alongside Hitler, Stalin, Lenin, Ceausescu in the pantheon of failed brutal dictators, and the Iraqi people are well on their way to freedom." - Rumsfeld.

* April 11, 2003 - "Stuff happens." - Rumsfeld, asked about rampant lawlessness in Baghdad after U.S. troops captured the capital. "It's untidy, and freedom's untidy, and free people are free to make mistakes and commit crimes and do bad things."

* May 1, 2003 - "Major combat operations in Iraq have ended. In the battle of Iraq, the United States and our allies have prevailed." - U.S. President George W. Bush, aboard the USS Abraham Lincoln under a banner declaring "Mission Accomplished".

* July 24, 2003 - "Death is not enough. They should have been hung up on poles in a square in Baghdad so all Iraqis could see them. Then they should have died as people ate them alive." - Baghdad businessman Khalil Ali after U.S. forces kill Saddam's sons Uday and Qusay.

* Sept. 14, 2003 - "He (Saddam) had long established ties with al Qaeda." - Cheney to a conservative think-tank.

* Oct. 3, 2003 - "There's no question this guy (Saddam) had invested billions in developing illegal programmes of weapons of mass destruction and don't let anybody tell you this was not a significant threat." - Cheney to political fund-raiser in Iowa.

* Dec. 13, 2003 - "My name is Saddam Hussein. I am the president of Iraq, and I want to negotiate." - Saddam to U.S. troops who captured him.

* Dec. 14, 2003 - "We got him," then U.S. governor of Iraq Paul Bremer announcing the capture of Saddam.

* Jan. 30, 2005 - "This is a historic moment for Iraq, a day when Iraqis can hold their heads high because they are challenging the terrorists and starting to write their future with their own hands." - interim Prime Minister Iyad Allawi.

* March 31, 2005 - "The intelligence community was absolutely uniform and uniformly wrong about the existence of weapons of mass destruction (in Iraq)." - Laurence Silberman, co-chairman, Commission on the Intelligence Capabilities of the United States regarding weapons of mass destruction.

* March 19, 2006 - "We are losing each day on average 50 to 60 people throughout the country, if not more. If this is not civil war, then God knows what civil war is." - former interim Prime Minister Allawi.

* Oct. 25, 2006 - "It's my responsibility to provide the American people with a candid assessment on the way forward ... Absolutely, we're winning." - Bush.

* Nov. 2006 - "Here I offer myself in sacrifice." - Saddam, in a letter dictated after he was sentenced to death for crimes against humanity. "If my soul goes down this path (of martyrdom) it will face God in serenity."

* Dec. 20, 2006 - "We're not winning, we're not losing." - Bush in interview with the Washington Post.

* Dec. 30, 2006 - "Moqtada, Moqtada, Moqtada." - Unidentified man attending Saddam's hanging, referring to a Shi'ite cleric whose family was perscuted by Saddam. Saddam, the noose around his neck, responded: "Is this what you call manhood?"

"The tyrant has fallen." - Unidentified witness at hanging.

* Dec 30, 2006 - "What happened today is unbelievable, it's a great joy that I can't even express." - Mohammad Kadhim, a journalist in Basra. "I can't believe what I'm seeing on television -- Saddam led to the gallows where he hanged tens of thousands of innocent Iraqis by the same method."

* Jan. 10, 2007 - "The situation in Iraq is unacceptable to the American people -- and it is unacceptable to me ... Where mistakes have been made, the responsibility rests with me." - Bush.

* April 18 - "The street was transformed into a swimming pool of blood." - Shopkeeper Ahmed Hameed, witness to a car bombing in Baghdad that killed 140 people.

* Aug 26 - "There are American officials who consider Iraq as if it were one of their villages, for example Hillary Clinton and Carl Levin. I ask them to come back to their senses," Maliki after Democratic presidential hopeful Senator Hillary Clinton and other U.S. critics who have called for him to be replaced.

* Sept 10 - "We succeeded in stopping Iraq from sliding toward civil war, which was threatening our beloved country." - Maliki.

* Nov 16 - "I tell folks all the time one way to train to conduct operations in Iraq is to watch the last season of the Sopranos. You get a sense of the conflict among like individuals." Major-General Rick Lynch, commander of U.S. troops south of Baghdad.

* Dec 5 - "I believe that the goal of a secure, stable and democratic Iraq is within reach." - U.S. Defense Secretary Robert Gates during a visit to Baghdad.

(Compiled by Dean Yates, Baghdad newsroom; Editing by Samia Nakhoul)

[Snuffysmith]

Public Opinion & Iraq
War Support Highest Since 2006
Opposition to Iraq War Divided

[Livyjr]

Thanks for the posts, Snuf ...

[Livyjr]

"Officials say Spitzer spent tens of thousands of dollars _ maybe $80,000 _ on call-girl ring"

By MICHAEL GORMLEY, Associated Press

Last updated: 7:42 p.m., Tuesday, March 11, 2008

ALBANY -- With pressure mounting on Gov. Eliot Spitzer to resign over a call-girl scandal, investigators said Tuesday he was clearly a repeat customer who spent tens of thousands of dollars -- perhaps as much as $80,000 -- with the high-priced prostitution service over an extended period of time.

Speaking on condition of anonymity, a law enforcement official said Tuesday that Spitzer, in fact, had spent tens of thousands of dollars with the Emperors Club.

Another official said the amount could be as high as $80,000.

In the court papers, an Emperors Club employee was quoted as telling Kristen that Client 9 -- Spitzer, according to investigators -- "would ask you to do things that ... you might not think were safe," and Kristen responded by saying:

"I have a way of dealing with that."

"... I'd be, like, listen, dude, you really want the sex?"

PRESS RELEASE

Department of Law
120 Broadway
New York, NY 10271

Department of Law
The State Capitol
Albany, NY 12224

For More Information:
(212) 416-8060

For Immediate Release

April 7, 2004

"OPERATORS OF 'ESCORT SERVICES' INDICTED - Authorities Say the Business Was a Front for a Massive Prostitution Ring"

Attorney General Spitzer said today that 18 people associated with popular "escort services" operating in New York City, Long Island, Westchester and New Jersey have been indicted for promoting prostitution and related charges.

The indictments by a Staten Island Grand Jury follow a lengthy investigation of the escort services, which authorities believed were really a front for a massive prostitution ring.

"This was a sophisticated and lucrative operation with a multi-tiered management structure," Spitzer said.

"It was, however, nothing more than a prostitution ring, and now its owners and operators will be held accountable."

New York City Police Commissioner Raymond W. Kelly said:

"These individuals thought they could hide in plain sight by pretending to provide legitimate and legal services without their true practices being discovered."

"The only escort they are getting now is a police escort."

In the first indictment, 16 defendants were charged with enterprise corruption, money laundering, promoting prostitution and falsifying business records.

In the second indictment, two individuals were charged with helping to launder proceeds from the illegal activities.

The charges are the result of an investigation conducted jointly by the Attorney General's Statewide Organized Crime Task Force (OCTF), the New York City Police Department, the Waterfront Commission of New York Harbor, the United States Department of Labor and Federal Bureau of Investigation.

In addition, the Richmond County District Attorney's Office was instrumental in launching the investigation.

The escort services, which advertised under various names, including Personal Touch, Day Dreams, Sweet, Gentlemen's Delight, White Diamonds, Ladies and Britney's, allegedly accepted payment for the prostitution services in cash or, in some cases, by credit card.

The credit card transactions were processed through different merchant accounts, each of which claimed to provide legitimate services to its customers.

The business allegedly operated 24 hours a day, seven days a week, with a staff of approximately eight office managers who supervised and directed the activities of approximately 15 to 20 drivers and 30 to 40 prostitutes each day.

The drivers and prostitutes were dispatched to all five boroughs of New York City, to Nassau, Suffolk and Westchester counties, and into suburban New Jersey, from business offices in Staten Island, Brooklyn and Queens.

As charged in the first indictment, defendant Frank Farella was the owner and boss of the illegal business.

Defendants John Pioppo and Mario Galbo were the upper-level managers responsible for the day-to-day operation of the criminal enterprise.

In this capacity, Pioppo and Galbo supervised the office managers, including defendants Joann Corey, Mildred Scarpa, Angela Altman, April Beiner, Dorothy Bray, Lillian Demalteris, Cynthia Dimele, Debra Gutierrez, Karen Kelly, Cynthia Raiser, Louise Santanastasio, Teresa Vera and Melissa Giandinoto.

The following defendants were charged with Enterprise Corruption, a class B felony which carries a possible penalty of up to 8 1/3 to 25 years, and several counts of Promoting Prostitution in the Third Degree, a class D felony:

Frank Farella, 44, of Staten Island

John Pioppo, 42, of Staten Island

Mario Galbo, 58, of Brooklyn

Joann Corey, 29, of Staten Island

Mildred Scarpa, 61, of Brooklyn

Angela Altman, 26, of Brooklyn

April Beiner, 52, of Brooklyn

Dorothy Bray, 50, of Staten Island

Lillian Demalteris, 43, of Brooklyn

Cynthia Dimele, 20, of Staten Island

Debra Gutierrez, 38, of Brooklyn

Karen Kelly, 39, of Brooklyn

Cynthia Raiser, 27, of Queens

Louise Santanastasio, 35, of Staten Island

Teresa Vera, 21 ,of Staten Island

Melissa Giandinoto, 27, of Brooklyn

Farella and Pioppo also were charged with falsifying business records and money laundering.

In two separate but related indictments, Lester Thompson, 46, of Coram, Long Island, was charged with falsifying business records, and Norman Greenblatt, 67, of Staten Island, was charged with promoting prostitution, falsifying business records and money laundering.

The indictments charge that Farella, Pioppo and Greenblatt falsified applications to open merchant accounts for processing credit card transactions, which applications hid the true nature of the business.

Through these merchant accounts it is alleged that the business laundered millions of dollars from January 1998 through March 2004.

The investigation was led by OCTF's Supervising Investigator Diego Cruz under the direction of Chief Investigator Thomas Mullen.

The matter was presented to the grand jury and will be handled at trial by Assistant Deputy Attorney General Amy Cohn, under the direction of Christopher Prather, Deputy Attorney General in charge of the OCTF.

The charges contained in these Indictments are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

http://www.oag.state.ny.us/press/2004/apr/apr7a_04.html