Life in OUR America, The Livyjr Files Volume 7 Options

[Livyjr]

"Embattled State Dept. official quits Blackwater probe over brother's role"

By Warren P. Strobel, McClatchy Newspapers

Wed Nov 14, 6:53 PM ET

WASHINGTON — The State Department's embattled inspector general suddenly removed himself Wednesday from investigations into security contractor Blackwater Worldwide, after belatedly acknowledging that his brother sits on a Blackwater advisory board.

The revelation came at a House of Representatives hearing that cited allegations from current and former State Department employees— and the Justice Department — that Inspector General Howard Krongard had impeded investigations into Blackwater and the construction of the $740 million U.S. Embassy complex in Iraq.

The allegations before the Oversight and Government Reform Committee added to the questions about Secretary of State Condoleezza Rice's management of the massive U.S. diplomatic presence in Iraq and of the State Department in Washington.

Krongard initially said that he was unaware that his brother, former CIA executive director Alvin "Buzzy" Krongard , had any financial ties with Blackwater.

He said he'd asked his brother about "ugly rumors" concerning his relationship with Blackwater and had been assured there was none.

But after Democratic committee members told him that his brother had stayed at a Williamsburg, Va ., hotel where Blackwater's "Worldwide Advisory Board" was meeting this week, Krongard used a break in the hearing to call his brother.

He said that Buzzy Krongard confirmed that he'd been at the meeting.

"I hereby recuse myself from any matters having to do with Blackwater," Howard Krongard announced.

Blackwater, which protects U.S. diplomats in Iraq , is under investigation for a series of lethal shootings of Iraqi civilians.

The revelation dismayed even Krongard's Republican defenders on the committee, who'd attempted to portray the probe by chairman Rep. Henry Waxman , D-Calif., as partisan score-settling.

Your brother "has done you tremendous damage," said Rep. Christopher Shays , R-Conn.

"I would be one pretty unhappy guy."

The advisory board role pays a $3,500 honorarium per meeting, according to Blackwater correspondence released by the committee.

It isn't known whether Buzzy Krongard accepted the honorarium.

He didn't return a phone call seeking comment.

Current and former top investigators in Howard Krongard's office have alleged that Krongard blocked a criminal probe into allegations of weapons smuggling by Blackwater employees, as well as several investigations into fraud and corruption in the construction of the U.S. Embassy complex in Baghdad.

Krongard disputed the allegations and portrayed them as fallout from his attempts to reorder the office and disputes over investigative priorities and resources.

He acknowledged that his management style was "brusque" and "shrill."

"I never nixed any investigations," he told the committee.

Krongard's accusers declined to testify publicly before the committee Wednesday.

They'd been deposed by committee staff previously.

Waxman quoted the Justice Department as saying that, as of last Friday, the department still hadn't received documents that it requested for its investigation into the weapons smuggling allegations.

The Justice Department told the committee that Krongard's actions led to "a cumbersome and time-consuming investigative process" and "added multiple layers to our investigative efforts," Waxman said.

Justice Department spokesman Dean Boyd declined to comment.

A 41-page report Waxman released also revealed that Krongard had met two individuals implicated in potential criminal activity involving the U.S. Embassy construction, despite warnings from his deputy and others not to do so.

Krongard met one of the individuals during a trip to Iraq in September, shortly after the individual had become a "subject of investigation," the report said.

It quoted Krongard's deputy, William Todd , as advising him not to meet the person because "it would be questioned by our investigators and would, you know, give people cause to comment."

The individuals aren't named in the report.

But at one point in the hearing, Krongard, perhaps inadvertently, referred to "Mr. Golden and Ms. French."

James L. Golden is a Washington -based State Department contractor charged with overseeing the embassy project.

U.S. Ambassador Ryan Crocker banned him from Iraq after he allegedly tried to alter the scene of a mortar explosion at the new embassy compound.

Mary French is the Baghdad -based project coordinator for the embassy.

Krongard, who said his talks with the individuals "were not witness interviews," also disclosed that he's recused himself from investigations involving the Baghdad embassy, which he said was in response to the House committee's probe.

The two recusals raise questions about his effectiveness as State Department inspector general.

[Livyjr]

"Musharraf swears in caretaker government"

By ZARAR KHAN, Associated Press Writer

16 November 2007

LAHORE, Pakistan - President Gen. Pervez Musharraf on Friday swore in a caretaker administration and declared he had "introduced the essence of democracy in Pakistan" as the emergency-ruled nation awaited a visit from a senior U.S. envoy.

The government also lifted the house arrest of opposition leader Benazir Bhutto, who has urged fellow opposition leaders to join her in forming an alliance to replace Musharraf and govern until parliamentary elections expected by Jan. 9.

Police said the detention order against Bhutto was withdrawn overnight.

"The house is no longer a sub-jail but security will remain for her own protection."

"She's free to move and anyone will be able to go to the house," Zahid Abbas, a senior police official, told an Associated Press reporter near the barricaded house where Bhutto has been confined for three days.

However, trucks and tractors were still parked across the road leading to the house in the eastern city of Lahore and police would not let reporters cross the cordon.

Bhutto, a two-time former prime minister who returned from exile last month to launch a political comeback, was detained Tuesday to prevent her from leading a protest against Musharraf's Nov. 3 declaration of a state of emergency.

She has the highest profile among the thousands of political activists who have been detained in a government crackdown on dissent that sparked an outcry at home and abroad.

Musharraf, who seized power in a 1999 coup, insists he is still moving toward a restoration of democracy and civilian rule that Western governments believe could help stabilize the nuclear-armed country as it battles rising Islamic extremism.

At a ceremony in the capital, Islamabad, a somber-faced Musharraf said the outgoing Cabinet should be proud of having helped turn around the economy and move Pakistan back toward democracy.

"I take pride in the fact that, being a man in uniform, I have actually introduced the essence of democracy in Pakistan, whether anyone believes it or not," the general said after installing the caretaker ministers at the presidential palace.

The interim government, headed by Musharraf loyalist and former Senate chairman Mohammedmian Soomro, is charged with guiding Pakistan through the parliamentary elections.

Musharraf insists he declared the emergency to prevent judicial interference and the rising threat from militants linked to the Taliban and al-Qaida from derailing the vote.

But Musharraf's emergency faces stiff criticism from countries including the United States, his key international backer, that the ballot cannot be fair unless restrictions on the opposition and the media are ended.

U.S. Deputy Secretary of State John Negroponte was expected to arrive in Pakistan later Friday for talks on the deepening political crisis.

It was unclear whether he would meet with Bhutto.

The State Department said he expected to meet "with whomever he wants to see," including Musharraf and opposition politicians.

President Bush "wants the state of emergency to be lifted."

"And it is up to President Musharraf."

"He has the responsibility to help restore democracy to the country," White House press secretary Dana Perino said.

Bhutto called Thursday on opposition parties, who deride Musharraf as a dictator trying to shore up his own fading power, to form a national unity government to replace him and organize the elections.

Her proposal, made in a telephone interview with AP, was quickly accepted by her archrival Nawaz Sharif, though the exiled former leader said the priority was to get Supreme Court judges ousted by Musharraf reinstated.

The general has long managed to keep the opposition divided and has refused to quit, telling AP on Wednesday he expects to relinquish his role as army chief by the end of November but stay on as president.

He suggested emergency rule would remain in place during the elections and blamed Bhutto for the chill in their relations that has dashed Western hopes that the two pro-Western secularists could join forces.

Bhutto said U.S. officials "worry about what would happen if Musharraf left and there would be a vacuum."

"So that is a concern, and a valid concern," she said.

In Washington, the chairman of the U.S. Joint Chiefs of Staff, Adm. Mike Mullen said there is no sign that Pakistan's political unrest has undermined the security of its nuclear weapons arsenal.

Deepening the political crisis Thursday, police said unidentified gunmen opened "indiscriminate gunfire" in Karachi, killing an adult protester and two boys aged 11 and 12.

They were the first reported deaths in unrest during the emergency.

Supporters of Bhutto had clashed with police in the same violence-ridden neighborhood since morning.

The protesters, angry at Bhutto's house arrest, traded fire with police who also used tear gas to try to disperse them.

Police and hospital officials said eight protesters and one policeman suffered gunshot wounds.
__

Associated Press writers Stephen Graham, Paul Haven and Sadaqat Jan contributed to this report.

[Livyjr]

AND NOW, FOR SOMETHING COMPLETELY DIFFERENT ...

We have ...

"1,700-year-old cemetery found in Syria"

Thu Nov 15, 8:15 PM ET

DAMASCUS, Syria - Archeologists have unearthed a Roman-era cemetery dating from the 3rd century A.D. in northeast Syria, one of several recent archaeological discoveries in the history-rich country, a government newspaper reported Thursday.

The cross-shaped limestone cemetery was discovered in the Nasiriya area in the remote Hasaka province, some 440 miles northeast of the capital Damascus and contained coins, pottery shards and bracelets dating to the later Aramaic era, Al-Thawra newspaper reported.

Local archaeology official Khaled al-Ahmed said that studies were under way to learn more about the site.

Just on Tuesday, an even older cemetery from the 2nd century A.D. was discovered in the famed ruins of Palmyra, one of the region's most impressive sites from Classical antiquity.

Syrian archaeologists also reported finding a rare limestone panel in Palmyra.

The stone, which depicts two men standing next to a heavily laden camel led by a young boy, also dates to the 2nd century A.D., Khalil Hariri, head of the Syrian National Archaeological Expedition, told the official SANA news agency.

Palmyra was the center of an Arab client state to the Roman empire during this period and thrived on the caravan trades across the desert to Mesopotamia and Persia, especially after the decline of ancient Petra in Jordan.

Under Queen Zenobia, the city rebelled against Roman rule and briefly carved out an independent desert Arab kingdom before being re-conquered and razed by the Romans.

[Livyjr]

"Marine instructor gets 6 months in brig"

By CHELSEA J. CARTER, Associated Press Writer

Thu Nov 15, 9:51 PM ET

SAN DIEGO - A military jury on Thursday sentenced a Marine drill instructor to six months in the brig and gave him a bad-conduct discharge for abusing 23 recruits.

Sgt. Jerrod M. Glass also received a reduction in rank to private and pay forfeiture.

He had faced a maximum sentence of 10 years of confinement.

Former colleagues lined up to hug Glass and shake his hand after the verdict was read.

Glass, 25, hugged his parents.

His mother broke down in tears in the courtroom filed to capacity, mainly with Glass' supporters, including some of the recruits he was accused of abusing.

Earlier, prosecutors recommended he spend two years in the brig and receive a bad-conduct discharge.

"You need to send the message this is not tolerated," Marine Capt. Brent Sticker told jurors.

The instructor's attorney had asked jurors to take into account Glass's previous exemplary record and sentence him to 60 days of restricted duty and reduction to a rank of their choice.

"There's ways to deal with Sgt. Glass without throwing him out," Capt. Greg Jensen said.

"This wasn't meaningless, senseless violence," Jensen said of the alleged abuse.

"It was done with the intent to assist (recruits)."

On Wednesday, Glass was found guilty of eight counts of cruelty and maltreatment, destruction of personal property, assault and violating orders on how to properly treat recruits.

The jury deliberated two hours before handing down the sentence Thursday.

Glass was accused of ordering one recruit to jump headfirst into a trash can and then pushing him farther into the container.

He is also accused of striking recruits with a tent pole and a heavy flashlight.

None of the recruits was seriously injured.

During the courts-martial, witnesses testified Glass routinely stomped on recruits' toiletry kits, breaking razors and soap containers inside, for minor infractions like not displaying name tags properly.

They also said Glass and another drill instructor would also line recruits up after meals and force them to down liters of water from their canteens.

Glass had worked as a drill instructor at the Marine Corps Recruit Depot San Diego for less than a year when the mistreatment occurred.

He was relieved of drill instructor duty in February.

Glass' mother, Barbara Glass, said, "I still believe he did not do anything he was not instructed to do ... by his superiors."

"If it's denied, I know it's a bald-faced lie by the Marine Corps."

Another defense attorney, Capt. Patrick J. Callahan, said he filed a clemency request to have the Marine released from the brig and have his discharge dismissed.

He said they would also file an appeal.

"He took it very hard."

"He loves the Marine Corps."

"Pretty much his entire adult life has been in the Marine Corps," Callahan told The Associated Press later.

Glass had previously been an exemplary Marine, according to both the defense and prosecution.

He graduated at the top of his class and volunteered for two tours in Iraq before becoming a drill instructor.

Pfc. Bradley Montgomery, 20, who was one of the recruits in Glass' platoon, said the sentence was too harsh.

Montgomery testified on behalf of the prosecution under orders.

"This whole thing is ridiculous," he said.

"Sgt. Glass thought of us as his own kids."

Glass was one of three drill instructors charged with abusing recruits.

Sgt. Robert C. Hankins and Sgt. Brian M. Wendel are facing special courts-martial on separate charges.

A fourth instructor, Sgt. Joseph Villagomez, received administrative punishment.

About 17,000 recruits graduate each year from the depot.

It is one of two Marine training depots nationwide; the other is in Parris Island, S.C.

[Livyjr]

"Court rebukes Bush fuel economy plan"

By PAUL ELIAS, Associated Press Writer

16 November 2007

SAN FRANCISCO - A federal appeals court sharply rejected the Bush administration's new pollution standards 'for most sport utility vehicles, pickup trucks and vans and ordered regulators Thursday to draft a new plan that's tougher on auto emissions.

The 9th U.S. Circuit Court of Appeals ruled that the National Highway Traffic Safety Administration failed to address why the so-called light trucks are allowed to pollute more than passenger cars and didn't properly assess greenhouse gas emissions when it set new minimum miles-per-gallon requirements for models in 2008 to 2011.

The court also said the administration failed to include in the new rules heavier trucks driven as commuter vehicles, among several other deficiencies found.

Judge Betty Fletcher wrote that the administration "cannot put a thumb on the scale by undervaluing the benefits and overvaluing the costs of more stringent standards."

Charles Miller, a Justice Department spokesman, said the administration was in the process of reviewing the decision.

"We will consider all of our options," he said.

California and 10 other states, two cities and four environmental groups sued the administration after it announced the new fuel economy standards last year.

"It's a stunning rebuke to the Bush administration and its failed energy policy," California Attorney General Jerry Brown said.

The court ordered the administration to draw up new rules as soon as possible, but automakers complained Thursday they're already deep into developing light trucks through 2011 based on the new standards.

"Any further changes to the program would only delay the progress that manufacturers have made toward increasing fleet-wide fuel economy," said Dave McCurdy, president and chief executive of the Alliance of Automobile Manufacturers.

McCurdy said the industry is dedicated to developing more fuel efficient automobiles, "but adequate lead time is necessary in order to fully integrate these technologies into the marketplace."

Former Transportation Secretary Norman Mineta announced to much fanfare the new rules in March 2006, proclaiming they were the "most ambitious fuel economy goals" yet for SUVs and their ilk.

Mineta called the plan "pragmatic," balancing fuel conservation against auto industry costs and jobs.

The standards required most passenger trucks to boost fuel economy from 22.5 mpg in 2008 to at least 23.5 mpg by 2010.

Passenger cars are required to meet a 27.5 mpg average.

"The idea of raising vehicle efficiency 1 mile per gallon is pathetic and shocking," said Brown, who along with Gov. Arnold Schwarzenegger is suing the Bush administration over its refusal to act on California's fuel economy plan for cars in the state.

The court ordered the White House to examine why it continues to consider light trucks differently than cars.

Regulators made a distinction between cars and light trucks decades ago when most trucks were used for commercial purposes.

NHTSA had argued that it considered the intent of the manufacturer in making light trucks, rather than their actual highway use, in developing the new fuel standards.

"But this overlooks the fact that many light trucks today are manufactured primarily for transporting passengers," Fletcher wrote for the three-judge panel.

Fletcher also wrote that the administration failed to consider the benefit to reducing greenhouse gas emissions.

"It did, however, include an analysis of the employment and sales impacts of more stringent standards on manufacturers," Fletcher wrote.

The court also took the administration to task for refusing to include in the new standards trucks weighing more than 8,500 pounds, a class that includes the Hummer H2, Ford F250 and other popular large vehicles.

The court ordered NHTSA to develop fuel standards for these large trucks or give a better reason than the agency's argument that it has never regulated those large trucks and that more testing needs to be done.

"This historic ruling vindicates our fight against fuel economy standards that are a complete sham and a gift to the auto industry," said Connecticut Attorney General Richard Blumenthal, who also joined the lawsuit.

Along with California and Connecticut, plaintiffs in the lawsuit filed last year include Maine, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, New York City, the District of Columbia and several environmental groups.
___

Associated Press Writer Ken Thomas in Washington contributed to this report.

[Livyjr]

"Stocks end volatile day with comeback"

By TIM PARADIS, Associated Press

Last updated: 6:03 p.m., Friday, November 16, 2007

NEW YORK -- Wall Street ended a volatile week with a late-day comeback Friday after investors set aside some concerns about the banking sector and the health of the overall economy.

Stocks began Friday's trading having fallen in six of the prior seven sessions as investors fretted about whether consumers would succumb to higher energy prices, rising mortgage costs and an anemic dollar.

Continuing credit turmoil has also stirred concerns about the soundness of corporate balance sheets and profits.

A sharp rally Tuesday was largely undone by subsequent pullbacks; on Friday, the market appeared headed to another down day before the major indexes, which had flip-flopped all day, turned higher in the last half-hour.

Financial stocks fell, partly due to a Fortune story that raised the possibility Fannie Mae could be masking the true magnitude of credit-related hits to its profits.

Company executives defended a change in the way the largest U.S. buyer and backer of home loans calculates losses on home loans.

Giving investors further reason for worry, FedEx Corp. lowered its earnings expectations for the fiscal second quarter and full year and Starbucks Corp. slashed its earnings forecast for the fourth quarter after it reported traffic at stores open at least 13 months dropped by 1 percent.

But tech stocks saw gains.

Investors have at times viewed technology companies as likely to fare better during an economic downturn than some groups such as retailers.

Cisco Systems Inc., the world's largest network equipment company, said Friday it plans to repurchase an additional $10 billion in stock and an analyst upgraded Hewlett-Packard Co.

Meanwhile, rising oil prices gave a boost to energy names such as Exxon Mobil Corp. and ConocoPhillips.

"You can certainly come up with a list of the top 10 reasons why we should be down," said Art Hogan, chief market strategist at Jefferies & Co. in Boston.

He contends the rally indicates the market was oversold.

"I think that's being clearly reflected as we rally into what otherwise would be considered negative catalysts."

The Dow Jones industrial average rose 66.74, or 0.51 percent, to 13,176.79

Broader stock indicators also recovered.

The Standard & Poor's 500 index rose 7.59, or 0.52 percent, to 1,458.74.

The Nasdaq composite index rose 18.73, or 0.72 percent, to 2,637.24.

Despite the gains in the major indexes, declining issues outnumbered advancers by about 6 to 5 on the New York Stock Exchange, where consolidated volume came to 4 billion shares compared with 3.81 billion traded Thursday.

The major indexes managed gains for the week, with the Dow rising 1.03 percent and the S&P 500 and the Nasdaq each adding 0.35 percent.

Government bond prices fell as stocks fluctuated.

The yield on the 10-year Treasury note, which moves opposite its price, rose to 4.15 percent from 4.14 percent late Thursday.

The dollar slipped against other major currencies, while gold prices rose.

Oil prices rose Friday amid expectations that global crude supplies will remain tight despite a U.S. oil inventory report that showed a surprising build in domestic crude stockpiles.

Light, sweet crude rose $1.67 to settle at $95.10 on the New York Mercantile Exchange.

The economic news arriving Friday seemed to offer investors little incentive to bid stocks higher.

Industrial production in October showed the sharpest decrease in nine months.

The Federal Reserve said output at the nation's factories, mines and utilities fell by 0.5 percent last month -- a much weaker showing than had been expected.

The reading revealed a big drop in utility output and continued troubles in sectors tied to automobiles and housing.

Friday's uneven trading followed a 120-point drop in the Dow on Thursday and didn't signal easing of long-simmering concerns about woes in the credit markets.

In particular, investors are wondering whether financial companies are facing a further souring of loans and will be forced to write down more than the $45 billion seen in the third quarter and the approximately $30 billion companies have outlined for the fourth quarter.

Fannie Mae fell $2.35, or 5.5 percent, to $40.69 after falling 10 percent Thursday.

Chief Financial Officer Stephen Swad said some of the $670 million in provisions for credit losses on soured home loans that Fannie Mae wrote off in the third quarter likely would be recovered.

Reports late Thursday said Residential Capital, the troubled mortgage lending arm of GMAC, was close to breaching bank loan covenants.

The unit is operated by private equity fund Cerberus Capital Management and General Motors Corp., which may not step in with an infusion of additional capital, according to the Financial Times and The Wall Street Journal.

Other corporate news weighed on the markets.

FedEx fell $4.57, or 4.5 percent, to $96.80 after lowering its forecast amid rising fuel costs and a troubled U.S. freight market.

And Starbucks fell 93 cents, or 3.9 percent, to $23.17 after the coffee retailer reported its first-ever decline in traffic at stores open more than a year.

The company also said it plans to slow the pace of U.S. store openings.

The strength in technology and energy stocks lent some support to stocks.

Cisco rose 64 cents, or 2.2 percent, to $29.94 after saying it would expand its stock buyback program to $62 billion.

H-P gained after Morgan Stanley raised its rating on the largest maker of printers to "overweight" from "equal weight."

The stock rose $1.85, or 3.8 percent, to $50.75.

And Exxon rose 61 cents to $85.10, while ConocoPhillips advanced 89 cents to $78.93.

As Friday's flip-flops would suggest, uncertainty remains a big force on Wall Street.

Four of the previous five sessions had seen selloffs in the final hour of trading.

The Russell 2000 index of smaller companies fell 2.10, or 0.27 percent, to 769.50.

Overseas, Britain's FTSE 100 fell 1.08 percent, Germany's DAX index fell 0.71 percent, while France's CAC-40 shed 0.61 percent.

In Asia, Japan's Nikkei stock average fell 1.57 percent and Hong Kong's Hang Seng index fell 3.95 percent.

------

The Dow Jones industrial average ended the week up 134.05, or 1.03 percent, at 13,176.79.

The Standard & Poor's 500 index finished up 5.04, or 0.35 percent, at 1,458.74.

The Nasdaq composite index ended up 9.30, or 0.35 percent, at 2,637.24.

The Russell 2000 index finished the week down 2.88, or 0.37 percent, at 769.50.

The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted index that measures 5,000 U.S. based companies -- ended Friday at 14,727.28, up 17.99 points, or 0.12 percent, for the week.

A year ago, the index was at 14,090.95.

------

On the Net:

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

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

[Livyjr]

"Fannie under fire over accounting change"

By MARCY GORDON, Associated Press

Last updated: 7:32 p.m., Friday, November 16, 2007

WASHINGTON -- Fannie Mae's bookkeeping is drawing scrutiny from Wall Street -- again.

Three years after a stunning accounting scandal that forced it to restate earnings by $6.3 billion, the giant government-sponsored company that buys and sells home loans is on the defensive over a change in how it calculates potential losses from the growing mortgage crisis.

The fear among investors is that a new accounting methodology masks the number of bad loans held by Fannie, downplaying potential losses.

Shares of Fannie, the largest U.S. player in the market for mortgages that packaged into tradable securities, tanked for the second straight day on Friday, even as executives tried to assuage skeptical Wall Street analysts on a telephone conference call.

The stock, which fell $2.35, or 5.5 percent, to $40.69 percent, recovered from an earlier dive of more than 16 percent that brought shares to a 10-year low, following a 10 percent drop the day before.

In bond markets, the risk premium on Fannie's debt -- what it costs to insure its mortgage-backed securities -- climbed.

Fannie disclosed its new calculation for potential mortgage losses last Friday, when it submitted several hundred pages of documents to the Securities and Exchange Commission.

The filing brought the company's financial reporting up to date for the first time since 2004.

But the bookkeeping change -- and its potential impact -- received significant attention on Thursday in an online article published by Fortune, which is owned by Time Warner Inc.

Using the new method, Fannie reported a so-called "annualized credit-loss ratio" of 4 basis points for the first nine months of this year, meaning the value of four out of every 1,000 mortgages it owns declined during that period.

The Fortune article pointed out that under the old method, the credit-loss ratio for that period would have been 7.5 basis points -- far exceeding Fannie's forecasts on the $2.4 trillion worth of mortgages it owns.

The adjustment is particularly unnerving to Wall Street because the company was racked by an accounting scandal in 2004 that resulted in government sanctions and a tarnished reputation.

"This just smacks too much of the accounting games the company was playing a couple years ago," said Armando Falcon, who headed the Office of Federal Housing Enterprise Oversight regulator of Fannie Mae at the time its accounting crisis erupted.

"They have very little room to play with here when it comes to trust and credibility," Falcon said in a telephone interview, adding that "it doesn't bode well for the new management."

The latest accounting uproar comes as Fannie pressures the government to further raise the mandated cap on its mortgage investment holdings, set at $735 billion after a two percent increase several months ago, as a way to help calm jittery credit markets.

"With this news, there is absolutely no justification" for Fannie being allowed to assume additional debt, said Rep. Richard Baker, R-La., a member of the House Financial Services Committee who is a longtime critic of the company.

"We don't know the embedded risk yet."

The reaction on Wall Street was only slightly more forgiving.

Citigroup analyst Bradley Ball said while Fannie executives provided helpful explanations of some confusing accounting issues during Friday's call to analysts, the company "continues to fall short on providing sufficient detail for clear analysis of core operating results."

"Management was unable to assuage the market's main concerns about credit losses going forward," Ball wrote in a research note.

Washington-based Fannie reported a $1.4 billion third-quarter loss last week, while forecasting housing market woes through next year because of mounting home loan delinquencies.

In Friday's conference call, Chief Financial Officer Stephen Swad said some of the $670 million in provisions for credit losses on soured home loans that Fannie wrote off in the third quarter likely would be recovered.

"We book what we book under (generally accepted accounting principles) and we provide this disclosure to help you understand it," Swad said.

Several analysts asked the executives in the conference call why the company couldn't disclose what proportion of high-risk mortgages it is able to refinance into fixed-rate loans and save from default.

"The problem is that we don't have the underlying information," said Credit Suisse analyst Moshe Orenbuch.

Another analyst said in a report that Fannie's new calculation method is similar to that used by Freddie Mac, its smaller government-sponsored sibling, which also suffered a multibillion-dollar accounting scandal several years ago.

But Michael Cosgrove, a spokesman for Freddie Mac, said:

"We believe that we have a different approach in how we account for these loans."

The current director of the Office of Federal Housing Enterprise Oversight, James B. Lockhart, would not have any comment Friday on the Fannie Mae matter, a spokeswoman said.

----

On the Net:

Fannie Mae: http://www.fanniemae.com

Freddie Mac: http://www.freddiemac.com

[Livyjr]

"AMD sells 8.1 percent stake to Abu Dhabi"

By JORDAN ROBERTSON, Associated Press

Last updated: 6:44 p.m., Friday, November 16, 2007

SAN FRANCISCO -- With oil prices surging and U.S. stock prices slumping, chip maker Advanced Micro Devices Inc.'s sale of an 8.1 percent stake to the Abu Dhabi government's investment arm represents the latest plunge by a wealthy Middle Eastern nation into a troubled U.S. corporation.

It also raises fresh questions about the appropriateness of Middle Eastern firms owning large chunks of U.S. businesses that specialize in advanced technologies.

Sunnyvale-based AMD, the world's No. 2 microprocessor maker, needs the $622 million investment from the Mubadala Development Company to help lift the company out of a deep financial slump.

AMD has lost more than $1.6 billion so far this year, and has just $1.5 billion in cash on hand as it works to pay down $5.3 billion in debt.

The financial woes have caused AMD's stock to fall more than 35 percent since the start of the year, a slide that has wiped out nearly $4 billion in shareholder wealth.

The infusion, announced Friday, is a necessary jolt for AMD is it hunts for money to fund its counteroffensive against Intel Corp., the world's largest chip maker, and amid a huge spike in investments in U.S. companies from Middle Eastern nations.

Middle Eastern investments in U.S. companies has increased more than fivefold in 2007, leaping from $4.5 billion on 32 deals last year to nearly $25 billion on 42 deals so far this year, according to data compiled by Thomson Financial.

The money invested in the past two years is more than the entire total invested from 1990 to 2005, according to the latest Thomson data.

During that period, $24.8 billion in investments were made in 258 deals.

Oil-rich countries have been enriched further in recent months by a run-up in the price of a barrel of oil, which has been hovering in the $90 range while many U.S. stocks continue to suffer from the housing and lending morass that's led some banks to absorb billions of dollars in losses.

The biggest deal so far this year involving Middle Eastern firms was General Electric Co.'s $11.6 billion sale of its plastics division, completed in August, to petrochemicals manufacturer Saudi Basic Industries Corp., a public company based in Riyadh that is 70-pecent owned by the Saudi Arabian government.

Firms based in the United Arab Emirates, a federation of seven oil-rich states, have invested nearly $10 billion in real estate, financial, power generation and other types of companies in the United States.

Earlier this year, Mubadala bought a 7.5 percent stake in the management operations of private-equity firm Carlyle Group for $1.35 billion, and this week unveiled a partnership with military contractor Northrop Grumman Corp. to collaborate on aerospace and aviation technologies.

The deal with AMD makes the Abu Dhabi government-run investment fund AMD's third-largest shareholder, according to AMD's latest regulatory filings, a development that AMD vows will not trigger a review by the U.S. government because it's a minority investment and Mubadala will not get a board seat.

However, some experts doubt that claim, citing the sensitivity of AMD's technology, which besides being used widely in consumer personal computers and corporate servers is also used in Defense Department computers and other government machinery.

John Reynolds, an attorney at Wiley, Rein & Fielding in Washington, said the transaction could face scrutiny by Committee on Foreign Investment in the U.S., or CFIUS, a 12-member panel headed by the Treasury Department, because the U.S. government is very interested in acquisitions by government-run investment funds, known as sovereign wealth funds, such as Mubadala.

China, Saudi Arabia and other Middle Eastern and Asian countries have set up such funds, which control an estimated $2.5 trillion in assets.

In addition, if AMD has government contracts for classified work, interest from CFIUS and Congress "is apt to be considerable, even if the investment is non-controlling," Reynolds said.

Generally, passive investments of less than 10 percent of a company's shares do not trigger review by CFIUS.

But that is not a hard-and-fast rule, Reynolds said, and an ownership stake below 10 percent is not automatically shielded from review.

AMD shares slid 6 cents to $12.64 in Friday trading.

------

Associated Press writer Chris Rugaber in Washington contributed to this report.

[Livyjr]

"Industrial production dropped in Oct."

By MARTIN CRUTSINGER, Associated Press

Last updated: 4:12 p.m., Friday, November 16, 2007

WASHINGTON -- Industrial production plunged in October by the largest amount in nine months, reflecting a big drop in utility output and continued troubles in autos and housing-related industries.

The Federal Reserve said output at the nation's factories, mines and utilities fell by 0.5 percent last month, a much worse outcome than had been expected.

The October decline, the biggest since a similar drop in January, was led by a sharp plunge in output of electricity and natural gas due to warmer-than-normal weather during the month.

Also contributing to the weakness was the third straight drop at auto factories and further weakness at industries producing lumber, appliances and other products tied to housing.

Auto makers are struggling with slumping demand in the face of soaring gasoline prices while housing is enduring its worst slump in more than two decades.

Economists said the new report was evidence that the troubles in housing have started to spread to other parts of the economy.

The hope had been that a rebound in U.S. export sales would cushion manufacturing from the slowdown in housing and consumer demand.

But some analysts worried this may prove to be too optimistic.

"The deepening housing and credit crises along with the recent surge in the price of oil has created the risk of an actual downturn in manufacturing," said Cliff Waldman, an economist for the Manufacturers Alliance/MAPI.

Analysts believe the economy will slow significantly in the current quarter and the first three months of next year, with many raising the odds for a recession.

The Federal Reserve has cut interest rates twice since September, but Federal Reserve Chairman Ben Bernanke sought to lower expectations for further rate cuts to boost economic growth.

He said Fed policymakers see the risks of weaker economic growth as roughly balanced with the risks of higher inflation that could be triggered by the latest surge in oil prices.

That surge pushed the price of a barrel of crude oil briefly above $98 per barrel last week.

Bernanke's views were echoed in comments Friday by Fed board member Randall Kroszner, who told a New York audience that he saw the economic threats from inflation and weaker growth as roughly balanced even though housing is likely to slump further.

"In the near term, the economy will probably go through a rough patch during which a number of economic data releases may be downbeat," Kroszner said.

"With the inventory of unsold homes already quite high relative to sales, a further weakening of demand is likely to prompt additional cutbacks in production."

Many analysts said they still believe if the economic slowdown worsens significantly, the Fed will cut interest rates again, either at the Dec. 11 meeting or at the first session of the new year in January.

Manufacturing output fell by 0.4 percent in October, the biggest drop since a 0.4 percent decline in August.

Output at the nation's utilities was down 1.6 percent.

Mining output, a category that includes oil production, fell 0.6 percent.

The declines left factories, mines and utilities operating at 81.7 percent of capacity last month, down from an operating rate of 82.2 percent in September.

[Livyjr]

"AMD gets $622 million Mubadala injection"

Associated Press

Last updated: 10:02 a.m., Friday, November 16, 2007

SUNNYVALE, Calif. -- Advanced Micro Devices Inc., the second-largest maker of PC and server microprocessors, said Friday it received a $622 million investment from a unit of Abu Dhabi-based Mubadala Development Co.

The United Arab Emirates investment firm received 49 million newly-issued shares at $12.70 each, the closing price Thursday of AMD's common stock, representing an 8.1 percent stake.

AMD received about $608 million, after reimbursing Mubadala for approximately $14.6 million in expenses.

The company said it will use the proceeds for general corporate purposes including investing in research and development, product innovations and manufacturing.

The company said Mubadala will not receive any board representation as part of the non-controlling, minority investment.

This transaction isn't therefore subject to review by the Committee on Foreign Investment in the U.S.

Merrill Lynch acted as financial adviser to Advanced Micro Devices.

Lehman Brothers acted as lead financial adviser to Mubadala and Morgan Stanley acted as co-financial adviser.

AMD shares rose 45 cents, or 3.5 percent, to $13.15 in premarket trading.

[Livyjr]

"US envoy to press Musharraf"

By STEPHEN GRAHAM, Associated Press Writer

16 November 2007

ISLAMABAD, Pakistan - President Gen. Pervez Musharraf faces a stern warning from a top American diplomat on Saturday: end emergency rule or wreck landmark elections and risk undermining vital U.S. support.

Musharraf made concessions ahead of Deputy Secretary of State John Negroponte's arrival Friday, allowing independent TV news back on the air and freeing opposition leaders and a respected U.N. rights expert.

But he also pushed ahead with plans for parliamentary elections in January, swearing in a caretaker government and defending his record since seizing power in a 1999 coup.

"I take pride in the fact that, being a man in uniform, I have actually introduced the essence of democracy in Pakistan — whether anyone believes it or not," a solemn-looking Musharraf said after a low-key ceremony at the presidential palace.

Negroponte touched down hours later and spoke by phone with opposition leader Benazir Bhutto, the highest-level U.S. contact with the former prime minister since Musharraf imposed a state of emergency Nov. 3.

"He wanted to hear from her how she viewed the political situation in Pakistan," State Department spokesman Sean McCormack said.

He said Negroponte's call to Bhutto "sends a very clear message that we intend to talk to and continue our contacts with members of Pakistan's political leadership and political civil society."

U.S. contacts with Bhutto have been handled by U.S. Ambassador Anne Patterson and the consul-general in the eastern city of Lahore, where Bhutto had been confined to her home.

She was freed Friday from three days of house arrest imposed to stop her from leading protests.

McCormack said he did not expect Negroponte to meet Bhutto in person, saying "it's just a little bit easier to have a phone call, you don't have a media circus outside and you can actually have probably more relaxed conversation."

Negroponte, who is expected to speak to Musharraf on Saturday, arrived from a stop in Africa, where he said that the democratic process in Pakistan had been "derailed."

"Our message is that we want to work with the government and people of Pakistan and the political actors in Pakistan to put the political process back on track as soon as possible," Negroponte said.

Under domestic pressure for relying too heavily on Musharraf, Washington appears increasingly exasperated with a man that President Bush has long defended as a stalwart ally against international terrorism.

The White House has called for him to lift the emergency immediately or destroy the credibility of parliamentary elections.

The crisis has also estranged Musharraf from Bhutto, a secular, pro-Western leader who had been expected to join forces with Musharraf if she fared well in the election.

Along with Bhutto, police freed two leaders of hard-line Islamic parties, along with Asma Jehangir, head of Pakistan's main human rights organization and a U.N. rights expert.

Bhutto, who leads Pakistan's largest opposition party, immediately reiterated her call for Musharraf to quit power, and said his sidelining of moderate opponents had allowed the rise of Islamic extremism.

She is calling for opposition parties to unite and maybe boycott the elections.

"Do we want to deny this nation its true legitimate leadership and make way ... for extremist forces?" she asked reporters in Lahore.

"The West's interests lie in a democratic Pakistan."

Patrick Cronin, an analyst at the International Institute of Strategic Studies in London, said Washington still hoped to persuade Musharraf to end the emergency and allow free elections "so they don't have to face the prospect of watching him go sooner rather than later."

He said U.S. officials were keen to avoid the embarrassment of dropping a man whose authoritarian rule they have long defended because of his help in Afghanistan and against al-Qaida, but also had to be seen to stand up for democracy.

The military is increasingly unhappy with Musharraf's alienation of Western backers and Pakistan's political parties and could yet force him out, Cronin said.

Musharraf "got a free ride because of 9/11 and that free ride is over," he said.

However, Western governments "don't see an easy alternative in terms of how to make the transition because ultimately it's the Pakistan army and elite that are going to make this call."

Musharraf told The Associated Press on Wednesday that he expects to relinquish his role as army chief this month but stay on as a civilian president.

On Friday, he swore in an interim government headed by loyalist former Senate chairman Mohammedmian Soomro.

Parliament was dissolved Thursday after completing its five-year term.

The caretakers will manage the country until elections due by Jan. 9.

"I hope and pray that the new Cabinet and new prime minister, in these difficult times, functions with only one thing in mind: Pakistan comes first," Musharraf said.

In the northwestern city of Peshawar on Friday, police used tear gas and batons to break up a rally by 500 supporters of a coalition of religious parties and detained several of their leaders.

The groups staged smaller rallies in Islamabad and the southern city of Karachi.
___

Associated Press writers Munir Ahmad in Islamabad, Zarar Khan in Lahore, Riaz Khan in Peshawar, Ashraf Khan in Karachi and Matthew Lee in Washington contributed to this report.

[Livyjr]

"Key test in Iraq: Is the power on?"

By Gordon Lubold Fri Nov 16, 3:00 AM ET

Washington - It is the Cadillac of electrical plants, new and sophisticated and reflected in the pride of the local security guards hired to protect it.

When it's turned on, providing enough power to run roughly the equivalent of 400,000 Iraqi homes, the Musayyib gas power plant will provide a large boost in the US military's campaign to restore basic services to Baghdad and, it hopes, quell the insurgency there.

But in Iraq, it seems, nothing is simple.

Lack of fuel and parts, and poor Iraqi governance, have kept the Musayyib plant's 10 jet-engine-sized turbines off-line.

It is emblematic of the large challenges facing the military's most important noncombat counterinsurgency tool: the provision of clean water, working sewage systems, and electric power to a population hungry for them.

US officials have long maintained that if Iraqis had these basic services, they would be less inclined to support the insurgency.

Lt. Gen. Ray Odierno, the No. 2 US commander in Iraq, sees electricity as the No. 1 priority.

"We now need to start to improve the basic services," General Odierno said while in Washington last month.

"If we can do that, I think we will see a tipping point" in Iraqi tolerance of the US occupation and support for the current Iraqi regime, he said.

The hours of power that Iraqis receive each day has fluctuated since the US invasion in 2003.

In March of that year, the average Iraqi had between four and eight hours of electricity per day, according to a study by the Brookings Institution in Washington.

In March 2004, Iraqis had as many as 16 hours of power per day.

Since then, however, that average has dipped again to as low as eight hours.

In September, according to the study, Iraqis had nearly 12 hours of power per day.

To get power, many Iraqis string wires from their homes to truck-size generators that sit on street corners.

But US and Iraqi officials aim to get most Iraqis on the country's power grid.

The average household in Baghdad gets just about eight hours of electricity per day � the lowest amount in any province.

US officials are furiously trying to raise those numbers even as Iraqis scramble to buy new air conditioners, refrigerators, and electronic devices that create all the more demand.

The unfinished Musayyib plant sits by itself in an agrarian area south of the city.

It has been plagued by a shortage of fuel to run it, in part because the Ministry of Oil is focused on exporting fuel to raise revenues instead of using it at home.

And it has ignored infrastructure problems, says Col. Mike Moon, director of electrical-sector development for the Gulf region of the US Army Corps of Engineers.

Parts to build it are hard to come by at a time when large industrial countries like China and India seek to expand their own power networks.

"You don't just go down to Auto Zone and get a transformer," says Colonel Moon.

"They cost a million dollars."

Controversy has dogged the plant since 2006, when Southeast Texas Industrial Services, the US-based firm that won the $350 million contract to build it, walked off the job, citing security concerns and lack of Iraqi government support, Moon says.

The US government is spending another $28 million to finish the project, which includes "commissioning" each of the remaining turbines not already running and completing a portion of the plant that will separate crude oil and leave higher-quality fuel on which the plant can run.

Terrorism and sabotage, aging equipment, and "overwhelmed repair crews" also impede overall progress with Iraq's power grid, according to a report by the Iraqi Ministry of Electricity.

The head of the ministry, Karim Hasan, has what US officials see as an ambitious, though not totally unrealistic, $25 billion plan to meet current power demand by 2010 and expand the power grid to handle even more demand by 2016.

Though his ministry is considered one of the most effective, poor coordination between ministries and bad governance overall within the Iraq government will stifle progress unless better coordination begins to occur, say Moon and other US officials.

Then there's the war.

"It's a pretty aggressive plan in the environment you're working in," says David Pumphrey, a senior fellow for the energy program at the Center for Strategic and International Studies, a think tank in Washington.

"You're basically rebuilding a whole power network where people are getting shot, and that's very hard."

Regional and sectarian politics also play a role in the distribution of power.

US officials say it's important to send as much power as possible to Baghdad in the hope that it could stabilize the city, home to some of Iraq's worst violence.

But in Iraq's outlying areas, the common perception is that the networks that distribute power often bypass the small cities and towns in favor of Baghdad, creating resentment.

Militias in some of those areas fight to keep the power that a local plant such as Musayyib generates, sometimes using strong-arm tactics to siphon it back into their areas.

Resentment of "Baghdad-centric" power distribution has already led to the sabotage of countless power lines so electricity can't be exported to Baghdad, one American official says.

Because little of the power distribution network is run by computers � it's typically men sitting in substations and circuit shacks � the distribution of power is often determined by whoever has the biggest gun.

"If you have a militia walk into the substation and say, 'We don't want you to flip on that circuit and ship more power to Baghdad,' that happens," Moon says.

When the Musayyib plant is running, Iraqis will have a state-of-the-art facility that will generate power efficiently and far more cleanly than an older plant nearby, whose four smokestacks belch a deep black smoke all day.

It's a point of pride to the Iraqis who guard the facility against would-be terrorists and other criminal acts, says Army Capt. Charles Levine, a commander at a nearby US base.

"This is an Iraqi-owned power plant using Iraqi engineers, and of course they have American mentors, but this is Iraq's chance to stand shoulder to shoulder with its neighbors in terms of power generation," says Captain Levine.

[Livyjr]

"Costume flap imperils immigration post"

By SAM HANANEL, Associated Press Writer

17 November 2007

WASHINGTON - Just when it appeared Julie Myers had cleared every hurdle in her quest to officially become the nation's top immigration official, a dreadlocked wig and a prisoner's outfit could cost her the job.

Myers, director of Immigration and Customs Enforcement, ran into trouble earlier this month after she and two other agency managers gave the "most original" costume award to a white employee who came to the agency's Halloween party dressed as an escaped prisoner with dreadlocks and darkened skin.

The incident drew complaints of racial insensitivity and an apology from Myers.

It also cast doubt on whether she'll get a confirmation vote before the end of the year, when her original appointment expires.

It would be a stunning collapse for Myers, 38, a native of Shawnee, Kan., who worked hard over the past two years to convince skeptical lawmakers that someone with little immigration experience was up to the task of running the government's second largest investigative force.

With just a few more weeks to go before the end of the session, Senate Majority Leader Harry Reid, D-Nev., has not scheduled a vote on Myers.

Spokesman Jim Manley said this week that Reid has "serious concerns" with the nomination and is consulting with other lawmakers about how to proceed.

Myers met resistance in 2005, the first time President Bush tried to appoint her to the Homeland Security Department post, after Democrats and Republicans said she had weak credentials for the high-profile job.

To avoid a fight, Bush installed her during a Senate recess and her position expires at year's end unless the Senate votes to confirm her.

Questions about nepotism also came up because Myers is the niece of Air Force Gen. Richard B. Myers, the former chairman of the Joint Chiefs of Staff.

She is married to John Wood, the U.S. attorney in Kansas City and former chief of staff to Homeland Security Secretary Michael Chertoff.

Even some of those expected to defend Julie Myers seemed shaky.

"The way things are going, we may not ever vote on her nomination," Sen. Kit Bond, R-Mo., who is a second cousin of Myers' husband, said Friday.

"Our nation's immigration enforcement agency needs non-controversial leadership."

"That would be best served by going in a different direction with this nomination."

Bond's reaction was a surprise, said ICE spokeswoman Kelly Nantel, and Myers is trying to speak with the senator about it.

Despite Bush's decision to circumvent the Senate, it was clear in hearings earlier this year that Myers had won over many doubters with her performance in stabilizing the agency's financial problems and improving its management.

Some key lawmakers have rallied to her defense, including Joe Lieberman, the Connecticut independent who chairs the Senate Homeland Security committee, and Sen. Susan Collins, R-Maine, the panel's top Republican.

"Senator Lieberman regrets her lapse in judgment regarding the Halloween incident," spokeswoman Leslie Phillips said.

"He is inclined to support her nomination, given the committee's review of her entire record, the fact that the union representing 7000 ICE employees supports her and her year's experience in office."

Myers has apologized repeatedly for the costume incident, saying she was "shocked and horrified" to learn the employee had altered his skin color and conceding "it was inappropriate for me to recognize any individual wearing an escaped prisoner costume."

"She took very direct steps prior to address what she felt was a bad judgment call, bad decision and to take responsibility for what was an offensive costume worn by an employee," Nantel said.

The employee was placed on administrative leave and Myers issued a formal apology to all ICE employees two days after the episode.

She also reached out to a black employees group to express her regrets.

The group, the National Association of African-Americans in the Department of Homeland Security, sent a letter to Reid this week praising Myers' commitment to black employees.

Still, it was not the kind of image many lawmakers wanted to see from the agency responsible for arresting and incarcerating illegal immigrants.

Sen. Claire McCaskill, D-Mo., one of Myers' harshest critics even before the costume episode, placed a hold on the nomination while lawmakers sought more details.

While McCaskill does not support Myers, she is willing to allow an up or down vote in the full Senate.

"I can forgive anyone who apologizes for a wrong deed," said McCaskill.

"But it doesn't change the fact that the incident showed a woeful lack of judgment."
___

On the Net:

Immigration and Customs Enforcement: http://www.ice.gov/

[Livyjr]

"Governments struggle as militants refine Web tactics"

By Alexandra Zawadil

Fri Nov 16, 8:54 AM ET

VIENNA (Reuters) - Islamist militants are becoming more skilled at tailoring their message to specific audiences, including women and children, and Western societies are struggling to find a response.

That was the message from a meeting hosted by the Organisation for Security and Cooperation in Europe (OSCE) this week, attended by leading experts on Islamist radicalization.

"One of the most alarming trends we found on the Internet recently is what we call 'narrowcasting'," said Gabriel Weimann, professor of communications at the University of Haifa in Israel which monitors 5,800 militant Web sites.

Instead of 'broadcasting' -- trying to reach the biggest possible audience -- the approach is to slice the audience into segments and target each with specific tactics, he said.

"Terrorists are using the Internet to focus on children, very young children, to attract young people to the ideology and later to the way of terrorism.

"When they target children, they do everything any commercial advertiser would do."

"They use comic books, storytelling, graphics, movies, competitions, prize-winning and so on," Weimann added.

Western security officials have been voicing growing concern about militant 'grooming' of children on the Internet.

Last week the head of Britain's MI5 spy service said individuals aged 15 and 16 had been implicated in terrorist-related activity.

WOMEN'S MANUAL

Weimann said al Qaeda was also targeting women, including via an online manual, presented in pink, which educates them in the roles of female suicide bomber or wife or mother to a jihadist 'martyr'.

The question is how to counter such messages.

Mohamed Bin Ali, an expert from Singapore, told reporters:

"It is important to produce counter-Web sites."

"If they produce one Web site, we need another Web site to counter that."

But Johnny Ryan of the Institute of European Affairs in Dublin said governments lacked the resources and Internet skill to fight the battle on the Web, so that role needed to be played by community and religious leaders, scholars and the public.

"If there are fallacies in the simple narrative of 'the West has been against Islam for hundreds of years' then you have to educate the public."

"And it is the public on the Internet who should then counter the message," he said.

At the international level, approaches vary.

The European Commission this month proposed that all 27 EU member states should make it a criminal offence to incite terrorism over the Internet or use the Web for militant recruitment and training.

The United States has taken a hands-off approach.

Some well known al Qaeda-linked Web sites are hosted by U.S.-based companies, including one forum which recently published a manual on how to kidnap Americans.

Counter-terrorism officials say freedom-of-speech laws prevent them for shutting down such sites, which in any case would just pop up somewhere else.

And having them out in the open enables security officials to monitor chatrooms and get a feel for what militant sympathizers are thinking.

Weimann said different types of extremist site required different approaches.

"Some Web sites should be kept monitored, some Web sites should be hacked because they are teaching how to use weapons, how to use explosives."

"Some have to be blocked and stopped.

(Writing by Mark Trevelyan; Editing by Ibon Villelabeitia)

[Livyjr]

"Economist: $2 trillion lending crunch may be ahead"

Friday November 16, 10:21 am ET

By Grace Wong, CNNMoney.com staff writer

The mortgage wipeout could result in a $2 trillion cutback in lending and have dramatic implications for the U.S. economy, according to Wall Street investment bank Goldman Sachs.

The housing slump is expected to end up costing banks, hedge funds and other lenders an estimated $400 billion as defaults on home loans rise, according to Goldman economist Jan Hatzius.

A $400 billion loss is equal to just about 2.5 percent of U.S. stock market capitalization - or a bad day on Wall Street, he wrote in a commentary on Thursday.

But most stock investors don't react aggressively to capital losses the way banks and other lenders do.

A bank that aims to maintain a capital ratio of 10 percent would need to shrink its balance sheet by $10 for every $1 in credit losses, the note said.

That means that if lenders end up suffering just half of the $400 billion in potential credit losses, they could be forced to reduce the amount they loan by $2 trillion.

Such a drastic credit crunch could have dire consequences for the economy.

"Even if this occurs gradually, and even if there are some offsets from reduced credit demand and increased lending by other sectors, the drag on economic activity could be substantial," Hatzius wrote.

Wall Street banks and brokerages face pain on two fronts.

They hold home loans, as well as securities backed by mortgages.

Losses on these holdings are expected to deepen as falling housing prices trigger more defaults.

There are a number of factors that could lessen the lending shock, Hatzius noted.

Regulators could encourage financial institutions to keep lending, even in times of stress.

Some players could raise additional capital by selling stakes in themselves.

But the overall outlook is bleak, as pressure on lending is likely to raise the risk of "significant weakness" in economic activity, the note said.

[Livyjr]

"Pakistan's Musharraf faces US pressure"

By MATTHEW ROSENBERG, Associated Press Writer

17 November 2007

ISLAMABAD, Pakistan - Pakistan's military ruler faced intense U.S. pressure Saturday to end emergency rule and restore democracy, with Washington's No. 2 diplomat personally delivering what many here see as a sharp warning from a once staunch ally.

Whether President Gen. Pervez Musharraf was ready to listen was the question.

He says the two-week long emergency — which has seen opponents jailed, judges purged and independent TV stations muffled — is needed to hold a peaceful vote in the country beset by an increasingly potent Islamic insurgency.

U.S. Deputy Secretary of State John Negroponte's trip was seen as a last best chance to persuade him and avoid political turmoil in Pakistan, a key front in the war on terror.

The diplomat was expected to make his only public comment at a news conference scheduled for early Sunday, just ahead of his departure.

Negroponte met for more than two hours with Musharraf and Pakistan's deputy army commander, Gen. Ashfaq Kayani, said an official in the president's office, who spoke on the condition of anonymity because he was not authorized to talk with the media.

Kayani is widely expected to take over the powerful role of military chief in the coming weeks when Musharraf sheds his uniform and starts his second term as president in the coming weeks.

The official said Musharraf told Negroponte the emergency was needed to hold a successful vote.

He wouldn't say what Negroponte had told Musharraf, and U.S. officials weren't talking.

But going into the meeting, senior Bush administration officials were clear on what they wanted: an end to the emergency, a date set for legislative elections in January, the release of opposition leaders and that Musharraf step down as army chief.

"We want to work with the government and people of Pakistan and the political actors in Pakistan to put the political process back on track as soon as possible," Negroponte said Friday during a stop in Africa.

He arrived in Pakistan a few hours later and phoned former prime minister Benazir Bhutto, the highest-level U.S. contact with the Pakistani opposition leader since the emergency began.

In their discussion, Negroponte underscored Washington's opposition to the emergency and its desire to see her and other opposition figures free to peacefully take part in Pakistani politics, said U.S. State Department spokesman Sean McCormack.

The conversation came just hours after Bhutto was released from house arrest, one of a number of face-saving measures the government took ahead of the senior American diplomat's arrival.

A prominent human rights activist was also released, and several opposition television news stations were allowed back on the air.

But there were also some ominous signs, with the broadcasts of two major independent television news stations — Geo and ARY, both of which transmit from nearby Dubai — being cut.

Both stations said Dubai took action in response to pressure from Musharraf.

GEO broadcast a continuous video of a thunderstorm at sea, with its logo floating on the choppy waves.

"The pressure was so intense from Gen. Musharraf," prompting the state-owned Dubai Media City to order the signal cut at midnight Friday, Shahid Massood, Geo Group executive director, said from Dubai.

Neither Emirati nor Pakistani officials commented on the allegations.

Bhutto and Musharraf had been negotiating a power-sharing arrangement, but talks apparently collapsed as the general moved against the opposition following his decision to suspend the constitution.

She has in recent days made increasingly strident demands for Musharraf to resign, and has proposed the opposition form a unity front to serve as a transition government ahead of elections due by Jan. 9.

The general, who until recently had been considered a vital U.S. ally and a bulwark in the war on terror, has steadfastly refused.

Instead, he's expressed exasperation with the mounting Western pressure and has pressed ahead with disputed plans for January elections, swearing in an interim government Friday charged with preparing for the vote.

Musharraf has also come under fire for his military's recent losses in fighting with pro-Taliban militants in Swat, where violence has raged since July and insurgents have captured several villages, police stations and government building.

A top general announced Saturday that the army has massed 15,000 troops for a major assault on Islamic militants in the northern valley, and the army said it had killed 40 militants there.

A militant spokesman said the government's figures were greatly exaggerated, but acknowledged suffering some casualties.

[Livyjr]

"Giuliani would pick conservative judges"

By JIM KUHNHENN, Associated Press Writer

Sat Nov 17, 5:24 AM ET

WASHINGTON - Rudy Giuliani assured a conservative legal group Friday that if elected president he would appoint federal judges who adhere to their principles.

He also praised a judge who declared the capital city's gun ban unconstitutional and ridiculed efforts to eliminate the words "under God" from the Pledge of Allegiance.

In a speech marking the 25th anniversary of the Federalist Society, Giuliani spelled out a conservative legal agenda in which he cited Supreme Court Justices Antonin Scalia, Clarence Thomas and Samuel Alito and Chief Justice John Roberts as models for the judges he would appoint to the federal bench.

He contended that Democrats Hillary Rodham Clinton, Barack Obama or John Edwards, as president, would select judges who were "activists and try to legislate social policy."

"We're seeking to find judges who understand the very, very important concept that judges exist to interpret the law, not to invent the law," he said.

Giuliani has been held suspect by some conservatives because as mayor of New York he backed some gun control laws and has supported a woman's right to abortion.

He has sought to alleviate those concerns, aligning himself with legal conservatives such as former Solicitor General Theodore Olson, who introduced him at Friday's gathering.

Giuliani was the only presidential candidate to speak to the group, a testament to his close ties to Olson and other prominent members of the organization.

Several of them are advising his campaign and have served as a bulwark for Giuliani against criticism from social conservatives.

He also said that as president he would demand that the Senate change its rules for confirming federal judges, decrying the filibusters that blocked some of President Bush's appointees and the atmosphere at nominating hearings dating back to the failed nomination of Robert Bork.

He argued that nominees should be judged on their qualifications, honesty and integrity, not their judicial philosophy.

He said such a standard should apply whether the president is a Republican, nominating conservative judges, or a Democrat nominating liberal judges.

Giuliani did not mention his Republican rivals, but did make a joke at Clinton's expense.

He suggested she be inducted into the Federalist Society because in addressing a question about driver's licenses for illegal immigrants, Clinton at one point indicated that it was a decision best left to the states.

"This is the only time in her career that she has decided anything should be decided on a state-by-state basis," he said to an audience that strongly advocates states' rights.

"And you know something, she picked out absolutely the wrong one."

Giuliani portrayed the United States in Reaganesque terms — an optimistic vision of a country with a preordained mission.

"There are some people I think nowadays that doubt that America has a special, even a divinely inspired role in the world," he said.

"Now I don't understand how you can look at history and not see the wisdom of that and the reality of it."

He said that from its beginnings, the United States fought tyranny and oppression and would do so again.

"It was this nation that saved the world from the two great tyrannies of the 20th century, Nazism and Communism," he said.

"It's this country that's going to save civilization from Islamic terrorism."

While Giuliani was the only candidate to speak at the Federalist meeting, Fred Thompson's supporters distributed fliers advertising an afternoon reception sponsored by "Lawyers for Fred" at a Washington law office.

Two of the founders of the Federalist Society, Spencer Abraham and David McIntosh, are Thompson supporters.

[Livyjr]

AND WHAT'S UP WITH THIS, THEN?

"Thieving monkeys 'out of control' in northeast India"

Sat Nov 17, 12:12 PM ET

GUWAHATI, India (AFP) - Troupes of monkeys are out of control in India's northeast, stealing mobile phones and breaking into homes to steal soft drinks from refrigerators, lawmakers in the region have complained.

"Monkeys are wreaking havoc in my constituency by taking away mobile phones, toothpastes, sipping coke after opening the refrigerators," Hiren Das told Assam state's assembly.

He said the primates were "even slapping women who try to chase them".

"It is a cause of serious concern in my area, with more than 1,000 such simians turning aggressive by the day," fumed Goneswar Das, another legislator representing Raha in eastern Assam.

Assam's wildlife minister, Rockybul Hussain, said the state government has formed a panel to study the problem.

Because of shrinking forest cover, monkeys have increasingly moved into cities elsewhere in India as well.

Last week, around two dozen people were hurt after monkeys rampaged through a New Delhi neighbourhood.

Last month, the deputy mayor of Delhi died when he fell from his balcony after being attacked by monkeys.

Efforts to drive out the animals is complicated by the fact that devout Hindus view them as an incarnation of Hanuman, the monkey god who symbolises strength.

[Livyjr]

"Over 2,200 die in Bangladesh cyclone

By PARVEEN AHMED, Associated Press Writer

18 November 2007

DHAKA, Bangladesh - The death toll from a cyclone that devastated Bangladesh has surpassed 2,200, officials said Sunday, while rescuers struggled through blocked paths to reach hundreds of thousands of survivors awaiting aid in wrecked homes and flooded fields.

The government deployed military helicopters, naval ships and thousands of troops to join international agencies and local officials in the rescue mission following Tropical Cyclone Sidr.

The U.S. and other countries also offered assistance.

At least 2,206 people have died since the storm struck Bangladesh on Thursday, said Selina Shahid of the Ministry of Food and Disaster Management.

The toll could rise still higher as more information comes in from battered regions.

Disaster Management Secretary Aiyub Bhuiyan met Sunday with representatives from the United Nations and international aid groups to discuss the massive relief effort.

"The donors wanted to know about our plan and how they can come forward to stand by the victims," Bhuiyan told reporters.

"We have briefed them about what we need immediately."

Rescuers struggled to clear roads and get their vehicles through, but many found the way impassable.

"We will try again ... on bicycles, and hire local country boats," M. Shakil Anwar of CARE said from the city of Khulna.

At least 1.5 million coastal villagers had fled to shelters where they were given emergency rations, said senior government official Ali Imam Majumder in the capital, Dhaka.

The worst-hit area was Bagerhat district, where 610 people died, said Ashraful Zaman, an official at a cyclone monitoring center in Dhaka.

"We have seen more bodies floating in the sea," fisherman Zakir Hossain from the country's southwest said, after reaching shore with two decomposing bodies he and other fishermen had found on their way.

Sidr's 150 mph winds smashed tens of thousands of homes Thursday in southwestern Bangladesh and ruined crops just before the harvest season.

Ferries were flung ashore like toy boats.

Aid organizations said they feared food shortages and contaminated water could lead to widespread problems if people remain stranded.

Storms batter impoverished, low-lying Bangladesh every year, often killing large numbers of people.

This time a government early warning program saved a vast number of lives, U.N. Resident Coordinator Renata Dessallien said in a statement.

However, property damage was massive.

Many evacuees who returned home Saturday found their bamboo-and-straw huts flattened.

"We survived, but what we need now is help to rebuild our homes," said Chand Miah of the small island of Maran Char.

An estimated 2.7 million people were affected and 773,000 houses were damaged, according to the Ministry of Disaster Management.

Roughly 250,000 cattle and poultry perished, and crops were destroyed along huge swaths of land.

The government said it has allocated $5.2 million in emergency aid for rebuilding houses.

Several countries pledged to help.

The U.S. government has provided $2.1 million in initial emergency relief, White House press secretary Dana Perino said, noting that President Bush offered condolences to victims.

She said that the ships USS Essex and the USS Kearsage were en route to Bangladesh to help with relief operations, and that the U.S. would airlift 35 tons of non-food items such as plastic sheeting and hygiene kits.

The United Nations released $7 million, while the German government offered $731,000.

The European Union released $2.2 million, and British officials said they would give $5 million.

The Rome-based World Food Program was rushing in food, and the Bangladesh Red Crescent Society was sending thousands of workers to stricken areas.

[Livyjr]

"Pakistan rejects calls to end emergency"

By MATTHEW ROSENBERG, Associated Press Writer

18 November 2007

ISLAMABAD, Pakistan - Pakistan on Sunday rejected a blunt call from Washington's No. 2 diplomat for President Gen. Pervez Musharraf to lift emergency rule and free political opponents ahead of elections.

"This is nothing new," Foreign Ministry spokesman Mohammed Sadiq told The Associated Press.

"The U.S. has been saying this for many days."

"He has said that same thing."

"He has reiterated it."

Deputy Secretary of State John Negroponte delivered the message that Musharraf must end emergency rule as soon as possible during a two-hour meeting Saturday with Musharraf and Pakistan's deputy army commander, Gen. Ashfaq Kayani.

The envoy's visit was seen as a last best chance to ease the latest political turmoil in Pakistan.

Sadiq said the government was taking steps to hold free and fair elections, and any decision on lifting the emergency would "be taken according to the ground situation."

Speaking during a news conference at the U.S. embassy earlier Sunday, Negroponte said he "urged the government to stop such actions, lift the state of emergency and release all political detainees" and that "Emergency rule is not compatible with free, fair and credible elections."

It's a view shared by opposition leaders, who insist that any vote held while thousands of opponents are in jail cannot be considered credible.

They say most of those targeted in the emergency are pro-Western moderates, not the Islamic extremists Musharraf said he needed to combat.

The state of emergency came into effect Nov. 3, and since then, thousands of opponents have been jailed, Supreme Court judges purged and independent TV stations muffled.

Just ahead of Negroponte's visit, Musharraf made some concessions — freeing opposition leader Benazir Bhutto and a leading human rights activist, and loosening his restrictions on several independent television news outlets.

Though measured in his comments, Negroponte expressed some impatience with Musharraf, saying he hoped to see more steps toward democracy soon.

"There remain some other issues that are yet to be considered, or yet to be undertaken," he said, without going into detail.

But despite Musharraf's apparent intransigence, Negroponte would not characterize his trip as a failure.

"In diplomacy, as you know, we don't get instant replies when we have these kinds of dialogue," he said.

"I'm sure the president is seriously considering the exchange we had."

Negroponte also praised Musharraf's efforts in the war on terror, and said he was heartened by the announcement that elections would be held by Jan. 9.

"President Musharraf has been and continues to be a strong voice against extremism," he said.

"We value our partnership with the government of Pakistan under the leadership of President Musharraf."

Going into Saturday's meeting, senior Bush administration officials were clear on what they wanted: an end to the emergency, a date set for legislative elections in January, the release of opposition leaders and that Musharraf step down as army chief.

Kayani is widely expected to take over the powerful role of military chief when Musharraf sheds his uniform and starts his second term as president in the coming weeks.

Shortly after arriving in Pakistan, Negroponte phoned Bhutto, the highest-level U.S. contact with the Pakistani opposition leader since the emergency rule began.

In their discussion, Negroponte underscored Washington's opposition to the emergency and its desire to see her and other opposition figures free to peacefully take part in Pakistani politics, said State Department spokesman Sean McCormack.

The conversation came just hours after Bhutto was released from house arrest.

Bhutto and Musharraf had been negotiating a power-sharing arrangement, but talks apparently collapsed as the general moved against the opposition following his decision to suspend the constitution.

On Sunday, Negroponte urged the two to restart talks and ease "the atmosphere of brinkmanship and political confrontation."

"If steps were taken by both sides to move back toward the kind of reconciliation discussions they were having recently, we think that would be very positive and could help improve the political environment," he said.

Bhutto has in recent days made increasingly strident demands for Musharraf to resign, and has proposed the opposition form a unity front to serve as a transition government ahead of elections.

Musharraf has steadfastly refused.

Instead, he's expressed exasperation with the mounting Western pressure and has pressed ahead with plans for elections, swearing in an interim government Friday charged with preparing for the vote.
___

Associated Press reporters Paul Haven and Stephen Graham in Islamabad contributed to this report.