Those are the ones who ARE the country, Arneoker ....

They ARE the economy .....

And so ...

Sunday, October 12, 2008

"Going John Galt"

Do you ever wonder after dealing with all that is going on with the economy and the upcoming election if it's getting to be time to "go John Galt."

For those of you who have never read Ayn Rand's Atlas Shrugged, the basic theme is that John Galt and his allies take actions that include withdrawing their talents, 'stopping the motor of the world', and leading the 'strikers' (those who refuse to be exploited) against the 'looters' (the exploiters, backed by the government).

Perhaps the partisian politics we are dealing with now is really just a struggle between those of us who believe in productivity, personal responsibility, and keeping government interference to a minimum, and those who believe in the socialistic policies of taking from others, using the government as a watchdog, and rewarding those who overspend, underwork, or are just plain unproductive.

Obama talks about taking from those who are productive and redistributing to those who are not -- or who are not as successful.

If success and productivity is to be punished, why bother?

Perhaps it is time for those of us who make the money and pay the taxes to take it easy, live on less and let the looters of the world find their own way.

My question to readers is, what are some ways to "go John Galt" (legally, of course)--that is, should productive people cut back on what they need, make less money, and take it easy so that the government is starved for funds, or is there some other way of making a statement?

posted by Helen at 9:57 AM

About Me
Name: Helen Smith
Location: Knoxville, Tennessee, United States
I am a forensic psychologist in Knoxville, Tennessee who enjoys commenting on popular culture, politics and psychological issues.

http://drhelen.blogspot.com/2008/10/going-john-galt.html

Well I would agree with that. And, thinking about the definition of the economy that your friend provided, I would point out that they are not just about money. They are about office work, personal service, professional service, etc. And whatever happens to Wall Street and the Federal Reserve, whatever they do, the things other than money that they are about will not change.

Based on what I know about her I think that Ayn Rand was a very brilliant and intellectual wackjob.

She well could have been, Arneoker ....

She certainly is not easily likeable, as you yourself are ...

But that does not change the fact that ATLAS SHRUGGED seems to have been a case of prescient vision .....

And she may have been nothing more than the transmitter .....

That is entirely possible ....

And she had little Alan Greenspan in her intellectual circle at the time ATLAS SHRUGGD was written ....

Supposedly, he gave her some input on it .....

And so ....

Well, I couldn't readily find it, but if I recall, your counter-definition had in it movement of goods and services, or words to that effect ....

My young friend called it "THE FLOW OF MONEY" .....

That does not imply that these people who are your neighbors are ABOUT MONEY ....

Rather, they are like pipes and conduits and valves and such in a plumbing system that keeps that flow going, or directs it in new and different directions ....

A dollar spent at a Chinese resturant may go in a different direction than a dollar spent at an Italian resturant, and you with your dollar get to make a vote as to which direction that will be ....

By the way, during the time of the construction of the transcontinental railroad, there was great hatred of the Chinese because they kept their earnings in their own local economy that was essentially closed to non-Chinese, instead of pouring them into the other local economy that was run by the whites of that time ....

And so ....

That fact never made me feel good about Greenspan.

And I don't know how prescient she was. Now I grant she was right about some very important things. But then, so was Karl Marx.

What was Karl Marx right about?

And what was up with all that "dialectic" business of his?

And all that proletariot and bourgesoi stuff .....

The original proletariot was those people in Rome who did not own property, but were citizens, and so, had a "duty" to contribute offspring to the "state" .....

But in Marx, they seemed to have become something else .....

I found it all to be quite DENSE, myself .....

So I am clueless as to anything that he might have gotten right ...

Outside of the spelling of his name ....

And so ....

WELL, Arneoker ....

I JUST CAME ACROSS THIS WP ARTICLE ON THE SUBJECT OF DEPUTIES FOR THE TIMMY ......

I DON'T KNOW HOW MUCH IT SUPPORTS YOU, HOWEVER, AS A TREASURY SPOKESPERSON IS SAYING THAT IT HAS NOTHING TO DO WITH VETTING ....

AND IT LOOKS LIKE IT HAS AS MUCH TO DO WITH DIVESTING, AS ANYTHING ....

And so ...

"Staffing Shortage Hinders Treasury's Progress"

By David Cho, Washington Post Staff Writer

Tuesday, March 10, 2009; Page D01

A shortage of staff at the Treasury Department is taking a toll on its ability to deal with a financial crisis that continues to deepen in scope and complexity, government and industry officials said.

Every key position within the Treasury, with the exception of Secretary Timothy F. Geithner, remains vacant or awaits confirmation.

The latest worry in the department concerns Lee Sachs, who was in line to be undersecretary for domestic finance or take a job of similar prominence at the Treasury requiring confirmation by the Senate.

Sachs is now contemplating withdrawing from consideration, two sources familiar with the matter said.

The reasons remain unclear.

Sachs did not respond to requests for comment.

Sachs, who served in the Clinton administration as assistant Treasury secretary for financial markets, is now one of the core members of Geithner's team.

Shortly after the presidential election, Sachs emerged as the transition team's key contact at the Treasury and has since been a counselor to Geithner, a position he could retain without Senate confirmation.

But some additional help for the Treasury is on the way.

Lael Brainard, deputy national economic adviser under Clinton and who was set to take a post at the State Department, instead is expected to be nominated as undersecretary of the Treasury for international affairs, administration sources said yesterday.

Caroline Atkinson, a former World Bank official, had been the leading candidate for the Treasury job but withdrew from consideration recently.

Some within government and various industries have said the thin ranks at the top of the department have made it a challenge to get the ear of senior Treasury staff.

"There are a couple of go-to people there trying to do five different jobs," said Federal Deposit Insurance Corp. Chairman Sheila C. Bair, who frequently deals with the agency.

"I do think that's a real issue. . . ."

"I think being unable to get their own people has hampered their ability."

Treasury officials maintained that the lack of staff has not affected their ability to develop programs to address the financial crisis.

In just over a month, they noted, officials have announced a plan to help homeowners, a stress test to capitalize banks in case the economy worsens and an initiative to restart the consumer lending markets.

Treasury officials also played a key role on the federal budget announced last month and are working on an initiative to tackle the toxic assets clogging the books of banks as well as a plan to overhaul financial regulation.

"In just weeks since taking office and inheriting the worst economic crisis in generations, we have taken an unprecedented level of action to strengthen our economy," said Treasury spokesman Isaac Baker.

"Any rumors of vetting problems or delays in the process are simply not true."

But some prospective candidates for Treasury posts have been held up because the White House is carefully examining every candidate to avoid the kind of embarrassing tax problems that dogged Geithner and other nominees, sources familiar with the matter said.

During Geithner's vetting process, the administration found that he had not paid some of the taxes he owed for his work at the International Monetary Fund, and that revelation sparked some opposition to his candidacy on Capitol Hill.

The sources added that the agency is also facing difficulties recruiting financial experts because of rules that require senior Treasury officials to divest of their investments.

With the markets plummeting, some candidates have been reluctant to sell their holdings and come to the department.

Annette Nazareth, a partner at law firm Davis Polk & Wardwell who was being vetted for deputy Treasury secretary earlier, dropped out of the process.

A government source said the White House was concerned that lawmakers would criticize the choice of Nazareth because she was responsible for overseeing the financial markets at the Securities and Exchange Commission during the credit boom that led to the current financial crisis.

But some congressional aides said they were puzzled by this explanation, questioning why White House officials let her vetting process proceed if they already knew about Nazareth's history at the SEC.

The administration is vetting H. Rodgin Cohen, a prominent New York attorney and chairman of the white-shoe law firm Sullivan & Cromwell, as a possible candidate for deputy secretary, sources said.

The administration over the weekend forwarded three Treasury nominees to the Senate Finance Committee: Princeton professor and economist Alan Krueger would head economic policy; David Cohen, an attorney who hails from the law firm WilmerHale, would be in charge of fighting terrorism financing; and Kim Wallace, who worked at Barclays Capital and Lehman Brothers, would oversee legislative affairs.

Staff writer Al Kamen contributed to this report.

MAYBE THE TIMMY IS GOING TO GET THROWN UNDER THE BUS, Arneoker ...

IF SO, IT WOULD TAKE SOME PRESSURE OFF OF HIM TO FIND SOME DEPUTIES FOR HIMSELF ....

And so ...

"Livid Democrats demand AIG return bailout bonuses - Livid Democrats demand AIG return $165M in post-bailout bonuses or watch Congress tax it away"

By LAURIE KELLMAN, Associated Press

Last updated: 6:36 p.m., Tuesday, March 17, 2009

WASHINGTON -- Talking tougher by the hour, livid Democrats confronted beleaguered insurance giant AIG with an ultimatum Tuesday: Give back $165 million in post-bailout bonuses or watch Congress tax it away with emergency legislation.

Republicans declared the Democrats were hardly blameless, accusing them of standing by while the bonus deal was cemented and suggesting that Treasury Secretary Timothy Geithner could and should have done more.

While the White House expressed confidence in Geithner, it was clearly placing the responsibility for how the matter was handled on his shoulders.

Fresh details, meanwhile, pushed AIG outrage ever higher: New York Attorney General Andrew Cuomo reported that 73 separate company employees received bonus checks of $1 million or more last Friday.

This at a company that was failing so spectacularly the government felt the need to prop it up with a $170 billion bailout.

The financial bailout program remains politically unpopular and has been a drag on Barack Obama's new presidency, even though the plan began under his predecessor, George W. Bush.

The White House is well aware of the nation's bailout fatigue -- anger that hundreds of billions of taxpayer dollars have gone to prop up financial institutions that made poor decisions, while many others who have done no wrong have paid the price.

The administration wouldn't be pleased to hear what Maria Panza-Villa, of Hillsboro, Ore., had to say.

"Wasn't Obama supposed to fix this?" asked the mother of two who said she has lost three jobs since November as one employer after another went under.

AIG chief executive Edward Liddy can expect a verbal pummeling Wednesday when he testifies before a House subcommittee.

On Capitol Hill late Tuesday, House Democrats directed three powerful committees to come up with legislation this week to authorize Attorney General Eric Holder to recover massive bonus payments made by companies like the ones paid last week by American International Group Inc.

Senate Democrats, meanwhile, suggested that if the AIG executives had any integrity, they would return the $165 million in bonus money.

One leading Republican even suggested they might honorably kill themselves, then said he didn't really mean it.

Whatever the process, lawmakers of all stripes said, the bonus money belongs back in the government's hands.

"Recipients of these bonuses will not be able to keep all of their money," declared Senate Majority Leader Harry Reid in an unusually strong threat delivered on the Senate floor.

"If you don't return it on your own, we will do it for you," echoed Chuck Schumer of New York.

Not all Democratic leaders were racing in that direction.

Penalizing people with the tax code is inappropriate, declared Rep. Charlie Rangel, D-N.Y., chairman of the taxwriting Ways and Means Committee.

He said, "It's difficult for me to think of the code as a political weapon."

Others saw the connection as reasonable and relevant.

House Financial Services Committee Chairman Barney Frank, D-Mass., noted that the government, through the bailout, is now an 80 percent owner of the company and suggested that was grounds to sue to recover the bonuses.

Republicans said President Obama and his administration should have leaned harder on AIG executives to reject the extra pay, raising some speculation over Geithner's future.

"I don't know if he should resign over this," said Sen. Richard Shelby, R-Ala.

"He works for the president of the United States."

"But I can tell you, this is just another example of where he seems to be out of the loop."

"Treasury should have let the American people know about this."

The administration quickly moved to quash talk of Geithner's ouster.

White House spokesman Robert Gibbs said Obama retains full confidence in his treasury secretary.

There was a daylong rush to the microphones on Capitol Hill -- a bipartisan campaign to out-outrage each other.

Sen. Chuck Grassley, R-Iowa, led the stampede with a statement Monday night on a radio show that AIG executives should either return the money or commit suicide in what he described as the Japanese style of taking responsibility.

He spent much of Tuesday backtracking but still calling for corporate titans to take responsibility for grievous errors in judgment.

Other Republicans said Democratic leaders last month killed a plan that would have forced financial institutions to compensate taxpayers if they paid their executives large bonuses after receiving federal bailout money.

Sen. Olympia Snowe, R-Maine, a co-sponsor of the amendment to Obama's stimulus bill, said striking it "left open an escape hatch of golden parachutes for top executives on Wall Street."

AIG has received more than $170 billion from U.S. taxpayers.

With bailouts in hand, AIG has paid out tens of billions of dollars to banks, municipal governments and other financial institutions around the world.

AIG is no stranger to controversy, nor is it the only publicly rescued company to give bonuses while being bailed out of financial ruin.

Merrill Lynch paid $3.6 billion in bonuses to its executives while its sale to Bank of America Corp., a big recipient of bailout money, was pending.

In recent months, AIG also has come under fire for a $440,000 weeklong retreat at the St. Regis Resort in California for top-performing insurance agents and a hunting trip in England.

The picture for AIG got no prettier Tuesday when subpoenas issued by New York Attorney General Cuomo revealed more details.

He said the company last week had paid bonuses of $1 million or more to 73 employees, including 11 who no longer work there.

Cuomo said that despite their company contracts, the AIG employees agreed to take 2009 salaries of $1 in exchange for receiving their bonus packages.

And he said the fact that AIG could negotiate the terms of the payments "flies in the face of AIG's assertion" that it had no choice but to make the contractual bonus payments.

Administration officials said Geithner did all that he legally could to avert the payments.

Geithner urged AIG chief executive Edward Liddy last week to renegotiate the contracts that called for the bonuses.

"He recognized that you can't just abrogate contracts willy-nilly, but he moved to do what could be done," Larry Summers, Obama's chief economic adviser, told The Associated Press in an interview Tuesday.

Though AIG's bonus plans were disclosed last year, Congress' outrage and threats have begun pouring forth only recently.

At least three Democratic bills and one Republican measure were introduced to crack down on the Treasury Department and stiffen rules for recipients of bailout funds.

The Internal Revenue Service currently withholds 25 percent from bonuses less than $1 million and 35 percent for bonuses more than $1 million.

The Obama administration said it was trying to put strict limits on how future government bailout dollars could be used, and Reid on Tuesday said he urged the administration to step up its pace on that.

------

Associated Press Writers Stephen Ohlemacher, Martin Crutsinger, Julie Hirschfeld Davis and Dave Espo contributed to this story.

NYS AG ANDREW CUOMO IS CALLING THE AIG BONUSES AKIN TO LOOTING....

AND OBAMA'S POPULARITY RATING IS SLIDING ....

WILL AIG BE OBAMA'S IRAQINAM?

And so ...

"Bonus furor may prompt limits on AIG bailout money - White House wants limits on $30 billion bound for AIG, decries company's executive bonuses"

By PHILIP ELLIOTT, Associated Press

Last updated: 11:06 a.m., Tuesday, March 17, 2009

WASHINGTON -- The Obama administration says it's trying to put strict limits on the next $30 billion installment in taxpayers' money for insurance giant AIG amid questions about whether it responded fiercely enough to executive bonus payments.

President Barack Obama and his top aides expressed outrage at reports that American International Group Inc. went ahead with $165 million in bonuses even though the company received more than $170 billion in federal rescue money.

Obama directed Treasury Secretary Timothy Geithner to see whether there was any way to retrieve or stop the bonus money -- a move designed as much for public relations as for public policy.

"I mean, how do they justify this outrage to the taxpayers who are keeping the company afloat?" Obama said Monday, in announcing a plan to help small businesses.

The financial bailout program remains politically unpopular and has been a drag on Obama's new presidency, even though the plan began under his predecessor, President George W. Bush.

The White House is aware of the nation's bailout fatigue; hundreds of billions of taxpayer dollars have gone to prop up financial institutions that made poor decisions, while many others who have done no wrong have paid the price.

The burgeoning controversy raged Tuesday as Sen. Richard Shelby, ranking Republican on the Banking Committee, charged that Geithner had known about the AIG bonus payments before they were made and failed to stop them.

"I don't know what President Obama knew about it," Shelby said.

"I'd say he probably didn't know about it."

Shelby said that Geithner "either knew or should have known what was going on."

"We need to know, what are the details of this?"

"When were the bonuses signed up?"

"Who's getting it?"

The Alabama senator stopped short of calling for Geithner's resignation, saying "he's under fire from all sides now."

"I don't know if he should resign over this," Shelby said.

"He works for the president of the United States."

"But I can tell you, this is just another example of where he seems to be out of the loop."

"Treasury should have let the American people know about this."

Administration officials said over the weekend that Treasury determined the government had no legal authority to block the current payments by AIG -- which are part of a larger total payout reportedly valued at $450 million.

Instead, Geithner asked that the company scale back future bonus payments where legally possible, the administration said.

Geithner was characterized as having called AIG Chairman Edward Liddy on Wednesday to demand that Liddy renegotiate AIG's current bonus structure.

In a letter to Geithner dated Saturday, Liddy informed Treasury that outside lawyers had informed the company that AIG had contractual obligations to make the bonus payments and could face lawsuits if it did not do so.

AIG got predictably raked over the coals at a Senate Banking Committee hearing on regulating the insurance industry.

"One way or another, we're going to try to figure out how to get these resources back," said Christopher Dodd, D-Conn., the panel's chairman.

"This is ridiculous," exclaimed Sen. Jon Tester, D-Mont.

He said AIG executives "need to understand that the only reason they even have a job is because of the taxpayers."

Expressions of outrage across the political spectrum reached a new crescendo Monday when Sen. Charles Grassley suggested in an Iowa City radio interview that AIG executives should take a Japanese approach toward accepting responsibility for the collapse of the insurance giant by resigning or killing themselves.

"Obviously, maybe they ought to be removed," the Iowa Republican said.

"But I would suggest the first thing that would make me feel a little bit better toward them if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide."

Grassley spokesman Casey Mills said the senator wasn't calling for AIG executives to kill themselves, but said those who accept tax dollars and spend them on travel and bonuses do so irresponsibly.

In another development, New York Attorney General Andrew Cuomo said he has issued subpoenas for the names of American International Group employees given bonuses despite their possible roles in its near-collapse.

Cuomo said his office will investigate whether the $165 million in payments are fraudulent under state law because they were promised when the company knew it wouldn't have the money to cover them.

AIG reported this month that it lost $61.7 billion in the fourth quarter of last year, the largest corporate loss in history, and it has benefited from more than $170 billion in a federal rescue.

"When a company pays funds that the company effectively doesn't have, it's akin to a looting of a company," Cuomo said.

"You could argue if the taxpayers didn't bail out AIG, those contracts wouldn't be worth the paper it's printed on."

News that AIG still needs billions in taxpayer dollars to prevent a collapse did little to build public confidence, Obama aides acknowledged.

Seeking to turn the public tide, White House spokesman Robert Gibbs aggressively criticized AIG and said administration officials were working to put strict limits on the next $30 billion installment bound for the company.

"Treasury has instruments that can address the excessive retention bonuses, and add provisions to ensure that taxpayers are made whole," Gibbs said.

The AIG news overshadowed what Obama's aides had hoped to spend the first part of the week discussing: billions of dollars to help the nation's small businesses in the hopes of getting credit flowing again.

Obama heaped praise on the little guys of American industry, often overshadowed in the blitz of government bailouts.

Two months into office, Obama's job approval rating is 61 percent, according to Gallup polling.

That number has been relatively stable so far this month but has dropped from the 68 percent when the president took office.

The major factor has been a decline in support among Republicans, from 41 percent to 26 percent.

A separate poll out Monday by the Pew Research Center put Obama's approval at 59 percent, slipping from 64 percent last month.

The Pew poll found that a growing number of Americans see him as listening more to the liberals than to the moderates in the Democratic Party.

AND HERE WE NOW ARE ....

And so ...

"Treasury provides $1.46 billion to 19 banks - Treasury provides $1.46B to 19 banking companies led by Discover in latest rescue fund payout"

By MARTIN CRUTSINGER, Associated Press

Last updated: 3:56 p.m., Tuesday, March 17, 2009

WASHINGTON -- The government said Tuesday it had provided $1.46 billion to 19 banks in the latest payments from its $700 billion financial rescue fund.

The Treasury Department said the new payments bring the total paid out in its program to buy banks' preferred stock to $198.5 billion.

The government is buying preferred shares of stock as a way to bolster banks' capital reserves in the hopes of encouraging them to resume more normal lending.

The largest payment in the latest round was $1.22 billion which went to Discover Financial Services of Riverwoods, Ill., and the smallest payment was $425,000 obtained by Haviland Bancshares Inc. of Haviland, Kan.

The latest payments were made last Friday.

Under the legislation that created the $700 billion bailout fund last October, the Treasury Department has two business days to disclose that a payment from the fund has been made.

The target announced by the Bush administration was that $250 billion of the first $350 billion in bailout support would go to banks to purchase stock as a way of bolstering their capital reserves.

Former Treasury Secretary Henry Paulson switched the emphasis of the program to buying bank stock after deciding that a program to purchase of toxic assets held by banks would take too long to implement giving the serious deterioration the financial system was undergoing last October.

The bailout effort also has supplied billions of dollars under other rescue programs, including one designed for large troubled banks that has provided aid to Citigroup Inc. and Bank of America Corp. Insurance giant American International Group Inc., as well as automakers General Motors Corp. and Chrysler LLC and their auto financing arms, also have received taxpayer support.

The administration is currently facing a firestorm of criticism after it was revealed that AIG paid out $165 million in bonuses in recent days to employees who worked for an AIG unit that sold credit default swaps, the risky contracts that caused massive losses for the company.

The Obama administration has promised to attach more strings to the assistance than the Bush administration did, but has not said how much of the second $250 billion in the fund will be used for bank stock purchases.

As part of the new administration's overhaul of the bailout effort, banking regulators are requiring 19 of the nation's largest banks to undergo stress tests to see whether they will need additional support to withstand a more severe downturn than the country is experiencing.

The new administration has also said that it will use part of the rescue fund to set up a private-public partnership to buy bad assets from banks and is expected to provide details on how that partnership will work in the coming two weeks.

The Obama administration raised the possibility when it released its first budget request to Congress last month that it could ask for up to another $750 billion in rescue support.

"Obama: new powers needed in financial area - Obama says he will ask Congress for sweeping new powers to deal with future financial threats"

By MARTIN CRUTSINGER, Associated Press

Last updated: 6:55 p.m., Wednesday, March 18, 2009

WASHINGTON -- President Barack Obama seeks new powers that would allow his administration to seize troubled companies like the insurer AIG -- and take ownership of their toxic assets -- if their collapse would threaten the financial system.

Obama said Wednesday his administration will soon propose new financial industry oversight that includes a "resolution authority" that would have powers similar to those of the Federal Deposit Insurance Corp., which can seize control of banks, take over their bad assets and sell the good ones to competitors.

Administration officials did not provide any details on how the new resolution authority would be financed.

That could be a key sticking point in Congress.

One official at a banking industry trade group in Washington said the Obama proposal raises concerns about the possible "nationalization" of banks.

Further details of the Obama administration's regulatory overhaul package are expected to be unveiled as early as next week, in advance of an April 2 meeting in London the president will attend to discuss the financial crisis with other world leaders.

Obama touted the idea Wednesday as his top officials and members of Congress scrambled to deal with public outrage over millions in employee bonus payments made by American International Group, which has gotten more than $182.5 billion in government support.

"This is part of the broader package of financial regulatory steps that we're going to be taking that ensures that, going forward in the future, we're not going to find ourselves in these kinds of terrible positions again," Obama told reporters before departing on a trip to California.

One administration official, speaking on condition of anonymity because a detailed plan has not yet been released, said that the proposal would give the treasury secretary the power, after consulting with officials at the Federal Reserve, to take control of a major financial institution and run the company in a type of conservatorship.

That is what occurred when the government seized control of mortgage giants Fannie Mae and Freddie Mac last September.

The government had the authority to take control of Fannie and Freddie and oust their top executives because those companies were government-sponsored enterprises.

However, the government did not have such powers when it came to AIG, forcing the government to pump tens of billions into the company, which then funneled money to its trading partners, such as Goldman Sachs and Deutsche Bank.

Obama said it was "outrageous" that the government was being forced to "clean up after AIG's mess."

He said it was critical that the government have the "tools to prevent ourselves from getting in a situation where an AIG can pose such enormous vulnerabilities to the system as a whole."

Scott Talbott, senior vice president for government affairs at the Financial Services Roundtable, which represents the country's biggest banks, said his group is skeptical of Obama's proposal.

"This could be a large step toward nationalization," he said.

The president, who on Wednesday discussed the "resolution authority" idea with House Banking Committee Chairman Barney Frank, said he believed the measure was on a "fast track."

Frank was also scheduled to discuss the issue with Treasury Secretary Timothy Geithner, who has been attacked by Republicans for his handling of the AIG bonus issue.

On Wednesday, Geithner received an endorsement from Obama, who told reporters he "is making all the right moves in terms of playing a bad hand."

European countries have pushed the administration to take a tougher approach to financial regulation, believing it was a weak regulatory structure in the United States that led to the crisis that has now pushed the global economy into recession.

The new powers the president seeks would apply to large non-bank financial institutions, such as insurance companies, as well as big bank-holding companies, the administration official said.

These kinds of companies have already received billions of dollars of support from the government's $700 billion financial system rescue fund that Congress created last October.

Other changes to financial regulation the Obama admistration is expected to seek, include:

-- expanding the powers of the Federal Reserve, giving it authority to oversee financial firms that could pose risks to the entire banking system.

-- expanding the capital reserve requirements for banks.

"Analysis: White House, Dems backpedaling on AIG"

By DAVID ESPO, AP Special Correspondent

18 MARCH 2009

WASHINGTON – For the first time since last fall's election, Democrats and the Obama administration are backpedaling furiously on an issue easily understood by financially strapped taxpayers: $165 million in bonuses paid out at bailed-out AIG.

Republicans, struggling to regain their political footing, are content to let Democrats try to dig their way out of this mess on their own.

Professing shock at the bonus payments, Democrats have embarked on a hurry-up effort to impose what amounts to confiscatory taxes on the bonuses, a maneuver that almost surely will be tested in the courts.

Treasury Secretary Timothy Geithner enjoys President Barack Obama's confidence, according to the White House.

But the mood is less charitable among congressional Democrats.

Republicans have made Geithner their top target, not surprising given Obama's continued high approval ratings.

"It's shocking that they would — the administration would come to us now and act surprised about these contracts," said Sen. Mitch McConnell, R-Ky., the Senate GOP leader.

"This administration could have and should have ... prevented this from happening."

"They had a lot of leverage two weeks ago."

That would be when the Treasury Department decided to make an additional $30 billion available to American International Group Inc., the huge insurance conglomerate deemed too big to fail by two administrations.

Which goes to the crux of the Democrats' current political problem.

Gone are the days when they could merely bludgeon the Bush administration and promise to seek bipartisan solutions to the nation's economic problems.

Now, in control of the White House and Congress, they are struggling to come up with an explanation for what no one in either party seems moved to defend.

Senate Majority Leader Harry Reid, D-Nev., said AIG stands as a symbol of "greed and perhaps corruption."

Sen. Max Baucus, D-Mont., scoffed at AIG's claim that the money represents retention pay.

"There are enough bright people in this country that would do the job for an honest salary, and enough honest taxpayers demanding that we put an end to this stuff."

"You can bet I'll make sure justice is served," he said.

But the bonus payments occurred on the Democrats' watch, and for Republicans, AIG seems politically providential.

Their overwhelming opposition to last month's stimulus bill appeared to be gaining little traction as Democrats showcase every shovelful of dirt that is turned — all in the name of economic recovery.

Criticism that Obama and Democrats are embarking on a new era of tax-and-spend is undercut by the lack of a budget alternative from Republicans — the party that presided over a historic run-up in the federal debt earlier this decade when it controlled both the White House and Congress.

Less than 100 days into the Obama administration, polls have brought little good news to Republicans.

While a recent Pew survey found some slippage in Obama's support, it also registered only 28 percent approval for the job being done by GOP congressional leaders, the lowest in nearly 14 years.

And a separate survey by CNN and Opinion research Corp. put support for the president's handling of the economy at nearly 60 percent.

Against this backdrop, White House press secretary Robert Gibbs sought to explain AIG.

He told reporters that Geithner "last week engaged with the CEO of AIG to communicate what we thought were outrageous and unacceptable bonuses," and "received a commitment to lessen some of the bonuses for senior executives ...."

Asked directly Obama is satisfied that he found out about the bonuses in a timely fashion, Gibbs said:

"Yes, the president is satisfied."

The president "has complete confidence" in his Treasury secretary, Gibbs added, although Geithner's early tenure has been anything but smooth.

The Cabinet official's introduction of a new plan to bail out the financial industry was widely panned, and his confirmation was held up earlier when it was disclosed he had paid $34,000 in back taxes.

Obama himself has been vocal on the need to do everything possible to recoup the money paid out in bonuses, and so far, no Democrats in Congress have tried to hold him to account.

But the Treasury Department isn't immune, even from Democrats.

"I'm outraged by this," said Baucus in a statement.

"At one point the Treasury was in a position to stop these bonuses."

"Those were the terms of TARP, terms that I helped draft."

But talk of legislation only leads to more uncomfortable questions for Democrats.

Sen. Olympia Snowe, R-Maine, and Ron Wyden, D-Ore., won passage of a provision earlier this year that they said would have prevented the type of payments now at the center of a storm.

It was dropped without explanation in the final compromise on the economic stimulus measure, replaced by a less restrictive set of conditions backed by Sen. Christopher Dodd, D-Conn., and accepted by the White House.

"The president goes out and says this is not acceptable and then some backroom deal gets cut to let these things get paid out anyway," said Wyden.
_____

EDITOR'S NOTE: David Espo is AP's chief congressional correspondent.

"Attorney general signals shift in marijuana policy"

By DEVLIN BARRETT

Thu Mar 19, 12:41 am ET

WASHINGTON – Attorney General Eric Holder signaled a change on medical marijuana policy Wednesday, saying federal agents will target marijuana distributors only when they violate both federal and state law.

That would be a departure from the policy of the Bush administration, which targeted medical marijuana dispensaries in California even if they complied with that state's law.

"The policy is to go after those people who violate both federal and state law," Holder said in a question-and-answer session with reporters at the Justice Department.

Medical marijuana advocates in California welcomed the news, but said they still worried about the pending cases of those already in court on drug charges.

California law permits the sale of marijuana for medical purposes, though it still is against federal law.

Holder did not spell out exactly who no longer would face the prospect of raids by the Drug Enforcement Administration.

But he was quick to add that law enforcement officers will target anyone who tries to "use medical marijuana laws as a shield" for other illegal activity.

"Given the limited resources that we have, our focus will be on people, organizations that are growing, cultivating substantial amounts of marijuana and doing so in a way that's inconsistent with federal and state law," the attorney general said.

Advocates and government officials had been waiting since President Barack Obama was sworn into office for a clear signal on what the new president's drug policy would be toward medical marijuana.

As a candidate, he repeatedly promised a change in policy in situations in which state laws allow the use of medical marijuana.

Yet shortly after Obama took office, DEA agents raided four dispensaries in Los Angeles, prompting confusion about the government's plans.

Thirteen states have laws permitting medicinal use of marijuana.

California is unique among them for the presence of dispensaries, which are businesses that sell marijuana and even advertise their services.

Legal under California law, such dispensaries are still illegal under federal law.

Kris Hermes, a spokesman for national medical marijuana advocacy group Americans for Safe Access, said he welcomed Holder's perspective.

"It signals a new direction and a more reasonable and sensible direction on medical marijuana policy," he said.

Still, Hermes said his Oakland-based organization was concerned about the fate of more than two dozen California medical marijuana cases currently pending in federal court.

"There remains a big question as to what the federal government's position is on those cases," Hermes said.

He pointed specifically to the case of Charles Lynch, who was federally convicted for running a medical marijuana dispensary collective in San Luis Obispo County last year.

Hermes said Lynch could face decades in prison when he is sentenced Monday even though his clinic had been compliant with state law.

According to the government's sentencing recommendation for Lynch, which says the five-year mandatory minimum prison term is an appropriate one, Lynch had violated California state law because his "operation was rife with activities having more to do with business and casual drug distribution than anything medical."

U.S. attorney's office spokesman Thom Mrozek declined to comment on what would happen to the outstanding marijuana cases in the Los Angeles area.

The 13 states that permit medical use of marijuana are Alaska, California, Colorado, Hawaii, Maine, Michigan, Montana, Nevada, New Mexico, Oregon, Rhode Island, Vermont and Washington.
___

Associated Press writer Thomas Watkins in Los Angeles contributed to this report.

"Obama guarantees that the econony will recover - Obama guarantees Americans that the nation's economy will recover, but asks for patience"

By CHARLES BABINGTON, Associated Press

Last updated: 7:05 p.m., Thursday, March 19, 2009

LOS ANGELES -- Buoyed by adoring crowds far from Washington's political wars, President Barack Obama guaranteed Americans on Thursday that the nation's economy will recover, though he asked them for patience.

Obama looked every bit the campaigner as he sometimes mocked his GOP critics, and sometimes asked people to forgive his shortcomings.

In general, his demeanor and message were more upbeat than in recent days when public fury over executive bonuses dominated Congress.

"We will come out on the other side stronger and a more prosperous nation," he said, acknowledging the nation's economic crisis.

"That I can guarantee you."

"I can't tell you how long it will take, what obstacles we'll face along the way, but I promise you this: There will be brighter days ahead."

The comments brought another roar of approval from about 1,000 people at a town hall forum in Los Angeles, where questions were more fawning than pressing.

"I'm very glad and thankful that you are our president," the first questioner began.

The second said, "thank God for you."

In his second California town hall in as many days, Obama asked Americans to back his plans to overhaul health care, change energy policies, and spend more on roads, education and many other areas to boost the stalled economy.

The resulting large deficits will be temporary and justified, he said.

He told Americans not to expect "something for nothing" from their government.

Improvements to the economy and medical care will take time, he said.

"Nothing is free," the president said.

Responding to a woman's complaint about cuts in jobs and salaries for California teachers, Obama urged people not to ask the federal and state governments to cut taxes and improve services at the same time.

"At some point you've got to make some choices," he said.

"We are not always going to be right," he said.

"And I don't want everybody disappointed if we make a mistake here or there."

The important questions, he said, are whether things are moving "in the right direction" and whether he is keeping his main campaign promises.

Obama mocked Republican officials who call his plans too costly even though they presided over huge deficits while they controlled Congress and the White House.

"Where have you been?" he said.

"What have you been doing?"

Obama also announced fresh aid to struggling homeowners in California.

He said the state would receive $145 million to help communities hardest hit by the home foreclosure crisis.

He said the money would be used to buy up and rehabilitate vacant homes, and provide loans to poorer and middle-income families to help with home assistance.

He announced a new Web site to help people around the nation: http://www.makinghomeaffordable.gov/.

California's GOP governor, Arnold Schwarzenegger, gave the president a far warmer greeting than Obama has received from Republicans in Congress.

"It's great to have him here," Schwarzenegger said in introducing Obama to the crowd.

He thanked Obama for "courageous leadership."

Obama called the governor "one of the great innovators of state government" and "an outstanding partner with our administration."

California Republican Party Chairman Ron Nehring, however, was not amused by Obama's plan to finish his visit with an appearance on Jay Leno's late-night show.

While the two "swap jokes," Nehring said in a statement, "hardworking California families continue to struggle to keep their homes and jobs."

------

Associated Press writer Mark S. Smith contributed to this report.

"Tim Geithner's Black Hole"

By David M. Smick

The Washington Post

Updated: Tuesday, March 10, 2009

Pity Barack Obama's economic advisers.

The blogs are now demanding their scalps, and Treasury Secretary Tim Geithner and his colleagues face a nasty dilemma: There are no solutions to the banking crisis without extraordinary political and financial risks.

Thus, they have adopted a three-pronged approach, delay, delay, delay, in the hope that somebody comes up with a breakthrough.

Here's the problem: Today's true market value of the U.S. banks' toxic assets (that ugly stuff that needs to be removed from bank balance sheets before the economy can recover) amounts to between 5 and 30 cents on the dollar.

To remain solvent, however, the banks say they need a valuation of 50 to 60 cents on the dollar.

Translation: as much as another $2 trillion taxpayer bailout.

That kind of expensive solution could send the president's approval rating into a nose dive.

Consider: $2 trillion is about two-thirds of the tax revenue the federal government collects each year.

The logical alternative -- talk show hosts' solution du jour -- is to temporarily restructure or nationalize the banks and leave taxpayers alone.

Remove the toxic assets, replace management and cut the too-big-to-fail financial dinosaurs into smaller, nimbler entities.

Then reprivatize these smaller banks and let the recovery begin.

Oh, if it were that simple.

I suspect Obama's advisers would like nothing more than to dismantle an irresponsible firm such as Citigroup.

They are afraid to do so, for one reason: All the big banks are connected to a potentially lethal web of paper insurance instruments called credit default swaps.

These paper derivatives have become our financial system's new master.

The theory holds that dismantling a big bank could unravel this paper market, with catastrophic global financial consequences.

Or not.

Nobody knows, because the market for these unregulated financial derivatives, amounting potentially to over $40 trillion (by comparison, global gross domestic product is now not much more than $60 trillion), is the financial equivalent of uncharted waters.

Geithner has reason to be terrified.

He was part of the Henry Paulson-led team that underestimated the devastating global-contagion effect of the collapse of Lehman Brothers.

Geithner won't make the mistake of underestimation again.

Geithner also knows that the mood in Congress has changed.

Were a global financial brush fire to break out as a result of bank restructuring or nationalization, today's populist Congress might just let it burn.

Congressional anger is likely to intensify when policymakers realize that credit default swaps demand a stream of premium payments like a life insurance policy, not just a payment due at termination.

And recent signs indicate that firms such as Citigroup, in recycling their taxpayer bailout funding, may have helped other financial firms, including some in Europe, meet these payment obligations.

In addition, Geithner worries that because the troubled insurance giant American International Group (AIG) is a conduit for the banks' use of credit default swaps, a collapse of AIG (as an unintended consequence of dismantling the big banks) could be catastrophic.

AIG's more than 300 million terrified holders of insurance-related investments and pension funds, who have investments totaling $20 trillion (U.S. GDP is $14 trillion), could suddenly rush for redemptions -- the equivalent of a run on a bank.

Geithner would face a worldwide insurance collapse to accompany his global banking collapse.

Or again, maybe not.

Nobody knows.

Here's another likely Geithner fear -- that Congress forces the banks' bondholders to take a hit.

So far, only stockholders have lost out because of the banking crisis.

One reason for the fragility in the credit default swap market of late is that markets fear that bank bondholders, who today are protected even before U.S. taxpayers, could soon see their status change.

The worry is that if even bondholders are put at risk, U.S. and foreign investors alike would stop financing all corporate America.

The administration says that won't happen, but market participants believe (probably correctly) that this White House can't control Congress.

So our Treasury secretary has no choice but to talk of bank stress-testing and other tactics to buy time before the big bank bailout.

Notice that the president's budget already contains a contingency fund of up to $750 billion for a future bank bailout -- a politically shrewd number that roughly matches the size of the Paulson bailout.

The true cost is likely to be two or three times as much, unless some last-minute intellectual breakthrough -- a tax holiday for derivatives? -- arises.

The Obama team needs to remember that we got into this mess because of a lack of financial transparency.

It's time to tell the American people what the stock market already knows: that the path to recovery will probably be expensive and politically unpopular, perhaps explosively so.

This dire situation could take us all down, which is why Obama should name a proven, world-class problem-solver who is not from Wall Street as his bank workout czar.

James Baker, the former Republican secretary of state and Treasury secretary, comes to mind.

Other possibilities: former Democratic senators Bill Bradley or George Mitchell.

Perhaps the White House should name a team.

In the end, at least one thing is certain: Our present position is unsustainable.

The longer we delay fixing the banks, the faster the economy deleverages, the more credit dries up, the further the stock market falls, the higher the ultimate bank bailout price tag for the American taxpayer, and the more we risk falling into a financial black hole from which escape could take decades.

David M. Smick is a global financial strategist and the author, most recently, of "The World Is Curved: Hidden Dangers to the Global Economy."

"$1 trillion deficits seen for next 10 years"

By ANDREW TAYLOR, Associated Press Writer

20 MARCH 2009

WASHINGTON – President Barack Obama's budget would generate deficits averaging almost $1 trillion a year over the next decade, according to the latest congressional estimates, significantly worse than predicted by the White House just last month.

The Congressional Budget Office figures, obtained by The Associated Press Friday, predict Obama's budget will produce $9.3 trillion worth of red ink over 2010-2019.

That's $2.3 trillion worse than the White House predicted in its budget.

Worst of all, CBO says the deficit under Obama's policies would never go below 4 percent of the size of the economy, figures that economists agree are unsustainable.

By the end of the decade, the deficit would exceed 5 percent of gross domestic product, a dangerously high level.

The latest figures, even worse than expected by top Democrats, throw a major monkey wrench into efforts to enact Obama's budget, which promises universal health care for all and higher spending for domestic programs like education and research into renewable energy.

The dismal deficit figures, if they prove to be accurate, inevitably raise the prospect that Obama and his allies controlling Congress would have to consider raising taxes after the recession ends or paring back his agenda.

But without referencing the figures, Obama insisted on Friday that his agenda is still on track.

"What we will not cut are investments that will lead to real growth and prosperity over the long term," Obama said.

"That's why our budget makes a historic commitment to comprehensive health care reform."

"That's why it enhances America's competitiveness by reducing our dependence on foreign oil and building a clean energy economy."

Many Democrats were already uncomfortable with Obama's budget, which promises to cut the deficit to $533 billion in five years.

The CBO says the red ink for that year will total $672 billion.

The worsening economy is responsible for the even deeper fiscal mess inherited by Obama.

As an illustration, CBO says that the deficit for the current budget year, which began Oct. 1, will top $1.8 trillion, $93 billion more than foreseen by the White House.

The 2009 deficit, fueled by the $700 billion Wall Street bailout and diving tax revenues stemming from the worsening recession, is four times the previous $459 billion record set just last year.

The CBO's estimate for 2010 is worse as well, with a deficit of almost $1.4 trillion expected under administration policies, about $200 billion more than predicted by Obama.

By the end of the decade, the deficit under Obama's blueprint would go back up to $1.2 trillion.

Long-term deficit predictions have proven notoriously fickle — George W. Bush inherited flawed projections of a 10-year, $5.6 trillion surplus and instead produced record deficits — and if the economy outperforms CBO's expectations, the deficits could prove significantly smaller

Democrats in Congress are readying Obama's budget for preliminary votes next week, and they promise to cut the deficit in half within five years.

Democrats are likely to curb somewhat Obama's request for a 9 percent increase in non-defense agency budgets.

Obama's $3.6 trillion budget for the 2010 fiscal year beginning Oct. 1 contains ambitious programs to overhaul the U.S. health care system and initiate new "cap-and-trade" rules to combat global warming.

Both initiatives involve raising federal revenues sharply higher, but those dollars wouldn't be used to defray the burgeoning deficit.

Republicans say Obama's budget plan taxes, spends and borrows too much, and they've been sharply critical of his $787 billion economic stimulus measure and a just-passed $410 billion omnibus spending bill that awarded big increases to domestic agency budgets.

The administration says it inherited deficits totaling $9 trillion over the next decade and that its budget plan cuts $2 trillion from those deficits.

But most of those spending reductions come from reducing costs for the war in Iraq.

"FACT CHECK: Obama's gas-mileage claim sputters - President Obama's claim for the Model T Ford runs out of gas"

By KEN THOMAS, Associated Press

Last updated: 5:55 p.m., Friday, March 20, 2009

WASHINGTON -- What's more fuel-efficient, a Ford Model T or a modern-day sport utility vehicle?

President Barack Obama says the Model T, but his comparison is a stretch.

Obama, touring a California electric car plant on Thursday, said, "The 1908 Model T -- think about this -- the 1908 Model T earned better gas mileage than the typical SUV in 2008."

"Think about that: 100 years later, and we're getting worse gas mileage, not better, on SUVs," Obama said.

Ford's own Web site says the Model T's mileage ranged from 13 to 21 miles per gallon.

Some Tin Lizzie enthusiasts who still drive the vehicles report numbers closer to the bottom end of that range.

A typical SUV sold in 2008 gets 18.7 miles per gallon.

But even comparing vehicles that are so different is misleading, say auto industry officials and fans of Henry Ford's pioneering car.

The 1909 Model T -- which debuted in September 1908 -- weighed 1,200 pounds.

A 1909 Model T ad told consumers it could reach 40 to 50 miles per hour on its 4-cylinder, 20-horsepower engine.

It had a 10-gallon gasoline tank with an advertised range of 200 to 225 miles carrying four passengers.

By contrast, a typical SUV sold in 2008 weighs about 4,600 lbs and carries equipment not dreamed of 100 years ago: emission controls, safety equipment like air bags, antilock brakes and an aerodynamic body.

Model Ts featured hand-crank starters and tail lamps fueled by kerosene.

"It's not a comparison that holds up well today," said Ford spokeswoman Jennifer Moore.

Moore said that by comparison, a 2009 Ford Escape achieves 20 mpg in the city and 28 mpg on the highway while providing 200 horsepower, a tenfold improvement over the Model T.

Obama's line echoed a 2003 advertisement from the Sierra Club which was published around Ford Motor Co.'s 100th anniversary.

The ad compared the fuel efficiencies of a Model T and a Ford Explorer and urged the Dearborn, Mich., company to "use existing technology to make cleaner cars that go farther on a gallon of gas."

"The point is that the average Ford today does not compare favorably to the Model T's fuel economy," said Dan Becker, a former director of the Sierra Club's Global Warming and Energy Program.

Many Model T enthusiasts report varying gas mileage levels -- from 10 mpg to 25 mpg -- and note that dirt roads commonly found in the early 20th century would have reduced the fuel efficiency.

Tom Miles, of Albuquerque, N.M., the vice president of the Model T Ford Club of America, says he typically gets 12 mpg on his 1926 Model T Touring car and the fuel efficiency suffers when he drives uphill.

When he heard Obama make the comparison, he thought, "Well, yeah, but you've got to look at all the other things modern cars do."

Jay Klehfoth, chief executive officer of the Centerville, Ind.-based Model T Ford Club of America, said he averages about 25 mpg on his four Model Ts.

But with an array of modern regulations, he noted, "You couldn't build a Model T today because the government wouldn't let you put it on the road."

"Obama makes pitch for budget priorities"

By LOLITA C. BALDOR, Associated Press Writer

21 MARCH 2009

WASHINGTON – President Barack Obama says that while the details may change, any budget passed by Congress must cut the deficit, reform health care, invest in education and reduce U.S. dependence on foreign oil.

After a week dominated by outrage over enormous corporate bonuses at bailed-out companies, Obama used his weekly radio and Internet address to turn the focus back on his budget proposal and getting it through Congress.

But even as he outlined his four key requirements for a spending plan that would top $3.6 trillion, there was growing unease on Capitol Hill over a budget that congressional auditors say will generate $9.3 trillion in red ink over the next decade.

"I realize there are those who say these plans are too ambitious to enact," Obama said.

"To that I say that the challenges we face are too large to ignore."

"I didn't come here to pass on our problems to the next president or the next generation — I came here to solve them."

Republicans, however, slammed Obama's budget as a breathtaking spending spree.

As states and families are struggling to cut spending, the president's budget "spends too much, taxes too much and borrows too much," said Gov. Haley Barbour of Mississippi, in the weekly Republican address.

Obama spent two days in California this week taking his sales pitch directly to the people.

The campaign took him from town-hall meetings to Jay Leno's "The Tonight Show" set in an effort to garner support for a budget that will pay for his key priorities.

At the same time, he is promising to cut the deficit in half by the end of his four-year term.

His message, however, was drowned out for much of the week by revelations that American International Group Inc. paid out $165 million in bonuses to employees, including to traders in the financial unit that nearly caused the insurance giant's collapse.

The public outrage was followed by congressional efforts to impose punitive taxes on those payouts.

In his Saturday message, Obama contended that ordinary Americans are more concerned about having a paycheck and being able to pay their college or medical bills more than they are about "the news of the day in Washington."

And those are the concerns, he said, that he addresses in his budget, calling it an economic blueprint for the future.

It is, he said, "a vision of America where growth is not based on real estate bubbles or over-leveraged banks, but on a firm foundation of investments in energy, education and health care that will lead to a real and lasting prosperity."

With a nod to Capitol Hill, he said the specific dollar amounts in his budget plan will likely change, but in the end his four priorities must be met.

Those are plans to boost investments in clean energy technologies, including wind and solar power; increased funding for childhood education programs, affordable college costs and higher standards for schools; health care reform that will lower costs, including Medicare and Medicaid; and a scrutiny on domestic spending that will lead to cuts in the deficit.

"The American people sent us here to get things done, and at this moment of great challenge, they are watching and waiting for us to lead," Obama said.

"Let's show them that we are equal to the task before us."
___

On the Net:

Obama address: http://www.whitehouse.gov

"Obama nudges Congress to empower regulatory units - Obama presses Congress to enact bill giving government broader non-bank regulatory powers"

By JENNIFER LOVEN, Associated Press

Last updated: 12:55 p.m., Tuesday, March 24, 2009

WASHINGTON -- President Barack Obama says he hopes "it doesn't take too long" to convince Congress to approve new authority to oversee financial firms.

The administration is pushing the idea of an overarching regulator, such as the Federal Reserve, to have the ability to take over nonbank financial entities whose failure could topple the entire financial system.

Obama spoke to reporters about the matter in the Oval Office Tuesday after meeting with visiting Australian Prime Minister Kevin Rudd.

Obama heads to London next week for a meeting on the global crisis with the leaders of the Group of 20 major world economies.

"Obama seeks filter-free news"

Jonathan Martin

Tue Mar 24, 4:24 am ET

At a time when his Washington honeymoon is turning into a hazing, President Barack Obama and his team are launched on a strategy to sail above the traditional White House press corps by reaching out to liberal commentators, local reporters and ethnic media.

The highest-profile moments in the new approach have been well-noted, such as the president giving an interview to progressive radio host Ed Schultz and Obama calling on a reporter from the liberal-leaning Huffington Post at his first news conference.

But those moves are only part of a much larger strategy aimed at communicating directly with audiences the White House believes are more sympathetic to the president’s agenda — and one in which much of the work is being done by Obama’s top advisers.

On the day Obama released his ambitious spending plan, the administration put White House budget director Peter Orszag on a conference call with liberal-leaning writers.

Senior administration aides have followed up by promoting the budget to local radio talk shows during morning drive time.

Jared Bernstein, Vice President Joe Biden’s economic adviser and a favorite of the labor-liberal wing of the Democratic Party, also held a conference call with friendly reporters.

White House chief of staff Rahm Emanuel has done conference calls with black and Hispanic media outlets.

Obama himself plans to meet soon with liberal bloggers, according to an administration official.

With little fanfare, he’s already sat for interviews with Black Enterprise magazine, Telemundo and Los Angeles-based Hispanic radio host Eddie “Piolin” Sotelo.

In many ways, Obama’s effort is simply the latest expression of a familiar phenomenon.

It is the perennial hope of presidents — especially early in their administrations — that they can escape the filter of an often-skeptical Washington press corps and communicate directly with a target audience.

But Obama now has advantages not enjoyed by some of his predecessors, from Richard Nixon to Bill Clinton and George W. Bush, who were most scornful of the motives of Washington reporters.

Obama can exploit the fact that the traditional newspapers and networks are weakened by competition from cable and the Web, and by a faltering business model.

What’s more, the proliferation of outlets has been embraced in recent years by a newly energized liberal base — eager to match the decades-old success of conservatives in building media channels to circumvent what they see as a biased or trivia-minded Washington press corps.

Obama has a special stake in encouraging this movement.

The campaign that vaulted him to power began mostly outside his party’s Washington establishment and was based heavily on the strength of his personality and promises to change the capital’s culture.

At his first news conference, for instance, his aides seated Schultz in the front row and called on reporter Sam Stein from The Huffington Post.

Unlike some of his predecessors, however, Obama and his aides tend not to boast about their media strategy or publicly exalt in how they are confronting or marginalizing the traditional news media.

To the contrary, Obama has continued to engage aggressively with the establishment outlets.

The New York Times recently had an interview, and CBS News’ “60 Minutes” has conducted two long interviews with Obama since Election Day.

These sessions reflect Obama’s belief, according to aides, that in a fragmented media universe, presidents must communicate nearly constantly across an array of platforms, both traditional and new.

“You’ve got lots of people that aren’t cable junkies or news junkies,” White House press secretary Robert Gibbs said, explaining the thinking behind the tailored media strategy.

“This gives us the opportunity to reach a little bit different of a segment.”

Another top aide used a sports analogy for the comprehensive strategy: “Flood the zone.”

Other presidents have been more defiant toward the Washington media.

Nixon went to war with the establishment press and dispatched Vice President Spiro Agnew to issue flamboyant denunciations of the “nattering nabobs of negativism” and to sneer at “a small band of network commentators and self-appointed analysts” who dared to interpret White House news.

Clinton, appearing before a Washington media banquet in the first months of his presidency in 1993, explained why he could “stiff” the White House press corps.

“Because Larry King liberated me by giving me to the American people directly,” Clinton said in a lead-balloon moment that failed as humor, since it seemed obvious that he was not really joking.

Bush’s team did little to disguise its skepticism of the establishment media, which it regarded as hostile and out of touch.

Aides set the White House TV sets to Fox News, dispatched Vice President Dick Cheney to do regular interviews with radio hosts like Rush Limbaugh and Laura Ingraham and brought in niche outlets such as Runner’s World and Field & Stream for sit-downs with the president.

Obama has recognized that the potential of niche media goes far beyond political channels.

Last week, he brought ESPN to the White House Map Room to show off an oversized bracket with the president’s picks for the NCAA basketball tournament.

Yet it’s the ideologically oriented outlets that offer some of the best opportunities for pinpoint rifle shots.

The Schultz program, heard on more than 100 stations, is a good example.

Gibbs would only say that Obama was doing shows like Schultz’s because he’s “a good audience for us.”

But another source in the White House said that doing such a program allows the administration to stroke a friendly audience that doesn’t now hear from the president on a regular basis.

Further, in a sign of how much a White House can now target its message, it’s also not lost on Obama officials that the prairie populist Schultz has a major following in North Dakota — home state of Senate Budget Committee Chairman Kent Conrad, a Democrat who may need a push to get behind the president’s budget.

Dan Bartlett, Bush’s White House communications director, said that he and his counterparts in the Obama administration were simply following the path of their audience.

“The lagging role of the mainstream media has prompted people to seek information from a wide variety of outlets that are often now aligned with their personal interests,” he said.

That can mean hoops fanatics or duck hunters, but it also often now means political partisans.

“The president has to be careful to tend to his base,” said Dee Dee Myers, press secretary in Clinton’s first term.

“A lot of what he’s doing, like giving trillions to corporations, is not that popular on the left flank of the Democratic base."

"So going to places like Ed Schultz or engaging the Huffington Post or MoveOn is a way to say, ‘Look, we get it; we’re talking to a lot of the people who brung us.’”

Just as Obama acknowledged on Schultz’s show that people are “rightly concerned” with the amount of money being sent to Wall Street, Bush and his top advisers would often take their case to sympathetic outlets, including twice inviting conservative talk show hosts to broadcast from under tents on the White House lawn.

“If you’re trying to pass a piece of legislation like No Child Left Behind, you want conservatives to support it,” said former Bush White House press secretary Dana Perino.

Going on opinion shows “allows you to more discreetly mobilize people for certain causes,” said Bartlett.

“It’s like mainlining into a vein — you’re getting the drugs where they need to go,” he said.

Adds Perino: “If they saw you on Rachel Maddow, maybe they’ll pick up the phone the next day and call their member of Congress and urge them to get behind health care, for example.”

The around-the-filter strategy began under Nixon, notes Martha Joynt Kumar, a Towson University political science professor and expert on presidential communications.

“Nixon created the Office of Communications, and they would send out copies of the president’s speeches directly to various groups,” Kumar said, referring to what is now the media affairs office.

The idea then, as now, was to reach certain groups directly and without the interpretation of an at times cynical Washington press corps.

The difference is that 40 years after Nixon, there are far more avenues to avoid the capital’s often insular media.

But Kumar, who has been attending White House events since 1975 for her research, said presidents still can’t avoid the reporters who cover him day in and day out.

Clinton may have boasted at the start of his term about the irrelevance of the capital’s media, but he eventually found out the power they still enjoyed.

“It was the Washington press corps that nailed him on Lewinsky,” noted Kumar.

IMAGINE THAT

Obama has a 70% favorable rating with the people

and he wants THE PEOPLE TO HEAR IT DIRECTLY FROM HIM as opposed to the rightwing media lying like they have the last 8 years

"EU presidency: US stimulus is 'the road to hell' - EU president calls Obama's plans to spend his way out of recession 'the road to hell'"

By AOIFE WHITE, Associated Press

Last updated: 3:45 p.m., Wednesday, March 25, 2009

BRUSSELS -- The head of the European Union slammed President Barack Obama's plan to spend nearly $2 trillion to push the U.S. economy out of recession as "the road to hell" that EU governments must avoid.

The blunt comments by Czech Prime Minister Mirek Topolanek to the European Parliament on Wednesday highlighted simmering European differences with Washington ahead of a key summit next week on fixing the world economy.

It was the strongest pushback yet from a European leader as the 27-nation bloc bristles from U.S. criticism that it is not spending enough to stimulate demand.

Shocked by the outburst, other European politicians went into damage control mode, with some reproaching the Czech leader for his language and others reaffirming their good diplomatic ties with the United States.

The leaders of EU's major nations -- France, Britain and Germany, among others -- largely ignored Topolanek and his remarks.

Obama pays his first official visit to Europe next week, aiming to thrash out reforms to the global financial system with the Group of 20 nations and call on NATO allies to commit more troops to the U.S. war in Afghanistan.

Europeans leaders hope the new U.S. administration will agree with them on tightening oversight over the global financial system -- which they see as crucial to fixing the global economy.

Instead, the United States is focusing its efforts on economic stimulus and plans to spend heavily to try and lift itself out of recession with a $787 billion plan of tax rebates, health and welfare benefits, as well as extra energy and infrastructure spending.

To encourage banks to lend again, the U.S. government will also pump $1 trillion into the financial system by buying up treasury bonds and mortgage securities in an effort to clear some of the "toxic assets" -- devalued and untradeable assets -- from banks' balance sheets.

Obama insisted Tuesday that his massive budget proposal will put the ailing U.S. economy back on its feet.

"This budget is inseparable from this recovery," he said, "because it is what lays the foundation for a secure and lasting prosperity."

But Topolanek took aim at Washington's deficit spending.

"All of these steps, these combinations and permanency is the road to hell," Topolanek said.

"We need to read the history books and the lessons of history and the biggest success of the (EU) is the refusal to go this way."

"Americans will need liquidity to finance all their measures and they will balance this with the sale of their bonds but this will undermine the liquidity of the global financial market," Topolanek said.

Topolanek spoke the day after he was ousted by his own parliament.

The Czech Republic currently holds the six-month rotating EU presidency but its leadership is in question, with Topolanek hanging on to a caretaker government at home after losing a "no confidence" Tuesday.

In Washington, State Department spokesman Gordon Duguid said he did not expect the Czech poltical turmoil to affect Obama's upcoming trip to Prague because the president was traveling to attend an EU event.

Analyst Nicolas Veron, a research fellow at the Bruegel think tank, said Topolanek's view is not widely shared by EU leaders.

"I don't think the damage can be as large as the very strong wording of this would lead one to think," he said.

"Many people have doubts about the U.S. plan but what he said is much stronger."

Veron said European leaders worry that the U.S. plan may not work or could cost taxpayers heavily -- but he did not doubt the U.S.' "fiscal robustness" or that it still had extra room to maneuver to stoke economic growth.

Martin Schulz, leader of the Socialist group in the European parliament, immediately chided Topolanek, saying his comments were "not the level on which the EU ought to be operating with the United States."

"You have not understood what the task of the EU presidency is," he told the Czech premier.

EU Commission President Jose Manuel Barroso also said it was "not helpful ... to try to suggest that Americans and Europeans are coming with very different approaches to the crisis."

"On the contrary, what we are seeing is increased convergence," he told the parliament.

But Europe's resistance to the U.S. call for new stimulus measures is starting to weaken despite Germany's fierce opposition to any new spending program this year.

French President Nicolas Sarkozy said Tuesday he is prepared to support the economy with a new spending package.

EU officials say they can't rule anything out -- even an EU-wide stimulus that could help nations like Ireland and Spain, which can't afford any extra stimulus.

British Prime Minister Gordon Brown has also supported U.S. calls to ramp up fiscal stimulus -- government spending and tax cuts -- although the Bank of England has warned that Britain's swelling public deficit may make it unable to afford new spending.

------

Associated Press writers Raf Casert in Strasbourg, France, Jane Wardell in London and Desmond Butler in Washington contributed to this report.

Which section of Queens was that, anyway, graham?

I had heard it was Kew Gardens ....

And so ...

"Stimulus, bailout will lead to more fraud: FBI"

By Andy Sullivan

25 MARCH 2009

WASHINGTON (Reuters) – The FBI is bracing for a wave of fraud and corruption cases stemming from the government's multitrillion-dollar effort to get the economy moving again, the agency's chief told Congress on Wednesday.

The expected surge in economic crimes will place further strain on an agency already stretched thin as it investigates mortgage fraud, terrorism and corrupt politicians, FBI Director Robert Mueller said.

"Our expectation is that economic crimes will continue to skyrocket," Mueller said.

After the September 11, 2001 hijacking attacks, the FBI moved more than 2,000 investigators out of its criminal division to place greater emphasis on national security.

But that reduced the agency's ability to cope with a subsequent explosion in corruption, fraud and gang-related cases, Mueller said.

Over the past three years the FBI has more than doubled the number of agents investigating mortgage fraud to 254 to keep up with its doubled caseload, he said.

Bank data suggest that the pace will continue to increase.

Public corruption cases have increased by more than half since 2003 to 2,500 pending investigations, he said.

Gang-related cases have doubled since 2001 as the agency has had to cope with the emergence of international criminal groups like MS-13 and Mexican drug-smuggling cartels.

The agency's caseload will only increase as federal dollars flow from the $787 billion economic stimulus package and several bank bailouts, he said.

"The unprecedented level of financial resources committed by the federal government to combat the economic downturn will lead to an inevitable increase in economic crime and public corruption cases," Mueller said.

Mueller noted that the FBI had more than 1,000 agents to cope with the last financial crisis, the savings-and-loan debacle of the late 1980s and early 1990s, roughly double the number it has now for economic crimes.

The agency has stepped up its recruiting efforts this year, Muller said, but was set back when the House of Representatives cut out a provision of the stimulus package that would have paid for 165 new FBI agents.

Senate Judiciary Chairman Patrick Leahy said the Senate is expected to take up legislation in April that would give $245 million a year to the FBI and other law enforcement agencies to fight financial fraud.

Mueller said the FBI was working with a number of U.S. attorneys and the Justice Department for what he called fast-track prosecutions in a number of areas.

"We're prioritizing our cases to hit the most egregious early and put those persons away," he said.

(Editing by Cynthia Osterman)

"Obama to critics: I'll bend, but not break"

By CHARLES BABINGTON, Associated Press Writer

24 MARCH 2009

WASHINGTON – With Congress pushing back against his proposals for energy, taxes and other matters, President Barack Obama is taking a bend-but-don't-break posture.

He will compromise on certain details if he must, he signaled at his news conference Tuesday evening, but not on the heart of his key initiatives.

His strategic retreats are a nod to political reality.

He is angling to avoid confrontations he probably can't win, but to sacrifice no more than is absolutely necessary.

On energy, for instance, influential Democratic lawmakers have joined Republicans in opposing Obama's bid to reduce greenhouse gases through a program that would let companies buy and sell a limited number of permits to pollute.

"When it comes to cap and trade," the president said, using the proposal's nickname, "the broader principle is that we've got to move to a new energy era."

"And that means moving away from polluting energy sources towards cleaner energy sources."

"I think cap and trade is the best way," Obama said, but he stopped well short of insisting on it.

He did not retreat on contentious issues on which he holds the upper hand.

Lifting a federal ban on embryonic stem cell research, he said, was the "right thing to do" despite criticisms from various quarters.

Asked why he hasn't asked Americans to do more to weather the economic crisis, he said, "I think folks are sacrificing left and right."

Obama was less certain and dismissive on topics in which he faces potentially bruising battles with Congress.

For example, he minimized a Senate leader's proposal to end Obama's signature tax cut for most working families after 2010.

"When it comes to the middle-class tax cut," the president said, "we know that that's going to be in place for at least the next two years."

"If Congress has better ideas in terms of how to pay for it, then we're happy to listen," he said.

Obama said the main thrust of his massive budget proposal is moving the nation in the right direction to turn around the ailing economy.

"This budget is inseparable from this recovery," he said, "because it is what lays the foundation for a secure and lasting prosperity."

He said he expects "serious efforts at health care reform," but not lawmakers' approval of every proposal in his $3.6 trillion budget.

"We never expected, when we printed out our budget, that they would simply Xerox it and vote on it," he said.

Obama used the 55-minute news conference's last question, on Middle East peace efforts, to summarize his strategy of pressing his main goals while letting critics nibble at the margins if they must.

"When it comes to domestic affairs," he said, "if we keep on working at it, if we acknowledge that we make mistakes sometimes, and that we don't always have the right answer, and we're inheriting very knotty problems, that we can pass health care, we can find better solutions to our energy challenges, we can teach our children more effectively, we can deal with a very real budget crisis that is not fully dealt with in my — in my budget at this point, but makes progress."

The closest he came to smugness was in noting that once-fierce criticism of Treasury Secretary Timothy Geithner has abated this week.

"It was just a few days ago or weeks ago where people were certain that Secretary Geithner couldn't deliver a plan," Obama said of proposals to bail out the financial sector.

"Today, the headlines all look like, 'Well, all right, there's a plan.'"

"And I'm sure there will be more criticism, and we'll have to make more adjustments, but we're moving in the right direction."

Obama's bend-not-break strategy will get a test Wednesday, when he travels to the Capitol to meet privately with Senate Democrats.

Some of them are his most troubling critics on energy, health care, taxes and spending.

"U.S. missiles hit NW Pakistan, rewards offered"

By Alamgir Bitani

26 MARCH 2009

PESHAWAR, Pakistan (Reuters) – Missiles believed to have been fired by a U.S. drone aircraft killed four people in Pakistan's North Waziristan region on Thursday, hours after a similar strike killed seven in neighboring South Waziristan.

The drone attacks coincided with the U.S. State Department posting $5 million rewards for information leading to the arrest or location of two al Qaeda allies based in Waziristan.

Two missiles struck a house near the town of Mir Ali in North Waziristan early on Thursday, killing four people, according to Pakistani intelligence officials in the area.

Hours earlier, missiles killed seven people, including four Arab militants in a strike that targeted two vehicles as they drove through the Makeen area of South Waziristan, a stronghold of Pakistani Taliban leader Baitullah Mehsud.

The United States, frustrated by an intensifying insurgency in Afghanistan getting support from the Pakistani side of the border, began launching more drone attacks last year.

It has carried out more than 30 since early 2008, killing about 300 people, including several mid-level al Qaeda members, according to a tally of reports from Pakistani officials, residents and militants.

Pakistan's civilian government, elected a year ago, and the army have complained the strikes are counterproductive and the civilian casualties they often leave have fueled support for militants.

President Barack Obama has ordered a review of the objectives and strategy for pacifying and stabilizing Afghanistan, but there has been no let up in the drone attacks under his administration.

The review, due to be presented to NATO partners meeting early next month, is expected to stress the need to eliminate militant havens in Pakistani tribal lands bordering Afghanistan.

In another development, a suspected suicide bomber killed 12 people at a restaurant frequented by militants opposed to Mehsud in South Waziristan's Jandola town on Thursday.

"The attack appears to be the result of rivalry between two militant groups," an intelligence official told Reuters by telephone from Jandola.

REPORTS OF PAKISTANI DOUBLE-DEALING

The U.S. State Department on Wednesday posted rewards for Mehsud and Sirajuddin Haqqani, a senior leader of the Haqqani militant faction, whose network is based in North Waziristan and the neighboring Afghan province of Khost.

Sirajuddin's father, Jalaluddin Haqqani, is a veteran Afghan mujahideen commander who forged a friendship with al Qaeda leader Osama bin Laden in the late 1980s when they were fighting the Soviet occupation of Afghanistan.

Pakistani officials and the CIA accused Mehsud of being behind the assassination of former prime minister Benazir Bhutto in December 2007.

Haqqani had taken credit for an assassination attempt on Afghan President Hamid Karzai in April last year, according to the State Department.

The Haqqani group was also believed to have been behind a suicide bombing that killed scores of people outside the Indian embassy in Kabul last July, and the New York Times reported at the time that U.S. intelligence had evidence the attackers were in contact with Pakistani agents.

The New York Times and Wall Street Journal reported on Thursday that U.S. officials believed Pakistani agents were supporting the Taliban and other militants in Afghanistan.

The Journal's report said U.S. and Pakistani intelligence officials were drawing up a new list of targets for unmanned drone strikes along the Pakistan-Afghanistan border.

The report said Pakistani officials wanted militants behind attacks inside Pakistan added to the target list.

Pakistani officials were not immediately available to comment on the latest reports.

(Additional reporting by Zeeshan Haider; Writing by Simon Cameron-Moore, Editing by Dean Yates)

"Administration unveils financial system overhaul"

By MARTIN CRUTSINGER, AP Economics Writer

26 MARCH 2009

WASHINGTON – The Obama administration on Thursday unveiled a sweeping overhaul of the financial system designed to impose greater regulation on major players like hedge funds.

Treasury Secretary Timothy Geithner told lawmakers that the changes are needed to fix the flaws exposed by the current financial crisis, the worst to hit the country in seven decades.

The goal is to repair a system that has proven "too unstable and fragile," he said.

"Over the past 18 months, we have faced the most severe global financial crisis in generations," Geithner said in testimony to the House Financial Services Committee.

"To address this will require comprehensive reform."

"Not modest repairs at the margin, but new rules of the game."

The administration's proposal, which will require congressional approval, would represent a major expansion of federal authority over the financial system.

Highlights of the plan include:

• Imposing tougher standards on financial institutions judged to be so big that their failure would represent a risk to the entire system.

• Extending federal regulations for the first time to all trading in financial derivatives, exotic financial instruments such as credit default swaps that were blamed for much of the damage in the meltdown.

• Requiring hedge funds and other private pools of capital, including private equity funds and venture capital funds, to register with the Securities and Exchange Commission if their assets exceed a certain size.

The threshold amount has yet to be determined.

• Creating a systemic risk regulator to monitor the biggest institutions.

Geithner did not designate where such authority should reside, but the administration is expected to support awarding this power to the Federal Reserve.

The plan also includes a measure that Geithner and Fed Chairman Ben Bernanke discussed before the committee on Tuesday to give the administration expanded powers to take over major nonbank financial institutions, such as insurance companies and hedge funds that were teetering on the brink of collapse.

That power was aimed at preventing a repeat of the problems surrounding insurance giant American International Group Inc., which sparked a furor last week when it was revealed the company had distributed $165 million in bonuses to employees of its financial products group.

The unit specialized in trading credit default swaps, the instruments that drove the company to near-collapse last fall.

"Let me be clear," Geithner told the committee.

"The days when a major insurance company could bet the house on credit default swaps with no one watching and no credible backing to protect the company or taxpayers must end."

The administration, pushing for quick action on its reform agenda, sent Congress a 61-page bill dealing with the expanded powers to seize control of nonbank institutions late Wednesday.

The House committee, chaired by Rep. Barney Frank, D-Mass., has indicated it could move on the measure as early as next week.

Frank said the overhaul should ensure the government has more options and can avoid repeating the unattractive choices it faced last fall of letting Lehman Brothers fail, which sent a shock wave to the entire financial system, and propping up AIG with billions of dollars.

"We are looking for an alternative method to avoid those polar extremes," he said.

While many Democratic lawmakers expressed support for Geithner's proposals, Republicans questioned whether the overhaul would give federal regulators too much power.

"Forgive me if I am a skeptic ... when I hear that if we only have a systemic regulator it will never happen again," Rep. Scott Garrett, R-N.J., told Geithner.

Sen. Charles Schumer, D-N.Y., a key member of the Senate Banking Committee, generally praised Geithner's proposal as a "good first outline" suggesting it will undergo extensive changes in Congress, including "some major consolidating and rearranging" of the government agencies that regulate the financial industry.

At a Senate Banking Committee hearing, SEC Chairman Mary Schapiro and key senators agreed it could be harmful for any one regulator to become too powerful.

"The devil is in the details," Schapiro said, adding she was concerned that "we don't create a monolithic entity" that would diminish the role of investor protection.

A "college of regulators," each overseeing different areas of potential risk according to their expertise, would be constructive in the new system, she suggested.

Such a regime would be relatively decentralized but more rational than the current patchwork system of financial authorities, which dates to the Civil War, supporters say.

Geithner's plan is silent on whether any consolidation of regulators is needed.

It provided only a broad outline on many of the initiatives, leaving many thorny details to be worked out in Congress.

Administration officials promised that the remaining issues would be hammered out in consultation with lawmakers with the goal of getting legislation approved as quickly as possible.

The proposal on credit default swaps and other derivatives would require the markets on which they are traded to be regulated for the first time, and for the buying and selling of these instruments to be conducted in ways that will foster greater oversight.

Credit default swaps, which trade in a $60 trillion global market without government oversight, are contracts to insure against the default of financial instruments like bonds and corporate debt.

They played a prominent role in the credit crisis that brought the downfall of investment banking giant Lehman Brothers Holdings Inc. last fall and nearly unraveled AIG, forcing the government to provide more than $180 billion in support.

Hedge funds, which hold an estimated $1.5 trillion in assets, operate mostly outside of government supervision.

As the market crisis deepened last fall, hedge fund selling was widely cited as one of the reasons for increased volatility that pounded stocks and bonds.

Hedge funds also suffered huge losses last year, notably from investments in securities tied to subprime mortgages.

The outline of the regulatory reform was unveiled a week before President Barack Obama is scheduled to meet for discussions among the Group of 20 major industrialized and developing countries in London to assess what needs to be done to deal with the global financial crisis.

While the administration is pushing other nations to follow the U.S. lead in putting together sizable economic stimulus programs to jump-start global growth, many in Europe are resisting those calls and arguing that the U.S. needs to do more to toughen financial regulations.

They believe the current troubles can be traced to lax regulation in the U.S. over such key areas as hedge funds and credit default swaps.

Requiring hedge funds to register would open their books to inspection by regulators.

The SEC sought that authority several years ago but was stymied by a federal appeals court in 2006.

Hedge funds have grown explosively in recent years while operating secretively.

They have lured an increasing number of ordinary investors, pension funds and university endowments — meaning millions of people now unwittingly invest in hedge funds indirectly.
___

AP Business Writers Marcy Gordon and Daniel Wagner contributed to this report.

FISCAL GIM-CRACKERY BY ANY OTHER NAME, INCLUDING "RECONCILIATION", IS STILL FISCAL GIM-CRACKERY ....

AND THE OBAMA-ITES ARE MASTERS AT THE TRADE OF FISCAL DECEPTION, HERE ...

AND THAT INCLUDES NANCY PELOSI ....

And so ...

"Obama's Budget Fight Starts with His Own Party"

By JAY NEWTON-SMALL / WASHINGTON

26 MARCH 2009

It's not exactly the can-do, uplifting kind of message that President Barack Obama or Congressional Democrats want to deliver to the voting public.

But in the face of soaring deficit projections and growing Republican and moderate Democratic opposition to the Administration's $3.6 trillion budget plan, it may just be the best they can do.

And so, when the President journeyed to Capitol Hill on Wednesday to rally his party's support for his agenda, he was seeking to make a counter-argument to the rising chorus to scale back his ambitious plans to reform health care, energy and education even as he tries to save the economy and cut the deficit.

"The real question is are we going to have a huge deficit with investment or a huge deficit without investment," said Senator Carl Levin, a Michigan Democrat, emerging from the meeting.

"Those are my words, not [Obama's], but I'm kind of summarizing what the argument is here."

"If you eliminated his investments you'd find the deficit would still be 80% or 90% of what it would be otherwise with his investment."

In other words, since Washington is going to rack up massive deficits, they may as well go all in and get some long-term bang for the buck.

Whether that kind or argument will convince fiscal conservatives and deficit hawks in Congress remains to be seen.

Obama's visit to the other end of Pennsylvania Avenue came as the House and the Senate Budget Committees each introduced their own versions of the budget bill, and less than a week after the Congressional Budget Office estimated that the 10-year shortfall would be $2.3 trillion greater than the White House's more rosy projections.

Both chambers delivered on their recent promises to make sizable cuts to Obama's budget resolution, which is more of a blueprint for future spending than any kind of binding legislation.

But the Administration put its best spin on the differences, arguing that Congress' offerings retained the commitment to the President's four "core principles" - universal health care, expanded education aid, renewable energy investments and regulation of greenhouse gases and provisions to halve the deficit in five years.

"Not only do [the House and Senate versions] embody the four key principles that the President has put forward for the budget, but they are 98 percent the same as the budget proposal the President sent up in February," White House Office of Management and Budget Director Peter Orszag told reporters on a conference call Wednesday morning.

"The resolutions may not be identical twins to what the President submitted, but they are certainly brothers that look an awful lot alike."

Still, even small differences can cause major rifts in any family, and the competing budgets suggest the challenges Obama's agenda faces.

Both the House and Senate, after all, removed Obama's $250 billion to $750 billion placeholder request for more bank bailout funds.

And they both slashed the Administration's proposed 10% increase in non-defense discretionary spending (for education, environment and health initatives, among other things) to 7% in the Senate to 7% and 9% in the House.

The Senate also stripped the President's signature middle class tax cuts, known as "Making Work to Pay," of $400 for individuals and $800 for families.

The Senate plan, crafted by Budget Committee Chairman Kent Conrad of North Dakota, also notably did not include any targeted funding to bankroll health care reform, as Obama's does with $634 billion over 10 years.

"When you lose $2.3 trillion, you have to cut things," said Conrad, whose plan has $160 billion less in discretionary spending over five years than the President's, with a target deficit of $508 billion in 2014.

To some degree, Congress scaled back Obama's budget by resorting to the same kinds of accounting gimmicks that the President had prided himself on avoiding, a fact that Republicans were quick to point out.

It dropped the long-term inclusion of the costly Alternative Minimum Tax fix - an annual must-pass bill to prevent the tax once intended for the super rich from hitting the Middle Class - and opted for a shorter time-line of just five years versus the 10-year budget the White House had crafted.

"Given the state of the economy, everyone agrees that it's very difficult to predict the next five years," said Senator Mark Pryor, an Arkansas Democrat, "let alone 10 years."

The House bill includes a controversial provision for so-called reconciliation - which would leave the door open to piggyback massive programs like universal health care on the budget in case they fail to make it through the regular legislative process.

House Democrats and the Administration support such a move specifically for health care - though, theoretically, the provision would allow for anything, including energy, to be pushed through the Senate with just a simple majority rather than a filibuster proof 60 votes.

Several moderate Democratic senators, including Senator Ben Nelson of Nebraska, have said that inclusion of reconciliation instructions in the final bill would be a deal breaker for them.

"Reconciliation is not where we'd like to start, but we are not willing to take it off the table," Orszag said.

Republicans latched on to the gap between Obama's budget request and the Democratic caucus's counteroffer as evidence that Obama's budget is "so far out of the mainstream" that even members of his own party won't support it, said Rep. Eric Cantor, the number two Republican in the House.

Republicans in both chambers almost all oppose the budget, though there are a few moderates still making up their minds.

"I intend to listen and I intend to be willing to think about things," Senator Arlen Specter, a Pennsylvania Republican, told reporters Wednesday.

Both chambers are expected to pass their respective versions by the end of next week, and then the real fun begins, as members work to hammer out the differences into a final bill.

During this process everyone, Obama noted at the Senate lunch, will have to give a little.

Given GOP opposition, support from a group of moderate Democrats known as the Gang of 16, led by Sen. Evan Bayh of Indiana, is essential.

Though most insisted Obama's presence on Capitol Hill was not a sales job, the luncheon was dominated by talk of his budget.

"These initiatives - education, better health care - are not free," said Senator Mary Landrieu, a Louisiana Democrat, who asked Obama about a provision she strongly opposes that would raise taxes on independent oil and gas producers.

"But he was very open to consider some of those changes, which is what I wanted to accomplish.

"Does Obama Have a Double Standard on Earmarks?"

By Jay Newton-Small and Michael Scherer / Washington

Thursday, Feb. 26, 2009

On Tuesday evening, when President Barack Obama declared before a joint session of Congress that "we passed the recovery plan free of earmarks," House Democrats, led by Speaker Nancy Pelosi, popped out of their seats like jackrabbits for a standing ovation.

On Wednesday, those same House Democrats, led by Pelosi, passed a budget with, by some counts, nearly 9,000 earmarks, worth an estimated $7.7 billion.

It may seem like yet another example of Washington hypocrisy, but the Obama Administration insists there is no contradiction between its words and actions.

The $410 billion budget in question was passed to keep the government running for the rest of fiscal 2009, since Congress agreed on only three of the 15 appropriations bills last year and the stopgap measure it passed expires on March 6.

Despite the fact that congressional Democrats crafted much of the bill after Obama was elected, the White House argues that the pork-laden bill — which increases federal spending across a range of Cabinet departments by 8% — is part of the prior Administration's legacy.

"What may be next week's bill is last year's legislation," said White House spokesman Robert Gibbs.

The Senate is expected to vote on the measure next week and send it to Obama, who will probably sign it.

That way he can turn his attention to what the White House says it is really focused on — Obama's first budget, for fiscal 2010, the outline of which is due to be released on Thursday.

"I want to pass a budget next year that ensures that each dollar we spend reflects only our most important national priorities," Obama said on Tuesday night.

The anticipated austerity of that budget, which will likely allow President George W. Bush's tax cuts for the wealthiest Americans to lapse and include a road map for health-care reform, will look all the more severe when compared with the bloated 2009 numbers.

And while the Obama Administration is turning a blind eye to the 2009 earmarks, White House officials say they fully expect Congress to live up to Obama's campaign pledge of reducing earmarks to below 1994 levels — when the GOP took control of the House — or less than $7.8 billion a year.

"They have got to draw a line in the sand, and they didn't do it here," says Steve Ellis, vice president of Taxpayers for Common Sense.

"They have got to draw it in 2010 or it's irrelevant, whatever the promises are."

(The Democratic leadership estimates that there are only $3.8 billion earmarks in the bill, while Ellis' nonpartisan watchdog group includes Army Corps of Engineers projects to reach a total of $7.7 billion — a figure still under Obama's targeted 1994 figure of $7.8 billion.)

Like the lobbying that helps produce them, earmarks were often demonized in the 2008 presidential campaign.

In the wake of several high-profile corruption cases over the past few years, from GOP superlobbyist Jack Abramoff to Representative Duke Cunningham, both Obama and Republican nominee John McCain tried to outdo each other with their pledges to rid Washington of the notorious pet projects that legislators slip into spending bills.

Obama, who authored 2007 legislation to overhaul congressional ethics rules governing lobbying and earmarks, runs a real credibility risk when he makes exceptions to his own rules.

He was already heavily criticized in the first weeks of his Administration for doing just that with respect to some appointees whose lobbying records technically violated the White House's new strict guidelines.

In the case of the current budget, Republicans — who themselves account for 40% of the earmark requests — are howling at what they view as Obama's blatant hypocrisy.

House minority leader John Boehner and nine other House Republicans sent Pelosi and Obama a letter asking for a freeze in spending levels and for a re-examination of the earmarks in the bill.

"There are 9,000 reasons to vote against this spending bill — 9,000 earmarks slipped and crammed into this pork-stuffed nightmare," Representative John Shadegg, an Arizona Republican, said on Wednesday in a statement.

"Last night, President Obama bragged about this claim that there were no earmarks in his stimulus bill — and yet he's silent today as he prepares to put his signature on 9,000 earmarks."

Senate majority leader Harry Reid on Wednesday defended the 2009 earmarks, arguing that while Democrats have worked to shrink the number of earmarks in recent years, such pet projects do play a vital role in the budget.

Who better knows the needs of each district and state, he argued, than the members representing those populations?

"Since we've been a country, we have had an obligation as a Congress to help direct spending," Reid told reporters on Capitol Hill.

"We cannot let spending be done by a bunch of nameless, faceless bureaucrats buried in this town someplace."

Still, Ellis and other observers argue that the fiscal-2009 budget's level of earmarking is too high and that projects such as $1.8 million for swine odor and manure management in Iowa, $190,000 for the Buffalo Bill Historical Center in Wyoming, $400,000 to combat bullying in Montana and $2.2 million to study grape genetics in New York are easily ridiculed and embarrassing.

And they show the risk of one-party control of both the executive and legislative branches of government — which was amply demonstrated by George W. Bush and congressional Republicans.

"The last eight years, spending got way out of control."

"The White House couldn't put a check on Congress and the Congress wouldn't put a check on the White House, so everyone spent what they wanted and we ended up with trillion-dollar deficits," says Representative Jim Moran, a Virginia Democrat who nevertheless voted for the package.

"We have a responsibility as Democrats to make sure that we don't do that sort of thing — that when the White House is willing to make tough budgetary choices, that Congress plays a constructive role."

Apparently, that new responsible role doesn't officially start until fiscal 2010.

OBAMA ROLLS OUT ALL THESE JOTTINGS ON COCKTAIL NAPKINS THAT HE EUPHEMISTICALLY CALLS "PLANS" ....

BUT WHEN YOU TRY AND DIG INTO THEM FOR CONTENT ....

YOU FIND THEM DEVOID OF THAT ....

And so ...

"Sources: Obama to add US troops in Afghanistan - Sources: Obama to add US troops plus hundreds of civilian advisers in Afghanistan"

By ANNE GEARAN and PAMELA HESS, Associated Press

Last updated: 5:55 p.m., Thursday, March 26, 2009

WASHINGTON -- Concerned about the faltering war in Afghanistan, President Barack Obama plans to dispatch thousands more military and civilian trainers on top of the 17,000 fresh combat troops he's already ordered, people familiar with the forthcoming plan said Thursday.

Obama also will call for increasing aid to neighboring Pakistan as long as its leaders confront militants in the border region.

The president plans to lay out his revamped strategy for Afghanistan and Pakistan on Friday.

Several sources told The Associated Press the strategy includes 20 recommendations for countering a persistent insurgency that spans the two countries' border, including sending 4,000 military trainers to try to increase the size of the Afghan army.

"It is an integrated military-civilian strategy," Secretary of State Hillary Rodham Clinton told reporters in Monterrey, Mexico.

"We are convinced that the most critical underpinning of any success we hope to achieve, along with the people and government of Afghanistan, will be looking at where civilian trainers, aid workers, technical assistance of all kinds can be best utilized."

Clinton declined to go into details to avoid pre-empting Obama's announcement.

White House press secretary Robert Gibbs also would not discuss specifics of the plan, but said Obama is beginning to discuss its findings with members of Congress and others.

Obama's top military advisers briefed key lawmakers Thursday.

In broad terms, Obama will define U.S. objectives as eliminating the threat from al-Qaida to undermine or topple U.S.-backed elected governments or to launch attacks on the United States, its interests and allies, the sources said.

They described the recommendations on condition of anonymity because the final wording was not complete.

The new plan identified al-Qaida as the target in a larger network of insurgents who threaten U.S. and allied forces in Afghanistan, often from sanctuaries across the border in Pakistan.

The written outline of Obama's plan describes a "strategy for success," as opposed to an exit strategy, but the goal is the same: Stability on both sides of the border that would allow a reduction and eventual withdrawal of U.S. combat forces from Afghanistan.

To do that, Obama proposes a greatly expanded commitment to improving and enlarging the Afghan army and Pakistan's frontier forces.

The additional 4,000 troops devoted to training and advising the Afghan armed forces would head to Afghanistan this spring and summer.

They come on top of about 17,000 combat and support troops Obama wants in place by the end of the summer.

Sen. Carl Levin, chairman of the Armed Services Committee, said the training group is needed because there aren't enough U.S. military advisers there now.

"We've got to increase the size," of the Afghan army more quickly than contemplated, said Levin, D-Mich.

"The trainers are the key to that."

Sen. John McCain, R-Ariz., said it seemed like a viable strategy as long as the manpower is there.

"I know we need more than the 17,000," he said.

As a candidate, Obama said the Afghan war should have been the U.S. priority all along, and that the Bush administration wrongly diverted U.S. attention and resources to the war in Iraq.

As president, Obama has been under pressure to say how he plans to address the sharp increase in violence in Afghanistan while prodding anti-terrorism ally Pakistan to deal with the militant threat on its soil.

"I'm comfortable that key policy makers on all levels are not minimizing the difficulties and are not missing anything," said Rep. Adam Smith, D-Wash.

"What I'm less confident about is that there is a solution to this problem."

He added that Congress cannot shrink from a long-term commitment, including providing money.

A pillar of the strategy for Afghanistan will be greater engagement with local and provincial leaders, as opposed to a focus on the central government, according to officials familiar with the document.

Officials said there will be a directed campaign to focus attention on tribal and provincial leaders across the expansive country.

With the bulk of the population living outside urban centers in small, far-flung villages, U.S. officials believe it will be more productive to build support, foster development and break down extremist ties district by district.

The plan will not abandon the central government in Kabul, said officials, but it will also not rely on bolstering efforts to govern from the capital.

Levin said the strategy will identify benchmarks to measure success in Afghanistan.

"Uncertainty is not the kind of commitment they need to succeed."

The forthcoming White House review also says the U.S. will add hundreds of civilian advisers to those already in Afghanistan.

The so-called civilian surge would concentrate on improving life for ordinary Afghans, and would include experts in agriculture in a country where subsistence farming is the norm.

The civilians are also meant to help extend government services and the administration of justice.

The plan notes that the top U.S. general in Afghanistan still wants some 10,000 or 11,000 additional U.S. forces next year, but does not say whether Obama intends to fulfill that request now, sources said.

That decision would come by the end of this year.

The plan also broaches dramatically increasing the size of Afghanistan's security forces.

It calls for a study to determine the size of the police and military force capable of securing the country.

Several defense officials said that could entail doubling the Afghan security force to almost 400,000.

However, the strategy review does not recommend any specific figure.

In fact, the Obama strategy document deliberately avoids specific numbers and timelines, a senior defense official said.

He said the intent is to set goals and a new direction, with specifics of implementation to be worked out in coming months.

The plan strongly backs legislation by Sens. John Kerry, D-Mass., and Richard Lugar, R-Ind., that would triple humanitarian aid to $1.5 billion to Pakistan for five years.

The bill had been proposed last year by now Vice President Joe Biden.

Kerry, who took over for Biden as chair of the Foreign Relations Committee, said he also supports placing conditions on military aid to Pakistan.

Biden's original bill threatened to cut military funding for Islamabad unless the government did more to fight Taliban forces.

Kerry said he planned to introduce next week an updated version of the measure that would slightly increase the $1.5 billion.

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Associated Press writers Anne Flaherty, Lolita C. Baldor, Pauline Jelinek and Robert Burns contributed to this report.

"Obama seizes bully pulpit online to pitch budget - Obama seizes bully pulpit online, pitching $3.6 trillion budget and asking for patience"

By STEVEN R. HURST, Associated Press

Last updated: 5:55 p.m., Thursday, March 26, 2009

WASHINGTON -- President Barack Obama seized the bully pulpit Thursday and reprised the best of his acclaimed campaign skills in an unprecedented Internet town hall from the White House -- a direct sales pitch for Americans to get behind his $3.6 trillion budget and be patient as he tries to right the tottering economy.

After an opening statement and declaring, "This isn't about me, it's about you," Obama took up a microphone and strolled the ornate East Room, playing to an audience of 100 invited guests and what the White House said were an estimated 67,000 people watching him in cyberspace.

The event capped a concerted Obama recent public relations foray in support of his young administration's assault on the country's twin crises in the economy and financial system, including two in-person town hall meetings in California and an appearance on Jay Leno's "Tonight Show."

On Tuesday Obama held a nationally televised news conference, also in the East Room, calling on an unusual mix of reporters in an apparent attempt to shake up the focus of questioning.

Obama explained he had called the first-of-its-kind online town hall meeting as an "an important step" toward creating a broader avenue for information about his administration.

Spokesman Robert Gibbs said there would be more such events.

Timing, of course, was key.

Obama was beamed out through cyberspace a day after the House Budget Committee adopted a spending and revenue plan that broadly matched his massive $3.6 trillion outline even while seeking to reel back on deficit projections.

In a forum that gave him an essentially passive audience, Obama said the budget would put the country on a path to "a recovery that will be measured by whether it lasts, whether it endures; by whether we build our economy on a solid foundation instead of an overheated housing market or maxed-out credit cards or the sleight of hand on Wall Street; whether we build an economy in which prosperity is broadly shared."

Obama's Republican opposition -- which he pointedly did not mention Thursday -- has fought his budget proposal, broadly declaring it a spending recipe for national bankruptcy.

Not surprisingly, the Internet questioning dovetailed with the president's key projects: universal health care, improved education, energy independence and the range of promises made in the White House campaign.

At times flashing his broad smile and at others determined and serious, Obama drew on his own experiences with the American health care system to empathize with one questioner who supported his goal of universal coverage.

He threw bouquets of praise to nurses who helped the family when his daughter Sasha was stricken with meningitis and returned with vigor to a recounting of the experience of watching his fatally ill mother argue with an insurance company to pay what it owed her for ovarian cancer treatment.

In a lighter moment, Obama noted there had been heavy support for a question about legalizing marijuana as a means of boosting the economy and creating jobs.

"The answer is, no, I don't think that is a good strategy to grow our economy," he quipped.

The in-house audience tittered.

The president did not make news, but ran smoothly through answers to questions posed to him on the White House Web site and chosen according to rankings by respondents.

A moderator read Obama some of the questions and other questions were displayed on monitors in the room.

And with more than 100,000 questions submitted for the forum, it gave the administration a significant number of e-mail addresses for future outreach and the next campaign.

The economy dominated, allowing Obama to sell his agenda for putting the country on a sounder footing in the midst of the worst economic downturn in decades and a financial crisis unmatched since the 1930s.

One questioner asked why the U.S. did not adopt a European-style government-sponsored health care system.

Because, Obama responded, he believed the best way forward was to build on the current system that relies heavily on employer plans rather than scrap what has existed for generations and largely has met the need of a majority of Americans.

Nevertheless, he said, any overhaul must cope with the country's institutions that aren't easily transformed, specifically pointing to Medicare and Medicaid, as well as the millions of Americans who are uninsured.

Detroit automakers, he said, must evolve or face extinction.

He promised more help to the struggling industry but demanded a new way of doing business.

"A lot of it's going to depend on their (the auto industry's) willingness to make some pretty drastic changes."

"And some of those are still going to be painful," he said.

As reflected in the Internet questioning, housing was near the top of American concerns, prompting Obama to urge mortgage refinancing for the 40 percent of American homeowners that he said were eligible under his programs.

Mortgage rates have hit record lows.

Obama appeared off balance only once, in an exchange with Bonnee Breese, a Philadelphia high school teacher in the East Room audience who questioned the president about charter schools and his efforts to improve the national teaching corps.

"OK, so you've been teaching for 15 years," Obama said at one point, directly addressing Breese and laughing.

"I'll bet you'll admit that during those 15 years there have been a couple of teachers that you've met -- you don't have to say their names -- who you would not put your child in their classroom."

"See?"

"Right?"

"You're not saying anything."

"You're taking the Fifth."

Obama was clearly teasing Breese, who turned her head away, seemingly in embarrassment or disagreement.

"Obama: Taliban and al-Qaida must be stopped"

By BEN FELLER, Associated Press Writer

27 MARCH 2009

WASHINGTON – President Barack Obama on Friday ordered 4,000 more military troops into Afghanistan, vowing to "disrupt, dismantle and defeat" the terrorist al-Qaida network in Afghanistan and neighboring Pakistan.

In a war that still has no end in sight, Obama said the fresh infusion of U.S. forces is designed to bolster the Afghan army and turn up the heat on terrorists that he said are plotting new attacks against Americans.

The plan takes aim at terrorist havens in Pakistan and challenges the government there and in Afghanistan to show more results.

Obama called the situation in the region "increasingly perilous" more than seven years after the Taliban was removed from power in Afghanistan.

"If the Afghanistan government falls to the Taliban or allows al-Qaida to go unchallenged," Obama said, "that country will again be a base for terrorists."

He announced the troop deployment, as well as plans to send hundreds of additional civilians to Afghanistan, with Secretary of State Hillary Rodham Clinton, Defense Secretary Robert Gates and top intelligence and national security figures at his side.

The announcement followed a policy review Obama launched not long after taking office.

The 4,000 troops bolster the dispatch of an additional 17,000 forces to the war-weary nation.

Afghanistan President Hamid Karzai welcomed the additional help to train his country's army and police force, saying in a statement that Obama's strategy "will bring Afghanistan and the international community closer to success."

There are clear risks and costs to Obama's strategy.

Violence is rising.

The war in Afghanistan saw American military deaths rise by 35 percent in 2008 as Islamic extremists shifted their focus to a new front with the West.

Obama's plan will also cost many more billions of dollars.

And the president's plan includes no timeline for withdrawal of U.S. troops.

Yet Obama bluntly warned that the al-Qaida terrorists who masterminded the Sept. 11, 2001 attacks were actively planning further attacks on the United States from safe havens in Pakistan.

And he said the Afghanistan government is in peril of falling to the Islamic militants of the Taliban once again.

"So I want the American people to understand that we have a clear and focused goal: to disrupt, dismantle, and defeat al-Qaida in Pakistan and Afghanistan, and to prevent their return to either country in the future," the president said.

"That is the goal that must be achieved," Obama added.

"That is a cause that could not be more just."

"And to the terrorists who oppose us, my message is the same: we will defeat you."

Obama's plan will put more U.S. troops and money on the line.

He said Pakistan and Afghanistan will be held to account, using benchmarks for progress, although those measures are just being developed and the consequences if not met remain unclear.

The president spoke just hours after a suicide bomber in Pakistan demolished a mosque packed with hundreds of worshippers attending Friday prayers near the Afghan border, killing at least 48 people and injuring scores more, in the bloodiest attack in Pakistan this year.

Rising violence in Pakistan is fueling doubts about the pro-Western government's ability to counter Taliban and al-Qaida militants also blamed for attacks on Western troops in Afghanistan.

The Pakistani central government has relatively little control in some areas bordering Afghanistan and has tolerated or even ignored the creation of Taliban and al-Qaida havens inside Pakistan.

In a direct challenge, Obama said Pakistan must show a commitment to hunt down the extremists within its borders.

"We will insist that action be taken one way or another when we have intelligence about high-level terrorist targets," Obama said.

Obama called the mountainous border region of Afghanistan and Pakistan "the most dangerous place in the world."

"This is not simply an American problem — far from it," Obama said.

"It is, instead, an international security challenge of the highest order."

"Terrorist attacks in London and Bali were tied to al-Qaida and its allies in Pakistan, as were attacks in North Africa and the Middle East, in Islamabad and Kabul."

"If there is a major attack on an Asian, European, or African city, it, too, is likely to have ties to al-Qaida's leadership in Pakistan."

The president added: "The safety of people around the world is at stake."

That strategy fits with Obama's operating premise — that the U.S. failed mightily in the years following the Sept. 11 terror attacks by focusing on Iraq instead of Afghanistan.

He said he is sending in the 4,000 military trainers after military commanders watched their demand for such help go unmet for years.

His moves comes ahead of a U.N. conference on Afghanistan next Tuesday in The Hague, where Clinton will join representatives from more than 80 countries.

And Obama himself is attending a NATO meeting next week in France and Germany.

At that meeting, the U.S. expects some NATO coalition members to commit more forces to the flagging war in Afghanistan, Obama officials said Thursday.

They did not provide specifics.

Roughly 65,000 international forces are in Afghanistan, more than half from the U.S.

One part of Obama's plan is to expose fractures in the Taliban in hopes of weakening it.

Administration officials say the most difficult part of their approach will be in dealing with Pakistan, an often chaotic place with an erratic relationship with the United States.

The administration will seek to bolster the democratic government of Pakistan, and try to get the people of that country to see the U.S.-led effort as one that is in their interests.

Obama also will call for increasing aid to Pakistan as long as its leaders confront militants in the border region.

The president will work with Congress on language to attach conditions to military aid, sources said.

The U.S. will launch an intensive and expanded diplomatic effort to gain international cooperation, including reaching out to Russia, China, India, Saudi Arabia and even Iran.

The 4,000 military trainers that Obama is sending to Afghanistan will come from 82nd Airborne Division at Fort Bragg in North Carolina.

All the troops he is dispatching to Afghanistan, including the combat troops, will be there by fall.

"GOP says Obama budget threatens future prosperity"

By WILL LESTER, Associated Press Writer

28 MARCH 2009

WASHINGTON – Attacking President Barack Obama's grand spending plans, a GOP lawmaker who almost joined the Democrat's Cabinet said Saturday the U.S. must live within its means or risk its tradition of passing a more prosperous country from one generation to the next.

"We believe you create prosperity by having an affordable government that pursues its responsibilities without excessive costs, taxes or debt," Sen. Judd Gregg said in the Republican radio and Internet address.

Gregg, who accepted the job as commerce secretary but then withdrew his nomination because of "irresolvable conflicts" with Obama's policies, has become one of the toughest critics of Obama's handling of the economy.

"In the next five years, President Obama's budget will double the national debt."

"In the next 10 years, it will triple the national debt," said Gregg, R-N.H.

"His budget assumes the deficit will average $1 trillion every year for the next 10 years and will add well over $9 trillion in new debts to our children's backs," said Gregg, the top Republican on the Senate Budget Committee.

"He also is proposing the largest tax increase in history, much of it aimed at taxing small business people who have been, over the years, the best job creators in our economy."

Gregg said Obama's proposals "represent an extraordinary move of our government to the left."

He acknowledged that Obama "is very forthright in stating that he believes that by greatly expanding the spending, the taxing and the borrowing of our government, this will lead us to prosperity."

In seeking to make the GOP case, Gregg said:

_ "It is the individual American who creates prosperity and good jobs, not the government."

_"We believe that you create energy independence not by sticking Americans with a brand new national sales tax on everyone's electric bill, but by expanding the production of American energy ... while also conserving more."

_"We also believe you improve everyone's health care not by nationalizing the health care system and putting the government between you and your doctor, but by assuring that every American has access to quality health insurance and choices in health care."

He said the U.S. "has an exceptional history of one generation passing on to the next generation a more prosperous and stronger country, but that tradition is being put at risk."

"Obama rules out US troops in Pakistan"

29 MARCH 2009

WASHINGTON – As he carries out a retooled strategy in Afghanistan, President Barack Obama says he will consult with Pakistan's leaders before pursuing terrorist hideouts in that country.

Obama said U.S. ally Pakistan needs to be more accountable, but ruled out deploying U.S. troops there.

"Our plan does not change the recognition of Pakistan as a sovereign government," the president told CBS' "Face the Nation" in an interview broadcast Sunday.

The president also bemoaned the tenuous security situation in Afghanistan, saying, "Unless we get a handle on it now, we're gonna be in trouble."

He made clear that his new strategy for the long war is "not going to be an open-ended commitment of infinite resources" from the United States.

In a wide-ranging interview, Obama sought to counter the notion that Afghanistan has become his war.

He emphasized that it started on George W. Bush's watch.

"I think it's America's war."

"And it's the same war that we initiated after 9/11 as a consequence of those attacks," Obama said.

"The focus over the last seven years, I think, has been lost."

Obama taped the interview Friday, the same day he launched the fresh effort to defeat al-Qaida terrorists in Pakistan and Afghanistan, widening a war that began after terrorists struck the U.S. on Sept. 11, 2001.

He set new benchmarks and ordered 4,000 more troops to the war zone as well as hundreds of civilians and increased aid.

The plan does not include an exit timeline.

Defense Secretary Robert Gates, in an interview on "Fox News Sunday," said the short-term objectives for U.S. forces in Afghanistan have narrowed under Obama's new strategy even as a flourishing democracy in Afghanistan remains a long-term goal.

"I think what we need to focus on and focus our efforts is making headway and reversing the Taliban's momentum and strengthening the Afghan army and police, and really going after al-Qaida, as the president said," Gates said.

Al-Qaida terrorists are still a serious threat and retain the ability to plan attacks against the United States even though they have been inhibited over the past several years, Gates said.

Both Pakistan and Afghanistan have praised the new U.S. strategy for dealing with growing violence in the region.

But Obama has irked Pakistan since taking office in January by retaining a powerful but controversial weapon left over from the Bush administration's fight against terrorism: unmanned Predator drone missile strikes on Pakistan along its border with Afghanistan.

Pakistan has urged Obama to halt the strikes.

But Gates has signaled to Congress that the U.S. would continue to go after al-Qaida inside Pakistan, and senior Obama administration officials have called the strikes effective.

Without directly referring to the strikes, Obama said:

"If we have a high-value target within our sights, after consulting with Pakistan, we're going after them."

"But our main thrust has to be to help Pakistan defeat these extremists."

Asked if he meant he would put U.S. troops on the ground in Pakistan, Obama said: "No."

He noted that Pakistan is a sovereign nation and said:

"We need to work with them and through them to deal with al-Qaida."

"But we have to hold them much more accountable."

"What we wanna do is say to the Pakistani people: You are our friends, you are our allies."

"We are going to give you the tools to defeat al-Qaida and to root out these safe havens."

"But we also expect some accountability."

"And we expect that you understand the severity and the nature of the threat," Obama added.

His strategy is built on an ambitious goal of boosting the Afghan army from 80,000 to 134,000 troops by 2011 — and greatly increasing training by U.S. troops accompanying them — so the Afghan military can defeat Taliban insurgents and take control of the war.

In the interview, Obama said he won't assume that more troops will result in an improved situation.

"There may be a point of diminishing returns in terms of troop levels."

"We've gotta also make sure that our civilian efforts, our diplomatic efforts and our development efforts, are just as robustly encouraged."

Obama agreed that things are worse than ever in Afghanistan, and then sought to clarify his point.

"They're not worse than they were when the Taliban was in charge and al-Qaida was operating with impunity," Obama said.

But, he added, "We have seen a deterioration over the last several years."

"This is gonna be hard," Obama said.

"I'm under no illusions."

"If it was easy, it would have already been completed."

He also stressed the need to be flexible.

"We will continue to monitor and adjust our strategies to make sure that we're not just going down blind alleys."

Richard Holbrooke, U.S. envoy to Pakistan and Afghanistan, dismissed comparing the war in Afghanistan to U.S. involvement in Vietnam more than a generation ago.

"The Viet Cong and the North Vietnamese never posed any direct threat to the United States and its homeland," Holbrooke, a Vietnam veteran, said on "State of the Union" on CNN.

"The people we are fighting in Afghanistan, and the people they are sheltering in western Pakistan, pose a direct threat."

"Those are the men of 9/11, the people who killed Benazir Bhutto," Holbrooke said, referring to the slain former Pakistan prime minister.

"And you can be sure that, as we sit here today, they are planning further attacks on the United States and our allies."

"Obama asserts gov't control over the auto industry - Obama sets tough deadline to force overhaul of ailing US automakers, seeks to reassure buyers"

By DAVID ESPO, Associated Press

Last updated: 7:15 p.m., Monday, March 30, 2009

WASHINGTON -- President Barack Obama asserted unprecedented government control over the auto industry Monday, bluntly rejecting turnaround plans by General Motors Corp. and Chrysler LLC, demanding fresh concessions for long-term federal aid and raising the possibility of quick bankruptcy for either ailing auto giant.

Obama took the extraordinary step of announcing the government will back new car warranties issued by both GM and Chrysler, an attempt to reassure consumers their U.S.-made purchases will be protected even if the companies don't survive.

"I am absolutely committed to working with Congress and the auto companies to meet one goal: The United States of America will lead the world in building the next generation of clean cars," Obama said in his first extended remarks on the industry since taking office nearly 10 weeks ago.

And yet, he added, "our auto industry is not moving in the right direction fast enough to succeed."

Obama, flanked by several administration officials at the White House, announced a short-term infusion of cash for the firms, and said it could be the last for one or both.

Chrysler, judged by the administration as too small to survive, got 30 days' worth of funds to complete a partnership with Fiat SpA, the Italian manufacturer, or some other automaker.

GM got assurances of 60 days' worth of federal financing to try and revise its turnaround plan under new management with heavy government participation.

That would involve concessions from its union workers and bondholders.

The administration engineered the ouster of longtime CEO Rick Wagoner over the weekend, an indication of its deep involvement in an industry that once stood as a symbol of American capitalism.

Obama's announcement underscored the extent to which automakers have been added to the list of large corporations now operating under a level of government control that seemed unthinkable less than a year ago.

Since last fall, the Bush and Obama administrations, often acting in concert with the Federal Reserve, have engineered the takeover of housing titans Fannie Mae and Freddie Mac, seized a large stake in several banks and installed a new CEO at bailed-out insurance giant American International Group.

The latest addition to the list, the once-proud auto industry, has struggled with foreign competition for more than a generation, then was further battered by the recession and credit crisis gripping the economy.

Obama said 400,000 industry jobs have been lost in the past year alone, many in Michigan.

Under Fritz Henderson, newly named as CEO, General Motors issued a statement saying it hopes to avoid bankruptcy, but will "take whatever steps are necessary to successfully restructure the company, which could include a court-supervised process."

Chrysler Chairman Bob Nardelli sought to assure customers, dealers, suppliers and employees that the automaker "will operate 'business as usual' over the next 30 days" while working closely with the government and Fiat to secure the support of stakeholders.

Sergio Marchionne, CEO of Fiat, issued a statement calling the Obama administration's involvement "tough but fair, and we believe we will arrive at a result that will establish a credible future for this crucial industrial sector and that assigns the right priority to the repayment of U.S. taxpayers' funds."

Fiat executives have talked to administration officials about a proposal to acquire a 35 percent stake in Chrysler in exchange for small car technology, transmissions and other items that Chrysler has valued at $8-$10 billion.

There was no immediate response from the United AutoWorkers Union.

One worker, Don Thompson, 56, of Chesterfield Township in Michigan, said automakers were being punished because of public anger over the banking bailout.

"They're using us for the mistakes they've made in Washington," he said.

Other workers alleged a double standard in how Washington dealt with Wagoner, as opposed to CEOs of bailed-out banks.

"They're using him as a fall guy," said Frank Rowser, financial secretary for UAW Local 909.

When Wagoner leaves the automaker, he will take a financial package worth an estimated $23 million.

Ford Motor Co., the third member of the Big Three, has not requested federal bailout funds.

Obama said bankruptcy would be a way for either GM or Chrysler to "quickly clear away old debts that are weighing them down so they can get back on their feet," and stressed that either firm would remain open.

"What I am not talking about is a process where a company is broken up, sold off and no longer exists."

"And what I am not talking about is having a company stuck in court for years, unable to get out," he said.

Still, fears about the industry's future sent stocks plummeting, with the Dow Jones industrial average losing about 254 points.

GM plunged 92 cents, or 25.4 percent, to $2.70.

Chrysler is not publicly traded.

Obama's remarks were prompted by the expiration of a temporary bailout approved by the Bush administration last winter, with $17 billion in federal funds to help GM and Chrysler survive.

Under its terms, the two automakers had until March 31 to submit restructuring plans as it searched for additional federal funds.

At the time, it appeared Bush had avoided an industry collapse on his watch yet had deferred the most difficult decisions for his successor.

By his comments, Obama bought himself a little more time, but made it clear it was fast running out.

"Now is the time to confront our problems head-on and do what's necessary to solve them," he said.

The administration issued papers detailing the prospects for survival of both GM and Chrysler, credited them with making difficult choices, yet also stressing the difficulties that remain.

It said that while GM's new car of the future, the Volt, "holds promise, it will likely be too expensive to be commercially successful in the short run."

The government has said it's willing to provide another $6 billion in financing for Chrysler if it is able to finalize an alliance with Italy's Fiat Group SpA.

But to get the money, Chrysler must rid its balance sheet of most of its debt, including any investment by its private owners.

That means Chrysler's majority owner, Cerberus Capital Management LP, would have to give up the $1 billion interest it has in the automaker, according to a person briefed on the deal.

The person asked not to be identified because terms are still being negotiated.

Cerberus would retain ownership in Chrysler's financial arm, but it has pledged to the government the first $2 billion in profits to repay a federal cash infusion, the person said.

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Associated Press writers Jim Kuhnhenn and Ken Thomas in Washington and Ben Leubsdorf in Warren, Mich., contributed to this report.

"Obama pledges new US relations with Europe"

By TOM RAUM, Associated Press Writer

3 MARCH 2009

STRASBOURG, France – Welcomed with thunderous cheers, President Barack Obama pledged on Friday to repair damaged relations with Europe, saying the world came together following the 2001 terrorist attacks but then "we got sidetracked by Iraq."

"We must be honest with ourselves," Obama said.

"In recent years, we've allowed our alliance to drift."

The new U.S. president said that despite the bitter feelings that were generated by Iraq, the United States and its allies must stand together because "al-Qaida is still a threat."

At a town-hall style gathering before a French and German audience, Obama also encouraged a skeptical Europe to support his revamped strategy for rooting out terrorism suspects in Afghanistan and Pakistan, and said Europe should not expect America to shoulder the burden of sending in combat troops by itself.

"This is a joint problem," Obama said on the cusp of the NATO summit.

"And it requires a joint effort."

Later, in Baden-Baden, Germany, Obama said his Afghanistan war strategy does not envision NATO troops in Pakistan.

He's previously ruled out deploying U.S. troops to that country.

Obama opened his Strasbourg appearance with a 25-minute prepared speech in which he set a dramatic, long-term goal of "a world without nuclear weapons."

He said he would outline details of his nonproliferation proposal in a speech in Prague on Sunday, near the end of a European trip that is spanning five countries in eight days.

"Even with the Cold War now over, the spread of nuclear weapons or the theft of nuclear material could lead to the extermination of any city on the planet," Obama said.

He held the campaign-like event in the midst of his first European trip as president as he sought to strengthen the United States' standing in the world while working with foreign counterparts to right the troubled global economy.

Obama said the United States shares blame for the crisis, but that "every nation bears responsibility for what lies ahead — especially now."

Back home, his administration was trying to weather the fallout of another dismal monthly jobs report that was announced as Obama spoke in France.

The jobless rate jumped to 8.5 percent, the highest since late 1983, as a wide range of employers eliminated a net total of 663,000 jobs in March.

In Germany, Obama called the new unemployment report a "stark reminder" of the nation's woes.

"None of us can isolate ourselves from a global market," and the world's economies are so intertwined that "if we do not have concerted action then we will have collective failure," Obama said, standing beside German Chancellor Angela Merkel after a private meeting.

He added that world powers are "going to go back at it" if steps the G-20 took to fix the crisis are not successful.

He tried to counter a European perception of American arrogance on the world stage, saying:

"I don't come here bearing grand designs."

"I'm here to listen, to share ideas."

At the town-hall style appearance in Strasbourg, Obama invited questions from his French and German audience heavily made up of students in a sports arena.

Even though Obama talked about the event as a way to interact with young foreigners, he did most of the talking and took only a handful of questions.

He acknowledged "my French and German are terrible" but noted that translators were on hand.

Much like during his presidential campaign, Obama paced the stage with a microphone, like a talk show host.

In his opening remarks, he underscored European and American ties and appeared intent on improving the U.S. image abroad, which suffered under George W. Bush.

"I've come to Europe this week to renew our partnership," Obama said, bluntly claiming that the relationship between the United States and Europe had gone adrift, with blame on both sides.

"In America, there's a failure to appreciate Europe's leading role in the world," Obama said.

Instead of celebrating Europe's dynamic union and seeking to work with you, Obama said, "there have been times where America's shown arrogance and been dismissive, even derisive."

"But in Europe, there is an anti-Americanism that is at once casual, but can also be insidious."

"Instead of recognizing the good that America so often does in the world, there have been times where Europeans chose to blame America for much of what's bad," Obama said.

He added: "On both sides of the Atlantic, these attitudes have become all too common."

"They are not wise."

"They do not represent the truth."

Obama also encouraged Europe to support his new Afghanistan-Pakistan strategy.

"I understand there's doubt about this war in Europe," Obama said.

"There's doubt even in the United States."

But he said the United States and its allies must continue to work to defeat the "terrorists who threaten all of us."

And, he said Europeans and Americans had to look past disagreements over Iraq.

Obama opposed the Iraq war, which divided America from many of its traditional allies and was the source of bitter relations between the U.S. and Europe.

"We got sidetracked by Iraq and we have not fully recovered that initial insight that we have a mutual interest in ensuring that organizations like al-Qaida cannot operate," he said.

"I think it is important for Europe to understand that even though I am president and George Bush is not president, al-Qaida is still a threat."

In Germany, Merkel said her country wants to bear its share of the responsibility in Afghanistan, and Obama thanked her for what Germany already has done.

But Obama also said:

"We do expect that all NATO partners are going to contribute."

"They have thus far, but the progress in some cases has been uneven."

He added, "We're going to refocus the strategy and then make sure the resources are there to do it."

Earlier in France, the president said he wants to look back at his tenure and know his work drastically lessened the threat of terrorism, particularly nuclear terrorism.

"We can't reduce the threat of a nuclear weapon going off unless those that possess the most nuclear weapons — the United States and Russia — take serious steps to reduce our stockpiles," Obama said.

"So we want to pursue that vigorously in the years ahead."

Obama and Russian President Dmitry Medvedev earlier this week pledged a new effort to reduce both nations' nuclear arsenals.

Touching on topics controversial in Europe, Obama also promoted his decision to close the U.S. prison camp at Guantanamo Bay within a year, and said "without equivocation that the United States does not and will not torture."

Earlier, in a symbolic gesture, French President Nicolas Sarkozy told Obama that France would accept a prisoner from the detention center where terrorist suspects are held if that would facilitate its closing.

Saying that he was determined to "speak the truth," Sarkozy said that Guantanamo "was not in keeping with U.S. values."

He said democratic states have a responsibility to speak honestly and do what they say, and that Guantanamo was a contradiction in that standard.

Obama said the U.S. needs help in finding a place to send those held at the center.

He thanked Sarkozy for "being good to his word."

About 240 detainees are still held — some without charge — at the Guantanamo Bay prison, which was set up after the Sept. 11, 2001, attacks to hold so-called "enemy combatants" accused of links to the al-Qaida terror network or the Taliban.

Spain and Portugal have already said they could accept prisoners, while Germany and others remain tightlipped whether they will accept non-nationals.

"Obama: US cannot shoulder Afghan burden alone"

By SLOBODAN LEKIC, Associated Press Writer

3 APRIL 2009

STRASBOURG, France – On the eve of the NATO summit, President Barack Obama didn't get what he wanted most from U.S. allies: significant new commitments of combat troops for Afghanistan.

Faced with stiff public opposition to war, reluctant European leaders on Friday offered only limited aid for civilians and some troops to help train Afghan police and soldiers.

Afghanistan was the theme to which a frustrated Obama returned over and over throughout the day.

"This is a joint problem, and it requires a joint effort," he said.

The summit's co-hosts, French President Nicolas Sarkozy and German Chancellor Angela Merkel, both were quick to offer support for Obama's new Afghan strategy of sending American reinforcements and bolstering Afghan forces.

But they went no further.

"We totally endorse and support America's new strategy in Afghanistan," Sarkozy said a joint news conference with Obama after they met.

After her own talks with the president later in the afternoon, Merkel said:

"We have a great responsibility here."

"We want to carry our share of the responsibility militarily — in the area of civil reconstruction and in police training."

Afghanistan was a key issue at a working dinner of all NATO leaders.

"This is our No. 1 operational priority," NATO spokesman James Appathurai said.

As the leaders talked, protesters clashed for a second day with French police, injuring two officers.

With more protests to come, the efforts to disrupt the summit signaled the unhappiness of many Europeans for the faraway war, especially at a time of global economic crisis.

Backing from Sarkozy and Merkel is vital for Obama, as he seeks to convince NATO that a greater effort by all is the only way to defeat the escalating Taliban insurgency.

U.S. diplomats said the administration was aware of the domestic pressures on their allies and would not press the issue.

What the Europeans had to offer concretely fell short of Obama's expectations, in part because many of their citizens believe that what is needed is a political solution and civilian aid to rebuild Afghanistan — not more combat troops.

Obama plans to add 21,000 U.S. soldiers and Marines to the 38,000 Americans already fighting militants.

His strategy also calls for increased focus on boosting the capabilities of Afghanistan's police and army and improving the effectiveness of the government in Kabul.

The president was to brief his fellow leaders about the new strategy at a formal dinner Friday in the German spa resort of Baden-Baden.

NATO officials said they expected the Europeans to pledge four more infantry battalions to provide security in the run-up to Afghanistan's general elections in August.

NATO has a force of about 58,000 soldiers in Afghanistan, of which about 26,000 are Americans.

The other 12,000 U.S. troops operate under a separate command.

British officials traveling to the summit with Prime Minister Gordon Brown told reporters he would offer to send more troops to Afghanistan — but the offer depended upon other NATO members sending additional forces, Britain's Press Association said.

Officials said the number would likely be in the "mid- to high hundreds."

Britain now has 8,000 soldiers in Afghanistan.

Spain, too, said it would increase the force it has in Afghanistan — currently numbering about 770 soldiers — with a small contingent to help train Afghan army officers.

Belgium said it would add some 65 soldiers to the 500 it has in Afghanistan and send two more F-16 jet fighters.

It also plans to double its financial aid to an annual euro12 million ($14.5 million).

In addition to Afghanistan, the summit will look at repairing the alliance's relations with Russia, which were frozen after last year's Russo-Georgian war.

Russia has become increasingly important as an alternate supply route for NATO forces in Afghanistan since insurgents stepped up attacks on the main logistics route through Pakistan.

Moscow has offered NATO the use of its railways and roads to move supplies from Europe to Central Asia.

NATO also wants Russia to provide the Afghan government with airlift support as well as equipment and spare parts for its Soviet-era weaponry.

There was agreement among NATO leaders "that Russia is a great European power, a partner with which NATO must cooperate and wants to cooperate," Appathurai, the alliance spokesman, said.

He said that the NATO-Russia Council — a joint body whose work was suspended after the war in Georgia — would hold its first meeting in coming weeks and that a meeting between NATO's and Russia's foreign ministers was expected in May.

In internal matters, the alliance planned discussions on a major leadership change, with Dutch diplomat Jaap de Hoop Scheffer's term as NATO secretary-general running out Aug. 1.

Danish Prime Minister Anders Fogh Rasmussen has emerged as the top candidate despite opposition from Turkey.

Fogh Rasmussen infuriated many Muslims by speaking out in favor of freedom of speech during an uproar over Danish newspapers' publication of cartoons of the Prophet Muhammad in 2006.

Appathurai said the leaders discussed the succession issue, but made no decision.
___

Associated Press writer Deborah Seward contributed to this report.

AND WHAT DON'T WASH IN THIS ARTICLE IS OBAMA APPARENTLY REFUSING TO TAKE BACK TARP MONEY FROM JP MORGAN ....

OBAMA SAID IT WOULD SEND A "BAD SIGNAL" ....

BUT TO WHOM?

WHAT IS UP WITH THAT, I MUST WONDER .....

WHAT FLIM-FLAM IS REALLY GOING ON HERE?

And so ...

"Inside Obama's bank CEOs meeting"

Eamon Javers

Fri Apr 3, 2:00 pm ET

The bankers struggled to make themselves clear to the president of the United States.

Arrayed around a long mahogany table in the White House state dining room last week, the CEOs of the most powerful financial institutions in the world offered several explanations for paying high salaries to their employees — and, by extension, to themselves.

“These are complicated companies,” one CEO said.

Offered another: “We’re competing for talent on an international market.”

But President Barack Obama wasn’t in a mood to hear them out.

He stopped the conversation and offered a blunt reminder of the public’s reaction to such explanations.

“Be careful how you make those statements, gentlemen."

"The public isn’t buying that.”

“My administration,” the president added, “is the only thing between you and the pitchforks.”

The fresh details of the meeting — some never before revealed — come from an account provided to POLITICO by one of the participants.

A second source inside the meeting confirmed the details, and two other sources familiar with the meeting offered additional information.

The accounts demonstrate that despite the public comments on both sides that the meeting was cordial, the tone in the room was in fact one of mutual wariness.

The titans of finance -- men used to being the most powerful man in almost any room -- sized up a new president who made clear in ways big and small that he expected them to change their ways.

There were signs from the outset that this was a business event, not a social gathering.

At each place around the table sat a single glass of water.

No ice.

For those who finished their glass, no refills were offered.

There was no group photograph taken of the CEOs with the president, which typically happens at ceremonial White House gatherings but not at serious strategy sessions.

“The only way they could have sent a more Spartan message is if they had served bread along with the water,” says a person who attended the meeting.

“The signal from Obama’s body language and demeanor was, ‘I’m the president, and you’re not.’”

According to the accounts of sources inside the room, President Obama told the CEOs exactly what he expects from them, and pushed back forcefully when they attempted to defend Wall Street’s legendarily high-paying ways.

From the White House, there were five principal attendees: chief of staff Rahm Emanuel, who arrived a few minutes late, Treasury Secretary Timothy Geithner, Council of Economic Advisers chairwoman Christina Romer, senior adviser Valerie Jarrett and director of the National Economic Council Larry Summers.

Uncharacteristically, Summers said almost nothing, and it appeared to one participant as if he had been told to remain silent.

To break the ice, JPMorgan Chase CEO Jamie Dimon offered Geithner a fake check for $25 billion, the amount of Troubled Asset Relief Program money that the company has accepted.

Although many of those in the room laughed, Geithner didn’t keep the check.

The president entered the room a few minutes later and made a lap of the table, shaking hands and saying hello to the CEOs, several of whom he called by name.

Taking his seat at the table, the president said, "So let's get to it."

He spoke for several minutes without notes, giving an overview of the economic situation as he saw it.

But the first comment that made an impression on several attendees was on Wall Street salaries and bonuses.

The president spoke of public outrage over the high-flying executive lifestyle.

"The anger gentlemen, is real," Obama said.

He urged pay reform and said rewards must be proportional, balanced, and tied to the health and success of the company.

The president described the financial system as still “fragile” and asked for cooperation from the CEOs.

But he also told them he wouldn’t shy away from regulatory reform.

Obama wrapped up his remarks and threw the conversation open to the table, saying, “So, who’d like to talk?”

JPMorgan’s Dimon spoke first.

He began by complimenting the president on the economic team he’d assembled.

And he said his industry needs to explain more directly to the American people that the economic recovery plans are already working.

Dimon also insisted that he’d like to give the government’s TARP money back as soon as practical, and asked the president to “streamline” that process.

But Obama didn’t like that idea — arguing that the system still needs government capital.

The president offered an analogy:

“This is like a patient who’s on antibiotics,” he said.

“Maybe the patient starts feeling better after a couple of days, but you don’t stop taking the medicine until you’ve finished the bottle.”

Returning the money too early, the president argued could send a bad signal.

Several CEOs disagreed, arguing instead that returning TARP money was their patriotic duty, that they didn’t need it anymore, and that publicity surrounding the return would send a positive signal of confidence to the markets.

Bank of America CEO Ken Lewis cracked a joke at the expense of his peers who’d lavished praise on the administration:

“Mr. President,” he said, “I’m not going to suck up to Geithner and Summers like the other CEOs here have.”

Lewis also urged the president not to paint all the banks with the same broad brush.

The president argued that’s not what the White House was doing.

Indeed, earlier the same week, Obama said at a nationally televised news conference, “The rest of us can’t afford to demonize every investor or entrepreneur who seeks to make a profit.”

As the meeting wound down after nearly an hour and a half, the CEOs hustled out to live television positions on the White House grounds, where many gave interviews to CNBC.

It had been a landmark day in the history of American capitalism.

Unbeknownst to the financial executives, General Motors CEO Rick Wagoner was also on Pennsylvania Avenue that day, meeting with Obama’s auto bailout task force.

Although the finance CEOs got a meeting with the president, Wagoner saw only Obama’s senior advisor Steven Rattner at the Treasury Department.

During the meeting, Rattner demanded Wagoner’s resignation.

It had been a tough day for CEOs in the nation’s capital.

"Suspected US missile kills 3 in northwest Pakistan - Suspected US missile kills 3 in northwest Pakistan, could strain American-Pakistani ties"

By NAHAL TOOSI, Associated Press

Last updated: 2:05 p.m., Wednesday, April 8, 2009

ISLAMABAD -- A suspected U.S. missile struck a car in a lawless northwest Pakistani tribal region Wednesday, intelligence officials said, killing two insurgents and a civilian a day after the country again told visiting U.S. officials it opposes such attacks.

The strike was a less-than-subtle hint that the Obama administration won't give up a Bush-era tactic that Washington says has killed a string of al-Qaida operatives along Pakistan's border with Afghanistan, even if it strains already-shaky relations with Islamabad.

The attack also damaged some shops in the village of Shin Warsak, wounding at least five villagers and killing one, they said.

U.S. officials rarely discuss the missile campaign, which has escalated since August.

ACCORDING TO OBAMA, THERE ARE SOME 7 TO 9 MILLION SPECIAL PEOPLE IN AMERICA WHO WILL GET TO SAVE MONEY BY RE-FINANCING THEIR MORTGAGES ....

AS TO THE REST, APPARENTLY THEY CAN GO EAT CAKE ....

OR POUND SAND ....

And so ....

"Obama: Timing right for millions to refinance"

By BEN FELLER and ALAN ZIBEL, Associated Press Writers

9 APRIL 2009

WASHINGTON – Declaring "good news" in the midst of an economic meltdown, President Barack Obama on Thursday urged families to take advantage of near-record low mortgage rates by refinancing their home loans.

"We are at a time where people can really take advantage of this," Obama said, seated with a handful of homeowners who have already lowered their bills.

Rates on 30-year mortgages inched upward this week but remain near the lowest level in decades, allowing borrowers with strong credit and stable jobs to save money if they refinance.

The average rate on a 30-year fixed-rate mortgage rose to 4.87 percent this week, up from 4.78 percent last week, Freddie Mac reported Thursday.

That was the lowest in the history of the survey, which dates back to 1971.

Low rates have sparked a surge in refinancing activity, with nearly 80 percent of new home loan applications coming from borrowers seeking to refinance.

Freddie Mac's sibling company, Fannie Mae, refinanced $77 billion in loans last month, nearly double February's volume.

"The main message we want to send today is there are 7 to 9 million people across the country who right now could be taking advantage of lower mortgage rates," Obama said in a photo opportunity in the Roosevelt Room.

"That is money in their pocket."

Last month, the Obama administration unveiled a new plan to provide $75 billion in incentives for the mortgage industry to modify loans to help borrowers avoid foreclosure.

On Thursday, the president encouraged people to take advantage of a government Web site — http://www.makinghomeaffordable.gov — to see how they can get help.

Obama also warned people to watch out for scam artists.

"If somebody is asking you for money up front before they help you with your refinancing," he said, "it's probably a scam."

___

AP Business Writer Alan Zibel reported from New York.

Friday April 10, 1:17 AM

"US military admits killing mother, children"

KABUL (AFP) - The US military in Afghanistan admitted Thursday that four people its troops killed in a raid were not "combatants", after Afghans said they included a mother and her children, with a baby dying afterwards.

Afghan officials and witnesses earlier accused the forces of killing civilians in an overnight raid in the eastern province of Khost that the US military initially said killed "four combatants".

"Further inquiries into the coalition and ANSF (Afghan National Security Force) operation in Khost earlier today suggest that the people killed and wounded were not enemy combatants as previously reported," the military said.\

"Coalition forces are working closely with local Afghan officials and family members to express condolences and provide assistance in the aftermath of this tragic event," it said, adding that an investigation was continuing.

It is the latest in a series of incidents in which civilians have been killed or wounded by international forces, who are in Afghanistan to hunt down Taliban and Al-Qaeda-linked militants.

The Khost police chief in charge of counter-terrorism, who is named only Ghazuddin, told AFP that the soldiers had gone to a village outside of Khost city in search of a militant.

They climbed on the roofs of other houses to surround the targeted building, he told AFP.

The occupants of one of the homes, which belonged to a colonel in the Afghan National Army who was serving elsewhere, suspected they were thieves, came out with guns and opened fire, Ghazuddin said.

"The Americans shot them thinking they are insurgents," he said.

The colonel's wife and daughter, son and brother were killed, he said.

Two women and a baby boy were also wounded.

"The coalition took the women and little boy to hospital for treatment."

"Later the boy died," Ghazuddin said.

He was unable to say what injuries killed the baby, whom he said was nine months old.

However, the baby's uncle, Janat Gul, said the child was seven days old.

The dead woman was a school teacher, the Afghan education ministry said in a statement.

It added that the girl who died was in the fourth grade at school, which would make her about 10 years old, and the boy was in the ninth grade, making him around 15.

The US military gave a similar version of events.

"Coalition and Afghan forces do not believe that this family was involved with militant activities and that they were defending their home against an unknown threat," its statement said.

The force said earlier that the raid targeted a militant linked to the radical Haqqani network and the Islamic Jihad Union, both associated with Al-Qaeda.

Three suspected militants were arrested at the compound that was initially targeted, it said.

They included the targeted militant, the force told locals.

Civilian casualties caused by international forces in Afghanistan have sparked frequent anger and resentment, leading President Hamid Karzai to accuse them of not taking enough care.

Karzai has told the international forces to work in close consultation with the Afghan authorities to avoid harming civilians.

The United Nations said in February that a record 2,118 civilians were killed in the Afghan conflict in 2008, with nearly 40 percent of the deaths caused by pro-government forces, including US-led and NATO troops.

"Federal budget deficit sets March record $192.3B - Federal deficit hits March record $192.3 billion; near $1 trillion halfway through budget year"

By MARTIN CRUTSINGER, Associated Press

Last updated: 4:50 a.m., Saturday, April 11, 2009

WASHINGTON -- The Treasury Department said Friday that the budget deficit increased by $192.3 billion in March, and is near $1 trillion just halfway through the budget year, as costs of the financial bailout and recession mount.

Last month's deficit, a record for March, was significantly higher than the $150 billion that economists expected.

The deficit already totals $956.8 billion for the first six months of the budget year, also a record for that period.

The Obama administration projects the deficit for the entire year will hit $1.75 trillion.

A deficit at that level would nearly quadruple the previous annual record of $454.8 billion set last year.

The March deficit was nearly four times the size of the imbalance in the same month last year.

Nearly $300 billion provided to the nation's banks and other companies to cope with the most severe financial crisis in seven decades has pushed government spending higher.

The Treasury report said that through the end of March, $293.4 billion had been provided to support companies through the $700 billion bailout fund Congress passed last October.

That support has been provided primarily to banks, although insurance giant American International Group Inc. and auto companies General Motors Corp. and Chrysler LLC also have received assistance.

Besides the bailout fund, Fannie Mae and Freddie Mac received $46 billion last month, bringing the total assistance provided to the mortgage finance companies to $59.8 billion since October.

The government took control of both last September after they had suffered billions of dollars in losses on mortgage loans.

Through the first six months of the budget year that began Oct. 1, tax revenues have totaled $989.8 billion, down 13.6 percent from the year-ago period.

The government's receipts have been reduced sharply by the recession, which is shaping up to be the longest of the post World War II period.

The downturn began in December 2007.

Government outlays totaled $1.95 trillion through March, 33.4 percent higher than the year-ago period.

Besides higher payments for the financial rescue, the government is paying more in such areas as unemployment benefits and food stamps.

The Treasury report showed benefit payments from the unemployment trust fund totaled $44.6 billion so far this budget year, up from $19.4 billion last year.

The Congressional Budget Office estimated last month that President Barack Obama's budget proposals would produce $9.3 trillion in deficits over the next decade, a figure $2.3 trillion higher than estimates made in February in the administration's first budget proposal.

The CBO review projected Obama's budget would generate deficits averaging almost $1 trillion annually over the decade ending in 2019.

The administration said it remained confident its forecasts for declining deficits over that same period could be achieved.

But private economists have faulted those estimates for relying on economic assumptions they believe are too optimistic.

The administration projects that after hitting $1.75 trillion this year, the gap between spending and tax revenues will dip to $1.17 trillion in 2010, and plunge to $533 billion in 2013.

If accurate, that would fulfill Obama's pledge to cut the deficit he inherited in half by the end of his current term in office.

Some economists have expressed concerns that the massive deficits being forecast could push interest rates up sharply, especially if foreign investors worry about the size of the U.S. deficit projections.

Lawrence Summers, director of Obama's National Economic Council, said Thursday there have been no indications that investors are growing worried about the size of the deficits.

On the contrary, he said yields on Treasury securities have been pushed lower by increased demand from investors seeking to hold Treasury bonds as a safe haven in uncertain economic times.

WHAT HE IS SAYING IS THAT LONG AFTER WE OLDER FOLKS IN HERE ARE DEAD AND GONE, THE ECONOMY FOR SOMEBODY ELSE MIGHT BE BETTER THAN THIS ONE IS FOR US ....

And so ...

"Obama tempers optimism with reality on economy - As economy shows signs of improvement, Obama mindful to problems that remain ahead"

By LIZ SIDOTI, Associated Press

Last updated: 5:16 p.m., Tuesday, April 14, 2009

WASHINGTON -- Aiming to assert control over the nation's economic debate, President Barack Obama on Tuesday warned Americans eager for good news that "by no means are we out of the woods" and argued his broad domestic agenda is the path to recovery.

In a speech at Georgetown University, Obama aimed to juggle his recent glass-half-full takes on the economy with a determination to not be stamped as naive in the face lingering problems.

He summarized actions his administration has taken to steady the limping economy and coupled that with a fresh overview of his domestic goals.

The speech, which key aides had signaled in advance would not contain any major announcements, came as Obama nears his symbolic 100-day mark in office, important because that has become a traditional marker by which to judge new administrations.

"There is no doubt that times are still tough," Obama said.

"But from where we stand, for the very first time, we are beginning to see glimmers of hope."

"And beyond that, way off in the distance, we can see a vision of an America's future that is far different than our troubled economic past."

Obama's message came on a day of conflicting economic indicators and Federal Reserve Chairman Ben Bernanke's suggestion that the recession may at last be bottoming out.

It would have been difficult to make that case based on a report the government released earlier Tuesday showing that retail sales plummeted by 1.1 percent in March, a performance much poorer than experts had anticipated.

At the same time, wholesale prices dropped sharply, a strong indication that inflation appears to pose little threat to the economy.

In a speech at Morehouse College in Atlanta, Bernanke talked of flickering signs of improvement, citing recent data on home and auto sales, home building and consumer spending.

But the government's broader message -- that a full turnaround might be a long time coming -- may not be welcome news for a weary U.S. public.

Obama, in fact, said in his speech that a complete recovery depends on building a new foundation for the U.S. economy and making changes in the political landscape.

And he said anew that rules governing the financial system must be made compatible with Digital Age technology and innovation, telling Congress that "I expect a bill to arrive on my desk for signature before the year is out."

He also said the economy must be transformed from one less dependent on a risk-obsessed financial sector and more on clean energy, good education and health care costs brought under control.

"We cannot rebuild this economy on the same pile of sand," he said, invoking a Biblical reference to Jesus' Sermon on the Mount.

"We must build our house upon a rock."

"We must lay a new foundation for growth and prosperity a foundation that will move us from an era of borrow and spend to one where we save and invest, where we consume less at home and send more exports abroad."

Obama also said the problem is exacerbated by politicians with an outsized interest in scoring points and an impatient media.

"When a crisis hits," he said, "there is all too often a lurch from shock to trance, with everyone responding to the tempest of the moment until the furor has died down and the media coverage has moved on to something else, instead of confronting the major challenges that will shape our future in a sustained and focused way."

"This can't be one of those times," Obama said.

Obama put his fledgling presidency on the line when he advocated sweeping new government intervention and spending to right the troubled economic conditions.

Shortly after taking office he signed a $787 billion package intended to boost the economy and his administration also has unveiled a slew of other programs aimed to right the troubled home, banking and auto sectors.

"Taken together, these actions are starting to generate signs of economic progress," he said, citing canceled government-sector layoffs, new clean-energy industry hires, a spate of refinancings, and signs of increased credit flows.

But, the president said, "2009 will continue to be a difficult year."

He predicted more job losses, foreclosures, and gyrating stock markets.

The president devoted a significant portion of his speech to defending actions he has taken in the face of criticism he has heard mainly from Republicans -- but also from some of the more conservative members of own Democratic Party -- that he has "been spending with reckless abandon, pushing a liberal social agenda while mortgaging our children's future."

Not so, Obama said.

"The last thing a government should do in the middle of a recession is to cut back on spending," the president said.

As for the long-term, increasingly dire federal budget deficit picture, he said that investments in new industries and economic foundations is crucial to future success and even to reducing the deficit.

"Chronically slow growth will not help our long-term budget situation," he said.

The president also defended the massive and unpopular government programs enacted under the Bush administration and expanded under Obama to bail out banks and other financial institutions.

He acknowledged that sending money directly to taxpayers might be more palatable -- but said it wouldn't be as effective.

"The truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth," Obama said.

THIS STRIKES ME AS AKIN TO THE GERMANS AND THE WORLD, INCLUDING THE USA, FORGIVING AND EMBRACING THE NAZIS WHO RAN CONCENTRATION CAMPS DURING WWII BECAUSE THEY WERE ONLY FOLLOWING ORDERS FROM THEIR GOVERNMENT ....

And so ...

"Disappointment with US not prosecuting CIA"

By REBECCA SANTANA, Associated Press Writer

17 APRIL 2009

CAIRO – Human rights groups and former detainees in U.S. custody expressed disappointment Friday with the decision by President Barack Obama not to prosecute CIA operatives who used interrogation practices described by many as torture.

Obama sought to turn a page on what he called "a dark and painful chapter" with his announcement a day earlier.

He condemned the aggressive techniques — including waterboarding, shackling and stripping — used on terror suspects while promising not to legally pursue the perpetrators.

But the decision left some bitter in the Muslim world, where there was widespread anger over abuse of detained terror suspects.

It could tarnish somewhat Obama's growing popularity among Arabs and Muslims, who have cheered his promises to close the Guantanamo Bay detention facilities and withdraw U.S. troops from Iraq.

"All of us in Guantanamo never had hope or faith in the American government," said Jomaa al-Dosari, a Saudi who spent six years in Guantanamo before being released last year.

"We only ask God for our rights and to demand justice for the wrongs we experience in this life."

"There will be a time in history when every person who committed a wrong will be punished."

The editor of the Saudi Arabia-based Arab News daily, Khaled Almaeena, said the decision not to prosecute "sends the wrong message."

"They destroyed people's lives ..."

"Unfortunately, they're allowed to go scot free," he said of operatives who carried out the techniques.

The Obama administration Thursday released secret CIA memos detailing interrogation tactics sanctioned under the Bush administration.

As well as waterboarding, the memos authorized keeping detainees naked, in painful standing positions and in cold cells for long periods of time.

Other techniques included depriving them of solid food and slapping them.

Sleep deprivation, prolonged shackling and threats to a detainee's family also were used.

Obama's attorney general offered CIA operatives legal help if anyone else takes them to court, although the administration's offer of help did not extend to those outside the CIA who approved the so-called enhanced interrogation methods or any CIA officers who may have gone beyond what was allowed.

Many human rights groups condemned the decision, saying that it was necessary to have a full accounting of what took place.

"The release of CIA memos on interrogation methods by the U.S. Department of Justice appears to have offered a get-out-of-jail-free card to people involved in torture," Amnesty International said in a statement on its Web site.

"Torture is never acceptable and those who conduct it should not escape justice."

In Egypt, Hafez Abu Saada, of the Egyptian Organization for Human Rights in Cairo, said the decision would encourage other nations to let abuses pass.

"Obama told us he will hold to account the people who committed a crime or a human rights violation," he said.

"So this is a wrong signal to the perpetrators of human rights — especially third world countries — and also a wrong signal to the international community."

Moazzam Begg, a British resident who spent more than two years in Guantanamo, said he wasn't surprised by the tactics revealed, saying "we witnessed" most of the techniques.

"It's the unwritten things — the things that happened in the heat of the moment on the battlefield like tying people up with chains and dragging them around — that are worrying and will likely never come out," he said.

The International Commission of Jurists, a widely respected Geneva-based organization of legal experts from around the world, issued a scathing statement saying Obama should thoroughly investigate and prosecute officials who authorized and engaged in torture.

"Without holding to account the authors of a policy of torture and those executing it, there cannot be a return to the rule of law," said Wilder Tayler, acting secretary-general of the ICJ.

Clara Gutteridge, a researcher with British human rights group Reprieve, which represents several Guantanamo inmates, said she was struck by the amount of time and effort apparently poured into drawing up the memos and justifying the use of what she called torture.

"It shows us the man hours that have gone into this program, and making people believe that they are following the law," Gutteridge said.

In Islamabad, Pakistan, Saad Iqbal Madni, released from Guantanamo Bay last summer after seven years in detention, said sleep deprivation techniques were used on him.

For months, he said, he was moved from cell to cell every two hours while shackled in an attempt to keep him awake.

"I believe that God will take care of anyone who did a wrong thing to me," said Madni.
__

Associated Press writers Hadeel al-Shalchi in Cairo; Paisley Dodds and Raphael G. Satter in London; and Shafika Mattar in Amman, Jordan contributed to this report.

IF OBAMA HAD BEEN AROUND AT THE END OF WWII WITH HIS ATTITUDE OF NOT LOOKING BACK OR PROSECUTING THOSE WHO MAKE POLICY, THE NAZIS WOULD HAVE ALL GONE FREE ....

And so ...

"Obama open to prosecution, probe of interrogations"

By JENNIFER LOVEN, AP White House Correspondent

21 APRIL 2009

WASHINGTON – President Barack Obama left the door open Tuesday to prosecuting Bush administration officials who devised the legal authority for gruesome terror-suspect interrogations, saying the United States lost "our moral bearings" with use of the tactics.

The question of whether to bring charges against those who devised justification for the methods "is going to be more of a decision for the attorney general within the parameters of various laws and I don't want to prejudge that," Obama said.

The president discussed the continuing issue of terrorism-era interrogation tactics with reporters as he finished an Oval Office meeting with visiting King Abdullah II of Jordan.

Obama also said he could support a congressional investigation into the Bush-era terrorist detainee program, but only under certain conditions, such as if it were done on a bipartisan basis.

He said he worries about the impact that high-intensity, politicized hearings in Congress could have on the government's efforts to cope with terrorism.

The president had said earlier that he didn't want to see prosecutions of the CIA agents and interrogators who took part in waterboarding and other harsh interrogation tactics, so long as they acted within parameters spelled out by government superiors who held that such practices were legal at the time.

But the administration's stance on Bush administration lawyers who actually wrote the memos approving these tactics has been less clear and Obama declined to make it so.

"There are a host of very complicated issues involved," Obama said.

White House chief of staff Rahm Emanuel said in a television interview over the weekend that the administration does not support prosecutions for "those who devised policy."

Later, White House aides said that he was referring to CIA superiors who ordered the interrogations, not the Justice Department officials who wrote the legal memos allowing them.

The president took a question on the volatile subject for the first time since he ordered the Justice Department to release top-secret Bush-era memos that gave the government's first full accounting of the CIA's use of waterboarding — a form of simulated drowning — and other harsh methods criticized as torture.

The previously classified memos were released Thursday, over the objections of many in the intelligence community.

CIA Director Leon Panetta had pressed for heavier censorship when they were released, but the memos were put out with only light redactions.

Far from putting the matter in the past, the move has resulted in Obama being buffeted by increased pressure from both sides.

Republican lawmakers and former CIA chiefs have criticized Obama's decision, contending that revealing the limits of interrogation techniques will hamper the effectiveness of interrogators and critical U.S. relationships with foreign intelligence services.

The release also has appeared to intensify calls for further investigations of the Bush-era terrorist treatment program and for prosecutions of those responsible for any techniques that crossed the line into torture.

Obama banned all such techniques days after taking office.

But members of Congress have continued to seek the release of information about the early stages of the U.S. response to the Sept. 11, 2001, terror under former President George W. Bush.

Lawsuits have been brought, seeking the same information.

Obama said an investigation might be acceptable "outside of the typical hearing process" and with the participation of "independent participants who are above reproach."

This, he said, could help ensure that any investigation would be a tool to learn, not to provide partisan advantage to one side or another.

"That would probably be a more sensible approach to take," Obama said.

"I'm not saying that it should be done, I'm saying that if you've got a choice."

The president made clear that his preference would be not to revisit the era extensively.

"As a general view, I do think we should be looking forward, not back," Obama said.

"I do worry about this getting so politicized that we cannot function effectively and it hampers our ability to carry out critical national security operations."

"Taliban deride 'worthless' truce with Pakistan - Taliban declare peace pact with Pakistan 'worthless' as army operation kills 20 militants"

By ZARAR KHAN, Associated Press

Last updated: 11:05 a.m., Monday, April 27, 2009

ISLAMABAD -- Taliban militants declared their peace deal with the Pakistani government "worthless" on Monday after authorities deployed helicopters and artillery against hide-outs of Islamist guerrillas seeking to extend their grip along the Afghan border.

The regions that straddle that frontier form a "crucible of terrorism," British Prime Minister Gordon Brown said during a visit to Afghanistan, where his country and the U.S. have thousands of troops.

In Pakistan later Monday, Brown said Britain wanted to work more closely with Islamabad to eliminate the terror threat.

The Obama administration is pressing Islamabad hard for more robust action against those extremists, who are threatening Pakistan's stability and the security of troops across the border.

A collapse of the peace pact would likely please American officials.

President Asif Ali Zardari called for more foreign support for cash-strapped Pakistan to prevent any danger of its nuclear arsenal falling into the hands of al-Qaida and its allies.

Zardari also said Pakistani intelligence thought Osama bin Laden -- recently offered sanctuary by militants in the area covered by the peace pact -- might be dead, but said there was no evidence of the al-Qaida chief's demise.

"He may be dead."

"But that's been said before," Zardari told a group of reporters.

"It's still between fiction and fact."

The government agreed in February to impose Islamic law in Swat and surrounding districts that make up Malakand Division if the Taliban there would end their violent campaign in the one-time tourist haven.

In recent days, Taliban forces from Swat began entering Buner, a neighboring district just 60 miles (100 kilometers) from the Pakistani capital.

American officials have described the pact as a capitulation and urged Pakistani leaders to switch their security focus from traditional foe India to violent extremists inside their borders.

Pressure on the creaking peace deal grew further Sunday when authorities sent troops backed by artillery and helicopter gunships to attack Taliban militants in Lower Dir, part of the region covered by the pact.

Paramilitary troops killed 20 suspected militants Monday, and a total of 46 have died since the operation began, an army statement said.

Maulvi Umar, a spokesman for the umbrella group of Pakistan's Taliban, claimed that insurgents in Dir had killed nine troops and lost two of their own.

Some terrified residents have fled the area clutching no more than their children and a few belongings.

At least one soldier was killed Sunday.

The military justified the operation in another statement Monday that said the insurgents had plunged Dir into lawlessness by attacking security forces, abducting prominent people for ransom.

The statement also blamed the militants for the death of 13 children who were playing with a bomb they thought was a toy.

A spokesman for the Taliban in their Swat Valley stronghold denounced the operation as a violation of the pact and said their fighters were on alert and waiting to see if a hard-line cleric who mediated the deal pronounced it dead.

"The agreements with the Pakistan government are worthless because Pakistani rulers are acting to please Americans," Muslim Khan, spokesman for Taliban militants in the Swat Valley, told The Associated Press.

A spokesman for Sufi Muhammad said the cleric was trapped in his home in the same area of Lower Dir attacked by troops and that his supporters have been unable to contact him.

"We will not hold any talks until the operation ends," spokesman Amir Izzat Khan said.

Umar, the Pakistani Taliban spokesman, said the militants would agree to talks about the situation in Dir, but only if the military operation is halted.

"We were living peacefully in Dir," Umar said.

"Nothing warranted the operation."

Dianne Feinstein, head of the U.S. Senate Intelligence Committee, said Sunday that the recent Taliban advance in Buner -- and the lack of a robust military response -- suggested Pakistan was "in very deep trouble."

"This thing has to get sorted out and sorted out quickly or you could lose the government of Pakistan, and Pakistan is a nuclear power and that concerns me deeply," Feinstein said on CNN television.

Brown also raised alarm Monday on a trip to tour British bases in southern Afghanistan.

He told reporters that areas on both sides of Afghan-Pakistani border "are the breeding ground, the crucible of terrorism."

During a press conference in Islamabad, Brown said Britain would give more aid to Pakistan to improve education and other sectors along the border -- with a particular focus on girls' schooling -- to lessen the allure of extremism.

He also said his country wanted to work more closely with Pakistan on its strategy to take on the extremists.

"Our two countries face a shared and urgent threat," said Brown, who noted that Britain has a large ethnic Pakistani population.

Pakistan's foreign minister asked Western officials Monday to "not panic."

"We mean business, and if we have to use force we will use force."

"We will not hesitate," Shah Mahmood Qureshi told The Associated Press on the sidelines of meetings with his Afghan and Iranian counterparts.

"We will not surrender, we will not capitulate, and we will not abdicate."

Zardari, who has termed Pakistan's dire situation as an opportunity to draw in economic and military assistance, insisted Pakistan's nuclear weapons were in "safe hands," but added:

"If Pakistan fails, if democracy fails, if the world doesn't help democracy, then any eventuality is a possibility."

Elsewhere in the northwest Monday, a remote-controlled bomb exploded near a police patrol, killing an officer and a passer-by while wounding five other police, officials said.

The blast occurred near a railway crossing in the Lakki Marwat area, said Amir Ahmed, a local police officer.

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Associated Press writers Nahal Toosi in Islamabad, Ishtiaq Mahsud in Dera Ismail Khan and Riaz Khan in Peshawar contributed to this report.

BUT SOME ARE MORE EQUAL THAN OTHERS ....

And so ...

"Obama administration expands housing aid plan - Obama administration launches effort to aid troubled borrowers with second mortgages"

By ALAN ZIBEL, Associated Press

Last updated: 5:06 p.m., Tuesday, April 28, 2009

WASHINGTON -- The Obama administration said Tuesday it is expanding its plan to stem the housing crisis by offering mortgage lenders incentives to lower borrowers' bills on second mortgages.

During the housing boom, lenders readily gave out "piggyback" second loans that allowed consumers to make small down payments or avoid them entirely.

While home prices soared, such mortgages were even extended to borrowers with poor credit scores and people who didn't provide proof of their incomes or assets.

But those loans, which are attached to about half of all troubled mortgages, have been an obstacle to efforts to alleviate the housing crisis.

That's because borrowers who are trying to get their primary mortgage modified at a lower monthly payment need the permission of the company holding the second mortgage.

The new plan aims to get rid of that roadblock, administration officials said.

"We're offering even more opportunities for borrowers," Treasury Secretary Timothy Geithner said in a statement.

The new incentives are estimated to help up to 1.5 million borrowers with second mortgages, Housing Secretary Shaun Donovan said.

While data on how many household have been helped by the Obama administration's housing plans are not available, Donovan told reporters there have been "hundreds of thousands of applications."

The administration's second mortgage initiative will be funded out of $50 billion in financial rescue money already allocated.

As an incentive to modify second loans at lower interest rates, mortgage companies would get $500 upfront for each modified loan, plus $250 a year for three years as long as the borrower doesn't default.

Similarly, borrowers would get up to $1,000 over five years applied to the principal balance of their primary mortgage, and the government would pick up part of investors' costs as well.

Lenders would also be given the ability to remove second mortgages entirely in exchange for larger government payouts.

The administration also plans to give mortgage companies $2,500 payments to entice them to participate in the "Hope for Homeowners" program.

It was launched by the government last fall but has so far has been a failure, proving unattractive to banks required to absorb large losses.

It was supposed to allow 400,000 troubled homeowners to swap risky loans for traditional 30-year fixed-rate mortgages with lower rates.

Instead only one loan has received final approval, with about 50 more in the works and fewer than 1,000 applications.

The program has been stymied by high fees, complex regulations and a requirement that banks absorb large losses.

The Obama administration supports legislation in Congress to ease those restrictions.

Meanwhile, the faltering economy is causing the housing crisis to spread.

Nationwide, nearly 804,000 homes received at least one foreclosure-related notice from January through March, up from about 650,000 in the same period a year earlier, according to RealtyTrac Inc., a foreclosure listing firm.

Meanwhile, another key piece of President Barack Obama's plan to keep borrowers from losing their homes is expected to be defeated this week in the Senate.

There does not appear to be enough votes to pass a bill that would allow people to seek mortgage relief in bankruptcy court.

Many lawmakers remain worried that such legislation would unleash a torrent of loan defaults, ultimately driving up mortgage rates and introducing fresh uncertainty to a housing market in crisis.

There were, however, fresh signs Tuesday that the housing recession may be hitting bottom.

Home prices have been setting record annual declines, but in February that 25-month cycle was broken.

The Standard & Poor's/Case-Shiller index of home prices in 20 major cities slid by 18.6 percent from February 2008, slightly better than the 19 percent in January.

The 10-city index slid 18.8 percent, also a little better than the month before.

Prices in the 20-city index have plunged 30.7 percent from their peak in the summer of 2006, and the 10-city index has lost more than 31.6 percent.

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AP Economics Writer Martin Crutsinger contributed to this report.

AS THE "POWER" OF HIS OFFICE GOES RIGHT TO HIS HEAD, IS "ALEXANDER THE GREAT" OBAMA PLANNING TO INVADE PAKISTAN NOW?

"Gun attacks in Pakistan's south kill 26"

By ASHRAF KHAN, Associated Press Writer

30 APRIL 2009

KARACHI, Pakistan – A slew of gun attacks in a major city in southern Pakistan killed at least 26 people, officials said Thursday, rattling a country already tense over a military offensive against Taliban militants in a district near the capital.

The unrest came as President Barack Obama said he was "gravely concerned" about Pakistan's stability and described its government as "very fragile" — although he did express confidence that the country's nuclear arsenal was safe from militants.

It also came as Pakistan's president urged the public to support the army's offensive against Taliban fighters so that Pakistan would remain "a moderate, modern and democratic state."

Ethnic tension was the suspected spark for the gun attacks Wednesday in Karachi, a teeming port city with a volatile history.

Much of the tension has been between the Pashtun population, who dominate the country's militant-infested northwest, and ethnic Urdu-speakers, who are descendants of migrants from India.

The latter are in large part represented by the political party that runs the city, the Muttahida Quami Movement.

The MQM has been outspoken against the Pashtun-dominated Taliban and has warned that the militants are gaining sway in Karachi, Pakistan's commercial hub.

The city was largely crippled Wednesday after two MQM activists were gunned down by unknown shooters, sparking street violence.

Paramilitary rangers roamed the city's trouble spots Thursday, as officials said the death toll hit 26.

There was concern that funerals set for later in the day could lead to more tension.

Officials and politicians resisted blaming groups beyond criminals.

"Criminals and the mafia want to put the city's peace on the stake, but all the peaceful citizens should come up to counter such designs," MQM leader Altaf Hussain said from London, where he is in self-exile.

The rangers arrested more than 25 suspects in the shootings, said Maj. Aurang Zeb, a spokesman for the security forces.

He added that educational institutions were ordered shut.

The military, meanwhile, proceeded with an offensive against Taliban militants in Buner, a district some 60 miles (100 kilometers) from Islamabad.

The army said Wednesday that it had retaken the main town in Buner and that more than 50 Taliban fighters and one member of the security forces died in the offensive.

Troops and commandos backed by jet fighters and helicopter gunships were moving toward militant strongholds in the Ambela and Pir Baba areas, an army official said Thursday.

The troops were facing resistance at Ambela and some other areas, said the official, who spoke on condition of anonymity because he was not authorized to speak to media.

Taliban fighters from the Swat Valley entered Buner earlier this month fresh off a peace deal with the government.

The military launched the offensive there Tuesday amid strong U.S. pressure.

In a statement late Wednesday, Pakistani President Asif Ali Zardari urged Pakistanis to unite against the Taliban.

The "time has come for the entire nation to give pause to their political differences and rise to the occasion and give full support to our security forces in this critical hour," Zardari said.

"This is the only way to demonstrate our will to keep Pakistan as a moderate, modern and democratic state where the rights of all citizens are protected."

The Obama administration, determined to stop militants from using Pakistan as a base to plan attacks on U.S. and NATO forces in Afghanistan, is asking Congress for more money to aid the Pakistani army.

In a news conference Wednesday marking his first 100 days in office, Obama said Pakistan was potentially unable to deliver basic services to its population such as health care and education.

"We need to help Pakistan help Pakistanis," Obama said.

"We want to respect their sovereignty, but we also recognize that we have huge strategic interests, huge national security interests in making sure that Pakistan is stable and that you don't end up having a nuclear-armed militant state."

Still, Obama expressed absolute confidence that Pakistan's nuclear arsenal will be secured, "primarily, initially" because he said he believes Pakistan's army will do the job.

But he left the door open for U.S. action if necessary.
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Associated Press writers Munir Ahmad in Islamabad and Lara Jakes in Washington contributed to this report.