It’s Time for the Banks to Face the Hangman

Mike Whitney
Dissident Voice
October 19th, 2007

Officials in the Treasury Department — working with their colleagues at Citigroup, J.P. Morgan and Bank of America — have concocted a scheme to rescue the banks from their massive losses in mortgage-backed securities. The group is planning to set up a $100 billion emergency fund that will purchase non-performing assets for short-term debt. In truth, the fund is a bailout that provides the financial giants with an excuse for not reporting their enormous losses from bad bets.

The story first appeared in Saturday’s Wall Street Journal and was followed on Monday with a second headline piece:

“RESCUE READIED BY BANKS IS BET TO SPUR MARKET”

WSJ: “The high stakes plan to RESCUE BANKS FROM LOSSES on mortgage securities amounts to a big bet that a consortium of financial giants — AT THE PRODDING OF THE US GOVERNMENT — can PERSUADE INVESTORS TO POUR MORE MONEY INTO THE TROUBLED CREDIT MARKET.”

That’s right. The Treasury Dept is directly involved in a scam that saves the banks while trying to “persuade” investors to “pour more money” into toxic mortgage-backed sludge. Treasury Department officials clearly have a different idea of “moral hazard” than the rest of us.

The banks are presently holding hundreds of billions of dollars in mortgage-backed securities (MBSs) that they cannot sell — because there are no buyers — and don’t want to take back on their balance sheets because they’ll be forced to increase their capital reserves. So they’ve decided to launch a public relations campaign to promote some goofy sounding fund, called the “Master-Liquidity Enhancement Conduit” or M-LEC, which will allow the banks to place their unwanted bonds in Limbo until some future date when the public appetite for garbage improves.

The WSJ does a good job of disguising the real motive behind the new “Super-Conduit” (a.k.a. the Bailout fund) but in the last paragraph, buried in Section C-3, they reveal the truth:

“The goal is to reassure investors and make them more willing to buy its short-term debt.” So, the fund is really just a way of rearranging the marketplace until the next crop of gullible investors sprouts up and buys more mortgage-backed garbage.

Bloomberg’s Mark Gilbert puts it like this:

“It seems the way to reassure investors that it’s safe to buy the repackaged junk that has torpedoed credit markets in recent months is to repackage the least-junky bits of the junk into more palatable securities. The pyramid just grew another layer. . .

I can’t decide whether the Treasury’s willingness to patronize such a misguided effort is evidence that the situation is more desperate than anyone thought, or a positive sign that financial markets will continue to evolve and innovate and might eventually wrestle the subprime demon to the ground.”

Indeed.

Where are the regulators? The SEC and Treasury should be forcing the banks to be straightforward with the public and let them know about the hanky-panky they’ve been up to with their risky SIVs (structured investment vehicles) Citigroup alone has nearly $80 billion in off-balance sheets operations which are in distress. The bank accounts for “25% of the global SIV market. As of August, assets held by SIVs totaled $400 billion”.

SIVs are set up as a way to make money without taking the risk onto their balance sheets. “They issue their own short-term debt, usually at relatively low rates …then use the proceeds to buy higher yielding assets such as securities tied to mortgages.” (WSJ)

Ever since Bear Stearns blew up in late July, investors have been steering clear of any securities connected to real estate, which means the SIVs are getting the Double Whammy — they can’t sell their asset-backed commercial paper (because it’s mortgage-backed) and they find buyers for their collateralized debt obligations. (CDOs) To a large extent, the market is still frozen despite the upbeat cheerleading on the business pages. Clearly, the worst is yet to come.

How bad is it?

An article in yesterday’s Financial Times of London said that, “Only $9.9 billion of home equity loan securitizations have come to market since July 1 — A 95% DECLINE FROM THE $200.9 BILLION IN THE FIRST HALF OF THIS YEAR AND A ROUGHLY 92% DECREASE FROM THE SAME PERIOD LAST YEAR.”

The banks are in trouble. Big trouble. Main sources of revenue have dried up overnight and they’re stuck with hundreds of billions of debt. That’s why the papers broke the story on Saturday when there was NO chance of triggering a stock market crash.

Imagine the horror of investors around the world when they discover that the major investment banks are running these shabby “off-balance sheets” operations while concealing their real financial condition from their investors. Consider the disgust the public feels when they see Treasury officials bailing out the banks instead of ordering them to report their losses and get on with business.

Still, Wall Street nonchalantly leaps from one swindle to the next never considering the damage it’s doing to the credibility of the market.

Susan Pulliam summed it up like this in the Oct 12 edition of The Wall Street Journal:

“Since the invention of the ticker tape 140 years ago, America has been able to boast of having the world’s most transparent financial markets. The tape and its electronic descendants ensured that crystal-clear prices for stocks and many other securities were readily available to everyone, encouraging millions to entrust their money to the markets. These days, after a decade of frantic growth in mortgage-backed securities and other complex investments traded off exchanges, that clarity is gone. Large parts of American financial markets have become a hall of mirrors.”

“Hall of mirrors” is an understatement. The system is thoroughly opaque and crooked as a ram’s horn. The market’s new architecture, “structured finance,” is a dismal rip-off from start to finish. Consider the mentality of the hucksters who dreamed up “securitizing” subprime mortgages and selling them off as precious jewels in the secondary market. This was a blatant con job. How can the liabilities of “borrowers with bad credit” be traded to foreign investors and pension funds like they were valuable assets? And where were the regulators while this scam was going on?

Isn’t this sufficient evidence that the system is totally out of whack?

Wall Street avoids transparency like the plague. That is to be expected. But what about the government? It’s the government’s job to protect the investor and maintain the integrity of the system. Is that what Treasury Dept is doing or are they “LURING investors to buy debt issued by the rescue fund as part of the plan”? (Wall Street Journal)

“Luring”? Is that how Paulson sees it; like luring turkeys to the chopping block with a trail of breadcrumbs?

The idea of protecting the little guy has never occurred to anyone in the Bush administration. Their job is to shift wealth from one class to the other via equity bubbles and government bailouts — anything that advances the corporate agenda.

Presently, the banks are sitting on $200 billion in non-performing mortgage-backed securities (MBSs) and collateralized debt obligations. (CDOs) They are also holding another $300 billion in collateralized loan obligations (CLOs) from mergers and acquisitions that stalled after the Bear Stearns meltdown. If the present bailout doesn’t materialize, we’re likely to see bank closures and a plummeting stock market.

Shouldn’t the regulators have considered the probability of a crash before they allowed trillions of dollars of radioactive bonds to flood the market when no one had any idea of their real value? Wouldn’t that have been the prudent thing to do?

Now we know what they are worth. They’re worth nothing. That’s why the banks are running scared and refusing to put them up for auction. They’d rather sleaze them into a lofty-sounding superfund that masks their true value.

In the last two weeks the stock market soared on the news that the banks were reporting billions of dollars in losses. Investors were hoodwinked into believing the banks were being honest and had “come clean” about their financial condition. What a joke. In reality, the banks only reported roughly 5% of their potential losses; the rest were hidden in their off balance sheets operations.

Equities skyrocketed to new heights. Wall Street was euphoric.

Now we know the truth. It was all baloney.

The Wall Street Journal: “The new fund is designed to stave off what Citigroup and others see as a threat to the financial markets world-wide: the danger that dozens of huge bank-affiliated funds will be forced to unload billions of dollars in mortgage-backed securities and other assets, driving down their prices in a fire sale . . . . The ultimate fear: If banks need to write down more assets or are forced to take assets onto their books, that could set off a broader credit crunch and hurt the economy. It could make it tough for homeowners and businesses to get loans.”

It could “hurt the economy” and “make it tough for homeowners and businesses to get loans?” Ahhh, yes. It’s all clear now. The banks only cooked up this colossal bailout to make things better for us common people. How is it that we didn’t notice that before? Our problem is that we don’t see the magnanimity and altruism which drives the corporate agenda.

From the New York Times:

“The conduit (The bailout fund) is expected to start operating in 90 days and will stay in place for a few years until it has disposed of the assets it buys, according to people familiar with the negotiations. . . . To maintain its credibility with investors from whom it would raising money, the conduit will not buy any bonds that are tied to mortgages made to people with spotty, or subprime, credit histories. Rather, it will buy debt with the highest ratings — AAA and AA — and debt that is backed by other mortgages, credit card receipts and other assets.”

We already know about the problems with the ratings agencies and how they are in bed with the investment banks. We also know that the whole purpose of the new fund is to off-load mortgage-backed tripe which is no longer sellable on the market. What we didn’t know is that the New York Times eagerly provides the peppy public relations narrative to assist big business in dumping its failing assets.

New York Times: “The conduit will pay market prices for the securities it buys. But it remains unclear how officials will determine the price of some bonds that have not been actively traded since August, because the difference between what buyers are willing to pay and what sellers want has widened significantly.”

Of course, they’ll pay full price because they want to be “made whole” again. The truth is, however, that these derivatives will probably only fetch pennies on the dollar unless they get another Wall Street PR face-lift.

Christian Stracke, market analyst from the research firm CreditSights, said the effort appears to be “an attempt to soothe tense investors in the debt market, rather than to provide substantive relief to the worst-hit mortgage securities.”

Stracke added, “For me, this is more of a P.R. blitz.”

Bingo.

The announcement of the forthcoming Master-Liquidity Enhancement Conduit or M-LEC further underlines the gravity of the problems facing the banking system. The fund creates a “buyer of last resort” so that these dubious assets won’t be sold on the market at fire-sale prices.

Citigroup appears to be the greatest beneficiary of the current plan. They have a number of Enron-type SIVs that could be at risk.

Again, the problems that are surfacing in the banking sector today are the direct result of Greenspan’s loose monetary policies coupled with the dismantling of the regulatory regime that was created following the 1929 stock market crash. We are now back to Square 1. All of the various scams and swindles which permeated that hyper-inflated market are now back in full-force foreshadowing a steep decline in investor confidence, increased market manipulation, and an unavoidable economic calamity.

“Structured finance” has transformed US markets into a carnival sideshow. Productivity and real growth have been replaced with never-ending credit expansion and speculative abuses. Reckless monetary policies and the behemoth current account deficit have destabilized the global economy a set the stage for a fiscal Armageddon.

The subprime mortgage crisis and subsequent shrinking of asset-backed commercial paper (ABCP) has thrown a wrench in the funding of daily corporate operations. These are the harbingers of an impending recession. As mortgages continue to default at a record pace; the aftershocks will continue to rumble through the credit markets where subprime loans have been “securitized” into bonds and leveraged at maximum levels. It’s just one domino knocking down the next.

The financial system is at greater risk now than any time in the last 80 years. Regrettably, the only remedies coming from the Fed are more currency-destroying rate cuts or hundreds of billions of dollars in repos to remove mortgage-backed bonds from the banks’ balance sheets. Neither of these solutions addresses the critical issues; they do not stabilize the market, reinvigorate lending, or restore investor confidence. They are merely band-aids on a sucking chest-wound. They won’t stop the bleeding.

The Fed’s monetary policies promote financial speculation that inevitably leads to equity bubbles. Under Greenspan’s stewardship, the country has lurched from the 1990’s bond bubble, to the dot.com bubble, to the subprime meltdown, to the liquidity crisis, to the credit crunch — all engineered at the Federal Reserve with ancillary assistance from the charlatans in the banking industry.

An article in China Worker, “Credit Crunch threatens Global Downturn” summarizes our present predicament it like this:

“Financial globalization has rebounded on the system. Capitalist leaders boasted that the near total integration of financial markets across the globe would provide lenders and borrowers everywhere with instant access to a completely liquid money market. New types of financial securities and sophisticated derivatives would spread the risk of borrowing so widely that it would eliminate risk entirely. While economies were growing and bubbles inflating, it appeared that — through derivatives trading — losses would be widely diffused among speculators, reducing risk to very low levels. Not even the most astute financial analysts could predict what would happen in the event of recession. The unanswerable question was: Who would ultimately bear the risks arising from widespread defaults or bankruptcies? The veteran investor, Warren Buffet, warned that derivatives would prove to be ‘weapons of mass destruction’.

The fantasy of financial alchemy transforming high risk gambling into low risk money-making has now been shattered.”

The author is right. “Structured finance” is a fraud. Risk has not been eliminated. In fact, it has exploded and become a system-wide problem. The dead wood is everywhere.

The banks are being crushed by a debt-load they generated through “securitization”. They need to accept responsibility for their poor judgment (or greed?) and report their losses. The Super-Conduit is just a dodge to put off the unavoidable day of reckoning. The whole wretched plan should be scrapped. No amount of financial chicanery will eradicate billions of dollars in bad bets. It’s time for the banks to face the hangman.

Rescue Efforts to Save Banks Reveals Total Bankruptcy of Financial Policies

Matthias Chang
Peace in Space
October 20, 2007

Recap of Past Events

The recent temporary rally of the Dow (as forecasted by me – continued ups and downs, but overall trend down as stated in previous Red Alerts) to an all time high (exceeding July 14,000 points) last week, had many people confused, especially the greedy ones and those in state of denial.

Some people went plunging into the stock market, to catch the rally and got burnt again. These people never learn and they deserve the trashing and I have no, absolutely no pity for such fools. It is like playing a poker game with the cards stacked against the stooge. The game at the global casinos was rigged from the word go.

If these people had examined critically, even for five minutes, the current state of affairs, it would have been apparent to them, that Bernanke’s sell out to Wall Street was a stop gap measure to calm the markets and create a state of illusion. But it did not work for the simple reason that one cannot simply revive, on a permanent basis, a hopelessly terminally ill patient, when all its organs are failing rapidly, save the ventilator maintaining the last few breaths.

The final clue that the global banking collapse is speeding down the one way street without any driver in control was the announcement by Paulson, the Treasury Secretary and the three big banks, JP Morgan Chase, CITI Group and Bank of America to set up a US$100 billion fund to mop up the toilet paper commercial paper market (i.e. to buy the structured vehicles’ toilet paper assets).

The global security fraud is now beyond redemption – what this means is that “investors” are not buying these commercial papers supposedly backed by securities, as their values are dubious. To avoid pubic auction of these toilet paper assets and then finding no buyers (i.e. finally being exposed that they are totally worthless), Paulson and these big banks are trying to buy these papers to avoid such a public exposure and in the hope that when things have “settled and there is no more panic” to unload them again to some other idiots. After all a fool is born every other day!

But their very act of setting the fund, have shown their scheme for what it is. The whole world is shouting. “The Emperor has no clothes!” I was shouting and shouting. Few heard my screams and saved their life savings.

This is the critical implication. Hence, the dramatic collapse of the Dow.

The End is Near

The rate cut of a hefty 50 basis points on 18th September 2007 by the Fed was a diversionary tactic and to buy time for the Banks to come up with another fraudulent scheme to hoodwink the self deluding public that all was well. It worked for barely three weeks and then lost all steam!

The dollar has plunged again – a massive 300 points. Gold has soared. Crude is heading for the US100 target by year end. Foreign funds (especially Sovereign Funds) are ditching US dollar assets. Long term bond yields are rising in tandem.

Literally, blood will flow in the streets in major cities of USA and UK in the not too distant future, when the full impact of the collapse hits every aspect of the economy and Joe six packs finally realises that Bush, Cheney, the neo-cons and the bastards controlling the City of London have taken them for a ride and robbed them of their pensions and future.

The policy of control chaos will be implemented and we will witness in major cities of the USA, UK and Europe of street battles, orchestrated by the Intelligence Services, between the white folks and the immigrant population. In the USA, it will be against the Latinos and then the blacks (after they realised that the Jewish community has abandoned them). In the UK and in Europe, it will be against mainly immigrants from Turkey, the Northern Mediterranean states and Pakistan and they are essentially Muslims. There is therefore, the added fuel of Islamic radicalism, which in the first place, was the creation of the Western intelligence services.

These immigrants (cannon folders for the continuing war on terrorism) will be blamed for the woes that afflict the white population. The big banks and the 1% rich have all disappeared with their mistresses and bunnies in some island resort and have engaged mercenaries like Blackwater to guard whatever real estate that need to be protected from the marauding crowds. The Katrina rehearsals have prepared such private armies to do their dirty work. They have their work cut out for them.

It will be ugly.

In the Middle East, the Western intelligence Services will ensure Muslims will slaughter fellow Muslims, as otherwise, only the West will be suffering from the consequences of the financial tsunami.

The Inevitable War

The G7 countries will give their consent and support Cheney’s mad adventure in the Middle East as their only solution to the mess which they have created.

I see no other scenario. How I wish I am wrong. But I doubt it. Events following every previous Red ALERTS have come to pass.

I am no soothsayer. But applying common sense, we must be realists and prepare our people and our family for the coming wars and prepare to take part in the Global Resistance, in whatever way and means at our disposal.

Take care and God bless you all.

Kosovo politicians refuse to reveal sources of wealth

B92
October 17, 2007

PRIŠTINA — The richest candidate in the Kosovo elections will be President of the New Kosovo Alliance Behgjet Pacolli.

He has declared property worth EUR 420mn to the Central Electoral Commission in Kosovo alone. Of all the party leaders, Kosovo President Fatmir Sejdiu came bottom on EUR 250,000.

The politicians generally put their wealth down to presents from wealthy associates, director of the NGO COHI Avni Zogiani told B92.

In Kosovo, it is common for politicians to live in houses costing EUR 5mn, says Zogiani.

The director of the NGO, which deals with the study of corruption, told B92 that the organization had been trying for some time to uncover the source of Kosovo politicians’ money.

“A year and a half ago, the Kosovo Anti-Corruption Agency was formed. We are applying pressure, but we always get the same answer. They claim that by law they are not permitted to reveal information concerning the sources of their wealth.”

“We disagree. There’s not a single sentence in the law which prohibits them from doing so. On the contrary, there is a Law on Information of Public Importance, which explicitly stipulates that independent agencies are obliged to publish information of public interest,” he says.

Zogiani says that the agency controls politicians, “who, at the same time, are corrupt and mixed up in organized crime.”

He adds that, “When we ask politicians about where they acquired such riches, they usually reply that they received it from old friends, or that supporters built their houses for free. However, everyone knows that the authorities are corrupt, that politics is linked to organized crime.”

“Everyone knows that their money comes from crime, or from directly manipulating state funds. Because of the current situation, Kosovo’s unresolved status, it’s hard to determine the origin of certain people’s wealth.”

“I think that everything will come to light once status has been settled, and I think a lot of information has been collected on how they made that money,” he predicted.

Other than Pacolli and Sejdiu, the remaining candidates have also declared their property. Reform Party leader Ora Veton Surroi declared property totaling EUR 2.5mn.

Prior to the 2004 elections he declared EUR 40mn, while it is known that in the meantime he has transferred ownership over his Koha Ditore company to his sister.

Hague accused and Alliance for the Future of Kosovo party leader Ramus Haradinaj declared EUR 1.3mn worth of property, while Democratic League of Dardania leader Nexhat Daci and Democratic Party of Kosovo leader Hashim Taci are worth EUR 300,000 each.

Kosovo politicians are not legally bound to declare the source of their property. However, some things are widely known. Kosovo’s richest politician, Pacolli, is the equivalent of Bogoljub Karić or Milan Panić, weekly Vreme correspondent Dejan Anastasijević told B92.

“The man owns a company in Switzerland which has done a lot of work with the Russians, particularly during the Yeltsin years. At one point, Carla del Ponte, while still a prosecutor in Switzerland, investigated him, and tried to prosecute him for laundering Russian money. It is presumed that the bulk of his wealth comes from those dealings in Russia,” explains Anastasijević.

Neither have there been any surprises concerning the wealth of the other candidates, says the journalist. “There’s no big mystery concerning Haradinaj, for example. Everone knows he’s the wealthiest man in Kosovo after Pacolli and Ekrem Luka, Haradinaj’s great friend and one of his party’s main donors.”

“As to the others, it’s a well known fact that after the ’liberation’ of Kosovo, that is the withdrawal of Serb forces, all the leading KLA commanders immediately ’liberated’ the most attractive business premises and cafes in Priština,” Anastasijević alleges.

Is the CIA helping itself to the Afghan heroin harvest?

Nick Possum
Whispers from the Mean Streets
October 22, 2007

No names, no pack drill, like we used to say in the army, but I had a client who wanted me to look into some aspects of the world heroin trade.

I googled a bit, and made a few phone calls and began to have disturbing suspicions.

Since the fall of the Taliban regime, which had seriously honoured an agreement to close down the trade, heroin production in Afghanistan has surged. In 2006 there was a 50 per cent increase in the poppy harvest and it created a new record for world production, my contact in the UN Office on Drugs and Crime told me. Afghanistan now accounts for 92 per cent of the world’s illicit production. She expected it would take another leap upwards this year.

So where is the stuff ending up? So far, not in Australia, but that’s only a matter of time. Once again, the streets of Western Europe and Russia are awash with the stuff and that fact got me thinking about the CIA.

The espionage game provides a powerful motive, superbly trained teams and the perfect cover for large-scale drug smuggling. It’s hardly a secret that, in the past, the CIA has partaken of the feast and, collectively, it couldn’t give a damn if the stuff gets dumped on the despised nations of ‘Old Europe’.

The US clandestine agencies are a sprawling brotherhood of silence and trust. And it isn’t just the huge bureaucracy of the CIA itself. Now, there’s also a freelance parallel universe of ‘special forces’ and ‘security contractors’ – created by the neocons for their War on Terror – doing everything from assassinations to ‘interrogation’. No mainstream politician wants to know what these people are doing in their name.

For security reasons these organizations are rigidly compartmentalised. Everything is on a need-to-know basis; “Don’t ask, don’t tell” is the rule. When (somewhere in the world) a Learjet from one of the CIA’s front companies rolls into the hanger at a US military airbase you just say “Hi, Raul” to the pilot and forget you saw the manacled guy being frogmarched down the steps, wearing a blindfold and earmuffs. You certainly don’t ask what those big black duffle bags might contain.

And, of course, this vast bureaucracy has a limitless appetite for money – over and above the official budget, itself often partly concealed. We’re talking about black, untraceable money. Money in quantities you can’t achieve by any means other than drugs. We’re talking hundreds of billions.

I read Amnesty International’s 2006 report on the CIA’s ‘rendition’ flights – Below the radar: Secret flights to torture and disappearance – and my suspicion deepened. Officially available flight details for known aircraft of the CIA’s clandestine fleet combined with observations by Amnesty’s global network of plane spotters reveal that these aircraft fly too often, and touch down far more often, than can be explained by the rendition of the hapless suspects they were carrying at the time. They often stopped at US air bases where the local authorities have no control over what gets loaded or unloaded.

I was musing on all this when a contact in the US emailed, drawing my attention to an 11 October piece in the New York Times.

“The director of the Central Intelligence Agency, Gen. Michael V. Hayden, has ordered an unusual internal inquiry into the work of the agency’s inspector general, whose aggressive investigations of the CIA’s detention and interrogation programs and other matters have created resentment among agency operatives.

“A small team working for General Hayden is looking into the conduct of the agency’s watchdog office, which is led by Inspector General John L. Helgerson. Current and former government officials said the review had caused anxiety and anger in Mr. Helgerson’s office and aroused concern on Capitol Hill that it posed a conflict of interest.”

It seemed that the General Hayden’s investigation is particularly focused on complaints that the inspector general had not acted as a fair and impartial judge of CIA ops but was instead conducting a crusade against participants in controversial detention programs.

“Any move by the agency’s director to examine the work of the inspector general would be unusual, if not unprecedented, and would threaten to undermine the independence of the office, some current and former officials say.

“A CIA spokesman strongly defended the inquiry … saying General Hayden supported the work of the inspector general’s office and had ‘accepted the vast majority of its findings’.

“‘His only goal is to help this office, like any office at the agency, do its vital work even better’, said Paul Gimigliano, the spokesman.”

Yeah, I’ll bet. Given that inspector general is appointed by the president and reports to both the director of the CIA and to Congress, one would have thought that he had every right to check up on what was going on in the CIA’s gulag archipelago.

But maybe that wasn’t where he’d trespassed. Maybe, just maybe, John Helgerson, in the course of auditing the whole dirty rendition process had begun to have the same suspicions as I about an even dirtier secret.

Scientists a step closer to steering hurricanes

Tim Shipman
Telegraph
October 21, 2007

Scientists have made a breakthrough in man’s desire to control the forces of nature – unveiling plans to weaken hurricanes and steer them off course, to prevent tragedies such as Hurricane Katrina.

The damage done to New Orleans in 2005 has spurred two rival teams of climate experts, in America and Israel, to redouble their efforts to enable people to play God with the weather.

Under one scheme, aircraft would drop soot into the near-freezing cloud at the top of a hurricane, causing it to warm up and so reduce wind speeds. Computer simulations of the forces at work in the most violent storms have shown that even small changes can affect their paths – enabling them to be diverted from major cities.

But the hurricane modifiers are fighting more than the weather. Lawyers warn that diverting a hurricane from one city to save life and property could result in multi-billion dollar lawsuits from towns that bear the brunt instead. Hurricane Katrina caused about $41 billion in damage to New Orleans.

Hurricanes form when air warmed over the ocean rises to meet the cool upper atmosphere. The heat turns to kinetic energy, producing a spiral of wind and rain. The greater the temperature differences between top and bottom, and the narrower the eye of the hurricane, the faster it blows.

Moshe Alamaro, of the Massachusetts Institute of Technology (MIT), told The Sunday Telegraph of his plans to “paint” the tops of hurricanes black by scattering carbon particles – either soot or black particles from the manufacture of tyres – from aircraft flying above the storms. The particles would absorb heat from the sun, leading to changes in the airflows within the storm. Satellites could also heat the cloud tops by beaming microwaves from space.

“If they’re done in the right place at the right time they can affect the strength of the hurricane,” Mr Alamaro said.

The theory has so far been tested only in computer simulation by Mr Alamaro’s colleague, Ross Hoffman. Mr Alamaro said: “With small changes to this side or that side of the hurricane we can nudge it and change its track. We’re starting with computer simulations, then will hopefully experiment on a small weather system.”

Last month scientists at the Hebrew University of Jerusalem announced that they had simulated the effect of sowing clouds with microscopic dust to cool the hurricane’s base, also weakening it. The dust would attract water but would form droplets too small to fall as rain. Instead, they would rise and evaporate, cooling hot air at the hurricane base.

In findings presented at a conference in Trieste, Italy, the team led by Daniel Rosenfeld demonstrated that dust dropped into the lower part of Hurricane Katrina would have reduced wind speeds and diverted its course.

The MIT team has now hired a professor of risk management to advise on steps necessary to protect themselves from legal action by communities affected if a hurricane is diverted. It is pressing for changes to US law and for an international treaty to settle possible disputes between neighbouring countries.

Mr Alamaro said: “The social and legal issues are daunting. If a hurricane were coming towards Miami with the potential to cause damage and kill people, and we diverted it, another town or village hit by it would sue us. They’ll say the hurricane is no longer an act of God, but that we caused it.”

Related: The U.S. government routinely conducts experiments on weather modification

Alex Ansary Video: Michael Chertoff Visits Topoff 4 Exercise

Topoff 4 took place at multiple locations in the Portland Metro area, as well as Phoenix, AR and Guam. In this clip, Mr. Chertoff visits David Douglas High School where 1100 teenagers volunteered to take part in this anti-terrorism exercise. The basketball court has been turned into a Rapid Screening Point (RSP) which is a temporary facility for high production screening of individuals with non-acute symptoms who are potentially ill or exposed to a harmful substance. Later, a press conference with Michael Chertoff, Mayor Tom Potter and the Governor takes place. Alex Ansary was fortunate enough to get his question in first (at 23:23) which pertained to the strange nature of nearly a dozen major war games happening around the world and asked Chertoff when the American people would be told about the situation with China and Russia. (note: Mic was only on Chertoff, sorry). This question is quickly dismissed, but is later followed by an excellent question from Ginny Ross from the OTA (oregontruthalliance.org) about the drills that took place on 911. Steve Keller, another concerned reporter, asked the panel about the possible use of private military contractors in the exercise or in future law enforcement locally. In general, Chertoff pushed the message of a never ending terror threat in nearly all of his responses to the press.

My first day reporting on Topoff 4:

Top Off 4 kicked off in Portland, Guam, and Phoenix on October 15th, 2007. This drill takes place alongside several other drills including both war games and martial law simulations. Our team (Oregontruthalliance.com) met over Thai food as we got our press passes. The first day seemed fairly quiet, so I took the time to go home and get some rest for the long week ahead. Earlier in the week, I made a request to play a victim to the site, t4volunteers.com. I got a email saying they were already done accepting new recruits, followed by another strange one saying that I could participate in a red cross exercise that was taking place in a church in Gresham, or Vancouver. It said to bring whatever I may need to stay overnight and provided an address. Meanwhile, the director of my television program called me up and told me she was driving home from Clackamas and the power was out. We made a note of it.

The next morning I assembled my camera gear.Upon hanging up the phone with Jack Blood, (a radio talk show host on Gcnlive.com) I heard the sound of jets overhead. Then I looked at the clock. 15 minutes til 9 AM, the official launch time of the “live” Topoff 4 drill. It was time to move.

I weaved my way through rush hour traffic worried that the drill in progress would delay my arrival for the official press conference that would pave the way for the rest of the day. The traffic was clear heading north on I -5. Deep sigh of relief…

At approximately 9:06AM a mock dirty bomb exploded at Portland International Raceway. However, the real area of concern is the Topoff 4 exercise was the east end of the Steel Bridge. P.I. R. was determined to be a better location to practice the response capabilities so the city center doesn’t have to come to a halt. The media tent was located about 1,000 feet from the staged incident. You could see about 50 police, all in black, with helmets with faceguards. One was walking a K-9 as he stopped to chat with a friend dressed up in a bio-hazard suit. I saw about 40 or 50 of them. This took place to the backdrop of an entire fleet of ambulances, firetrucks, and Red Cross tents. Dozens of firefighters moved into action taking care of the victims. On the ground there appeared to be several non-moving bodies. In another area, you could see a bunch of bodies in some kind of protect quarantine zone.

I was present to witness the press conference that followed with FEMA. There were multiple agencies present, including the FBI and ATF.

I was one of only a few independent videographers present. I traded contact info with a report from Willamette Week. I also bumped onto a reporter from KBOO community radio who came up to me to give me a warm greeting for being there.

Many of the questions that were asked were very basic. I saw all of the television and local radio stations present today, although not all were present during every single staged media event. I asked the media coordinator about Vigilant Shield 08. He told me he couldn’t answer any questions on that. That was a DOD issue. I still have yet to find the DOD’s PIO (public information officer) . Later I spoke with three AFT agents about the simultaneous drills. The ladies, all in their 40s, listened with partial interest, but gave no facial or verbal response when I was finished. That kind of hurt, but I accept the fact that many participants are simply earning their paychecks, (just like the reporters) and are really too compartmentalized to know or have a reason to care about the ‘other’ drills.

The next stage was OHSU, one of only two level 1 trauma centers in the state of Oregon. There the media witnessed victims enter a decontamination phase as they entered the hospital. Men in white bio-hazard outfits seemed to be all over the place, and doctors and coordinators conducted interviews with the media. I decided to regain some trust from the FEMA coordinator by asking him some softball questions. He welcomed my interview request by saying with a smile, “I remember you. You’re the ‘Vigilant Shield’ guy. I was amused when a half dozen role playing victims pointed at me. They were viewers of my show, saying “that’s the Outside the Box guy.”

At 12:30 I was happy to appear on Deadline live. It was the break I needed after the press conference and simulated terror. After a brief 2 hour rest and reflection on the days events, I went back to P.I.R. for the press conference with the DHS, the Mayor, and Governor. The main coordinator of the conference noted that the questions should be kept to Topoff 4, as he glanced in my direction. However, this time the questions got a bit more spicy. One reporter asked about the details about the last drill and why we don’t have the information about the results. He mentioned something about martial law that I couldn’t quite make out. The response was that information is withheld so it won’t fall into the wrong hands. The conference was meant to move very quickly, with no elaboration on anything. Every response was a general one about “working together to keep us safe.”

Finally, it was my turn as one of the coordinators said only a few more questions would be granted. I asked the following:

“If this attack does happen, the city will likely be evacuated. Who will make that decision, who will direct it? Also, can the mayor guarantee that the military will NOT be involved in domestic law enforcement in the case of a disaster? I’m asking this due to ND51 pushed into law in May of this year by Bush.”

The mayor answered saying that he was the mayor and is in change of those decisions. He then talked about the importance of working with the Federal government in terms of the drill, but never really addressed the real question. He simply sidestepped it with a simple response, to which the coordinator of the conference added his thoughts that that directive is only for an extreme situation. Later, a man had an unrelated question for the governor about a recent scandal involved a Multnomah Country sheriff. The governor shocked the crowd by refusing to answer the question and stormed off the stage. I will remember that moment with a smile for a long time.

The last theatric spectacle of the day for the media to watch took place at Legacy Emanuel Hospital in NE Portland. There, an even more elaborate set up with mock victims was taking place within special tents where the victims were showered down for several minutes. One particular actor enjoyed screaming in pain loudly. He was about 50 or so. This was his moment in Shakespeare. The Topoff4 staff collectively laughed, for this was somewhat comical, but also a bit disturbing that someone would look at this event as a joking matter. One of the media coordinators for the hospital was curious exactly who I worked for, since Portland Community Media did not ring a bell in her head. Throughout the day, I met several people that asked me who I was with. I dressed very professionally and physically blended in. But I think it’s hard for a lot of people to comprehend that someone would come to every exercise and event simply to document it for access television. It also seems to stir suspicion about my intentions. I could feel that from a few mainstream reporters.

I was relieved to finish the day, and maintain my press badge, even though its deteriorating from the exposure to the rain . On my route home, near the intersection of NE Columbia and I 205, the traffic lights were blinking red, obviously out of order. I rarely see that happen in Portland. After talking with my friend who witnessed the blackout in Clackamas last night, we figured out it happened during the same time of the evening, yet on two different days in different parts of the Metro area.

I will have another report for you tomorrow. Please spread this report. Thank you. Thursday we will have a full hour special on this topic. Ginny Ross from the Oregon Truth Alliance will be with me. (oregontruthalliance.com)
homepage: http://alexansary.com

Global stocks see sharp declines

Wall Street losses prompted a broad sell-off in Asian markets

bbc news
European shares were down sharply in late afternoon trading, mirroring earlier falls in East Asia as worries about the US economy continue.

The UK's FTSE 100 index was 1% lower at 6,464 by late afternoon in London, while Germany's Dax had lost 1.2%, and France's Cac had shed 1.7%.

And on Wall Street, the Dow Jones index lost ground - extending Friday's heavy fall which first prompted the slumps.

Earlier, Tokyo's Nikkei index closed 2.2% lower.

Caterpillar warning

The Dow Jones, the main US share index, fell 367 points on Friday, the 20th anniversary of the Black Monday stock market crash.

And it had lost another 80 points in the first hour of Monday trading, though the tech-heavy Nasdaq index was 0.1% ahead.

Friday's slump on Wall Street is going to dominate market sentiment as the new trading week gets under way Matt Buckland, a trader with CMC Markets Q&A: What's troubling the markets?

US falls were triggered by concerns that the full effects of the housing slowdown had not yet been seen.

It started when the building equipment firm Caterpillar cut its profit forecast, blaming the state of the economy.

Caterpillar added that the US economy would be "near to, or even in, recession" next year.

'Sentiment driven'

"Friday's slump on Wall Street is going to dominate market sentiment as the new trading week gets under way," said Matt Buckland, a trader in London with CMC Markets.

"Obviously there's speculation that we may see a repeat of the losses from Black Monday some 20 years ago, and with little economic data being scheduled for release, it's going to be sentiment rather than the fundamentals that provide the bulk of the direction."

On Black Monday in 1987, the Dow Jones fell 23%, which nowadays would mean a drop of more than 3,000 points.

The fall on the FTSE 100 comes after it had recovered from the panic that gripped markets in August in the wake of the global credit squeeze.

Last month the US Federal Reserve slashed interest rates from 5.25% to 4.75%, making borrowing cheaper, in a bid to encourage more consumer spending and corporate activity.

And some believe that polic ymakers will reduce rates again when they meet next week.

Iraq: US involved in terrorist acts

Press TV
Monday October 22, 2007

A report by Iraq's parliament confirms that the US military had cooperated with terrorists in a raid on a village in Diyala province.

Ali Adib, an MP form the United Iraqi Alliance, in a report to the Iraqi National Assembly on Sunday said that a probe launched by the parliament into the incident had proved that the US army helped terrorists attack the Shia village of Jizani al-Imam on October 15.

At least 26 civilians, including women and children, were killed in the raid, one of the bloodiest massacres since the US invasion of Iraq.

According to IRNA, after the report, Iraqi MP's considered a bill to end the presence of foreign forces in Iraq.

The report and the decision by the MPs represent another challenge to the embattled Bush's administration which is under fire over the unpopular war in Iraq.

The Iraqi parliament also condemned an attack on Baghdad's Sadr city by the US military which left 49 civilians dead.

Dollar slides to record low against euro

Neil Dennis
Financial Times
Monday October 22, 2007

The dollar hit a record low against the euro on Monday after the weekend G7 summit failed to explicitly address dollar weakness.

In their post-meeting communique G7 finance ministers urged China to let its renminbi appreciate more rapidly, but did not mention dollar weakness, which provided the catalyst for traders to dump the currency.

”The communique did not make any references to the levels of the dollar, euro or yen,” said Sue Trinh at RBC Capital Markets. She added: ”This is, in effect, a green light to sell the dollar.”

After hitting a record $1.4348 against the euro, the dollar later clawed back to trade up 0.2 per cent on the session at $1.4280. Sterling climbed as high as $2.0537 against the dollar.

Japan’s yen hit a six week high of Y113.27 against the dollar, helped by rising aversion to risk after tumbling US equity markets drove the Nikkei 225 more than 2 per cent lower.

Full article here.

Sunday NY Post Blacks Out Ron Paul

FreeMarketNews.com
Monday October 22, 2007

Even though Jeffersonian conservative presidential candidate Ron Paul has declared the media blackout of his candidacy is over, don't tell that to the editors of the New York Post.

The "conservative" paper owned by Media Mogul Rupert Murdoch, has managed the feat of covering the Family Research Council's recent "Values Voter" presidential debate, and ranking candidates according to their popularity with "values voters" without mentioning third-place finisher GOP presidential contender Ron Paul (R-Tex).

The page 4 story in the Sunday Post, "Religious Right Rejects [Giuliani's] Values Plea" chooses to report only the "onsite voting results" and then actually drops off Ron Paul's name. It also manages to write a full article without mentioning either Ron Paul or his results. This is in marked contrast to other major news outlets (CNN, Daily News) that mention Ron Paul and his results as an obviously routine part of the coverage of the Values Voter debate.

Maybe there was justification in leaving Ron Paul out of commentary in a crowded field six months ago. But Ron Paul has now raised more money than most of his fellow GOP candidates and finished higher, on average, in more straw polls than any other GOP candidate.

Coming from behind as a "dark horse," Ron Paul is arguably the biggest story in American politics in this political year – one of the reasons that, as a free-market news site, FMNN has continually covered him and his campaign.

At this point, the New York Post would seem to owe its readers an explanation of just what its editorial really policy is and what it considers a "conservative." Even in its own press release, the Family Research Council chose to highlight the on-line straw poll rather than the smaller "onsite" poll results.

=====

http://www.frcaction.org/get.cfm?i=PR07J04

Nearly six thousand votes - 5,775 - were cast in the first-ever Values Voters Straw Poll at FRC Action's 2nd Annual Washington Briefing. FRC Action members had the choice of voting on-line, by mail, or at electronic voting stations during this weekend's event. All presidential candidates from both parties were listed on the ballot. The following are the straw poll results:

Candidate Name Total Votes Percentage
1. Mitt Romney 1,595 27.62 %
2. Mike Huckabee 1,565 27.10 %
3. Ron Paul 865 14.98%
4. Fred Thompson 564 9.77 %
5. Sam Brownback 297 5.14 %
6. Duncan Hunter 140 2.42 %
7. Tom Tancredo 133 2.30 %
8. Rudy Giuliani 107 1.85 %
9. John McCain 81 1.40 %

* The full results can be accessed at www.frcaction.org

The straw poll voting process is constructed so that each member of FRC Action will only be able to vote one time regardless of how the voting occurs (i.e. US mail, email alert or at the event). Every member of FRC Action has a unique identifier which must be used in order to vote electronically.

For more information on The Washington Briefing 2007: Values Voter Summit, log onto www.frcactionwashingtonbriefing.org

Turkey on brink of invading Iraq after rebel clashes kill 17 troops

Tim Shipman
UK Daily Mail
Monday October 22, 2007

Turkish leaders last night held a crisis summit to consider invading Iraq after border clashes with Kurdish separatists left dozens dead.

Rebel positions along the rugged Turkish-Iraqi border were shelled by Turkish artillery units in retaliation for a rebel attack that killed at least 17 soldiers.

The attack, the worst in more than a decade by separatists from the outlawed Kurdistan Workers Party (PKK), came four days after Turkey's parliament approved a motion to allow troops to enter Iraq to fight guerillas hiding there.

Kurdish rebels want to carve out their own homeland from part of south-east Turkey and northern Iraq.

Turkish military, civilian and intelligence leaders gathered for an emergency meeting last night to decide whether to push into mountainous northern Iraq to try to inflict a blow on the increasingly aggressive Kurdish rebels.

Turkey's defence minister, Vecdi Gonul, said they were "planning to cross the border" – but added "not urgently".

Britain, the U.S., the EU and Iraq all oppose an invasion. U.S. Defence Secretary Robert Gates met Mr Gonul in Ukraine yesterday and urged Turkey not to launch a major cross-border incursion.

The 17 soldiers died when an estimated 200 guerillas attacked an infantry company near the village of Daglica, less than three miles from the Iraqi border.

Mr Gonul said 16 Turkish soldiers had also been injured and ten others were missing. The PKK claimed that its guerillas had captured a "number" of Turkish soldiers.

In a separate attack yesterday, one civilian was killed and at least 13 more injured when a landmine exploded as a minibus – part of a wedding convoy – passed near where the soldiers died.

Turkey said its troops were chasing the rebels and pounding 63 suspected positions.

Deputy prime minister Cemil Cicek would not say whether the positions were on Iraqi soil. Turkish troops, backed by helicopter gunships, had killed 32 rebels.

"Whatever is necessary in this struggle is being done and will be done," he added. "Every kind of attack will be avenged many times over."

Foreign Secretary David Miliband said: "I utterly condemn the attacks by the PKK. I want to express my complete solidarity with the government, armed forces and people of Turkey.

"The Turkish government is right to seek a solution through dialogue with the Iraqi government."

UPDATE 3-Crisis was "accident waiting to happen"-Greenspan

WASHINGTON, Oct 21 (Reuters) - An unusually high degree of risk-taking across asset classes made recent financial market turmoil all but inevitable, former Federal Reserve Chairman Alan Greenspan said on Sunday.

"The financial crisis that erupted on August 9th was an accident waiting to happen," Greenspan said in a speech on the sidelines of the International Monetary Fund and World Bank meetings. "Credit spreads across all global asset classes had become suppressed to clearly unsustainable levels."

"Something had to give."

"If the crisis had not been triggered by a mispricing of securitized U.S. subprime mortgages, it would eventually have erupted in some other sector or market," Greenspan said.

Greenspan himself has drawn some criticism for cutting U.S. benchmark interest rates to 1 percent in 2003 and holding them there for a prolonged stretch, which some say helped inflate the U.S. housing bubble. But the former Fed chief said it was low long-term interest rates set in financial markets that pushed down mortgage costs and encouraged home buying.

"Central banks around the world have essentially lost control over the markets beyond maybe three or four or five years out. In other words, there is no evidence that we at the Fed had the capability of affecting mortgage interest rates," he said, noting that even when the U.S. central bank began raising rates in 2004, mortgage rates remained low.

Defaults on subprime loans, made to borrowers with poor credit records, have spiked in recent months, setting off a chain reaction that has tightened credit conditions around the globe. That, in turn, has raised worries about the U.S. economy that have sent the value of the U.S. dollar tumbling.

The weaker dollar is helping to rein in a large U.S. trade deficit by lending support to U.S. exporters, who are finding their goods more competitive in overseas markets.

NO UNDUE ALARM

Some economists have been concerned that a large U.S. trade shortfall could lead to a sharp and economically harmful drop in the value of the dollar.

Greenspan, who stepped down from the Fed early last year, said apprehension about the size of the shortfall in the U.S. current account, the broadest trade measure, was not groundless. However, he said would not view the unwinding of the deficit with "undue alarm," unless protectionist trade pressures and budgetary red ink continued to grow.

"If the pernicious drift toward fiscal instability is not arrested and is compounded by a protectionist reversal of globalization, the current account adjustment process could be quite painful for the United States and our trading partners," he warned.

The U.S. current account gap swelled to more than 6 percent of gross domestic product last year, leaving the United States heavily reliant on foreign capital to finance that deficit.

"At some point, foreign investors will balk at increasing their share of dollar-denominated assets in the portfolios they hold," he said, adding the recent dollar decline is an indication that America may be nearing that point.

Some economists worry the growing role of state-controlled investment funds may increase fears in the United States about the potential takeover of strategic U.S. assets.

These sovereign wealth funds are thought to have some $2.5 trillion at their disposal, with much of that under the control of trade surplus countries, such as China, Russia and the Middle East oil exporters.

Greenspan said the wealth funds may be disappointed by the level of return they receive on investments, and he said he suspected they would "fade eventually".

Still, he said Western countries were justifiably worried that the funds may base investment decisions on political rather than economic motives, and said such actions could destabilize financial systems. (Additional reporting by Steven C. Johnson and Lesley Wroughton)

IMF warning on risks of inflation

There have been demonstrations during the meetings

bbc news

The International Monetary Fund (IMF) has warned central banks and finance ministers to stay focused on keeping inflation under control.

At its annual meeting, the IMF also stressed that countries have to work to deal with financial market turbulence.

The IMF's Policy Committee made progress on attempts to give emerging economies more voting power.

Former French Finance Minister Dominique Strauss-Khan takes over as IMF head at the end of the month.

His appointment resurrected arguments about whether Europe should always choose the head of the IMF while the US gets to nominate the head of the World Bank.

The new World Bank head, Robert Zoellick, is presiding over his first set of meetings since he took over from Paul Wolfowitz, who resigned in May.

The IMF's discussions reforms to voting systems are a reaction to the perception that developed nations have too much power over the IMF and World Bank.

Its policy committee is confident that at its meeting this time next year it will be able to finalise agreements to double the number of basic votes in which each member has equal voting power.

"I think that consensus includes certainly that there will be an increase in the voice of emerging economies and developing countries as a whole," said the outgoing IMF chief Rodrigo de Rato said at the summit.

Dollar: How Low Can It Go?

The Taipei Times
Oct 21, 2007

The weakened US dollar tumbled further on Friday on foreign exchange markets, sinking to another record low against the euro, as G7 finance chiefs met for talks in Washington.

The G7 finance ministers and central bank chiefs did not spell out a specific course of action. Rather, they sought to strike a confident tone that they are on top of the situation. Finance officials also said they will seek to learn the causes and lessons from the turmoil.

At 9pm GMT, the euro was swapping hands at US$1.4301, up from US$1.4297 late on Thursday. The euro had earlier surged to a record US$1.4319.

The dollar meanwhile fell sharply against the Japanese currency, dropping to ?114.53 from ?115.62 a day earlier.

The dollar has been undermined by mounting expectations that the US central bank will be again forced to cut borrowing costs.

The US Federal Reserve slashed its key interest rate last month by half a percentage point to 4.75 percent amid financial market turmoil and a lingering housing market downturn.

Lower borrowing costs in the US reduce interest in the dollar and boost the attractiveness of the euro.

US Treasury Secretary Henry Paulson has voiced confidence in a “strong dollar” in the past week, but the currency has declined sharply in the past year, falling by over 13 percent against the euro.

And many analysts expect the dollar’s fortunes to dwindle further in coming weeks, but that could trigger thorny problems for policy makers in other countries, particuarly the eurozone where exporters are becoming concerned about the euro’s strength.

Concerns are also mounting in the US that the dollar’s fall could spark inflation risks for the world’s largest economy as it makes foreign goods and products more expensive for Americans to buy.

The greenback’s value also dipped against the Canadian dollar, as the Canadian currency climbed as high as US$1.0381, marking its highest level against the US dollar in 33 years, before settling at US$1.0345.

Some analysts said a coordinated action by the G7 was unlikely because the strength of the euro reflected the good health of the eurozone economies.

In late New York trading, the dollar stood at 1.1660 Swiss francs, down from SF1.1693. The pound rose to US$2.0514 from US$2.0444.

Call to increase stop and search

BBC
Sunday October 21, 2007

More young people should be stopped and searched to help tackle knife and gun crime, a leading black police representative says.
Keith Jarrett, the outgoing president of the National Black Police Association (NBPA), said he would be pressing police for such an approach.

He said: "The black community is telling me we have to look at this."

Some senior black police officers have criticised the suggestion fearing it could lead to racial profiling.

Black people are six times more likely to be stopped than white people, according to Home Office figures.

This disparity has led to continued charges of police racism and critics say that increased use of stop and search tactics would inevitably affect the black community disproportionately.

'Victims and perpetrators'

Mr Jarrett will use a speech at the NBPA's annual conference this week to ask Police Minister Tony McNulty and Metropolitan Police chief Sir Ian Blair to consider searching more young people.

The suggestion contradicts the approach taken by the NBPA to date which has questioned the high proportion of black people stopped and searched by police.

Mr Jarrett told BBC News 24: "It's not that we should stop and search more black youths. It's not just black people that carry weapons, white people carry weapons as well.

Full article here.

2nd-Grader Suspended for Drawing of Gun

AP
Sunday October 21, 2007

A second-grader's drawing of a stick figure shooting a gun earned him a one-day school suspension.

Kyle Walker, 7, was suspended last week for violating Dennis Township Primary School's zero-tolerance policy on guns, the boy's mother, Shirley McDevitt, told The Press of Atlantic City.

Kyle gave the picture to another child on the school bus, and that child's parents complained about it to school officials, McDevitt said. Her son told her the drawing was of a water gun, she said.

A photocopy of the picture provided by McDevitt showed two stick figures with one pointing a crude-looking gun at the other, the newspaper said. What appeared to be the word "me" was written above the shooter, with another name scribbled above the other figure.

School officials declined to comment Friday. A message left at the superintendent's office Saturday was not returned.

Kyle drew other pictures, including a skateboarder, King Tut, a ghost, a tree and a Cyclops, the newspaper reported.

DynCorp Likely to Replace Blackwater in Iraq

WARREN P. STROBEL
Miami Herald
Oct. 20, 2007

Troubled military contractor Blackwater USA is likely to be eased out of its role of guarding U.S. diplomats in Iraq in the aftermath of a shooting last month that left 17 Iraqi civilians dead, U.S. officials said Friday.

While no decisions have been finalized, Blackwater’s role in Baghdad is likely to be taken over by one of two other contractors who provide security for the State Department in Iraq, the officials said. They are Triple Canopy and DynCorp International.

”There will be some sort of disengagement process, but it won’t be that they’re shown the door,” said a State Department official. “As one builds down, another builds up.”

He and other U.S. officials spoke on condition of anonymity because Secretary of State Condoleezza Rice had not received an oral report from a four-person team led by Patrick Kennedy, the department’s director of management policy.

The team reviewed State Department security operations in Iraq.

Blackwater has denied wrongdoing in the Sept. 16 shooting, the latest deadly incident involving its employees in Iraq, saying the guards were defending themselves. But reports by the U.S. military and the Iraqi government say the Blackwater guards fired without provocation.

Iraq’s government has demanded that Blackwater leave Iraq within six months.

A company spokeswoman, Anne Tyrrell, didn’t return a phone call seeking comment.

Blackwater’s current work order under a State Department contract worth $834 million reportedly runs out in May 2008.

But replacing the Moyock, N.C., company with another contractor raises several questions.

It’s unclear whether Blackwater employees in Iraq could simply switch employers. And, according to congressional officials, the State Department’s Diplomatic Security service argues that it cannot operate without the helicopters that Blackwater provides for escort and rescue efforts.

In a related development Friday, Rep. Henry Waxman, D-Calif., who’s been investigating State Department operations in Iraq, said in a letter that Blackwater attempted to transport two Iraqi military aircraft out of Iraq without official permission.

In the letter to Blackwater founder Erik Prince, Waxman said an unnamed military official told his House Oversight Committee that “the Iraqi ministry of defense attempted to reclaim the aircraft, but that Blackwater would not comply.”

Waxman also alleged that Prince had misled the committee in testimony earlier this month.

Prince had said that the company’s early contracts with the Coalition Provisional Authority in Iraq and the State Department were competitively bid, when in fact they were sole-source contracts.

Israel Warns World War III May be Biblical War of Gog and Magog

Ezra HaLevi
Arutz Sheva
October 21, 2007

US President George W. Bush said a nuclear Iran would mean World War III. Israeli newscasts featured Gog & Magog maps of the likely alignment of nations in that potential conflict.

Channel 2 and Channel 10 TV showed the world map, sketching the basic alignment of the two opposing axes in a coming world war, in a manner evoking associations of the Gog and Magog prophecy for many viewers. The prophecy of Gog and Magog refers to a great world war centered on the Holy Land and Jerusalem and first appears in the book of Yechezkel (Ezekiel).

On one side were Israel, the United States, Britain, France and Germany. On the other were Iran, Russia, China, Syria and North Korea.

US President Bush said Wednesday during a press conference that Iran attaining nuclear weapons raises the risk of “World War III.”

“If Iran had a nuclear weapon, it’d be a dangerous threat to world peace,” Bush said. “So I told people that if you’re interested in avoiding World War III, it seems like you ought to be interested [in preventing a nuclear Iran]…I take the threat of Iran with a nuclear weapon very seriously.”

Russian President Vladimir Putin visited Iran Tuesday and slammed the US’s refusal to rule out the use of force against Iran’s nuclear project. “Not only should we reject the use of force, but also the mention of force as a possibility,” he said.

Russia has blocked tougher UN sanctions in the UN Security Council, where it has veto power. The Russian president asserts that there is no evidence Iran is pursuing nuclear weapons rather than a peaceful nuclear power program.

Israel’s Foreign Minister Tzipi Livni called for a new Security Council resolution against Iran at a press conference following her meeting with US Secretary of State Condoleezza Rice Wednesday. “I do believe there is a need for another Security Council resolution,” she told reporters. “In the past, the need to get everybody on board - including Russia and China - led to some compromises on the nature of the sanctions. I hope this will not be the case this time.”

Prime Minister Ehud Olmert announced Wednesday a sudden trip to Moscow Thursday morning, where he will meet with Putin about Iran. Other topics of discussion will reportedly be Russia’s continued supply of weapons to Syria, which have then made their way into the hands of various terrorist groups based there as well.

Kristol: Iran Is ‘The Only Real Threat’ To Success In Iraq

Think Progress
October 21, 2007

Today, on Fox News Sunday, Weekly Standard editor Bill Kristol declared that the U.S. was close to victory in the Iraq war, arguing that the “only” concern left for the U.S is dealing with alleged Iranian involvement in Iraq:

We’re winning in Iraq. That is the absolute crucial precondition to having success in the broader fight against Islamic jihadism. … And I think we are going to have to be serious about dealing with both their intervention in Iraq — which is now the only real threat, I think, incidentally, to relative success in Iraq — and their nuclear program.

Watch it:

While Iran may be causing some violence in Iraq, there are more pressing “threats” to “success.” A National Intelligence Estimate released in February concluded that Iranian involvement was “not likely” to be a major driver of violence. An August McClatchy analysis found that the majority of suicide bombers in Iraq are from Saudi Arabia, not Iran.

In reality, “Iraq’s complex and overlapping sectarian, political and ethnic conflicts, as well as the difficult security situation continue to hinder progress in promoting economic development, the rule of law and political reconciliation,” according to Special Inspector General For Iraq Reconstruction Stuart Bowen.

Kristol used his allegations of Iranian involvement in Iraq to push for more war in the Middle East, claiming, “There has to be the credible threat of force” with Iran. He was quickly rebuked by Juan Williams:

Do you think there’s any question about this — whether or not we have credible military force? We are the superpower in the world. … The thing is we have our military stretched beyond all bounds, and you seem to want to engage in other wars. I don’t know why you feel this way.

Bill Kristol will readily lower his standards for the Iraq war in order to implement his hawkish, neoconservative agenda.

Transcript:

KRISTOL: We’re winning in Iraq. That is the absolute crucial precondition to having success in the broader fight against Islamic jihadism. So Senator Obama was wrong about that.

And he’s wrong about Iran. Senator Obama’s professed position –he’s given speeches on this — is that Iran should not be allowed to have a nuclear weapon. He’s not comfortable with an Iranian nuclear weapon.

And yet we’ve been pursuing diplomacy for four years, with our European friends — just two days ago, Ali Larijani, the Iranian negotiator who — when you go to the Europeans, they say, Well, Ahmadinejad is crazy, but he doesn’t matter. Khamenei, who knows? But Larijani — he’s a reasonable man. We can work with him. He resigned.

He was forced out. It looks like the Iranian government is going for the full hard line on their nuclear program. And I think we are going to have to be serious about dealing with both their intervention in Iraq — which is now the only real threat, I think, incidentally, to relative success in Iraq — and their nuclear program.

WALLACE: When you say getting serious, I think a lot of our viewers are going to say, Kristol thinks there’s going to be a war.

WILLIAMS: Yes.

KRISTOL: I think there could be a use of force. September 6th, 2007, when Israel used force against Syria to prevent them from developing nuclear weapons with North Korean aid, is going to go down in history, I think, as the date where we got a glimpse of the kind of future we’re dealing with.

If diplomacy works, that’s great. There has to be the credible threat of force both on the nuclear issue and, I think much more short-term, though — I agree with Brit on this. I think the short-term question is does Petraeus think he needs a little help across the border to secure our successes in Iraq.

And if so, I think the president will give it to him. We can’t let them just build IEDs and train Iraqis with impunity across the border.

WILLIAMS: Look. Do you think there’s any question about this –whether or not we have credible military force? We are the superpower in the world.

The thing is we have our military stretched beyond all bounds, and you seem to want to engage in other wars. I don’t know why you feel this way.

KRISTOL: I want to win the war. I want to support the military who are fighting over there who are being killed…

WILLIAMS: Oh, wait a second.

KRISTOL: … who are being killed by Iranian weapons.

WILLIAMS: Just a minute. You mean when it came to the surge, you wanted to defend the surge. Why don’t we defend the fact that for five years we’ve been involved in a war that’s cost us life and limb, and we have — we’re totally out of control?

Miami Real Estate Crash: Properties Sell for Half Price at Auction

Cryptogon
October 21st, 2007

Chertoff Warns IEDs a Rising Threat in U.S.

Spencer S. Hsu and Mary Beth Sheridan
Washington Post
October 20, 2007

The Department of Homeland Security and the FBI agree that the homemade explosive devices that have wreaked havoc in Iraq pose a rising threat to the United States. But lawmakers and first responders say the Bush administration has been slow to devise a strategy for countering the weapons and has not provided adequate money and training for a concerted national effort.

Homeland Security Secretary Michael Chertoff, who told the Senate last month that such bombs are terrorists’ “weapon of choice,” said yesterday at a local meeting that President Bush will soon issue a blueprint for countering the threat of improvised explosive devices, or IEDs. Chertoff’s department said in a draft report on IEDs earlier this year that national efforts “lack strategic guidance, are sometimes insufficiently coordinated . . . and lack essential resources.”

Among the shortcomings identified in the report: Explosives-sniffing dogs are trained differently by various federal agencies, making collaboration between squads “difficult if not impossible.” Federal agencies maintain separate databases on bomb incidents. Separately, bomb squad commanders have complained of inadequate training for responding to truck bombs.

Local officials say preparedness efforts around the country remain a patchwork. For instance, the Los Angeles Police Department’s bomb squad, which responds to about 1,000 calls a year, has 28 full-time explosives technicians and is about to move into a new, $8 million downtown headquarters. The squad has an explosives library, a research facility for testing and access to an explosives range for training.

In contrast, the D.C. police bomb squad’s 10 technicians handle about 700 calls a year, but they are housed in portable trailers and must also perform crime patrols. Among the six U.S. metropolitan regions considered top terrorist targets, only the Washington area has not earned the top rating of the DHS three-level scoring system for bomb squads. Regional officials recently decided to spend $7 million in federal grants to buy equipment to lift that rating.

Experts and officials have struggled in reaching a consensus that the government should invest more in efforts to detect and disrupt bomb plots in advance, and not just pay for equipment and training that could keep specific devices from exploding in metropolitan regions or reaching other targets.

Senior Democratic senators have criticized the administration for not completing its national strategy. Principal Associate Deputy Attorney General William E. Moschella said of the forthcoming strategy, “It’s late and we wish we were two months earlier, but the bottom line is we have submitted . . . a product [to the White House] that we’re very proud of.”

Although the document has been under preparation since February, Chertoff said, “we haven’t waited for the paperwork . . . because my concern, frankly, is not words; it’s deeds and actions.” He said his department has provided $1.7 billion in grants related to the IED threat, trained workers at 16 ports and deployed thousands of new explosives detectors at airports, and plans to increase the screening of small boats and private aircraft that might carry bombers or bombs.

While roadside bombs and armor-piercing charges have become the signature weapons of the Iraqi insurgency, U.S. officials define the domestic IED threat across a wide spectrum, including a block of TNT with a remote-controlled detonator; a fertilizer bomb delivered by a car, truck or plane; and a suicide runner carrying a peroxide-based explosive. At the extreme, an IED can be enhanced into a “dirty bomb,” rigged to scatter radioactive material.

“Terrorists’ use of IEDs cannot be extrapolated into anything other than a major threat to this country,” Supervisory Special Agent Barbara Martinez, a senior official at the FBI’s Critical Incident Response Group, said yesterday at a discussion organized by the Center for Strategic and International Studies.

“National coordination of IED prevention efforts is absolutely crucial,” said Lt. Shawn E. Stallworth, a Michigan State Police detective and member of the National Bomb Squad Commanders Advisory Board. The group this year called for “urgent action” to increase training in handling the threat posed by large-vehicle bombs.

Congress last fall called for DHS to produce a national strategy, but the department never released it. Instead, the White House stepped in on Feb. 12, issuing a presidential directive reassigning the lead role for the project to the Justice Department and setting a new, July deadline. That date passed, too, a casualty of fierce disputes among the FBI, the DHS Office for Bombing Protection and the Bureau of Alcohol, Tobacco, Firearms and Explosives over the role that the ATF should continue to play in training, the collection of statistics and technical analysis.

“U.S. leaders have been concerned about IEDs for a number of years, but despite the known threat and fear of IEDs reaching America, the government has fallen way behind,” said David Heyman, director of the Center for Strategic and International Studies’ homeland security program. “If terrorists initiated an IED campaign in America today, it could paralyze us.”

Addressing Heyman’s group, Chertoff said the lesson from Iraq is to gather intelligence to disrupt the long chain of events needed to deliver a bomb — from recruiting terrorists to infiltrating them into the country, gathering bomb materials, and selecting targets and tactics. “The better we hone our intelligence, the better we are in having a focused, less disruptive and less costly intervention to prevent an IED from detonating,” he said.

Chertoff cited the example of Raed al-Banna, 32, a Jordanian identified through his fingerprints as the perpetrator of a February 2005 suicide car-bombing in Iraq. In 2003, he was flagged as a potential terrorist by customs inspectors at O’Hare International Airport in Chicago and ordered to leave the country.

U.S. authorities have long tracked the IED threat, since the first World Trade Center attack in 1993 and the Oklahoma City bombing in 1995. But officials worry that Iraq — where the explosives have killed or wounded more than 21,200 Americans — has become a laboratory for bomb design, technologies and tactics that can be spread over the Internet.

From the transit system bombings in Madrid and London in 2004 and 2005, to a disrupted Britain-based plot to smuggle liquid explosives onto transatlantic airliners in 2006, al-Qaeda-inspired cells may be importing that group’s signature tactic of coordinated and spectacular attacks but using quickly assembled conventional weapons against softer targets, analysts said.

“As we saw in London and Glasgow, Scotland, in June, this trend has already begun,” FBI Director Robert S. Mueller III said in August, citing the failed car-bomb attacks against a nightclub and an airport.

Critics have noted that although the Pentagon’s main IED-fighting agency is spending $15 billion over five years to defeat the threat in Iraq, the DHS Office for Bombing Prevention is to receive less than $50 million over the same period.

Sen. Susan Collins (R-Maine), who has proposed adding $25 million per year to its budget, said the office currently cannot afford to finish comparing the capabilities of all local and state bomb squads, or to connect enough first responders to an online network called Tripwire that contains information on terrorist IEDs.

In a recent letter to Chertoff, Senate Appropriations Committee Chairman Robert C. Byrd (D-W.Va.) and Sen. Christopher J. Dodd (D-Conn.) criticized the administration for its slow pace and for threatening to veto IED-related funding in a pending budget bill. Byrd told Chertoff in another letter this week: “Having a Strategy is not worth the paper it is printed on unless it is backed up with resources and a commitment to working at all levels of government to address the threat.”

Iran warns it can fire 11,000 rockets in one minute if attacked

Muslim World News
October 20, 2007

TEHRAN, October 20 (RIA Novosti) - Iran has the capability to fire 11,000 rockets at enemy bases within one minute if the country is attacked, a top commander in the Revolutionary Guards Corps said on Saturday.

“Within the first minute of any attack by enemies against our country, the missile and artillery unit of the ground force is capable of firing 11,000 missiles and shells at targets that are known to us,” Gen. Mahmoud Chaharbaghi, the top missile commander of the Revolutionary Guards, said on national TV.

Iran has precise data on the deployment of potential attackers’ military bases in the region, he said.

“A possible war will not last long, because within days we will reduce our enemies to ashes. The enemy must ask himself what losses he is prepared to suffer for his stupidity,” the commander said.

The commander’s comments come four days after United States President George W. Bush’s warning that if Iran’s nuclear program is not stopped, World War III could break out. The United States has military bases in several countries near Iran, including thousands of troops in Iraq and Afghanistan, which share borders with the Islamic Republic.

In response to Bush’s comments, Iranian Foreign Ministry spokesman Mohammad Ali Hosseini said on Thursday: “Statements of this kind reflect America’s expansionist goals, which will surely weaken international security and ignite the U.S. government’s militarist policy.”

Washington, which along with many other Western nations accuses Iran of pursing a secret nuclear weapons program, despite Iranian denials, has refused to rule out military action against the country in the long-running international dispute.

Bush’s comments at a White House news conference came a day after President Vladimir Putin’s visit to Tehran, where the Russian leader said he saw no evidence that Iran was developing nuclear weapons.

Putin’s trip to Iran for a summit of Caspian littoral states, the first visit by a Russian or Soviet leader since Joseph Stalin traveled to Iran in 1943, provoked concerns in the West over increasingly close ties between Moscow and Tehran. The summit resulted in a five-way agreement that no Caspian nations would allow the use of their territories for a military strike against any of them.

Living Paycheck to Paycheck Gets Harder

ANNE D’INNOCENZIO
Associated Press
October 19, 2007

NEW YORK (AP) - The calculus of living paycheck to paycheck in America is getting harder. What used to last four days might last half that long now. Pay the gas bill, but skip breakfast. Eat less for lunch so the kids can have a healthy dinner.

Across the nation, Americans are increasingly unable to stretch their dollars to the next payday as they juggle higher rent, food and energy bills. It’s starting to affect middle-income working families as well as the poor, and has reached the point of affecting day-to-day calculations of merchants like Wal-Mart Stores Inc. (WMT) (WMT), 7-Eleven Inc. and Family Dollar Stores Inc. (FDO) (FDO)

Food pantries, which distribute foodstuffs to the needy, are reporting severe shortages and reduced government funding at the very time that they are seeing a surge of new people seeking their help.

While economists debate whether the country is headed for a recession, some say the financial stress is already the worst since the last downturn at the start of this decade.

From Family Dollar to Wal-Mart, merchants have adjusted their product mix and pricing accordingly. Sales data show a marked and more prolonged drop in spending in the days before shoppers get their paychecks, when they buy only the barest essentials before splurging around payday.

“It’s pretty pronounced,” said Kiley Rawlins, a spokeswoman at Family Dollar. “It seems like to us, customers are running out of food products, paper towels sooner in the month.”

Wal-Mart, the world’s largest retailer, said the imbalance in spending before and after payday in July was the biggest it has ever seen, though the drop-off wasn’t as steep in August.

And 7-Eleven says its grocery sales have jumped 12-13 percent over the past year, compared with only slight increases for non-necessities like gloves and toys. Shoppers can’t afford to load up at the supermarket and are going to the most convenient places to buy emergency food items like milk and eggs.

“It even costs more to get the basics like soap and laundry detergent,” said Michelle Grassia, who lives with her husband and three teenage children in the Bedford-Stuyvesant section of Brooklyn, N.Y.

Her husband’s check from his job at a grocery store used to last four days. “Now, it lasts only two,” she said.

To make up the difference, Grassia buys one gallon of milk a week instead of three. She sometimes skips breakfast and lunch to make sure there’s enough food for her children. She cooks with a hot plate because gas is too expensive. And she depends more than ever on the bags of free vegetables and powdered milk from a local food pantry.

Grassia’s story is neither new nor unique. With the fastest-rising food and energy prices since the 1980s, low-income consumers are stretching their budgets by eating cheap foods like peanut butter and pasta.

Industry analysts and some economists fear the strain will get worse as people are hit with higher home heating bills this winter and mortgage rates go up.

It’s bad enough already for 85-year-old Dominica Hoffman.

She gets $1,400 a month in pension and Social Security from her days in the garment industry. After paying $500 in rent on an apartment in Pennsauken, N.J., and shelling out money for food, gas and other expenses, she’s broke by the end of the month. She’s had to cut fruits and vegetables from her grocery order - and that’s even with financial help from her children.

“Everything is up,” she said.

Many consumers, particularly those making less than $30,000 a year, are cutting spending on nutritious food like milk and vegetables, and analysts fear they’re further skimping on basic medical care and other critical services.

Coupon-clipping just isn’t enough.

“The reality of hunger is right here,” said the Rev. Melony Samuels, director of The BedStuy Campaign against Hunger, a church-affiliated food pantry in Brooklyn.

The pantry scrambled to feed 5,000 new families over the past 12 months, up almost 70 percent from 3,000 the year before.

“I am shocked to see such numbers,” Samuels said, “and I am really concerned that this is just the beginning of what we are going to see.”

In the past three months, Samuels has seen more clients in higher-paying jobs - the $35,000 range - line up for food.

The Regional Food Bank of Northeastern New York, which covers 23 counties in New York State, cited a 30 percent rise in visitors in the first nine months of this year, compared with 2006.

Maureen Schnellmann, senior director of food and nutrition programs at the American Red Cross Food Pantry in Boston, reported a 30 percent increase from January through August over last year.

Until a few months ago, Dellria Seales, a home care assistant, was just getting by living with her daughter, a hairdresser, and two grandchildren in a one-bedroom apartment for $750 a month. But a knee injury in January forced her to quit her job, leaving her at the mercy of Samuels’ pantry because most of her daughter’s $1,200 a month income goes to rent, energy and food costs.

“I need it. Without it, we wouldn’t survive,” Seales said as she picked up carrots and bananas.

John Vogel, a professor at Dartmouth College’s Tuck School of Business, worries that the squeeze will lead to a less nutritious diet and inadequate medical or child care.

In the meantime, rising costs show no signs of abating.

Gas prices hit a record nationwide average of $3.23 per gallon in late May before receding a little, though prices are expected to soar again later this year. Food costs have increased 4.5 percent over the past 12 months, partly because of higher fuel costs. Egg prices were 44 percent higher, while milk was up 21.3 percent over the past 12 months to nearly $4 a gallon, according to the Bureau of Labor Statistics.

The average family of four is spending anywhere from $7 to $10 extra a week - $40 more a month - on groceries alone, compared to a year ago, according to retail consultant Burt Flickinger III.

And while overall wage growth is a solid 4.1 percent over the past 12 months, economists say the increases are mostly for the top earners.

Retailers started noticing the strain in late spring and early summer as they were monitoring the spending around the paycheck cycle.

Wal-Mart and Family Dollar key on the first week of the month, when government checks like Social Security and public assistance generally hit consumers’ mailboxes.

7-Eleven, whose customers are more diverse, looks at paycheck cycles in specific markets dominated by a major employer, such as General Motors in Detroit, to discern trends in shopping.

To economize, shoppers are going for less expensive food.

“They’re buying more peanut butter and pasta. And they’re going for hamburger meat,” Flickinger, the retail consultant, said. “They’re trying to outsmart the store by looking for deep discounts at the end of the month.”

He said the last time he saw this was 2000-2001, when the dot-com bubble burst and the economy went into a recession after massive layoffs.

For now, low-price retailers are readjusting their merchandising and pricing.

Wal-Mart is becoming more aggressive on discounting. It announced Thursday it is expanding price cuts to 15,000 items, ranging from Motts apple juice and Progresso soups to women’s fleece tops, heading into the holidays.

Family Dollar, whose food offerings were limited to candy and snacks until two years ago, has expanded its mix of groceries like fruit cups, cereal and such refrigerated items as milk and ice cream while cutting back on shoes. This summer the chain began accepting food stamps.

Food pantries are also getting creative. Samuels said her church, Full Gospel Tabernacle of Faith, just started offering free cooking classes to teach clients who are diabetic or have other health conditions how to prepare vegetables like squash. It’s also offering free exercise classes.

“We are trying to make them health conscious,” Samuels said. “It’s not right to give them just anything. Our mantra is eat well and live well.”