Fear reigns on Wall Street

WORST 3-DAY DROP IN 5 YEARS

By Tim Paradis
Associated Press

Article Launched: 01/18/2008 01:36:04 AM PST

NEW YORK - Wall Street extended its 2008 plunge Thursday, with the Dow tumbling more than 300 points, giving the blue-chip average its lowest close since March and its worst three-day percentage decline since October 2002.

Thursday's decline came after a regional Federal Reserve report showed a sharp decline in manufacturing activity and as investors feared that downgrades of key bond insurers could trigger further trouble with souring debt.

Rating agency Moody's Investor's Service placed bond insurer Ambac Assurance, whose parent company is Ambac Financial, on review for a possible downgrade. That possibility alarmed investors because it would place all bonds insured by Ambac on review, and Wall Street is concerned that bond insurers would be unable to absorb a spike in claims.

The tech-heavy Nasdaq dropped 47.69, or 2 percent, to 2,346.90, giving it a 2008 deficit of 11.5 percent. Among the 150 largest companies in Silicon Valley, share prices fell a median 2.2 percent Thursday and are down a median 12.9 percent so far this year.

Among valley companies, Cisco Systems closed at $24.33, down 3.3 percent; Hewlett-Packard closed at $43, down 3 percent; Google closed at $600.79, down 2.5 percent; and Intel closed at $19.33, down 2.8 percent.

The Dow opened higher and at one point was up more than 50 points. But by the end of the day, it was down 306.95, or 2.5 percent - its lowest close since March 16, 2007. The Dow, which closed at 12,159.21, has not closed below 12,000 since November 2006.

Though there have been just 12 trading days so far in 2008, the Dow's frequent triple-digit losses have now forced it to give back all its 2007 gains. For the year, the Dow is now off 8.3 percent.

The broader market indicators also plummeted. The S&P 500 index lost 39.95, or 2.9 percent, closing at 1,333.25, and leaving it was a year-to-date loss of 9.2 percent.

Thursday's close was the lowest for the S&P 500 since October 2006 and the worst for the Nasdaq since March 2007. Like the Dow, both indexes have forfeited all of their 2007 gains. For the year, the Nasdaq is down 11.5 percent.

Declining issues outnumbered advancers by more than 5 to 1 on the New York Stock Exchange, where volume came to a heavy 2.17 billion shares compared with Wednesday's 2.11 billion.

Bond prices rose as stocks fell and anxious investors sought the safety of government-issued securities. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.63 percent from 3.74 percent Wednesday. The dollar was mixed against other major currencies.

The Chicago Board Options Exchange's volatility index, known as the VIX, and often referred to as the "fear index," jumped nearly 17 percent Thursday.

The manufacturing reading from the Philadelphia Federal Reserve caught Wall Street by surprise - igniting fears that the economy is slowing precipitously and that policy-makers might be too late in contemplating aid.

Economists had expected the Philadelphia index to come in at a negative 1.5, according to Dow Jones Newswires. Instead, the negative 20.9 figure was the weakest since October 2001, when the economy was reeling from the shock of the Sept. 11 terror attacks.

Other economic reports added to investors' glum mood. The Commerce Department said housing starts plunged 14 percent to 1.01 million in December, marking the weakest pace of home building in more than 16 years. In addition, permits to build new homes dropped 8 percent last month to 1.07 million, the lowest level since 1993.

The week's steady flow of news, much of which has dented investor sentiment, has led to a growing chorus of calls for the Fed to cut rates. The Fed's monetary policy committee meets Jan. 29 and 30 and is widely expected to lower its federal funds target from the current 4.25 percent level. Federal Reserve Chairman Ben Bernanke on Thursday reiterated recent signals that the central bank will reduce rates for a fourth straight time.

The economic concerns come in a week in which some of Wall Street's biggest names have posted huge losses following bad bets on mortgage investments.

Merrill Lynch on Thursday posted a massive loss that underscored the depth of the economy's credit problems. Morgan Stanley and Bear Stearns also have posted losses for the last three months of 2007.

Moody's announcement that it will review Ambac came after the insurer booked a $5.4 billion write-down on its credit derivative portfolio during the fourth quarter.

Ambac plunged $6.73, or 52 percent, to $6.24.

Oil Prices Back Above $90 a Barrel

By PABLO GORONDI AP – 3 hours ago

Oil prices rose Friday following the lead of higher stock prices in Europe as traders bought crude contracts ahead of the holiday weekend in the United States.

Light, sweet crude for February delivery was up 68 cents to $90.81 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Europe. It had fallen below $90 in earlier trading on worries that weakness in the U.S. economy could curb demand for oil.

The contract fell Thursday by 71 cents to settle at $90.13.

In London, Brent crude for March delivery rose 87 cents to $89.62 a barrel on the ICE Futures exchange.

European stock markets were mostly higher Friday, with London's FTSE-100 index up 114.9 points to 6,017.3 early afternoon. The CAC-40 index in Paris and Frankfurt's DAX were also higher.

Analyst Olivier Jakob of Petromatrix in Switzerland said price fluctuations showed the U.S. benchmark oil price has become a "pure derivative" of sentiment on Wall Street.

"The crisis of confidence on the economy is far from over," Jakob said in a research note. "The extremely high correlation seen yesterday between the Dow and oil needs to be taken as a new risk factor and developments on Wall Street to be watched closer than ever."

Concerns about the economy were stoked by a U.S. Commerce Department report Thursday that construction of new homes fell nearly a quarter in 2007, the largest drop in 27 years. Also, a Philadelphia Federal Reserve survey of regional manufacturing activity registered a negative 20.9 from a revised reading of negative 1.6 in December, coming in well short of expectations.

The data added to the negative economic sentiment that has been the market's dominant driver in recent days, pushing prices down nearly US$10 from their record over US$100 a barrel two weeks ago.

"It's one piece of bad news after another," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "The worries about the U.S. economic slowdown, and of oil demand slowing down in the U.S. and other parts of the world, continue to weigh on the market."

The White House and Congress moved toward a rescue of the U.S. economy Thursday through steps that would include tax rebates. Federal Reserve Chairman Ben Bernanke endorsed the idea of putting money into the hands of those who would spend it quickly and boost the flagging economy. He said he expects slower economic growth in 2008, but no recession.

"The good news, if you can call it that, is that the U.S. Federal Reserve recognizes the weaker economic outlook, and it looks like actions will be taken both by the Bush administration and the Fed to help bolster the economy," Shum said.

Meanwhile, the American Petroleum Institute, a trade group for oil and gas producers, said high prices cut demand for gasoline and oil in the fourth quarter. On Wednesday, the International Energy Agency cut growth predictions for world oil demand this year to 2.3 percent from a previous estimate of 2.5 percent.

Shum said that regardless of the health of the U.S. economy, the oil market would soon be heading into a period of softer demand.

"No matter how the U.S. economy turns out in the next few months, the global oil market will see softer demand when we go into February because peak winter demand would have passed and demand is typically weaker in the spring," Shum said.

Heating oil prices rose 2.07 cent to $2.5242 a gallon while gasoline prices added 2.75 cents to $2.2943 a gallon.

Natural gas futures added 9.1 cents to $8.172 per 1,000 cubic feet.

Home Sec in anti-terror plan to control entire web

Lewis Page
The Register
Friday January 18, 2008

UK Home Secretary Jacqui Smith has decided to mount a push against cyber terror, in which the internet itself will somehow be modified to prevent people using it for terrorist purposes.

Today, Ms Smith addressed an international conference on radicalisation and political violence. Much of the speech was about engagement with the Muslim community, preventing the use of schools and prisons for jihadi propaganda etc. There was also some suggestion that "dirty bombs" are jolly dangerous, and that this shows how serious the domestic terror threat is*.

However, the Home Secretary also reiterated the Brown government's promise of technical measures against web terror:

The internet is a key tool for the propagandists for violent extremism... Let me be clear. The internet is not a no-go area for Government.

We are already working closely with the communications industry to take action against paedophiles... we should also take action against those who groom vulnerable people for the purposes of violent extremism... I will be talking to industry... about how best to do this.

Where there is illegal material on the net, I want it removed.

The government's moves still appear to be focused more on perception than action. Yesterday, UK media outlets - for instance the Times, the BBC and the Daily Mail - obligingly rehashed the old, not-very-terrifying case of Younes Tsouli (aka "Terrorist 007") the most fearsome web terror mastermind yet snared, despite the complete absence of any new revelations. Only a cynic would suspect that Home Office briefers were behind the sudden news-free flood of web terror ink.

Today, Ms Smith followed in the less-than-illustrious footsteps of EC vice-president Franco Frattini and indeed her political master Gordon Brown.

Frattini memorably said last year that: "It should simply not be possible to leave people free to instruct other people on the internet on how to make a bomb." He reportedly planned to prevent this by unspecified actions at the level of European ISPs.

Brown went down a similar route in November, saying: "The Home Secretary is inviting the largest global technology and internet companies to work together to ensure that our best technical expertise is galvanised to counter online incitement to hatred." This turned out - thus far, anyway - to be no more than political posturing for the technically challenged, however.

UK internet service provider group ISPA confirmed to the Reg today that it still hadn't heard anything from the government regarding the web terror crackdown. It had asked for a meeting following the Brown speech, but so far has heard nothing.

An ISPA spokesman added: "It is important to note that many of these sites are hosted overseas... there is a working takedown procedure but censorship is the remit of the government not of industry."

The industry spokesman added that the government should "bear in mind that the internet is not the only place for this activity".

Full article here.

Pakistani forces say kill up to 90 militants

ISLAMABAD, Jan 18 (Reuters) - Pakistani forces killed up to 90 militants in two battles on Friday in the South Waziristan region on the Afghan border, the military said.

The clashes came two days after hundreds of militants overran a paramilitary fort in another part of South Waziristan, dealing the military a setback in its efforts to defeat the al Qaeda-linked militants.

In one incident on Friday, government forces attacked a large number of militants who had gathered to attack another attack fort in the region, at Ladha, killing 50 to 60 of them. The rest dispersed, said military spokesman Major-General Athar Abbas.

"The miscreants, these terrorists, wanted to probably attack another fort and they were gathering there. Therefore, the security forces took action in retaliation," Abbas said.

Security forces used artillery and mortars to attack the militants and suffered no casualties, he said.

In the second incident, militants ambushed a convoy and 20 to 30 of them were killed when security forces fought back, he said.

"We had a convoy passing through Chaghmalai and these miscreants started firing on the convoy. The security forces retaliated and there was a firefight for an hour or two and then the security forces cleared the area," he said.

Four members of the security forces were wounded in the second clash, he said.

Both clashes were in areas of South Waziristan where an al Qaeda-linked militant leader, Baitullah Mehsud, operates.

The government said Mehsud was behind the assassination of opposition leader Benazir Bhutto in Rawalpindi on Dec. 27.

CIA CHIEF BLAMES MEHSUD

Mehsud has been blamed for a string of other attacks on security forces in recent months, compounding a sense of crisis in the nuclear-armed country as President Pervez Musharraf has struggled to hold power in the face of protests from opponents.

The government says the militants are intent on destabilising the country in the run-up to a Feb. 18 general election that is meant to complete a transition to civilian rule.

A spokesman for Mehsud was not immediately available for comment. Residents of South Waziristan said they had heard the sound of explosions on Friday.

CIA Director Michael Hayden, in an interview with the Washington Post published on Friday, also blamed Mehsud for Bhutto's murder.

"This was done by that network around Baitullah Mehsud. We have no reason to question that," Hayden said.

His comments were the most definitive public assessment by a U.S. intelligence official of who was responsible for the assassination of the former prime minister. He declined to discuss the intelligence behind the CIA's assessment.

Security forces have been battling al Qaeda-linked militants in South Waziristan for several years. The mountainous region, occupied by conservative, independent-minded Pashtun tribesmen, has never come under the full authority of any government.

Militants flocked to Waziristan and other parts of the Afghan-Pakistani border in the 1980s to support U.S.- and Saudi Arabian-backed Afghan guerrillas fighting Soviet troops in Afghanistan.

Many al Qaeda and Taliban members took refuge on the Pakistani side of the border after U.S.-led troops ousted the Taliban government in Afghanistan weeks after the Sept. 11, 2001, attacks on the United States.

From remote border sanctuaries the militants have been launching raids back into Afghanistan, and increasingly into populated parts of Pakistan.

Pakistani forces have been trying to expel foreign militants and subdue their Pakistani allies along the border, where Osama bin Laden is also believed to be hiding. (Additional reporting by Robert Birsel)

FBI probes World Bank bomb threat: spokesperson

WASHINGTON (Reuters) - The FBI said on Friday it was investigating a bomb threat made to the World Bank's Washington headquarters and sniffer dogs had swept its buildings but not found any explosives.

A spokeswoman for the FBI Washington field office, Debbie Weierman, said the World Bank decided to close its headquarters on Friday as a precautionary measure.

The bank said on Thursday the threat was phoned in, but gave no details

Weierman said the FBI was leading the investigation with the help of the Secret Service and local police.

"We had canine bomb dogs sweep the building last evening and no devices were found. The investigation is continuing," Weierman said.

The World Bank, which fights (Comment: creates) global poverty, is a few minutes' walk from the White House and across the street from the International Monetary Fund.

Mainstream Media Acknowledges The National ID Card

Youtube
Friday January 18, 2008

They are now pushing the real ID b/c of the falling dollar. All of your information is going to be on that card even your money.

Oklahoma Police Unveil Siren Impossible to Ignore

WBKO
Thursday, January 17, 2008

It's a police siren that cannot be ignored.

Officers in Oklahoma are excited over a new piece of equipment called the "Rumbler," which is a very loud siren.

It is so noisy, in fact, that drivers will be able to feel their seats vibrate from the sound.

Tulsa policemen say even with their lights on and sirens blaring, most drivers don't notice their patrol cars.

But the low tone surprises many drivers, making them look up and pull over.

"I like it," said Tulsa Police Officer Harold Goad.

"I used it this morning and yesterday and in one or two cases it was obvious the rumbler brought the attention to the driver."

Some in the community debate if the Rumbler could pose a health risk.

Area doctors report they didn't know enough about the Rumbler to make a comment, but Tulsa Police say it's like any high tech sound system where the woofer and amplifier make you feel a slight tremor in your body.

Biggest drop in US housing starts since 1980

Daniel Pimlott
Financial Times
Friday January 18, 2008

New residential building in the US last year suffered its biggest drop in nearly three decades, according to government data published on Thursday that highlighted the dramatic downturn in US housing.

Housing starts for 2007 fell by more than 25 per cent to 1,376,100 homes. The largest previous drop was recorded in 1980, as the US entered a deep recession.

Builders broke ground on fewer new homes in December, leaving the annual rate of construction at 1,006,000 – its lowest level since 1991, and down 14 per cent from November and 38 per cent from the same month a year earlier.

Permits issued to build new homes, which signal future construction trends, fell 8 per cent in December, and were 34 per cent down year-on-year.

The plunge in starts was driven by a 40 per cent drop in the volatile multi-family sector - single-family starts dropped by only 2.9 per cent.

The housing data may be the worst in decades, but economists say that housing starts need to fall in order to run down record inventories of homes already on the market.

“The rate of decline of permits has re-accelerated markedly since the turmoil in the markets began in the summer; builders have finally thrown in the towel,” said Ian Shepherdson of High Frequency Economics. “This is a precondition for recovery, as it will eventually reduce the inventory overhang, but there is a long way to go.”

As the US economy slows, sales of homes are likely to fall further as buyers hold off from making purchases. Foreclosures on properties are also set to rise, boosting the supply of homes on the market and further depressing construction.

The dismal housing situation was somewhat relieved by data on weekly unemployment claims, which fell 21,000 to 301,000, the lowest level since May and well below the consensus estimate of 331,000.

Economists suggested that the drop might be due to seasonal factors, but the fact that the jobs situation did not deteriorate dramatically was taken as a positive indicator.

New Hampshire ballot boxes found slit

Bev Harris
Black Box Voting.org
Friday January 18, 2008

No worries, say New Hampshire officials when cuts up to eight inches long are spotted in newly delivered ballot boxes. "The only seal that counts is the one on top."

Except the seal on top can be peeled off without leaving a trace, then reaffixed.

Black Box Voting has been doing a chain of custody exam for the New Hampshire Primary's recount. On Wednesday night, Election Defense Alliance's Sally Castleman mentioned a troubling observation: After following the ballots back to the ballot vault following Wednesday's recount, she had the opportunity to enter the ballot vault, and noticed what looked like cuts, or slits, in the side of many ballot boxes. New Hampshire officials assured us that these cuts, which slice through the tape, seals and box itself do not permit access to the uncounted ballots, pointing to a label on the boxtop which they call a seal.

But the "seal" can be removed, like a Post-it, and reaffixed. So it's not a seal all!

We wanted to know if the ballot boxes were slit while in the vault, in the transport van, or came from the towns with slits in them.

I confirmed this morning that many if not most of the boxes scheduled to be counted today had slits in them. I went out when a vanload of ballots arrived, and saw that they were slit at the time they arrived by van. Susan Pynchon and I drove to two nearby towns and watched as they handed over their ballot boxes to "Butch and Hoppy", the two men who drive around in the state in a van picking the ballots up. We observed as they loaded boxes of ballots into the van with no slits at all in them. We videotaped each of these up close. They arrived at the destination without slits. The label on the top was affixed, but in some cases was crumpled, or also damaged.

Of cource, the label affixed to the top can be removed and reattached without telltale signs.

No vault tonight

A significant departure from the normal chain of custody path occurred tonight. They decided not to use the vault to store the ballots.