U.S. loses prison camp records of bin Laden's driver

By Jane Sutton GUANTANAMO BAY U.S. NAVAL BASE, Cuba (Reuters) - The U.S. military has lost a year's worth of records describing the Guantanamo interrogation and confinement of Osama bin Laden's driver, a prosecutor said at the Yemeni captive's war court hearing on Thursday.

Lawyers for the driver, Salim Ahmed Hamdan, asked for the records to support their argument that prolonged isolation and harassment at the Guantanamo prison have mentally impaired him and compromised his ability to aid in his defense on war crimes charges.

"All known records have been produced with the exception of the 2002 Gitmo records," one of the prosecutors, Navy Lt. Cmdr. Timothy Stone, told the court. "They can't find it."

He said the military was still looking for the records kept at the remote U.S. naval base in southeast Cuba, which he referred to by its nickname.

President George W. Bush authorized the Guantanamo court to prosecute suspected al Qaeda members on grounds that the existing military and civilian courts were not adequate to prosecute terrorism charges against war captives who are not part of any national army.

Hamdan, who is in his late 30s, was the prisoner whose lawsuit prompted the U.S. Supreme Court to strike down the initial Guantanamo war crimes system. The charges against him were twice dismissed and then refiled and the military hopes to begin his trial in May.

Hamdan was captured in Afghanistan in November 2001 and faces life in prison if convicted on charges of conspiracy and providing material support for terrorism. He has said he never joined al Qaeda but worked as bin Laden's driver in Afghanistan because he needed the $200 monthly salary.

TRUSTED MEMBER OF AL QAEDA?

Prosecutors say he was a trusted member of al Qaeda who helped bin Laden elude U.S. forces in Afghanistan and that he had two anti-aircraft rockets in his car when he was captured at a checkpoint near Kandahar.

At a pretrial hearing on Thursday, Hamdan's lawyers asked the judge to drop the charges on grounds that their client's acts were not recognized as war crimes when committed.

Legal authority to try non-U.S. captives in the Guantanamo tribunals rests on a 2006 law that made conspiracy and providing material support for terrorism war crimes, but Hamdan's lawyers said it could not be retroactively applied.

A U.S. Justice Department lawyer argued that although no international law or treaty specifically listed conspiracy as a war crime, the Nuremberg war court set a precedent by prosecuting German SS members after World War Two. They were accused of membership in what had been declared a criminal organization, essentially the equivalent of conspiring with al Qaeda, said the attorney, Jordan Goldstein.

He also cited as precedent an 1865 legal opinion from the U.S. Civil War era that authorized summary execution for "banditti, jayhawkers" and others who join marauding bands.

Hamdan's civilian lawyer, Joseph McMillan, said the law has since evolved and marauders may no longer be "hunted down like wolves" and summarily executed.

"There has been a lot that has occurred in the international arena since the American Civil War," McMillan said.

The judge, Navy Capt. Keith Allred, asked, "This is what the president's saying, international law needs to evolve to (counter) terrorism?"

(Editing by Tom Brown and Vicki Allen)

The Economy: Not So Super

Irene Tsikitas The National Journal

The excitement surrounding yesterday’s unprecedented Super Tuesday nominating contests obscured the latest and perhaps most damning news to come out on the troubled economy: Activity in the crucial service sector slowed for the first time in nearly five years last month.

The report from the Institute of Supply Management shows a significant decline in non-manufacturing activity (previously the "firmest pillar of economic expansion") in January. Those numbers, coupled with last week’s news that jobs were declining, are heightening concerns that the economy is not only headed for a recession, but is already in one.

"Recession is here," the headline on CNNMoney.com read yesterday. The report quotes several economists who said the ISM report was the tipping point for them.

"The service sector is a much larger component of the economy [than manufacturing] and this is very much a recession reading," said Keith Hembre of First American Funds. "The big drop in business activity, that’s a huge red flag," agreed Gus Faucher of Moody’s Economy.com, which is now officially considering the economy in a recession, although not necessarily a long-lasting one.

Reports from the Wall Street Journal, Agence France-Presse, Thomson Financial and the Boston Herald quote other economists sounding similar notes of pessimism after the ISM report.

The report sent stocks plunging yesterday — its largest one-day drop in almost a year — although they’ve rebounded somewhat this morning on a Labor Department report showing worker productivity increased more than expected in the fourth quarter. The Wall Street Journal (subscription) has more on that report.

The Journal writes that the disappointing service-sector report "reinforced expectations that the Federal Reserve will cut its target for the benchmark federal-funds rate, at which banks lend to each other overnight, to 2.5% at its March 18 policy meeting from the current 3%."

The mounting consensus among economists that a recession has already begun could also increase pressure on senators scrambling to reach a consensus on the economic stimulus package quickly agreed upon by President Bush and House leaders. The Senate is attempting to expand the scope of tax rebates and incentives included in the package, and Majority Leader Harry Reid has said he will not back down from those efforts.

In testimony before the Senate Finance Committee yesterday, Treasury Secretary Henry Paulson hinted that the White House could agree to expand rebates to retirees and disabled veterans, although the administration continues to raise objections to some other proposals in the panel’s version of the bill, which is slated for a vote later today.

Reuters reports that the three sitting senators running for president are planning to return to Washington today for that vote — and with good reason. The economy is now far and away the No. 1 issue (subscription) Americans say they want the presidential candidates to address.

The issue appears to be working in Hillary Rodham Clinton’s favor on the Democratic side, with voters most concerned about the economy leaning toward the New York senator in nearly two-thirds of the Super Tuesday states for which there are exit polls, according to National Journal’s Ronald Brownstein.

Somewhat surprisingly, Sen. John McCain also picked up a plurality of GOP voters citing the economy as a top concern, even though businessman and former Massachusetts Gov. Mitt Romney has fought hard to lay claim to the issue.

AP has more exit poll stats on the economy and other factors affecting yesterday’s results.

Federal Reserve Under Increased Scrutiny After Huge Interest Rate Cuts

Alex Newman
JBS
February 5, 2008

Questions about the underlying structure of America’s monetary policy are becoming increasingly important on the national stage after what economists are calling “wild” rate cuts by the Fed.

Jim "Mad Money" Cramer, a financial guru with a television show on CNBC, called for an investigation of the Fed during an interview with Wall Street Confidential. He criticized the institution for allegedly causing every "boom and bust business-cycle," for the recent interest cuts, and more. He was also severely critical of the new chairman, Ben Bernanke.

"The Federal Reserve created the stock bubble with low margin rates and it created the housing bubble with low mortgage rates, yet I never hear about anyone talking about investigating the Fed," he said on his show. "It’s a creature of Congress, why don’t we do it?"

He featured Republican Presidential candidate, Rep. Ron Paul, who said the Federal Reserve is more secretive than the C.I.A., and that it should at least be audited by Congress, if not totally abolished.

Paul went on to discuss the problems associated with the idea of a central bank engaging in "central-planning."

"If you believe in free-enterprise and capitalism, you should have the market forces determining interest rates," he said. "It’s the distortion of interest rates by manipulating the money supply that causes these bubbles to form." The current chairman of the House Banking Committee is taking an interest in these matters and is better than past leadership, Paul also noted.

Congressman Paul’s comments echo a common argument made by economists critical of the Fed; manipulations in interest rates and the supply of money by the Fed cause bad investments. They argue that interest rates should be determined by the market.

In fact, the idea of a strong central bank with control over credit can be found among Marx’s 10 Planks, along with a progressive tax on income and a state-run education system. In a society based truly on free-enterprise, interest rates would be set by the market.

The Fed’s recent cuts, three-quarters of a percentage point, lowered interest rates to 3.5 percent. Critics say this is simply going to cause more inflation, which is already out of control, leading to an even further depreciation dollar. This is likely to be exacerbated by other Fed actions as well, such as the planned injection of $60 billion into the economy through an auction this month. According to the AFP news service, the Fed plans to "conduct biweekly auctions for as long as necessary to provide short-term liquidity to banks."

The recent rate cuts came after economic planners at the Fed, already supposedly scared of a recession in the U.S., realized there was trouble in Asian and European markets. It turns out one of the central causes of these market problems was a rogue trader at a large French bank who made some terrible, enormous investments. He is now being prosecuted for fraud, but the point is that the Fed claims they didn’t have knowledge of this when they became alarmed and reduced rates. The Fed, even if we assume it is acting in the best interests of the American economy, will never be able to replace market forces in determining appropriate rates.

Another question now entering the debate is the Constitutionality of the Fed. Article I, Section 8 is clear when it gives Congress the authority to coin money and regulate the value thereof. The Constitution also states that no State shall make anything but gold or silver legal tender.

Congress created the Fed in 1913, the same year America was saddled with the income tax. The legislation that created it was written during secret meetings between the elite of the banking world on Jekyll Island. The museum that stands there today, now a Georgia State Park, names the conspirators in attendance.

Now, this privately held, virtually unregulated institution has the power to create money out of nothing, backed by the IRS and your wages, and charge interest on top of it. A bill in Congress, H.R. 2755, would change this by abolishing the Federal Reserve. To urge your Representatives in Congress to support this measure and help bring back a sound currency, click here.

Cheney Defends Use of Harsh Interrogations

By DAVID STOUT and SCOTT SHANE
New York Times

Published: February 7, 2008

WASHINGTON — Vice President Dick Cheney on Thursday vigorously defended the use of harsh interrogation techniques on a few suspected terrorists, saying that the methods made up “a tougher program, for tougher customers” and might have averted another attack on the United States.

“A small number of terrorists, high-value targets, held overseas have gone through an interrogation program run by the C.I.A.,” Mr. Cheney said in an address to the Conservative Political Action Conference in Washington, around the same time that the head of the Central Intelligence Agency said one of the most controversial interrogation methods, “waterboarding,” may be illegal under current law.

The “high-value targets” included Khalid Shaikh Mohammed, the mastermind of the Sept. 11, 2001, terrorist attacks, Mr. Cheney recalled. “He and others were questioned at a time when another attack on this country was believed to be imminent. It’s a good thing we had them in custody, and it’s a good thing we found out what they knew,” the vice president said, drawing applause.

Mr. Cheney did not use the term “waterboarding,” which simulates the feeling of drowning in the subject. But the C.I.A. director, Michael V. Hayden, acknowledged recently that Mr. Mohammed was one of three suspects on whom the harsh technique was used several years ago.

The vice president asserted that the techniques used by the C.I.A. were safe and professional, and that the interrogation program had unearthed information that had “foiled attack against the United States, information that has saved thousands of lives.”

And, in a rebuttal to critics of the Bush administration critics, Mr. Cheney said, “The United States is a country that takes human rights seriously. We do not torture — it’s against our laws and against our values.”

Meanwhile, General Hayden told a Congressional committee on Thursday that waterboarding may be illegal under current law, despite assertions this week from the director of national intelligence and the White House that the harsh interrogation method may be used in the future.

General Hayden said that while “all the techniques we’ve used have been deemed to be lawful,” laws have changed since waterboarding was last used nearly five years ago.

“It is not included in the current program, and in my own view, the view of my lawyers and the Department of Justice, it is not certain that the technique would be considered to be lawful under current statute,” the general said before the House Intelligence Committee.

His remarks and those of the vice president came as Attorney General Michael B. Mukasey rebuffed Democrats’ demands for a criminal investigation of waterboarding, which creates a feeling of suffocation and was used on the three Al Qaeda suspects in 2002 and 2003.

Mr. Mukasey noted that the Central Intelligence Agency’s interrogation techniques, including waterboarding, were approved by the Justice Department.

As a result, Mr. Mukasey told the House Judiciary Committee, waterboarding by C.I.A. officers “cannot possibly be the subject of a criminal, a Justice Department investigation, because that would mean that the same department that authorized the program would now consider prosecuting someone who followed that advice.”

The flurry of public statements about an interrogation technique that has not been used since mid-2003 showed how the harsh tactics secretly adopted by the Bush administration after the Sept. 11 terrorist attacks have become a stubborn political burden. The contradictory pronouncements also reflected deep divisions in the government over whether waterboarding is illegal torture, as many scholars suggest, or whether it may be legal in extreme cases.

US Defense Secretary Urges NATO to Send More Troops to Afghanistan

By Al Pessin (VOA News) Vilnius 07 February 2008

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U.S. Defense Secretary Robert Gates did as he promised at a NATO meeting in Lithuania Thursday, he again urged other allies to provide more troops for Afghanistan. But he also says he does not believe there is a crisis in the country, and he understands the political difficulties some allies face. VOA's Al Pessin reports from Vilnius.

Robert Gates speaks during a news conference at meeting of NATO defense ministers in Vilnius, Lithuania, 7 Feb 2008

Secretary Gates had said he would "nag" NATO allies again to send more troops to Afghanistan, and he says that is what he did on the first of two days of meetings here.

"I called on the other allies to make further commitments to the mission, to do what they could to meet unmet needs as articulated by the commanders out there, and to consider other, more creative, ways that they may be able to contribute," he said.

Many European governments stress the need for more efforts on reconstruction and economic development in Afghanistan. But while Secretary Gates agrees with that, he made clear that the United States believes more troops are needed, too, and with fewer restrictions imposed by their home governments.

"What we are obviously interested in is more who will have no caveats on their forces, and those who are willing to engage in the fight itself," he added.

After a NATO meeting last October, Secretary Gates sharply criticized some allies for not fulfilling their commitments and for putting the alliance's Afghanistan mission at what he called "real risk." Last month, he announced the deployment of 3,200 U.S. Marines, most of them to restive southern Afghanistan, to ensure gains made against the Taliban are not lost.

On Wednesday, Secretary Gates said NATO could evolve into a two-tier alliance, with fighters and non-fighters, but the secretary said he was encouraged after Thursday's meetings.

"I do not think that there is a crisis," he explained. "I do not think that there is a risk of failure. My view is that it represents potentially the opportunity to make further progress faster in Afghanistan if we had more forces there."

Secretary Gates says he will not send more Marines when this deployment ends in November, and he wants other NATO members to provide replacement forces. In addition, Canada has said it will withdraw from southern Afghanistan next year if it does not get more help from the allies.

Secretary Gates says he understands the political difficulties and public opposition some European governments face when they consider sending more troops to Afghanistan, but he says more must be done, perhaps by sending equipment and paying costs.

A few countries indicated they might send a few more troops to Afghanistan, but no major announcements are expected until the NATO summit in April in Romania.

At a separate news conference, NATO Secretary General Jaap de Hoop Scheffer noted that NATO has increased its troop presence in Afghanistan by more than 8,000 in the past year, and he disputed claims that the mission is close to failing.

Jaap de Hoop Scheffer talks at start of informal meeting of NATO defense ministers meeting in Vilnius, 7 Feb 2008

Scheffer also had strong words for the government of Afghanistan, saying it cannot rely on NATO to do everything for the country.

"We do not own it," he said. "The Afghan people own their own nation. And it is up to the Afghan government to be responsible for the fight against corruption, to play their role in the fight against narcotics to see that law and order is there in the full sense of the word. That is their responsibility."

Scheffer said he is "cautiously optimistic" that NATO will succeed in Afghanistan, but he also said it will take patience and a long-term commitment. He is working on a strategy document to be approved at the summit that U.S. officials say is designed in part to convince Europeans that creating a stable Afghanistan is important for their security, so they will support their governments sending more troops

Home prices set to slide in '08

National Association of Realtors pulls back on outlook and forecasts second consecutive annual decline in prices and sales

By Chris Isidore, CNNMoney.com senior writer

February 7 2008: 11:34 AM EST

NEW YORK (CNNMoney.com) -- In a fresh sign that the nation's housing crisis will worsen, home prices are likely to decline in 2008 for the second straight year, the National Association of Realtors said Thursday.

The Realtors, in its monthly economic and sales outlook, is forecasting a 1.2% drop in prices of existing homes sold this year.

Only a month ago, the association was forecasting that prices would be flat in 2008 and that the home market would rebound in the last half of the year.

The group was forecasting that the first quarter would see a record 5.3% drop from year ago levels. Now it's expecting the current quarter to see even a larger decline in prices of 6.1%.

Last year, when the median price slipped 1.4 from 2006 levels, was the first on record that the Realtors recorded full-year decline in existing home prices.

The group is also forecasting a 4.8% decline in the number of existing homes sold this year. A month ago it was still forecasting a 0.9% pickup in the sales. Existing home sales plunged 12.8% in 2007, according to the group's figures.

"We're seeing a pattern that is consistent with skimming along the bottom of the cycle, and sales could ease modestly," said Lawrence Yun, the group's chief economist, in a statement.

The Realtors forecast further decline in sales and prices even though it projects the overall U.S. economy will stay out of recession. It expects gross domestic product, the broad measure of the nation's economic activity, to show 1.2% growth in the first quarter and 2.2% growth in the second quarter.

But a growing number of economists are forecasting that the economy has already entered into a recession and is like to see GDP in negative territory for at least the first half of the year.

In the year ahead, the Realtor's see even greater weakness in new home sales - a 4.3% drop in median prices and a 17.7% plunge in the number of sales.

The Realtors have been recently lowering their price and sales forecasts with each monthly update. The group still has a more bullish view of the market than other outside forecasts. For example, investment firm Merrill Lynch (MER, Fortune 500) is forecasting a 15% drop in home values this year, and an additional 10% decline in 2009. The Realtors are forecasting a 3.2% rebound in prices next year in this latest reading.

Christian Menegatti, lead analyst for online economic research firm RGE Monitor, is forecasting a much sharper drop in home prices in 2008 and beyond, probably double digit.

"What we've seen so far are still mild declines," Menegatti said. "I think we'll see much sharper declines through this year and the next. I don't think we are even close to a bottom yet."

Pending home sales fall again

Menegatti points to the Realtors' Pending Home Sales Index for December, which was also released Thursday. That index showed that the number of homes under contract fell once again to the second-lowest level on record - indicating growing weakness on the demand side, which Menegatti said will keep the inventories of homes for sale at record levels.

"Our inventories are still very very high and they need to be worked off before we get to bottom," he said.

The Pending Home Sales Index fell 1.5% to 85.9. That was better than only the record low of 85.5 set in August, when the meltdown in the mortgage finance market made it difficult for many buyers to arrange financing.

While the index posted a modest rebound in September and October, it has fallen each month since then. The four weakest readings on record have come in the last five months of 2007. Before that downturn, the previous record low had been 89.8 reached in September 2001, the period in which the terrorist attack shook buyer confidence.

The pending home sales index is more forward looking than the group's more widely followed reading on existing home sales, which tracks closings. A home is generally under contract for a month or two before closing.

The Pending Home Sales Index is only seven years old, and a 100 reading represents the level of homes under contract in 2001, the first year of the index. The December report brought the index' annual reading in at 96.3, the first time the annual number has fallen under 100.

Cisco shares fall on disappointing outlook

NEW YORK (Reuters) - Shares of Cisco Systems Inc (CSCO.O: Quote, Profile, Research) fell as much as 5.7 percent to a more than one-year low on Thursday after the network equipment maker warned of a rapid slowdown in U.S. and European orders and gave a disappointing outlook.

The news dragged down shares of other U.S. telecom equipment makers, including Juniper Networks Inc (JNPR.O: Quote, Profile, Research) and Ciena Corp (CIEN.O: Quote, Profile, Research).

JPMorgan analyst Ehud Gelblum said in a research report that he was downgrading Cisco shares to "neutral" from "overweight" because "growth rates appear headed south quite rapidly for much of the foreseeable future.

"Even more telling is the fact that management decided to curb guidance after just one month of slow order growth in January due to weakness in the U.S. and Europe, indicating this slowdown could be just the tip of the iceberg," Gelblum said.

Cisco, the largest maker of the routers and switches that direct traffic on data networks, forecast fiscal third-quarter revenue to rise 10 percent, short of the 15 percent growth expected by Wall Street, according to Reuters Estimates.

That would also be a slowdown from Cisco's 16.5 percent revenue growth in the second quarter, which ended on January 26.

Cisco also said it expected revenue growth in fiscal 2008 to be at the low end of the projected 13 percent to 16 percent range.

"With numbers moving lower, we are reducing our price target on the shares of Cisco from $33 to $23," Bank of America analyst Tim Long said in a research note, adding that he was concerned about weakness in Europe and pressure on margins from continued investments.

"We believe Cisco may struggle to achieve the low end of its long-term growth objectives if macro conditions worsen further," he said, referring to Cisco's goal to maintain long-term revenue growth of 12 percent to 17 percent.

Shares of Cisco fell as much as $1.31 to $21.77 on the Nasdaq, their lowest level since September 2006. Later in the morning, they traded at $22.60, down 2.1 percent.

"Cisco's outlook suggests a much greater degree of uncertainty than the market expected," said Goldman Sachs analyst Brantley Thompson in a report, cutting the price target on the stock to $28 from $32. "As a result, we believe it will take at least another quarter or two of solid results before the stock can regain sustained positive momentum."

(Reporting by Tiffany Wu)

Sales at U.S. Retailers Languish on Recession Concern (Update4)

By Heather Burke

Feb. 7 (Bloomberg) -- Sales at U.S. retailers languished in January as discounts failed to lure consumers concerned that a recession is coming. Macy's Inc. and Nordstrom Inc. reported declines, while the gain at Wal-Mart Stores Inc. was less than analysts estimated.

Sales at stores open at least a year rose 0.5 percent at Wal-Mart as winter storms discouraged shoppers in the Midwest and fewer customers redeemed gift cards. The monthly increase among retailers was also 0.5 percent, the worst January since 1970, the International Council of Shopping Centers said today.

Department stores and mall-based shops slashed prices on clothing and bedding to attract customers following the slowest holiday season since 2002. Consumers refrained from spending as median home values probably fell for the first time since the Great Depression and employers cut back on hiring.

``You're seeing the continuing unfolding of the consumer spending slowdown,'' said Ken Perkins, president of Retail Metrics LLC, a Swampscott, Massachusetts-based research firm. ``Clearance sales were widespread, there were certainly enough incentives to draw the consumer in under normal economic circumstances, but consumers are hunkering down.''

Department stores have been hit hard by a decline in customer visits to malls and a lack of new products that excite consumers, Perkins said. Nordstrom's sales sank 6.6 percent. Analysts surveyed by Retail Metrics expected a 0.4 percent decline.

Macy's, the second-biggest U.S. department-store chain, said yesterday that January same-store sales dropped 7.1 percent, cut its fourth-quarter profit forecast and said it will eliminate 2,300 jobs. Kohl's, the fourth-largest U.S. department-store chain, posted a 8.3 percent decline, worse than the estimate for a 7.9 percent drop.

J.C. Penney Profit

J.C. Penney Co. said monthly results fell 1.9 percent, better than its forecast, and said fourth-quarter profit would be at the high end of its projection of $1.65 to $1.80 a share.

The retailers' shares rose, with the Standard & Poor's 500 Retailing Index gaining 2.5 percent after losing 8.3 percent during the previous three sessions.

J.C. Penney climbed $4.13, or 9.5 percent, to $47.85 at 10:27 a.m. in composite trading at the New York Stock Exchange. Wal-Mart, the world's largest retailer, was unchanged at $48.83 while Kohl's rose 4.7 percent to $44.92.

``Sales weren't great, but they generally weren't worse than expected,'' said Howard Tubin, a retail analyst at RBC Capital Markets in New York. ``Given the lack of additional bad news, the sector is rallying a bit today.''

Low Expectations

Among retailers tracked by Retail Metrics, 57 percent of them beat ``very low expectations,'' Perkins said today in a statement.

Same-store sales are seen as a key gauge of a retailer's performance because they exclude locations that have recently opened or closed.

Sales dropped 8 percent at Limited Brands Inc., owner of the Victoria's Secret chain. The sales decrease exceeded the average analyst estimate for a decline of 7.1 percent. American Eagle Outfitters Inc. said yesterday that same-store sales fell 7 percent.

Wal-Mart had predicted a January same-store sales gain of 2 percent, the same as the average Retail Metrics estimate.

Target Corp., the second-largest U.S. discount chain, reported a 1.1 percent decline. It had said Jan. 21 it expected January sales to be ``near the low end'' of its forecast range of a 1 percent decrease to a 1 percent gain.

Other retailers performed better than analysts expected.

Children's Place

Children's Place Retail Stores Inc. reported a 6 percent same-store sales increase, ahead of the 3.6 percent estimated gain. AnnTaylor Stores Corp., a women's clothing retailer, said sales were unchanged from a year earlier, better than the estimated 3.7 percent decline. Chief Executive Officer Kay Krill said in the statement it was ``promotionally aggressive'' to clear inventory.

Gap Inc., the biggest U.S. clothing retailer, said same- store sales decreased 2 percent, better than the 6.1 percent drop predicted by analysts. Gap said it was able to clear out holiday merchandise on higher margins than planned and boosted its full-year profit forecast.

January consumer confidence fell near a two-year low, the Conference Board reported last week, as Americans struggled with higher energy costs and the persistent housing slump. Last month the U.S. unexpectedly lost jobs for the first time in more than four years.

Median Price

The median price of an existing single-family home dropped 1.8 percent in 2007, the first decline since records began four decades ago and probably the first drop since the Great Depression in the 1930s, the National Association of Realtors said last month.

Morgan Stanley, Merrill Lynch & Co., Goldman Sachs Group Inc. and Citigroup Inc. are forecasting the first recession since 2001 this year. The Federal Reserve on Jan. 30 lowered its benchmark interest rate for the second time in nine days. Congress is considering fiscal stimulus plans that would provide tax rebates to try to spur consumer spending.

Wal-Mart and Costco Wholesale Corp. may benefit because they sell necessities such as groceries, and some consumers may be trading down, Timothy Ghriskey, who helps manage more than $2 billion at Solaris Asset Management LLC in Bedford Hills, New York, said yesterday. Last month Wal-Mart cut prices up to 30 percent on food, televisions, and home and exercise products.

Costco said today in a statement that same-store sales rose 7 percent. Analysts expected 6.3 percent.

The National Retail Federation last month predicted 2008 total sales would rise 3.5 percent from last year, which may be the slowest gain in six years.

To contact the reporter on this story: Heather Burke in New York at hburke2@bloomberg.net .

Trichet Sees `Unusually High Uncertainty' on Growth (Update2)

By Simone Meier and Gabi Thesing

Feb. 7 (Bloomberg) -- European Central Bank President Jean- Claude Trichet signaled that he's open to cutting interest rates for the first time in almost five years, saying there's ``unusually high uncertainty'' about economic growth.

``As the reappraisal of risk in financial markets continues, there remains unusually high uncertainty about its overall impact on the real economy,'' Trichet told reporters in Frankfurt today after the ECB kept its key rate at 4 percent. The euro fell and bonds rose following his remarks.

The ECB kept borrowing costs at a six-year high, declining to follow cuts by counterparts in the U.S. and Great Britain to contain inflation. The Bank of England today lowered its rate a quarter point to 5.25 percent. Trichet's focus on growth today reflected mounting concern that a U.S. slowdown is infecting the outlook for Europe, said Jacques Cailloux, chief European economist at Royal Bank of Scotland Plc.

Trichet's comments were a ``capitulation'' to the view that Europe could resist fallout from the U.S. housing recession, said Cailloux. He moved up his forecast of an ECB cut to April from May, according to a note today. He also assigned a 40 percent chance of a quarter-point reduction next month.

``There is a greater acknowledgment that risks to growth are on the downside,'' said David Owen, chief European economist at Dresdner Kleinwort in London, who predicts a 3.5 percent rate by year end. ``The ECB's not going to cut in next couple of months, but it is starting to prepare the markets for rate reductions.''

Futures Trading

Investors are raising bets the ECB will have to pare its benchmark at least twice this year, according to futures trading. The yield on interest-rate contracts maturing in December fell 10 basis points to 3.42 percent at 3:37 p.m. in Frankfurt. It was as high as 4.36 percent on Dec. 27.

The euro weakened 0.8 percent to $1.4531 from $1.4632 yesterday and the yield on 10-year German bunds fell 5 basis points to 3.85 percent.

The ECB on Dec. 6 projected economic growth of 2 percent this year after 2.6 percent in 2007. Trichet said today that latest data confirmed the bank's assessment that ``risks surrounding the economic outlook lie on the downside.''

The International Monetary Fund on Jan. 29 cut its 2008 euro-region growth estimate by half a point to 1.6 percent, saying that ``no one is going to be exempt from some slowdown.'' The Washington-based fund also trimmed its growth estimates for the U.S. and Japan, the world's two largest economies.

Stock markets have dropped this year on concern the U.S. economy is sliding into a recession, curbing earnings growth. Germany's benchmark DAX Index has lost 16 percent this year and the Dow Jones Stoxx 600 Index 12 percent.

Fed, BOE

The Bank of England today cut interest rates for the second time in three months, and the Fed last month lowered its rate by 1.25 percentage points in two reductions to 3 percent.

The ECB's 21 rate-setting governing council was ``unanimous to decide on maintaining rates at 4 percent,'' and ``there was no call for an increase in rates of a decrease in rates,'' Trichet said today. At the January meeting, the council discussed raising rates.

Trichet today said the bank remained concerned about a potential wage-price spiral.

Inflation in the 15 countries sharing the euro accelerated to 3.2 percent in January. The ECB predicted in December that price gains will average about 2.5 percent this year after 2.1 percent in 2007. That would make 2008 the ninth year the bank failed to achieve its goal of keeping inflation just below 2 percent.

``The ECB sounds more worried by downside risks to growth than in previous months,'' said Dario Perkins, an economist at ABN Amro in London. ``This suggests the tightening bias has gone. But don't assume this means interest-rate cuts are coming soon. The ECB is still constrained by inflation.''

To contact the reporters on this story: Gabi Thesing in Frankfurt gthesing@bloomberg.net ; Simone Meier in Frankfurt at smeier@bloomberg.net .

Bush attacks Ron Paul

Youtube
Thursday February 7, 2008

Kidnappings of U.S. citizens on rise

Tony Manolatos
San Diego Union Tribune
Thursday February 7, 2008

Organized, well-financed and violent Mexican kidnapping cells are targeting a growing number of U.S. citizens visiting communities popular with San Diegans and other California residents.

Last year, at least 26 San Diego County residents were kidnapped and held for ransom in Tijuana, Rosarito Beach or Ensenada, local FBI agents overseeing the cases said yesterday. In 2006, at least 11 county residents had been kidnapped in the three communities.
“Some of the 26 were recovered, some were hurt and some were killed,” said agent Alex Horan, who directs the FBI's violent-crime squad in San Diego.

“It's not a pleasant experience. Victims have reported beatings, torture and there have been rapes. . . . Handcuffs and hoods over the head are common,” he said.

When contrasted to the 40 million border crossings made every year at the San Ysidro Port of Entry, the kidnapping numbers are small. Most of the victims have business interests or family members in Mexico.

But authorities said anyone planning to visit Mexico should be cautious.

“I would certainly be concerned,” Horan said.

The U.S. Consulate in Tijuana issued a travel advisory last week that said U.S. citizens living and traveling in Mexico should be extra vigilant.

Gunfights and other violence linked to drug cartels have increased in Baja California, and more Mexican citizens have been kidnapped lately.

While some of the groups suspected of kidnapping Americans are connected to drug trafficking, most aren't, Horan said.

He described the kidnapping groups as sophisticated operations similar to terrorist cells, each with a boss and clear divisions of labor. Usually, one group is involved in scouting, another carries out the kidnapping, a third holds the victim and a fourth handles the ransom.

“They know who they're going after. I think they have a list,” Horan said. “These are kidnapping cells. . . . That's what they do. They do kidnappings all year long.”

Full article here.

Key figures in the Israel lobbies support a terrorist group that has fired on US troops

CRIMES AND CORRUPTION OF THE NEW WORLD ORDER NEWS
Thursday February 7, 2008

I'm very excited and pleased to introduce today's guest poster, Danny Postel, who comes to us with some absolutely chilling revelations about the bad faith of the neoconservatives' supposed dedication to "freedom" (I know, I know: you're shocked). Danny is the author of Reading “Legitimation Crisis” in Tehran: Iran and the Future of Liberalism and is co-coordinator of the Committee for Academic and Intellectual Freedom of the International Society for Iranian Studies.
 —Rick Perlstein

By Danny Postel

During the week of October 22-26, an official announcement effuses, “The nation will be rocked by the biggest conservative campus protest ever – Islamo-Fascism Awareness Week, a wake-up call for Americans on 200 university and college campuses.” Ringmastered by David Horowitz, this circus will be performing under the tent of something called the "Terrorism Awareness Project.”

The purpose of this ballyhoolooza, we are told, is to confront the “Big Lies” of the Left regarding terrorism and militant Islam. Worthy subjects, to be sure. Indeed I would like to help the sponsors of the “wake-up call” promote awareness of them. Toward this end, let’s consider the American Right’s “special relationship” with one group of terrorists.

The U.S. State Department officially considers the Mujahedeen-e Khalq (MEK) a Foreign Terrorist Organization. While those honors date back to 1994, they’ve been renewed during the Bush years. Indeed in 2003 Foggy Bottom went further, including the National Council of Resistance of Iran — an MEK alias — under the terrorist designation. (The MEK is also known as the People’s Mujahedeen.)

To make a long and bizarre story short, the MEK got its start in early 1960s Iran, helped overthrow the Shah in 1979, but quickly turned on the revolutionary government it helped bring to power. Employing an ideological blend of Stalinism and Islamism, the tactics of a paramilitary guerilla faction, and the organizational structure of a cult, the group went into exile, eventually making their home in Iraq in the mid-1980s. Not only did Saddam give the organization cover: he armed, funded, and utilized them for a variety of ends over two decades.

The group’s wicked political brew was on spectacular display on the old MEK flag (see below; since abandoned), with its sickle and Kalashnikov positioned atop ofbeneath a Koranic verse. (Not — to state the obvious — that the mere presence of a Koranic verse in and of itself implies Islamist political commitments, but in this case the shoe very much fits.)

Here you have virtually everything the Right claims to oppose all rolled into one: Islamism, Marxism, terrorism, and Saddam. Naturally, then, neoconservatives would utterly deplore the MEK and everything it stands for, right? The MEK would in fact make an ideal target for Islamo-Fascism Awareness Week and Terrorism Awareness efforts, no?

Well, no. At least one of the carnival’s acts, it turns out, is rather fond of the Islamo-Stalinist-terrorist cult group, and has repeatedly argued for the removal of the MEK from the State Department’s list of terrorist groups and indeed urged the U.S. government to embrace it. Daniel Pipes, who will be speaking at Tufts on October 24th as part of the Horowitz high jinks, has made the MEK a recurring theme in his writings going back several years: here, here, and here.

Pipes has also gone to bat for the MEK right in the pages of Horowitz’s house organ.

But Pipes is far from alone on the Right in championing the MEK. He co-authored the first piece linked to above with Patrick Clawson of the right-wing Washington Institute for Near East Policy. Right-wing commentator Max Boot has argued not merely for the removal of the MEK from the terrorist list but for funding and unleashing it to do battle with Iranian forces — this while casually acknowledging that it is a “political cult.” (More on Boot’s disfigured views here.)

In some cases the MEK plays a stealth role in the media machinery of the American Right. What the FOX News Channel tells viewers about Alireza Jafarzadeh when he appears on its airwaves is that he is an “FNC Foreign Affairs Analyst.” What you have to go to the FOX News website to discover, however, is that Jafarzadeh served “for a dozen years as the chief congressional liaison and media spokesman for the U.S. representative office of Iran’s parliament in exile, the National Council of Resistance of Iran.” But it is scarcely known that the sonorous-sounding National Council of Resistance of Iran is in fact a front name for the MEK.

Now, it's true that Jafarzadeh discontinued his post with the National Council of Resistance of Iran—but only when (and only because) its Washington office was forced to close in 2003 as a result of the State Department decision about it being a front for the MEK. It's not like he had a change of heart.

If you attend an “Islamo-Fascism Awareness Week” event, you might want to ask the speakers about this terrorist cult and whether they condemn it. Some of them might — not all neoconservatives agree on the MEK. (See here and here for examples of right-wing criticism of the outfit — though the lines of argumentation are sometimes bizarrely convoluted.)

But the fact that several prominent American conservatives have cozied up to an Islamist-Stalinist cult that was on Saddam’s payroll and the State Department considers a terrorist organization — this raises serious questions (to put it mildly) about the Right’s bedfellows and the calculus that determines them.

It suggests the need for a little more terrorism awareness.

Buchanan: John McCain ‘Will Make Cheney Look Like Gandhi’

Think Progress
Thursday February 7, 2008

On the NBC Today Show, liberal radio host Rachel Maddow, conservative pundit Pat Buchanan, and Democratic strategist Paul Begala discussed the importance of “change” in the upcoming election. Voters want a “clean break from Bush,” argued Maddow. Begala added that McCain does not represent that type of change:

BEGALA: If McCain wins, he’s running for a third term for Bush. He wants to make Bush’s Iraq war permanent, Bush’s economic program permanent.

Buchanan concluded the segment by arguing that McCain “will make Cheney look like Gandhi.” Watch it:

Yesterday, ThinkProgress released a video documenting the fact that the leading Republican candidates are mimicking Bush’s policies and are looking to institute a third Bush term.

ABC reporter inside Pentagon during Sept. 11th attacks dies

Transworld News
Thursday February 7, 2008

John McWethy, a retired ABC News correspondent who had been at the Pentagon on Sept. 11, 2001 when it was hit by the hijacked American Airlines Flight 77, was killed on Wednesday while he was skiing in Keystone, Colorado.

McWethy died from blunt force chest injuries when he missed a turn while skiing on an intermediate trail and slammed into a tree.

The 61-year-old McWethy had retired from ABC News in 2003 but had served as a special correspondent from 2003-2006.

O'Reilly Calls Willie Nelson a Pinhead for 9/11 Remarks

JonesReport.com
Thursday February 7, 2008

O'Reilly launched an attack on country legend Willie Nelson last night in retaliation for bolstering support for 9/11 Truth.

But first, Bill O'Reilly took a moment to recognize himself as one of America's true patriots-- an humble patriot, well, because he called the Super Bowl five years straight.

Never was there a truer example of Samuel Johnson's famous words, "patriotism is the last refuge of a scoundrel."

Willie Nelson, on the other hand, is labeled a "pinhead" for statement he made on the Alex Jones Show where he claimed the towers' collapse resembled a Las Vegas demolition.

Samuel Johnson also said of the true patriot, "It is the quality of patriotism to be jealous and watchful, to observe all secret machinations, and to see public dangers at a distance. The true lover of his country is ready to communicate his fears, and to sound the alarm, whenever he perceives the approach of mischief."

Electronic searches prompt protests

Seizure of laptops, cameras and cellphones raising legal questions

By Ellen Nakashima

The Washington Post

updated 3:59 a.m. ET, Thurs., Feb. 7, 2008

Nabila Mango, a therapist and a U.S. citizen who has lived in the country since 1965, had just flown in from Jordan last December when, she said, she was detained at customs and her cellphone was taken from her purse. Her daughter, waiting outside San Francisco International Airport, tried repeatedly to call her during the hour and a half she was questioned. But after her phone was returned, Mango saw that records of her daughter's calls had been erased.

A few months earlier in the same airport, a tech engineer returning from a business trip to London objected when a federal agent asked him to type his password into his laptop computer. "This laptop doesn't belong to me," he remembers protesting. "It belongs to my company." Eventually, he agreed to log on and stood by as the officer copied the Web sites he had visited, said the engineer, a U.S. citizen who spoke on the condition of anonymity for fear of calling attention to himself.

Maria Udy, a marketing executive with a global travel management firm in Bethesda, said her company laptop was seized by a federal agent as she was flying from Dulles International Airport to London in December 2006. Udy, a British citizen, said the agent told her he had "a security concern" with her. "I was basically given the option of handing over my laptop or not getting on that flight," she said.

The seizure of electronics at U.S. borders has prompted protests from travelers who say they now weigh the risk of traveling with sensitive or personal information on their laptops, cameras or cellphones. In some cases, companies have altered their policies to require employees to safeguard corporate secrets by clearing laptop hard drives before international travel.

Right to search?
Today, the Electronic Frontier Foundation and Asian Law Caucus, two civil liberties groups in San Francisco, are filing a lawsuit to force the government to disclose its policies on border searches, including which rules govern the seizing and copying of the contents of electronic devices. They also want to know the boundaries for asking travelers about their political views, religious practices and other activities potentially protected by the First Amendment. The question of whether border agents have a right to search electronic devices at all without suspicion of a crime is already under review in the federal courts.

The lawsuit was inspired by some two dozen cases, 15 of which involved searches of cellphones, laptops, MP3 players and other electronics. Almost all involved travelers of Muslim, Middle Eastern or South Asian background, many of whom, including Mango and the tech engineer, said they are concerned they were singled out because of racial or religious profiling.

A U.S. Customs and Border Protection spokeswoman, Lynn Hollinger, said officers do not engage in racial profiling "in any way, shape or form." She said that "it is not CBP's intent to subject travelers to unwarranted scrutiny" and that a laptop may be seized if it contains information possibly tied to terrorism, narcotics smuggling, child pornography or other criminal activity.

The reason for a search is not always made clear. The Association of Corporate Travel Executives, which represents 2,500 business executives in the United States and abroad, said it has tracked complaints from several members, including Udy, whose laptops have been seized and their contents copied before usually being returned days later, said Susan Gurley, executive director of ACTE. Gurley said none of the travelers in the ACTE suit raised concerns about racial or ethnic profiling. And Gurley said none of the travelers were charged with a crime.

Copied log-on, password
"I was assured that my laptop would be given back to me in 10 or 15 days," said Udy, who continues to fly into and out of the United States. She said the federal agent copied her log-on and password, and asked her to show him a recent document and how she gains access to Microsoft Word. She was asked to pull up her e-mail but could not because of lack of Internet access. With ACTE's help, she pressed for relief. More than a year later, Udy has received neither her laptop nor an explanation.

ACTE last year filed a Freedom of Information Act request to press the government for information on what happens to data seized from laptops and other electronic devices. "Is it destroyed right then and there if the person is in fact just a regular business traveler?" Gurley asked. "People are quite concerned. They don't want proprietary business information floating, not knowing where it has landed or where it is going. It increases the anxiety level."

Udy has changed all her work passwords and no longer banks online. Her company, Radius, has tightened its data policies so that traveling employees must access company information remotely via an encrypted channel, and their laptops must contain no company information.

At least two major global corporations, one American and one Dutch, have told their executives not to carry confidential business material on laptops on overseas trips, Gurley said. In Canada, one law firm has instructed its lawyers to travel to the United States with "blank laptops" whose hard drives contain no data. "We just access our information through the Internet," said Lou Brzezinski, a partner at Blaney McMurtry, a major Toronto law firm. That approach also holds risks, but "those are hacking risks as opposed to search risks," he said.

The U.S. government has argued in a pending court case that its authority to protect the country's border extends to looking at information stored in electronic devices such as a laptop without any suspicion of a crime. In border searches, it regards a laptop the same as a suitcase.

"It should not matter . . . whether documents and pictures are kept in 'hard copy' form in an executive's briefcase or stored digitally in a computer. The authority of customs officials to search the former should extend equally to searches of the latter," the government argued in the child pornography case being heard by a three-judge panel of the Court of Appeals for the 9th Circuit in San Francisco.

As more and more people travel with laptops, BlackBerrys and cellphones, the government's laptop-equals-suitcase position is raising red flags.

"It's one thing to say it's reasonable for government agents to open your luggage," said David D. Cole, a law professor at Georgetown University. "It's another thing to say it's reasonable for them to read your mind and everything you have thought over the last year. What a laptop records is as personal as a diary but much more extensive. It records every Web site you have searched. Every e-mail you have sent. It's as if you're crossing the border with your home in your suitcase."

If the government's position on searches of electronic files is upheld, new risks will confront anyone who crosses the border with a laptop or other device, warned Mark Rasch, a technology security expert with FTI Consulting and a former federal prosecutor. "Your kid can be arrested because they can't prove the songs they downloaded to their iPod were legally downloaded," he said. "Lawyers run the risk of exposing sensitive information about their client. Trade secrets can be exposed to customs agents with no limit on what they can do with it. Journalists can expose sources, all because they have the audacity to cross an invisible line."

Hollinger said customs officers "are trained to protect confidential information."

'Content of people's thoughts'
Shirin Sinnar, a staff attorney with the Asian Law Caucus, said that by scrutinizing the Web sites people search and the phone numbers they've stored on their cellphones, "the government is going well beyond its traditional role of looking for contraband and really is looking into the content of people's thoughts and ideas and their lawful political activities."

If conducted inside the country, such searches would require a warrant and probable cause, legal experts said.

Customs sometimes singles out passengers for extensive questioning and searches based on "information from various systems and specific techniques for selecting passengers," including the Interagency Border Inspection System, according to a Customs statement. "CBP officers may, unfortunately, inconvenience law-abiding citizens in order to detect those involved in illicit activities," the statement said. But the factors agents use to single out passengers are not transparent, and travelers generally have little access to the data to see whether there are errors.

Although Customs said it does not profile by race or ethnicity, an officers' training guide states that "it is permissible and indeed advisable to consider an individual's connections to countries that are associated with significant terrorist activity."

"What's the difference between that and targeting people because they are Arab or Muslim?" Cole said, noting that the countries the government focuses on are generally predominantly Arab or Muslim.

It is the lack of clarity about the rules that has confounded travelers and raised concerns from groups such as the Asian Law Caucus, which said that as a result, their lawyers cannot fully advise people how they may exercise their rights during a border search. The lawsuit says a Freedom of Information Act request was filed with Customs last fall but that no information has been received.

Kamran Habib, a software engineer with Cisco Systems, has had his laptop and cellphone searched three times in the past year. Once, in San Francisco, an officer "went through every number and text message on my cellphone and took out my SIM card in the back," said Habib, a permanent U.S. resident. "So now, every time I travel, I basically clean out my phone. It's better for me to keep my colleagues and friends safe than to get them on the list as well."

Udy's company, Radius, organizes business trips for 100,000 travelers a day, from companies around the world. She says her firm supports strong security measures. "Where we get angry is when we don't know what they're for."

Staff researcher Richard Drezen contributed to this report.

© 2008 The Washington Post Company

URL: http://www.msnbc.msn.com/id/23037049/page/2/