Dollar Heads for Weekly Loss on Concern U.S. Growth Has Stalled

By Kim-Mai Cutler and Stanley White

Feb. 22 (Bloomberg) -- The dollar traded near a three-week low against the euro, headed for a second weekly decline, on speculation the Federal Reserve will cut borrowing costs to stave off a recession while European policy makers keep rates on hold.

The U.S. currency fell against 14 of its 16 most-active counterparts after manufacturing in the Philadelphia area shrank the most in seven years. The Australian and New Zealand dollars climbed as gold surged and prices of oil, grains and other commodities rose to records. The Brazilian real advanced to the highest in almost nine years and Singapore's dollar reached a decade high.

``The dollar is generally coming under pressure because of the divergence we're seeing among central bank policy approaches to the current environment,'' said Ian Stannard, a London-based currency strategist at BNP Paribas SA, France's largest bank. ``The Fed has demonstrated that it's very much focused on growth concerns while the European Central Bank is likely to continue with quite hawkish comments.''

The dollar fell to $1.4828 per euro at 7:09 a.m. New York, the weakest since Feb. 5, from $1.4814 yesterday. The currency lost 1 percent against the euro since the end of last week and dropped 0.8 percent to 107.02 yen. The euro was at 158.69 yen, from 158.25 on Feb. 15, paring a weekly gain to 0.3 percent.

The euro extended its advance against the dollar after an industry report showed growth in European service industries accelerated more than forecast in February.

Singapore Dollar

Singapore's dollar advanced 0.5 percent this week to S$1.4060 per dollar, the highest since January 1997, before a government report Feb. 25 forecast to show consumer prices climbed the most in a quarter century. The Brazilian real rose to 1.7009 yesterday, the highest level since May 1999.

The Australian and New Zealand dollars headed for a second weekly gain on speculation the interest-rate advantage of the two nations over the U.S. will widen, bolstering demand for their higher-yielding assets. The Australian dollar rose 1.6 percent to 92.32 U.S. cents and the New Zealand dollar gained 2.1 percent to 80.68 U.S. cents.

Futures on the Chicago Board of Trade show odds of a half- point cut in the Fed's target rate to 2.5 percent on March 18 have risen to 92 percent, from 66 percent last week. Traders increased bets Australia's central bank will raise borrowing costs a quarter point to 7.25 percent next month. New Zealand's key rate is a record high 8.25 percent.

The dollar fell the most against the euro in four weeks after a report yesterday showed manufacturing in the Philadelphia region, seen as a proxy for other areas in the U.S., had the biggest contraction since 2001 in February.

Fed Forecasts

The Fed has lowered its main rate to 3 percent from 5.25 percent since Sept. 18 to avert the first recession since 2001. That has eroded the appeal of U.S. assets as accelerating inflation in Europe prompted investors to reduce expectations for lower ECB interest rates.

Fed officials cut their 2008 U.S. growth forecasts for a third time on Feb. 20 and said in the minutes of their last meeting rates should be held down ``for a time.'' They now expect the economy to expand by 1.3 percent to 2 percent, compared with the 1.8 percent to 2.5 percent predicted in October.

Some members noted ``when prospects for growth had improved, a reversal of a portion of the recent easing actions, possibly even a rapid reversal, might be appropriate.''

U.S. Recovery

``If you take the view that the U.S. is going to have a strong V-shaped recovery, then the euro at $1.48 starts to look pretty exposed,'' said Gerry Celaya, chief strategist at Redtower Ltd. in Aberdeen, Scotland in a television interview. ``That's the view we're taking, that the Fed will have to raise rates before 2009.''

The dollar may rebound to $1.40 against the euro by year- end, according to the median forecast of 39 analysts surveyed by Bloomberg.

Currencies from Norway and Sweden, two commodity exporters, tend to ``perform best'' when inflation expectations rise, said Deutsche Bank AG, the world's largest currency trader. The krone may rise to 7.83 and the krona may advance to 9.11 in three months, Deutsche Bank forecast.

The Norwegian krone traded at 7.8930 per euro and the Swedish krona was at 9.3062.

Ten-year Treasuries yielded 2.35 percentage points more than similar-maturity Treasury Inflation Protected Securities, the rate of consumer price increases investors expect for the next decade, compared with 2.2 percentage points a month ago.

Breakeven Rate

The so-called breakeven rate will widen for major economies, Bilal Hafeez, London-based global head of currency strategy at Deutsche Bank, wrote in a research note today. Norway's and Sweden's central banks are likely to raise interest rates, boosting their currencies, the report said.

The yen rose versus eight of the 16 most-active currencies this week including the rand and Canadian dollar as falling stock prices prompted traders to shun higher-yielding assets funded by loans in Japan, or carry trades.

Japan's currency rose 1.6 percent this week against the South African rand to 13.8287 and advanced 1 percent to 106.02 per Canadian dollar. Japan's benchmark interest rate of 0.5 percent, the lowest among developed nations, compares with 11 percent in South Africa and 4 percent in Canada.

Stocks in Europe and Asia fell. The MSCI Asia-Pacific Index dropped 0.6 percent and Europe's Dow Jones Stoxx 600 Index declined 0.5 percent.

Stocks, Correlation

The Nikkei 225 Stock Average fell 1.4 percent today following the biggest decline in a week on the Standard & Poor's 500 Index. The dollar-yen's correlation with the Nikkei 225 was 0.95 in the past year, according to data compiled by Bloomberg. A value of 1 means the two variables move in lockstep.

``The yen's fate is dependent on the stock markets,'' said Tokichi Ito, deputy general manager of foreign exchange in Tokyo at Trust & Custody Services Bank Ltd., a unit of Japan's second- largest publicly traded lender. ``Almost every time equities sell off, people get nervous about carry trades and buy yen.''

In carry trades, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between them. The risk is that currency moves erase those profits.

Protesters break into U.S. Embassy in Serbia

Support for Kosovo independence raised tensions with Balkan nation

BREAKING NEWS

NBC News and news services

updated 1:31 p.m. ET, Thurs., Feb. 21, 2008

BELGRADE, Serbia - Protesters broke into the U.S. embassy in Belgrade on Thursday and set fires, cheered on by crowds outside rallying against U.S. support for Kosovo's independence.

Doors were ripped off, set on fire and wedged in the embassy windows. Black smoke billowed from the building. Papers and chairs were thrown out of the windows.

One protester climbed up to the first floor, ripped the U.S. flag off its pole and briefly put up a Serbian flag in its place.

Some protesters jumped up and down on the embassy balcony, holding up a Serbian flag as the crowd below of about 1,000 people cheered them on, shouting "Serbia, Serbia".

Police had not been protecting the building, but riot police intervened, firing tear gas and driving a number of armored jeeps down the street to clear the crowd.

The storming of the building came during a state-backed rally to protest at Kosovo's secession on Sunday attended by some 200,000 people, which was otherwise peaceful.

The rioters were mainly young men, some of whom wore balaclavas and scarves to hide their faces. They had attacked the building with sticks and metal bars and destroyed two guard boxes outside.

Protesters ripped some metal grilles from the embassy windows and also tore a handrail off the building's entrance and used it as a battering ram against the main door.

The embassy had been closed in anticipation of the demonstration. State Department spokesman Sean McCormack said the only staff there were security personnel and Marine guards. He said Secretary of State Condoleezza Rice had been briefed. She was en route to the United States with President Bush after an six-day trip to Africa.

McCormick said the United States had asked the Serbian government to help protect U.S. diplomatic facilities.

The neighboring Croatian Embassy also was attacked.

The attack came after Kosovo declared its independence Sunday. The United States recognized the new nation the next day, and European nations have followed suit.

There has been unrest in Kosovo since the independence declaration. Hundreds of Serbs have launched attacks on border outposts, prompting NATO to reinforce the northern Serb-dominated part of Kosovo and take control of the borders.

The violence has sparked fears of sustained violence, with Serbian officials saying the attacks were in line with its attempt to contest Kosovo's secession.

Ethnic Albanian separatists fought a 1998-99 war with Serbian forces, and an estimated 10,000 people were killed.

In areas of Kosovo where Serbs live surrounded by majority ethnic Albanians, Serb leaders urged Serbia's government to tone down statements or risk endangering lives.

"Serbs from the north have brought other Serbs in Kosovo in a position to fear for their children and their lives, which is a very painful feeling — the fear of what your own people might do," Kosovo Serb leader Rada Trajkovic was quoted Thursday as saying by the independent Serbian news agency FoNet.

© 2008 MSNBC Interactive URL: http://www.msnbc.msn.com/id/23277147/

America’s economy risks mother of all meltdowns

Financial Times of London

“I would tell audiences that we were facing not a bubble but a froth – lots of small, local bubbles that never grew to a scale that could threaten the health of the overall economy.” Alan Greenspan, The Age of Turbulence.

That used to be Mr Greenspan’s view of the US housing bubble. He was wrong, alas. So how bad might this downturn get? To answer this question we should ask a true bear. My favourite one is Nouriel Roubini of New York University’s Stern School of Business, founder of RGE monitor.

Recently, Professor Roubini’s scenarios have been dire enough to make the flesh creep. But his thinking deserves to be taken seriously. He first predicted a US recession in July 2006*. At that time, his view was extremely controversial. It is so no longer. Now he states that there is “a rising probability of a ‘catastrophic’ financial and economic outcome”**. The characteristics of this scenario are, he argues: “A vicious circle where a deep recession makes the financial losses more severe and where, in turn, large and growing financial losses and a financial meltdown make the recession even more severe.”

Prof Roubini is even fonder of lists than I am. Here are his 12 – yes, 12 – steps to financial disaster.

Step one is the worst housing recession in US history. House prices will, he says, fall by 20 to 30 per cent from their peak, which would wipe out between $4,000bn and $6,000bn in household wealth. Ten million households will end up with negative equity and so with a huge incentive to put the house keys in the post and depart for greener fields. Many more home-builders will be bankrupted.

Step two would be further losses, beyond the $250bn-$300bn now estimated, for subprime mortgages. About 60 per cent of all mortgage origination between 2005 and 2007 had “reckless or toxic features”, argues Prof Roubini. Goldman Sachs estimates mortgage losses at $400bn. But if home prices fell by more than 20 per cent, losses would be bigger. That would further impair the banks’ ability to offer credit.

Step three would be big losses on unsecured consumer debt: credit cards, auto loans, student loans and so forth. The “credit crunch” would then spread from mortgages to a wide range of consumer credit.

Step four would be the downgrading of the monoline insurers, which do not deserve the AAA rating on which their business depends. A further $150bn writedown of asset-backed securities would then ensue.

Step five would be the meltdown of the commercial property market, while step six would be bankruptcy of a large regional or national bank.

Step seven would be big losses on reckless leveraged buy-outs. Hundreds of billions of dollars of such loans are now stuck on the balance sheets of financial institutions.

Step eight would be a wave of corporate defaults. On average, US companies are in decent shape, but a “fat tail” of companies has low profitability and heavy debt. Such defaults would spread losses in “credit default swaps”, which insure such debt. The losses could be $250bn. Some insurers might go bankrupt.

Step nine would be a meltdown in the “shadow financial system”. Dealing with the distress of hedge funds, special investment vehicles and so forth will be made more difficult by the fact that they have no direct access to lending from central banks.

Step 10 would be a further collapse in stock prices. Failures of hedge funds, margin calls and shorting could lead to cascading falls in prices.

Step 11 would be a drying-up of liquidity in a range of financial markets, including interbank and money markets. Behind this would be a jump in concerns about solvency.

Step 12 would be “a vicious circle of losses, capital reduction, credit contraction, forced liquidation and fire sales of assets at below fundamental prices”.

These, then, are 12 steps to meltdown. In all, argues Prof Roubini: “Total losses in the financial system will add up to more than $1,000bn and the economic recession will become deeper more protracted and severe.” This, he suggests, is the “nightmare scenario” keeping Ben Bernanke and colleagues at the US Federal Reserve awake. It explains why, having failed to appreciate the dangers for so long, the Fed has lowered rates by 200 basis points this year. This is insurance against a financial meltdown.

Is this kind of scenario at least plausible? It is. Furthermore, we can be confident that it would, if it came to pass, end all stories about “decoupling”. If it lasts six quarters, as Prof Roubini warns, offsetting policy action in the rest of the world would be too little, too late.

Can the Fed head this danger off? In a subsequent piece, Prof Roubini gives eight reasons why it cannot***. (He really loves lists!) These are, in brief: US monetary easing is constrained by risks to the dollar and inflation; aggressive easing deals only with illiquidity, not insolvency; the monoline insurers will lose their credit ratings, with dire consequences; overall losses will be too large for sovereign wealth funds to deal with; public intervention is too small to stabilise housing losses; the Fed cannot address the problems of the shadow financial system; regulators cannot find a good middle way between transparency over losses and regulatory forbearance, both of which are needed; and, finally, the transactions-oriented financial system is itself in deep crisis.

The risks are indeed high and the ability of the authorities to deal with them more limited than most people hope. This is not to suggest that there are no ways out. Unfortunately, they are poisonous ones. In the last resort, governments resolve financial crises. This is an iron law. Rescues can occur via overt government assumption of bad debt, inflation, or both. Japan chose the first, much to the distaste of its ministry of finance. But Japan is a creditor country whose savers have complete confidence in the solvency of their government. The US, however, is a debtor. It must keep the trust of foreigners. Should it fail to do so, the inflationary solution becomes probable. This is quite enough to explain why gold costs $920 an ounce.

The connection between the bursting of the housing bubble and the fragility of the financial system has created huge dangers, for the US and the rest of the world. The US public sector is now coming to the rescue, led by the Fed. In the end, they will succeed. But the journey is likely to be wretchedly uncomfortable.

*A Coming Recession in the US Economy? July 17 2006, www.rgemonitor.com; **The Rising Risk of a Systemic Financial Meltdown, February 5 2008; ***Can the Fed and Policy Makers Avoid a Systemic Financial Meltdown? Most Likely Not, February 8 2008

Meet Obama’s Foreign Policy Brain: Zbigniew Brzezinski

Aidan Monaghan
911 Blogger
February 20, 2008

Obama foreign policy advisor sanctioned creation and support of militant Islam tied to al-Qaeda

Apparent Democratic party presidential front-runner and supposed anti-war candidate Barack Obama has obtained the endorsement of and foreign policy advice of Zbigniew Brzezinski, who once endorsed the creation and support of militant Islamic forces in Afghanistan, that were directed by accused 9/11 mastermind Osama Bin Laden. Brzezinski has admitted to the provocation of a Soviet-Afghan war that claimed the lives of 1 million people in Afghanistan during the 1980’s. Brzezinski also sanctioned the support of a southeast Asian regime that claimed the lives of up to 2 million during the 1970’s, through execution, starvation and forced labor.

Brzezinski is confirmed to be an Obama advisor:

http://www.huffingtonpost.com/2008/02/12/obama-adviser-leads-deleg_n_861…

From the History Commons:

In an interview, Zbigniew Brzezinski, President Carter’s National Security Adviser, admits that it was US policy to support radical Islamists to undermine Russia. He admits that US covert action drew Russia into starting the Afghan war in 1979. Asked if he has regrets about this, he responds, “Regret what? That secret operation was an excellent idea. It had the effect of drawing the Russians into the Afghan trap and you want me to regret it? The day that the Soviets officially crossed the border, I wrote to President Carter: We now have the opportunity of giving to the USSR its Vietnam war.” Then he is asked if he regrets “having given arms and advice to future terrorists,” and he responds, “What is most important to the history of the world? The Taliban or the collapse of the Soviet empire? Some stirred-up Muslims or the liberation of Central Europe and the end of the Cold War?” The interviewer then says, “Islamic fundamentalism represents a world menace today.” But Brzezinski responds, “Nonsense! It is said that the West had a global policy in regard to Islam. That is stupid. There isn’t a global Islam….” [Le Nouvel Observateur (Paris), 1/15/1998]

http://www.cooperativeresearch.org/context.jsp?item=a011598stirredup#a01…

The decade long Soviet war with Afghanistan endorsed by Brzezinski resulted in the deaths of 1 million Afghans.

http://en.wikipedia.org/wiki/Soviet_war_in_Afghanistan

Radicalization of Afghans, endorsed by Brzezinski, fell under the direction of accused 9/11 mastermind Osama Bin Laden.

From the History Commons:

Osama bin Laden begins providing financial, organizational, and engineering aid for the mujaheddin in Afghanistan, with the advice and support of the Saudi royal family. [New Yorker, 11/5/2001]

http://www.cooperativeresearch.org/context.jsp?item=a80osama#a80osama

Brzezinski also endorsed covert Chinese aid to Cambodia’s Pol Pot, leader of the Khmer Rouge regime that was responsible for the deaths of up to 2 million in Cambodia through execution, starvation and forced labor.

From Wikipedia:

The executed were buried in mass graves. In order to save ammunition, the executions were often carried out using hammers, axe handles, spades or sharpened bamboo sticks. Some victims were required to dig their own graves; their weakness often meant that they were unable to dig very deep.

http://en.wikipedia.org/wiki/The_Killing_Fields

From the History Commons:

China and the US sustain the Khmer Rouge with overt and covert aid in an effort to destabilize Cambodia’s Vietnam-backed government. With US backing, China supplies the Khmer Rouge with direct military aid. Zbigniew Brzezinski, national security adviser during the administration of President Carter, will later acknowledge, “I encouraged the Chinese to support Pol Pot…. Pol Pot was an abomination. We could never support him, but China could.”

http://www.cooperativeresearch.org/context.jsp?item=cambodia_662#cambodi…

Obama has threatened to expand the U.S. lead ‘war on terror’, into Pakistan:

Pakistan is located in central Asia, a region of great interest to Zbigniew Brzezinski for decades.

From the History Commons:

October 1997: Brzezinski Highlights the Importance of Central Asia to Achieving World Domination

Former National Security Adviser Zbigniew Brzezinski publishes a book, The Grand Chessboard: American Primacy and Its Geostrategic Imperatives, in which he portrays the Eurasian landmass as the key to world power, and Central Asia with its vast oil reserves as the key to domination of Eurasia. He states that for the US to maintain its global primacy, it must prevent any possible adversary from controlling that region. He notes: “The attitude of the American public toward the external projection of American power has been much more ambivalent. The public supported America’s engagement in World War II largely because of the shock effect of the Japanese attack on Pearl Harbor.” He predicts that because of popular resistance to US military expansionism, his ambitious Central Asian strategy can not be implemented, “except in the circumstance of a truly massive and widely perceived direct external threat.” [Brzezinski, 1997, pp. 24-25, 210-11] The book also theorizes that the US could be attacked by Afghan terrorists, precipitating a US invasion of Afghanistan, and that the US may eventually seek control of Iran as a key strategic element in the US’s attempt to exert its influence in Central Asia and the Middle East. [Brzezinski, 1997]

http://www.cooperativeresearch.org/context.jsp?item=a1097chessboard#a109…

Miami police plans urban test of Honeywell’s micro-UAV

Graham Warwick
Flight
February 20, 2008

Police in Miami, Florida want to find out whether a small unmanned air vehicle able to hover and stare can help law enforcement in urban areas.

To that end, Miami-Dade Police Department plans a four- to six-month evaluation of Honeywell’s ducted-fan Micro Air Vehicle (MAV).

The gasoline-powered gMAV has just received an experimental airworthiness certificate from the US Federal Aviation Administration, clearing the way for the ground-breaking experiment. Approval was granted following a demonstration flight for the FAA at a remote site in Laguna, New Mexico.

The wingless gMAV can take off and land vertically, transition to high-speed flight and hover and stare using electro-optical/infrared sensors. Miami-Dade is buying one gMAV and leasing a second for the FAA-sanctioned technology demonstration, says Vaughn Fulton, Honeywell’s small UAS programme manager.

The police department will operate the UAVs, and helicopter pilots from its aviation unit have been trained to fly the gMAV. "The demonstration will be in urban terrain, involving real tactical operations," he says.

The 8.2kg (18lb) gMAV is Honeywell’s second version of the man-portable UAV. Compared with the original tMAV developed for the US Defense Advanced Research Projects Agency, the gMAV has a larger outside diameter housing twice the fuel and providing an endurance exceeding 55min at sea level.

Military gMAVs have been used in Iraq to detect improvised explosive devices. The basic UAV has fixed sensors and Honeywell is developing a follow-on version with gimballed payload. The company is also working on diesel-powered dMAV, which it expects to fly in 2008. Another version is in development for the US Army’s Future Combat Systems programme.

Honeywell has begun low-rate initial production of MAVs on a new line in Albuquerque, New Mexico, sized to manufacture up to 100 vehicles a month. "We expect several large contracts in 2008," says Fulton.

Navy Missile Hits Satellite, Pentagon Says

By Marc Kaufman and Josh White
Washington Post Staff Writers
Thursday, February 21, 2008; 6:06 AM

A missile fired from a Navy cruiser in the Pacific Ocean hit an out-of-control spy satellite falling toward Earth last night, Pentagon officials said.

They said that a single SM-3 missile fired from the USS Lake Erie hit the satellite at 10:26 p.m. Eastern time. The missile struck the dead satellite about 150 miles above Earth as it traveled in orbit at more than 17,000 mph.

Military officials had hoped to rupture the satellite's fuel tank to prevent 1,000 pounds of hydrazine from crashing to Earth, a situation they depicted as potentially hazardous for people on the ground. It was unclear last night whether the missile hit was able to break up the fuel tank, but Pentagon officials said they hope to determine that within 24 hours.

A news conference is scheduled for 7 a.m.

A defense official said last night that the military believes it got a "pretty solid" direct hit on the satellite.

Before last night's intercept, some experts had expressed doubts about the seriousness of the risk and questioned whether the shot was an excuse to perform an anti-satellite test that many people around the world found controversial. Skeptics in the arms-control community have speculated that the administration chose to undertake the shoot-down partly to test missile defense technology.

Jonathan McDowell, an astrophysicist at the Harvard-Smithsonian Center for Astrophysics and satellite tracker, said after the shoot-down that he had not heard any reports of debris spotting but that "I know people are on the lookout." He said that around midnight the debris was probably over Australia, but that it would be over Canada 30 minutes later.

"Due to the relatively low altitude of the satellite at the time of the engagement, debris will begin to re-enter the Earth's atmosphere immediately," the Pentagon said in a statement. "Nearly all of the debris will burn up on reentry within 24-48 hours and the remaining debris should re-enter within 40 days."

Pentagon officials said earlier that while the military has been able to precisely track the satellite in orbit, shooting it down was a daunting challenge, with the actual window of opportunity for a successful shot open for only about 30 seconds.

President Bush made the initial decision to shoot down the satellite at the urging of his national security team, which said that the rocket fuel posed a very small but real risk to people on Earth. Defense Secretary Robert M. Gates, who is traveling abroad, made the final decision about when to shoot.

In steps taken in coordination with the Defense Department, the Centers for Disease Control and Prevention sent out a health advisory yesterday that warns that those who breathe the rocket fuel can suffer convulsions, tremors or seizures. The administration also mobilized what it called six "joint interagency task forces" nationwide to reach the site of any satellite debris.

"There's only a small chance the hydrazine will land in a populated area or cause injury or death, but there's still a chance that it could," said Bryan Whitman, a Pentagon spokesman. "The United States has a chance to mitigate that risk or possibly eliminate it. We have this capability and can reduce the risk to human life on this planet, and that's why we're doing it."

Scientists, arms-control advocates and others said the shoot-down was based on questionable modeling by the government of the risks to human health and was a danger to the future peaceful use of space.

Some scientists calculated that the tank of hydrazine could not possibly survive a descent through the atmosphere, and others said that even if it did, the chances of anyone being injured were extremely small. Some worried that the U.S. decision to adapt a rocket designed for missile defense to serve as an anti-satellite weapon would encourage other nations to experiment with their own anti-satellite technology.

In January 2007, China shot down an aged satellite orbiting about 600 miles above Earth and was roundly criticized by the United States and many other nations for doing so. That anti-satellite test created thousands of pieces of debris that will remain a potential hazard to orbiting spacecraft for decades.

At a news conference in Beijing, Foreign Ministry spokesman Liu Jianchao raised concerns about the destruction of the U.S. satellite, the Associated Press reported.

"China is continuously following closely the possible harm caused by the U.S. action to outer space security and relevant countries," Liu said, according to the Associated Press. "China requests the U.S. to fulfill its international obligations in real earnest and provide to the international community necessary information and relevant data in a timely and prompt way so that relevant countries can take precautions."

Administration critics worried that debris from the U.S. intercept could harm other satellites as well, especially if the pieces are pushed far out into space by the force of the strike. But NASA Administrator Michael D. Griffin and Marine Gen. James E. Cartwright, vice chairman of the Joint Chiefs of Staff, said they expect half of the debris to fall to Earth quickly and the rest to remain in safe low orbit until it descends in the next few weeks.

Most information about the malfunctioning spy satellite is classified, but space and defense experts believe that it was launched from Vandenberg Air Force Base in California in December 2006 and that it malfunctioned soon after reaching low-Earth orbit. That spacecraft, called L-21 and commissioned by the government's National Reconnaissance Office, cost hundreds of millions of dollars and included the most advanced radar imaging technology, said defense analyst John Pike of GlobalSecurity.org.

He said there is "good reason" to believe that it was part of the National Reconnaissance Office's Future Imagery Architecture program, which was supposed to replace the larger spy satellites now being used. "The whole program has had problems" with challenging technology and contracts that were bid unrealistically low, he said. "And now this."

The National Reconnaissance Office is an arm of the Defense Department tasked with designing, building and operating spy satellites for the nation. While hundreds of these spacecraft have been launched in the past decades, few remain useful for more than several years, and so, to keep important orbits clear, they routinely are directed back to Earth. Generally, that is done with a controlled burn of a craft's remaining fuel, one that allows ground control to crash it safely into an ocean, analysts say.

In the past, the most important spy satellites were large, about 8 to 10 tons. The newer generation was supposed to be considerably smaller and lighter, making them potentially cheaper and quicker to launch.

Pike and others believe that the failed satellite was part of a controversial contract given in 1999 to Boeing, which had never built a spy satellite before, and ultimately the contract was taken from the company because of technological and financial problems.

Amateur astronomers who track satellites identified the December 2006 launch as troubled from the start. They reported that the satellite never left its low orbit for the higher one it needed and that the orbit gradually became lower.

Kucinich to Investigate 9/11 Insider Trading

Aaron Dykes
JonesReport.com
February 20, 2008

Congressman Dennis Kucinich revealed that he is initiating an investigation the insider trading that took place leading up to 9/11, particularly in regards to put options placed on American Airlines and United Airlines stock.

Kucinich said that he had personal questions about the implications insider trading had.

"I’ve indicated a long-standing interest in gathering information and trying to get to the bottom of exactly what happened with respect to all the stock activity that took place preceding 9/11." Kucinich said.

Kucinich said it was the bizarre record-level put options that caught his attention initially. The odd trades heavily indicate prior knowledge of the September 11 attacks and have raised a number of questions that Kucinich hopes to probe.

"First of all, I’m not afraid to ask questions about 9/11," Kucinich told the Alex Jones Show.

"From my own personal standpoint, I’ve had long-standing questions about why this volume, why those airlines, why that time, who made the buys, why did they buy them, who told them to make the buys, who was involved? There are questions there that need to be answered as part of an effort to get to the truth," Kucinich said.

He made clear he was not yet pointing the finger. "I don’t know what happened. I’m not alleging anything here. But I sure want to find out how it happened."

But Kucinich hopes that inquiries in a committee hearing would clarify the information and answer questions.

"I think we need to talk to the people who were involved in making those transactions in order to try to figure out why they were made, for example, American Airlines and United Airlines stock." Kucinich said.

At least two FBI agents have been previously charged for their smaller roles in the insider trading. The NY Times has reported on the cases, but larger coverage of the issue has been largely ignored by the mainstream media, and no larger probe has been underway until now.

Kucinich has also promised to hold hearings on the health of 9/11 first responders. He has already met with a number of rescue workers to hear their stories and is in the process of bringing forth information to committee.

The Congressman warned, however, that his seat has been hotly contested by ‘Cleveland corporate interests’ who have sunk millions into defeating Kucinich. He pleaded for help to win his local election, but remained steadfast.

"I can’t be bought and I can’t be bossed." Kucinich said. "I’m going to keep speaking the truth, I’m going to keep seeking the truth, and as long as people are there to support that, I’ll be in Congress."

To find out more about Kucinich’s Congressional race and/or help his campaign, visit www.Kucinich.us.

SEE ALSO:

Suppressed Details of Criminal Insider Trading Lead Directly to the CIA’s Highest Ranks

Prison Planet: 9/11 Prior Knowledge Archive

Ex-MI6 chief details Balkan assassination plan

By Nick Allen and Gordon Rayner

Last Updated: 12:51am GMT 21/02/2008

The former head of MI6 has admitted in court that a secret plan was drawn up to assassinate a Balkan leader suspected of genocide. Diana, Princess of Wales inquest coverage in full Sir Richard Dearlove, the most senior spy to give evidence before a British jury, confirmed that MI6 was authorised to use "lethal force" against specific targets if it had ministerial approval. advertisement But, as he gave evidence at the inquest into the death of Diana, Princess of Wales, he said assassination had never been used during his 38 years in the service, and denied "absolutely" that MI6 agents had murdered the Princess. Sir Richard, codenamed "C" during his time as head of MI6 from 1999 to 2004, was defending the agency against allegations made by Mohamed Fayed and two former spies. Richard Tomlinson had claimed that MI6 had plotted to assassinate the late Serbian leader Slobodan Milosevic, while David Shayler has spoken in the past of a plot to kill Libya's president Col Muammar Gaddafi. Sir Richard confirmed that a plan to kill a Balkan leader during the war in 1993 was put down on paper by an agent, but said it was "killed stone dead" straight away. He said the target was not Milosevic, but would not be drawn on whether the planned victim had been the notorious Serbian warlord Arkan (Zeljko Raznatovic), who was shot dead in 2000. There is no suggestion MI6 was involved. "An officer working in one of the sections to do with the Balkans had suggested the possibility of assassinating another political personality who was involved in ethnic cleansing," Sir Richard said. The idea was "out of touch with service practice, service ethos and it was not a proposal to which consideration would be given," he claimed. Sir Richard was MI6 director of operations when the Princess of Wales, her boyfriend Dodi Fayed and driver Henri Paul died in a car crash in Paris in August 1997. He told the inquest that he felt the allegation of MI6 involvement in the Princess's death was a "very personal one" because he was responsible for all the agency's activities at the time. The inquest heard that under the laws governing MI6 provision was made for "lethal force" to be used but only with Government authorisation in times of emergency or crisis which caused danger to the UK or its citizens. Sir Richard said lethal force had never been authorised in his 38-year career at MI6. Sir Richard described how MI6 would require authorisation from the Foreign Secretary to carry out any operation that would involve breaking the law, such as bugging or assassination, even if the act was being carried out abroad. Sir Richard gave evidence two days after Dodi's father alleged that his son and the Princess were "murdered" by MI6 on the orders of the Duke of Edinburgh, Tony Blair and the Prince of Wales. He described the suggestion that the Duke was able to direct MI6 operationally from Balmoral and involve the French state in a cover-up as "mischievous and fanciful". The inquest continues.

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Get ready for a recession...in 2009

High inflation may keep the Fed from lowering interest rates much further...and that could lead the economy to weaken even more next year.

NEW YORK (CNNMoney.com) -- Guess what, kids: Inflation isn't going away. And that means the Federal Reserve's job is getting tougher.

Oil is hovering around $100 a barrel. And the January Consumer Price Index figures - released Wednesday morning - showed inflation bubbling up.

With that in mind, some see dimming hopes for more aggressive interest rate cuts by the Federal Reserve.

The high inflation figures will "further complicate the Fed's easing campaign," said Ashraf Laidi, chief currency strategist with CMC Markets US, a New York-based brokerage firm, in a note Wednesday morning.

TalkBack: Will the economy get even worse next year?

The Fed's "dual mandate" is to foster price stability and sustainable economic growth. And if the Fed keeps slashing interest rates, the risk is that the dollar will weaken further and this could fuel even more big spikes in commodity prices.

The new inflation numbers will make the Fed's latest economic forecasts - which it will release this afternoon in conjunction with the minutes from its last meeting - even more important.

It's unlikely the Fed will predict an actual decline in economic growth. But it's possible the Fed may have to lower its growth forecasts for 2008 as well as boost its projections for unemployment.

In October, the Fed said it expected gross domestic product growth of 1.8% to 2.5% for 2008 and an annual unemployment rate of 4.8% to 4.9%. Laidi wrote that he thinks the Fed will reduce the low end of its 2008 GDP forecast to 1.5% and raise the upper end of its unemployment projection to 5%.

Others think that this year isn't the biggest problem for the Fed.

David Joy, chief market strategist for RiverSource Investments, said his biggest concern now is that the Fed may have to boost rates later this year to keep inflation in check.

If that's the case, the current economic woes are nothing compared to what lies ahead.

"Our forecast is that the economy will be strong enough in the U.S. later in 2008 to cause inflation. That will lead to the Fed raising interest rates and push us into a recession in the latter half of 2009," Joy said.

Fed official: 2008 similar to 1991 recession

In other words, we have the classic case of stagflation rearing its ugly head - high inflation leading to slower growth. The Fed can only do its best to combat one of these bugaboos at a time and Joy believes the Fed will eventually err on the side of reducing inflation.

He added that there could be some good news next year. The worst might soon be over for housing and banks. But 2009 could be highlighted by what Joy dubs "rolling sector recessions" - i.e. other parts of the economy start to experience slowdowns even as the credit market recovers.

Joy also predicts that the unemployment rate will head much higher than current levels next year.

Economists at Lehman Brothers also are forecasting a tough 2009...although not necessarily a recession. In a report late last week, Lehman's economists wrote that they see GDP growth in 2009 of just 0.8% and an unemployment rate of 5.7%

The Fed, for what it's worth, forecast in October that GDP will increase 2.3% to 2.7% next year and that the unemployment rate will remain around 4.8% to 4.9%

So something's gotta give. I highly doubt the Fed will lower its targets to levels that are in line with the bleakest forecasts on Wall Street.

But if the central bank doesn't reduce its projections significantly enough, it risks looking at best, Pollyannaish about the economy, and at worst, completely out of touch with reality.

What do you think? Will the economy bounce back in 2009 or is the worst yet to come?

Recession Watch 2008

New single-family homes at 17-year low

Inflation jumps more than forecast

Deputy tasers high school student against direct orders

David Edwards and Adam Doster
Raw Story
Wednesday February 20, 2008

Outside a Maryland high school gym last Wednesday, sophomore Brandon Bennett got into a small altercation with a fellow student. It was after a basketball game and tempers were high, but the the two were separated by officials and students without much problem. Only then did things get really violent.

According to Julius Bennett, the student's father, Deputy Anthony Lenzi fired a Taser at his son after being told twice by a senior officer it was not necessary.

"He left two puncture wounds just above his heart in his chest," says Bennett. "And [Brandon] said to me that he was in quite a bit of pain because he could feel electric shocks going throughout his whole body."

The father says he has written proof Sgt. Mathew Kempel twice ordered Lenzi to holster the weapon, but Lenzi fired anyway, hitting the teen in the chest.

"Brandon did absolutely nothing wrong," says Bennett, "and there was no reason to use that type of force on my son."

The Queen Anne's County Sheriff's Office says Lenzi has been reassigned to internal duties while authorities investigate the allegations. Bennett is hoping fair punishment is given.

"I will not be satisfied until I know that Deputy Lenzi will be in a position to never to this to anyone else's child ever again."

This video is from CNN.com, broadcast February 19, 2008.

Stop Blair: ambition to lead Europe hits fierce opposition

Ian Traynor and David Gow
London Guardian
Wednesday February 20, 2008

Tony Blair's hopes of becoming Europe's first president are running into mounting opposition across the EU, with Germany determined to stymie the former prime minister.

A "Stop Blair" website run by pro-Europeans has launched a petition against him; a transnational, cross-party caucus in the European parliament is forming to campaign against a Blair presidency; senior officials in Brussels are privately dismissive about the new post going to a Briton; and senior diplomats in European capitals also doubt that Blair is the right person for the post being created under Europe's new reform treaty.

"There was surprise in Berlin when Blair's name came up so soon," said a European ambassador. Chancellor Angela Merkel of Germany admires Blair and has "great personal sympathy for Tony", he added.

"But more generally the German political elite would be puzzled by the idea of Tony Blair. His track record on EU matters is not so great. There is unease about a Briton at the top in that job. And then personally with Blair, there's the Iraq thing."

Sources close to Merkel confirmed her opposition. "He made a lot of fine speeches about Europe but, essentially, stood on the sidelines when it came to concrete steps forward," they said.

The Lisbon treaty now being ratified by EU member states creates a new post of president of the European council, representing and chairing summits of the leaders of the 27 member countries from the beginning of next year for a maximum five-year term. The president's role and powers are yet to be properly defined. EU ambassadors are expected to meet next month to try to come up with a job description.

Praising Blair as "the most European of Englishmen", President Nicolas Sarkozy of France first threw the Briton's name into the ring last October. Blair has chosen not to dispel the reports of his candidacy.

EU officials believe a Blair bandwagon is being rolled out and hope to halt it in its tracks. "The feeling here about Blair is that he never stuck his neck out for Europe," said a senior official in Brussels. "All the political risk he took was transatlantic, always towards Washington, never for Europe. His chances are dim. Merkel is against."

The opposition to Blair feeds on his commitment to the Iraq war, Britain's high rates of Euroscepticism, the government's half-hearted ambivalence towards the EU and Gordon Brown's battles over the past six months to exclude the UK from several key elements of the Lisbon treaty by "defending Britain's red lines" against the rest of Europe.

"This is a treaty that marks quite a serious drift by the UK away from the EU," said a second senior EU official.

Full article here.

Lou Dobbs covering NAFTA Superhighway

Youtube

Thug Cop Beats Up Defenseless Handcuffed Woman

Paul Joseph Watson
Prison Planet
Tuesday, February 19th, 2008

Shocking police station video of an argumentative woman who ended up unconscious in a pool of her own blood with two black eyes, a broken nose and broken teeth did not lead to criminal charges against the cop after officials claimed the woman "fell over."

Quite how Angela Garbarino received two black eyes, a broken nose, broken teeth and blood pouring from her head after a "slip and fall" is not quite explained by officials or ABC News, who ran with the headline Police Brutality or Slip and Fall?

Below is a low quality You Tube version, the high quality ABC News version can be watched here.

The police are refusing to press criminal charges against the officer because "no one knows for sure what occurred." That’s probably because this cowardly thug, Officer Wiley Willis, made sure his brutal assault wasn’t recorded on camera.

If police arrived at a house where a handcuffed woman was lying unconscious in a pool of her own blood with two black eyes, a broken nose and broken teeth with a man standing nearby, who would the prime suspect be? Would the police refuse to arrest the man because no videotape of the incident took place or would they go with what every single piece of circumstantial evidence was screaming out had happened?

Comments posted in response to the ABC News story underscore how blatantly ridiculous the police’s explanation and handling of the matter is.

- "What is most insulting is this: They haven’t charged the officer because "no one knows for sure what happened". Crimes are committed each and every day that aren’t videotaped and yet the suspects are arrested based on the best evidence available at the time. Why is he being treated any different? I AM a former police officer and can tell you this: in Ohio, for example, in domestic violence cases, we had a duty to arrest the obvious aggressor. Meaning this: if I showed up on scene and the man was fine and the woman had two black eyes and two busted teeth and was lying in a pool of her own blood, I didn’t need a videotape of the incident occurring, I made the arrest of the male suspect. This officer is a disgrace to both the badge and to humanity in general. I say give him a taste of his own medicine, take him out behind the woodshed as they used to say."

- "Let’s suppose my wife has black eyes, broken teeth, and is lying in a pool of her own blood when cops arrive. I say, "She fell down when she tried to leave the house." Do the cops: 1. Arrest me or 2. Let me go because, "No one really knows what happened". Cop should be in jail, now."

- "The only way a person can end up looking like that after a "fall" is if that fall was off a cliff!"

RELATED: POLICE BRUTALITY ARCHIVE

Mortgage applications down 22.6% last week: MBA

By Amy Hoak, MarketWatch

Last update: 7:00 a.m. EST Feb. 20, 2008
Marketwatch

CHICAGO (MarketWatch) -- Mortgage applications filed last week dropped a seasonally adjusted 22.6% from the previous week, as interest rates on fixed-rate mortgages increased, the Mortgage Bankers Association reported Wednesday.

Applications in the week ended Feb. 15 were up 33.9% compared with the same week in 2007, the Washington-based MBA's latest survey showed.

Applications for loans to refinance existing mortages were down 27.9% on a week-to-week basis, while applications for mortgages to purchase homes were down a seasonally adjusted 11.5%, according to the survey.

The four-week moving average for all loans was down 3.8%.

According to the survey, refinancing applications accounted for 61.7% of all filings last week, down from 67.4% the previous week. Adjustable-rate mortgages made up 12.8% of all applications, higher than 9.9% in the previous week.

Average interest rates for 30- and 15-year fixed-rate mortgages increased last week to 6.09% and 5.55%, respectively, up from 5.72% and 5.18% in the previous week. But the average rate on one-year ARMs didn't change, remaining at the 5.72% seen in the Feb. 8 week.

The MBA survey covers about half of all U.S. retail residential mortgage applications.

Weakening Demand? Oil Still Passes $100

By NEIL KING JR. and ANA CAMPOY
February 20, 2008; Page A3
Wall Street Journal

Crude-oil prices finished slightly above $100 a barrel for the first time yesterday despite signs the world's petroleum thirst may be subsiding.

The latest surge surprised many in the oil patch who have expected prices to head in the other direction as oil stockpiles increase and the U.S. experiences an economic slowdown, softening demand for energy. Higher prices put more pressure on the Organization of Petroleum Exporting Countries to keep supplies steady despite some calls within the cartel to cut output.

If prices linger at or above $100 a barrel, energy-intensive industries such as oil refiners and airlines could face higher costs, as could consumers. Oil's rise helped reverse a stock-market rally yesterday.

Analysts and traders pointed to a slew of causes for the price surge, but put the main onus on the continued flow of speculative cash into the oil market and other commodities like coal and platinum. Political instability in Nigeria and Venezuela, tightness in the light-crude market and challenges in the refining sector also contributed.

"It's a combination of lots of little things," said Adam Sieminski, chief energy economist at Deutsche Bank, who contends the main driver is "the huge volumes of money moving into oil and other commodities."

U.S. benchmark crude yesterday rose $4.51, or 4.7%, to settle at $100.01 a barrel on the New York Mercantile Exchange. Oil has touched or passed the $100 mark twice before but retreated before the end of the closing day. U.S. heating-oil and gasoline-blendstock futures also finished at nominal highs. On an inflation-adjusted basis, oil is only $3.09 below its record, set in April 1980.

Analysts said options trading helps explain the volatility. Banks sell clients such as hedge funds options to buy or sell oil at preset prices. Because banks make their own trades to cover their risks, moves can be accentuated. Big price swings in "each direction pull like a magnet," said Adam Robinson, an analyst with Lehman Brothers Holdings Inc.

Also, the futures contract for March delivery expires today, reducing investor interest in the contract and making it easier for a few big trades to push up the market, he said.

The latest price surge, if it holds up, will make it tough for the big producers within OPEC to support an output cut when ministers meet March 5, as some within the group have urged. At a meeting earlier this month, OPEC ministers pointed to the weakening U.S. economy to warn of a possible oversupply of oil in the second quarter.

Since then, most key indicators have served to buttress OPEC's argument. The Energy Department is forecasting a flattening of oil demand in the U.S. and a buildup in oil and gasoline stockpiles. Most big institutional forecasters, including the Energy Department and OPEC, now predict that demand growth will hover around 1% this year. Demand rose 1.4% last year from 2006.

Analysts still contend that increasing oil and gasoline stockpiles in coming weeks could spark a sharp retreat in prices. To keep supplies steady, they said, OPEC would optimally like to trim its output by around 600,000 barrels a day. Yesterday, the Energy Department's Energy Information Administration reiterated its call for OPEC to increase production.

Some market speculators seem to be fixated on refinery snags, both actual and potential, analysts said. Last summer, a bout of unplanned outages drove gasoline prices to record levels. There are fears among investors of a repeat this year, said Stephen Schork, president of Schork Group Inc., a provider of oil- and gas-market research. "Concern and fear translate into greed, and speculators take [any news of refinery outages] and hype it into much higher prices," he said.

Reformulated-gasoline blendstock futures yesterday on the New York Mercantile Exchange jumped 4.4% to $2.60 a gallon on news of a fire at a small Texas refinery on Monday. The refinery, owned by Alon USA Energy Inc., has the capacity to process 70,000 barrels of crude oil a day, a fraction of the total U.S. installed capacity of 17.4 million barrels of crude a day.

With many refineries in the midst of seasonal maintenance, not all of that capacity is being used. Still, refiners have been adding more gasoline supplies to storage tanks and pipelines. Since the beginning of the year, gasoline stocks rose by 16.1 million barrels, or 8%, to 229.2 million barrels, and are well above average for this time of year, according to data from the EIA.

Serbs Torch U.N. Border Checkpoints

Associated Press
February 19, 2008

KOSOVSKA MITROVICA, Kosovo — Thousands of Serbs chanting ‘‘Kosovo is Serbia’’ marched Tuesday to a bridge dividing them from ethnic Albanians while others torched U.N. border checkpoints and cars to protest Kosovo’s declaration of independence.

NATO troops later closed down the roads leading to the checkpoints, cutting off the only link between northern Kosovo and Serbia, said Besim Hoti, a U.N. spokesman. The move appeared to be due to fears that the reduction of U.N. control of the border could allow Serbian militants to return to fight in Kosovo, a land

Serb nationalists consider the cradle of their state and religion. Smoke billowed from two checkpoints separating Kosovo from Serbia and flames engulfed several U.N. vehicles set ablaze in protest against Kosovo’s weekend proclamation of independence and anger over international recognition of the new nation.

For two days, Kosovo’s Serbs have shown their determination to shun the declaration by destroying U.N. and NATO property, setting off small bombs and staging noisy rallies through the Serb stronghold of Kosovska Mitrovica.

The attacks on U.N. border crossings showed the protesters’ willingness to use violence to hold onto Kosovo — and could clear the way for Serbian militants to return to fight in Kosovo, a land Serb nationalists consider the cradle of their state and religion.

Read entire article

U.S. strikes in Pakistan — without notice

Unilateral attack on al-Qaeda commander called a model for operations

By Joby Warrick and Robin Wright

The Washington Post

updated 11:45 p.m. ET, Mon., Feb. 18, 2008

In the predawn hours of Jan. 29, a CIA Predator aircraft flew in a slow arc above the Pakistani town of Mir Ali. The drone's operator, relying on information secretly passed to the CIA by local informants, clicked a computer mouse and sent the first of two Hellfire missiles hurtling toward a cluster of mud-brick buildings a few miles from the town center.

The missiles killed Abu Laith al-Libi, a senior al-Qaeda commander and a man who had repeatedly eluded the CIA's dragnet. It was the first successful strike against al-Qaeda's core leadership in two years, and it involved, U.S. officials say, an unusual degree of autonomy by the CIA inside Pakistan.

Having requested the Pakistani government's official permission for such strikes on previous occasions, only to be put off or turned down, this time the U.S. spy agency did not seek approval. The government of Pakistani President Pervez Musharraf was notified only as the operation was underway, according to the officials, who insisted on anonymity because of diplomatic sensitivities.

Model for the future
Officials say the incident was a model of how Washington often scores its rare victories these days in the fight against al-Qaeda inside Pakistan's national borders: It acts with assistance from well-paid sympathizers inside the country, but without getting the government's formal permission beforehand.

It is an approach that some U.S. officials say could be used more frequently this year, particularly if a power vacuum results from yesterday's election and associated political tumult. The administration also feels an increased sense of urgency about undermining al-Qaeda before President Bush leaves office, making it less hesitant, said one official familiar with the incident.

Independent actions by U.S. military forces on another country's sovereign territory are always controversial, and both U.S. and Pakistani officials have repeatedly sought to obscure operational details that would reveal that key decisions are sometimes made in the United States, not in Islamabad. Some Pentagon operations have been undertaken only after intense disputes with the State Department, which has worried that they might inflame Pakistani public resentment; the CIA itself has sometimes sought to put the brakes on because of anxieties about the consequences for its relationship with Pakistani intelligence officials.

Pakistan considered unreliable
U.S. military officials say, however, that the uneven performance of their Pakistani counterparts increasingly requires that Washington pursue the fight however it can, sometimes following an unorthodox path that leaves in the dark Pakistani military and intelligence officials who at best lack commitment and resolve and at worst lack sympathy for U.S. interests.

Top Bush administration policy officials -- who are increasingly worried about al-Qaeda's use of its sanctuary in remote, tribally ruled areas in northern Pakistan to dispatch trained terrorists to the West -- have quietly begun to accept the military's point of view, according to several sources familiar with the context of the Libi strike.

"In the past it required getting approval from the highest levels," said one former intelligence official involved in planning for previous strikes. "You may have information that is valid for only 30 minutes. If you wait, the information is no longer valid."

But when the autonomous U.S. military operations in Pakistan succeed, support for them grows in Washington in probably the same proportion as Pakistani resentments increase. Even as U.S. officials ramp up the pressure on Musharraf to do more, Pakistan's embattled president has taken a harder line in public against cooperation in recent months, the sources said. "The posture that was evident two years ago is not evident," said a senior U.S. official who frequently visits the region.

A U.S. military official familiar with operations in the tribal areas, who spoke on the condition of anonymity because he was not authorized to talk about the operations, said: "We'll get these one-off flukes once every eight months or so, but that's still not a strategy -- it's not a plan. Every now and then something will come together. What that serves to do [is] it tamps down discussion about whether there is a better way to do it."

The target is identified
During seven years of searching for Osama bin Laden and his followers, the U.S. government has deployed billions of dollars' worth of surveillance hardware to South Asia, from top-secret spy satellites to sophisticated eavesdropping gear for intercepting text messages and cellphone conversations.

Yet some of the initial clues that led to the Libi strike were decidedly low-tech, according to an account supplied by four officials briefed on the operation. The CIA declined to comment about the strike and neither confirmed nor denied its involvement.

Hours before the attack, multiple sources said, the CIA was alerted to a convoy of vehicles that bore all the signatures of al-Qaeda officers on the move. Local residents -- who two sources said were not connected to the Pakistani army or intelligence service -- began monitoring the cluster of vehicles as it passed through North Waziristan, a rugged, largely lawless province that borders Afghanistan.

Eventually the local sources determined that the convoy carried up to seven al-Qaeda operatives and one individual who appeared to be of high rank. Asked how the local support had been arranged, a U.S. official familiar with the episode said, "All it takes is bags of cash."

Kamran Bokhari, director of Middle East analysis for Strategic Forecasting, a private intelligence group, said the informants could have been recruits from the Afghanistan side of the border, where the U.S. military operates freely.

"People in this region don't recognize the border, which is very porous," Bokhari said. "It is very likely that our people were in contact with intelligence sources who frequent both sides and could provide some kind of targeting information."

Precisely what U.S. officials knew about the "high-value target" in the al-Qaeda convoy is unclear. Libi, a 41-year-old al-Qaeda commander who had slowly climbed to the No. 5 spot on the CIA's most wanted list, was a hulking figure who stood 6 feet 4 inches tall. He spoke Libyan-accented Arabic and learned to be cautious after narrowly escaping a previous CIA strike. U.S. intelligence officials say he directed several deadly attacks, including a bombing at a U.S. military base in Afghanistan last year that killed 23 people.

Observing their prey
Alerted to the suspicious convoy, the CIA used a variety of surveillance techniques to follow its progression through Mir Ali, North Waziristan's second-largest town, and to a walled compound in a village on the town's outskirts.

The stopping place itself was an indication that these were important men: The compound was the home of Abdus Sattar, 45, a local Taliban commander and an associate of Baitullah Mehsud, the man accused by both the CIA and Pakistan of plotting the assassination of Benazir Bhutto on Dec. 27.

With all signs pointing to a unique target, CIA officials ordered the launch of a pilotless MQ-1B Predator aircraft, one of three kept at a secret base that the Pakistani government has allowed to be stationed inside the country. Launches from that base do not require government permission, officials said.

During the early hours of Jan. 29, the slow-moving, 27-foot-long plane circled the village before vectoring in to lock its camera sights on Sattar's compound. Watching intently were CIA and Air Force operators who controlled the aircraft's movements from an operations center at Creech Air Force Base in Nevada.

On orders from CIA officials in McLean, the operators in Nevada released the Predator's two AGM-114 Hellfire missiles, 100-pound, rocket-propelled munitions each tipped with a high-explosive warhead. The missiles tore into the compound's main building and an adjoining guesthouse where the al-Qaeda officers were believed to be staying.

Even when viewed from computer monitors thousands of miles away, the missiles' impact was stunning. The buildings were completely destroyed, and as many as 13 inhabitants were killed, U.S. officials said. The pictures captured after the attack were "not pretty," said one knowledgeable source.

Libi's death was confirmed by al-Qaeda, which announced his "martyrdom" on Feb. 1 in messages posted on the Web sites of sympathetic groups. One message hailed Libi as "the father of many lions who now own the land and mountains of jihadi Afghanistan" and said al-Qaeda's struggle "would not be defeated by the death of one person, no matter how important he may be."

A temporary impact
Publicly, reaction to the strike among U.S. and Pakistani leaders has been muted, with neither side appearing eager to call attention to an awkward, albeit successful, unilateral U.S. military operation. Some Pakistani government spokesmen have even questioned whether the terrorist leader was killed.

"It's not going to overwhelm their network or break anything up definitively," acknowledged a military official briefed on details of the Libi strike. He added: "We're now in a sit-and-wait mode until someone else pops up."

Richard A. Clarke, a former counterterrorism adviser to the Clinton and Bush administrations, said he has been told by those involved that the counterterror effort requires constant pressure on the Pakistani government.

"The United States has gotten into a pattern where it sends a high-level delegation over to beat Musharraf up, and then you find that within a week or two a high-value target has been identified. Then he ignores us for a while until we send over another high-level delegation," Clarke said.

Some officials also emphasized that such airstrikes have a marginal and temporary impact. And they do not yield the kind of intelligence dividends often associated with the live capture of terrorists -- documents, computers, equipment and diaries that could lead to further unraveling the network.

The officials stressed that despite the occasional tactical success against it, such as the Libi strike, the threat posed by al-Qaeda's presence in Pakistan has been growing. As a senior U.S. official briefed on the strike said: "Even a blind squirrel finds a nut now and then. But overall, we're in worse shape than we were 18 months ago."

© 2008 The Washington Post Company

URL: http://www.msnbc.msn.com/id/23228197/

Investors Leave Dollar, Seeking Higher Yields

By DAN MOLINSKI
February 19, 2008 2:03 p.m.
Wall Street Journal

The dollar is weaker against most rival currencies Tuesday afternoon in New York, after aggressive statements from the Reserve Bank of Australia highlighted the greenback's yield disadvantage with other major currencies.

Tuesday afternoon, the euro was at $1.4744 from $1.4659 Monday, while the dollar traded at 107.80 yen from 108.20 yen. The British pound lost some ground against the buck, trading at $1.9484 from $1.9525. The dollar was at 1.0948 Swiss francs from 1.1025 francs.

In yet more strong language from the central bank since it hiked rates to 7.0% earlier this month, the RBA revealed in the minutes from its February meeting it had considered raising the cash rate even higher. Australia is battling higher inflation amid continued-high global prices for commodities, a key driver of its economy.

The RBA statements boosted expectations of more rate hikes in Australia, while other places such as the euro zone have also suggested rate hikes remain a possibility. This comes as the Federal Reserve, in an effort to keep the U.S. economy on track, is likely to continue cutting its benchmark rate, which currently stands at 3.0%.

The relatively low rate has led many investors to sell the dollar and look elsewhere for currencies that pay higher interest rates.

"Despite ongoing, if not rising, fears that the U.S. will/has fallen into recession, commodity markets are taking little notice, keeping the dollar under broad-based downward pressure," said Tom Levinson, currency strategist at ING Wholesale Banking in London.

The dollar fell to its weakest level against the Australian dollar in three months Tuesday, and declined to a two-week low against the euro. The greenback is also trading low versus the yen, the pound and the Swiss franc.

There is no important U.S. data out Tuesday. The NAHB housing market index for February, unveiled at 1 p.m. EST, came in slightly better than expected. Minneapolis Federal Reserve Bank President Gary Stern spoke at 9 a.m. EST, but the dollar showed little reaction to his comments. Mr. Stern said the U.S. economy may face slower growth and rising unemployment.

Meanwhile, the dollar is also lower against the yen as Japan's currency benefits from expectations of more interest rate hikes in China. China's inflation rate rose to an 11-year high in January, according to a report Tuesday, fueling speculation that the People's Bank of China may soon need to lift its benchmark interest rate to stem price pressures.

Government Surveillance is not a Mistake

Kurt Nimmo
Truth News
February 18, 2008

How stupid do they think we are? According to Nick Juliano, writing for Raw Story, they think we’re pretty darn stupid. “As President Bush continues to demand legal immunity for telecommunications companies accused of violating customers’ privacy, the government and its private-sector facilitators are reported to ‘regular[ly] foul up’ surveillance orders and filter untold numbers of innocent Americans’ communications into government computers,” writes Juliano.

Because of an “apparent miscommunication” between the FBI and a private internet provider, e-mail messages across an entire computer network were collected by the government, reports the New York Times’s Eric Lichtblau, who first uncovered the National Security Agency’s warrantless wiretapping program.

E-mails from “perhaps hundreds of accounts or more” were sucked into FBI computers, Lichtblau reports, “instead of simply the lone e-mail address that was approved by a secret intelligence court as part of a national security investigation, according to a internal report of the 2006 episode.”

Hundreds? Try millions. And it’s anything but a mistake. It really is getting old, this “oops, our bumbling government screwed up again” propaganda.

According to the New York Times, probably the most successful propaganda sheet in the country — think Judith Miller, aluminum tubes, and a million plus dead Iraqis — these supposed mistakes are the product of miscommunication as the government sharpens its “technological tools.” As if to demonstrate we are indeed considered chumps and clueless bystanders, Eric Lichtblau quotes “an intelligence official, who spoke on condition of anonymity,” and blamelessly declares: “It’s inevitable that these things will happen. It’s not weekly, but it’s common.”

In fact, unrestrained surveillance is almost as old as dirt, spanning back to the beginning of the country but really gaining steam at the turn of the last century when the government vigorously snooped on unions, political radicals, and immigrants before and after World War I. Chances are the average reader of the New York Times has never heard of the American Protective League, an organization that developed a liaison with what would eventually become the FBI. It was the InfraGard of its day, teaming up with business to rat out people deemed anti-American. It wasn’t a bumbling government that organized the Committee on Public Information, not only designed to brainwash Americans into supporting the First World War but also going after antiwar activists of the day. It sure helped when Congress passed the Sedition Act in 1918 to crack down on dissent and anti-war protests. Like the Patriot Act, this law was no mistake.

After the “war to end all wars” — or rather create more wars for more profit — Congress put together a “special” committee, known as the Dies Committee, to track and snoop subversives, that is to say people who opposed militarization and were a bit too energetic in organizing unions. The FBI, hardly fumbling, played a crucial role as the House Un-American Activities Committee convened. Agents snooped, opened mail, read telegrams, and pressured employers not to hire people deemed too radical. All of this furious activity led to the creation of COINTELPRO a few years later. The FBI infiltrated the civil rights and antiwar movements. J. Edgar Hoover, the FBI director, sent informants to church meetings, intercepted mail and phone calls, conducted break-ins, and planted news stories to defame civil rights leaders.

But it wasn’t simply the FBI, assisted by local law enforcement, who surveilled, harassed, and maligned — and some believe even assassinated — activists: the military got in on the action as well. In the 1960s and 1970s, the U.S. Army began secretly and illegally monitoring protests and anti-war groups. Of course, the picture would not be complete without the CIA’s “Operation Chaos,” designed to subvert entirely legal antiwar activity, never mind the CIA’s useless charter prohibited such behavior.

It should be noted that the NSA, now so often in the news, helped out the CIA by feeding it information on U.S. citizens. In 1975, the New York Times reported that the Rockefeller Commission learned that the NSA, “under ‘Project Minaret,’ received ‘watch lists’ of U.S. citizens about whom other agencies such as the CIA, the Defense Intelligence Agency and the FBI wanted information…. The legality of the operations is questionable. The committee arranged for Attorney General Edward Levi to appear … to discuss the matter. [Then NSA Director Lew Allen] admitted that the NSA had obtained no warrants for any of the monitoring.” In short, the NSA’s violation of the Fourth Amendment is nothing new or particularly surprising, going back at least thirty years. In fact, as noted above, such violations go back at least a hundred years. Due to advanced computer technology, these violations — virtually an uninterrupted tidal wave of violations — are simply more effective and widespread today.

Finally, since we know so little about the NSA and its technology — and the New York Times admitted they withheld “a number of technical details” about the latest NSA snoop program — we will probably never know if the NSA and FBI are making the sort of “mistakes” Eric Lichtblau insists they make routinely.

It is wise, however, to keep in mind something Franklin D. Roosevelt said: “In politics, nothing happens by accident. If it happens, you can bet it was planned that way.”

Ditto surveillance for political reasons.

Henry Kissinger: The Making Of A War Criminal

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February 19, 2008