Free Internet Press Newsletter - Friday January 18 2008 - (813)

Friday January 18 2008 edition
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Dow Drops 300 Points Despite Stimulus Talk 2008-01-17 20:45:14 Intellpuke: There are two articles here on the subject of the U.S. economy. The first is from the Washington Post. That article is followed by a New York Times article. Here's the Post's article: Federal Reserve chief Ben S. Bernanke told lawmakers Thursday it is "critically important" that any economic stimulus package take effect quickly if it is to help ward off recession, and the White House announced that President Bush would make a speech Friday laying out his criteria for such a program. Despite Bernanke's comments, the flow of disappointing economic news today sent Wall Street lower. The Dow Jones industrial averagedropped 307, or about 2.5 percent, to close at 12,159. The Nasdaq composite index was down about 48 points at 2,347, a loss of 2 percent, and the Standard & Poor's 500 index fell 40 points to 1,333, 2.9 percent. Just before Bernanke spoke, new corporate and government data demonstrated the economy's trouble spots. A Commerce Department report showed that housing starts and new building permits continued to fall in December, and both are more than 30 percent below where they stood in December 2006. Investment giant Merrill Lynch, meanwhile, reported that it lost $8.6 billion in 2007, and over the past three months had written down by an additional $11.5 billion the value of assets linked to U.S. subprime mortgages. Bernanke's comments to a House budget committee are likely to push Congress and the administration toward faster action on an economic package that has become the subject of intense election-year debate.  Read The Full Story Environmental Activists Are Returned To Anti-Whaling Vessel 2008-01-17 20:44:33 Japanese captain releases pair after two-day standoff. Two environmental activists who were detained after boarding a Japanese whaling ship were back on board the protest vessel Steve Irwin after a two-day standoff in the icy waters near Antarctica. Giles Lane, 35, from Brighton, East Sussex, and Benjamin Potts, 28, of Sydney, Australia, were held on Tuesday after boarding the Japanese vessel Yushin Maru 2. The two members of the marine conservation group Sea Shepherd were detained by the crew and were later caught on film being tied to the ship's railings. Thursday night, the group's founder, Paul Watson, said the two men had been handed over to an Australian Customs vessel, the Oceanic Viking, after intervention by the Japanese and Australian governments. Speaking by satellite phone from the Steve Irwin, Sea Shepherd's vessel, Watson said the two men - both vegans - had not eaten since they were taken captive on Tuesday. Read The Full Story Wall Street - Stocks Slump On Gloomy Outlook 2008-01-17 15:33:48 Stock markets fell for a third consecutive day on Thursday as investors confronted new chapters of a well-worn story: the economy is in trouble. The Standard and Poor’s 500-stock index tumbled below its low for last year, set in March. It was down 1.4 percent on Thursday after giving up early morning gains. The Dow Jones industrial average was down 136 points, or 1.1 percent, to 12,330.00, and technology stocks in the Nasdaq composite index lost 0.7 percent. A dismal report on manufacturing activity caught investors by surprise on Thursday morning, sending the main indexes into the red after an early stint in positive territory. The Federal Reserve reported that a survey of Philadelphia-area manufacturers contracted much more than expected, hitting its lowest level since 1990. “It’s a very damaging report for the idea of recession,” said James Paulsen, the chief investment officer of Wells Capital Management. Read The Full Story Editorial: Don't Tie The Next President's Hands 2008-01-17 15:33:13 Intellpuke: The following editorial appears in the New York Times edition for Thursday, January 17, 2008. President Bush is discussing a new agreement with Baghdad that would govern the deployment of American troops in Iraq. With so many Americans adamant about bringing our forces home as soon as possible, a sentiment we strongly share, Mr. Bush must not be allowed to tie the hands of his successor and ensure the country’s continued involvement in an open-ended war. Given what’s at stake in Iraq in terms of American and Iraqi lives lost, national treasure and broad national security interests, the negotiations on any new agreement must be fully transparent - which they are not. The national debate must be vigorous and thoughtful, and then Congress must vote on whatever deal results. The White House and the Iraqi government decided in December to pursue the pact as a way to define long-term relations between the two countries, including the legal status of American military forces in Iraq. The ostensible goal is a more durable political, economic and security relationship than is possible under a United Nations resolution, the current international legal basis for the American military presence in Iraq. Iraqi officials, increasingly unhappy with restrictions on sovereignty because of the presence of 160,000 foreign troops, have said that they won’t extend the United Nations mandate beyond this year. A Washington-Baghdad deal would have to take its place for the troops to stay. Read The Full Story Lehman Bros. To Cut 1,300 Mortgage Jobs 2008-01-17 15:32:34 Investment bank Lehman Brothers Holdings Inc. on Thursday said it would stop U.S. wholesale mortgage lending because of a continued slump in credit and housing markets, a move that will cut 1,300 jobs and result in a $40 million charge. With these cuts, Lehman will have eliminated 3,750 mortgage jobs globally since June 2007. That represents a big scaling down of a business model the investment bank was one of the first to adopt, namely making home loans itself with the sole purpose of packaging the mortgages into bonds for investors. Lehman said it will suspend wholesale and correspondent lending at its Aurora Loan Services unit. Read The Full Story Dry, Polluted, Plagued By Rats: The Crisis In China's Yangtze River 2008-01-17 14:47:18 The waters of the Yangtze have fallen to their lowest levels since 1866, disrupting drinking supplies, stranding ships and posing a threat to some of the world's most endangered species. Asia's longest river is losing volume as a result of a prolonged dry spell, the state media warned Wednesday, predicting hefty economic losses and a possible plague of rats on nearby farmland. News of the drought - which is likely to worsen pollution in the river - comes amid dire reports about the impact of rapid economic growth on China's environment. The government also revealed yesterday that the country's most prosperous province, Guangdong, has just had its worst year of smog since the Communist party took power in 1949, while 56,000 square miles of coastline waters failed to meet environmental standards. The immediate concern is the Yangtze, which supplies water to hundreds of millions of people and thousands of factories in a delta that accounts for more than 40% of China's economic output. According to the Chinese media, precipitation and water levels are at or near record lows in its middle and upper stretches. Read The Full Story European Commission Stages Dawn Raids On Europe's Pharmaceutical Companies 2008-01-17 03:40:46 The European commission has mounted dawn raids on pharmaceutical companies across Europe as part of an investigation into possible anti-competitive behavior that could be preventing new drugs and cheaper generic alternatives from entering the market. The raids, staged on Tuesday at the offices of companies including GlaxoSmithKline, AstraZeneca, Sanofi-Aventis, Pfizer and Merck, as well as generic firms such as Teva, are part of increasing scrutiny of an industry worth $300 million (200 billion euros, £150 billion) a year in the European Union alone. They were dovetailed with, among others, the British, French and German competition authorities. The E.U. is also working with its U.S. counterpart, the federal trade commission, and the Swiss. It is the first time a so-called E.U. sectoral inquiry has begun with surprise inspections of companies, and Neelie Kroes, competition commissioner, made plain this was to prevent "highly confidential" information being "withheld, concealed or destroyed". She said the groups, selected according to 40 criteria including size, might hide or shred thousands of documents. They include generic drug-makers and subsidiaries of non-European groups. Kroes cited the case of AstraZeneca, which was fined 60 million euros ($90 million) in 2005 for misusing the patent system to delay the entry of rivals to its ulcer drug Losec. Read The Full Story Fears Of U.S. Recession Push European Prices, Stocks Lower 2008-01-17 03:40:23 Stock markets fell sharply again Wednesday on continuing fears of a recession in the United States that also pushed oil prices back below $90. On another frantic day of trading, the FTSE 100 index dropped through the key 6,000 level to close 82.7 points, or 1.37%, down at 5942.9, its lowest level since mid-August. That followed a 3% fall the day before and means shares are down over 8% this year. In Europe, stocks fell to their lowest levels in 16 months. As London closed, Wall Street was also looking shaky after Intel, the world's largest computer chip maker, issued a profit report and outlook weaker than markets had expected. Dealers took fright because many had felt technology stocks would weather a U.S. economic downturn better than companies such as house builders or banks exposed to the sub-prime mortgage crisis. Oil markets, too, took fright at signs that the U.S. economy may be slowing and as weekly stock figures showed the first rise in U.S. crude inventories for nine weeks. U.S. light crude futures fell $2 a barrel, tumbling through the $90 level for the first time in a month. Crude prices are more than 10% down from the all-time high of $100 a barrel set at the beginning of January. Brent crude fell below $89 a barrel in London. Read The Full Story Grumbling, U.S. Supreme Court Reluctantly Lets 'Party Boss' Law Stand 2008-01-17 03:39:25 If it's possible for Supreme Court justices to uphold a law while holding their noses, that's what happened Wednesday when the court delivered a unanimous victory for party bosses and "smoke-filled rooms" in New York.  The state's convoluted process for electing trial court judges may discourage outsiders, empower party bosses and even be bad policy, the court said, but it is constitutional. "None of our cases establishes an individual's constitutional right to have a 'fair shot' at winning the party's nomination," Justice Antonin Scalia wrote for the court. Challengers to the system have asserted that it is almost impossible for a candidate to be elected as a New York Supreme Court judge - the name the state gives its trial courts - without being a party nominee. Since 1921, the state has allowed the parties to employ a complicated system of petitions, delegates and conventions to choose their nominees for the general election, a process that gives great sway to party leaders. Read The Full Story Homes Flooded In England And Wales As Rivers Rise 2008-01-17 03:36:13 Hundreds of householders were mopping up Thursday or bracing themselves for flooding as heavy rain continued to fall on saturated ground. There were rescues, accidents and travel disruption on road and rail routes and there was more misery for many people who live close to rivers or on flood plains. Forecasters and the Environment Agency warned people to remain vigilant, predicting the bad weather could last for several days and river levels may continue to rise. Homes and businesses were flooded across England and Wales, from Abergavenny in south Wales to Tonbridge in Kent. In Grimsby, one of the areas badly affected in the summer, dozens of homes were flooded and hundreds more were at risk. Scores of homes in Oxfordshire were also under threat. In the west and southwest, forecasters said the threat of flooding in Gloucester, Tewkesbury and Forest of Dean would not recede until next week as water moved through the river system from the Welsh mountains. David Throup, of the Environment Agency, warned: "We need to stay very vigilant. It all depends on the amount of rain and where it falls. If we were to get more rain than predicted it could leave us with problems." By Wednesday evening there were 74 flood warnings on rivers across the country and 164 flood watches. But 131 all-clears were given on spots that had been at risk. Rain caused problems in Canterbury Cathedral as water seeped through the 150-year-old lead roof in 70 mph winds. Read The Full Story	Panic Selling Shuts $4 Billion Fund In U.K. 2008-01-17 20:44:57 Exclusive Scottish Equitable acts after slump. One of Britain's biggest property funds was forced to shut its doors to withdrawals Thursday after the slump in commercial prices triggered panic selling by small investors. The move prompted fears of a Northern Rock-style run on billions of pounds invested in once high-flying funds which many savers have seen as a safe haven for their pensions. Scottish Equitable said Thursday that 129,000 small investors in its £2 billion ($4 billion) property fund will not be able to access their money for up to a year. It said that the giant fund, invested in London office blocks and shopping centers across Britain, no longer had sufficient cash reserves to meet demands from investors wanting to withdraw their money. Its "buffer fund" was down to 1% of its total assets, instead of the usual 10%-15%. Commercial property values, especially in the crucial City of London office market, have dived amid fears of a recession brought on by the global credit crunch. Read The Full Story GAO Report Challenges Effectiveness Of U.S. Sanctions On Iran 2008-01-17 15:33:57 A three-year international effort to pressure Iran is faltering, with a new report to Congress questioning the impact of 20 years of U.S. economic sanctions on Tehran and a long-sought U.N. resolution against Iran in trouble. In a report released Wednesday, the investigative arm of Congress challenged the impact of U.S. sanctions against Iran dating to 1987. Tehran has circumvented many economic sanctions, it concluded, noting Iran's ability to negotiate $20 billion in contracts with foreign firms since 2003 to develop its energy resources. With the country's oil wealth, Iranian banks also have funded their activities in currencies other than the dollar. "Iran's global trade ties and leading role in energy production make it difficult for the United States to isolate Iran and pressure it to reduce proliferation and support for terrorism," said the Government Accountability Office (GAO). "Iran's overall trade with the world has grown since the U.S. imposed sanctions, although this trade has fluctuated." The report also faults the Bush administration for not developing a system to assess sanctions and recommends that Congress require the National Security Council to do so and report results regularly to Congress. Read The Full Story Merrill Lynch Posts A $9.8 Billion Loss 2008-01-17 15:33:35 Merrill Lynch, a firm one-third the size of Citigroup, posted an equally huge fourth-quarter loss of $9.8 billion on Thursday, fueled by write-downs totaling $16.7 billion, more than double the firm’s 2006 profits. The staggering losses came from packaging and holding onto complex securities that seemed safe but have recently unraveled. The result was the worst quarterly loss in Merrill Lynch’s history, underscoring both the severity of the credit crunch and the brokerage firm’s failure to adequately understand or manage the risks it was taking. For the year, Merrill lost $7.78 billion, compared with profits of $7.5 billion in 2006. Merrill’s stock was down almost 8 percent in midday trading as analysts expressed concern about remaining exposure to the mortgage market - from the subprime market to the safer so-called Alt-A market and commercial real estate -  as well as the reality that the firm will be constrained in many aspects of its business. “There is still a lot of uncertainty ahead for Merrill,” said Brad Hintz, a securities analyst at Sanford C. Bernstein & Company. Read The Full Story U.S. Military Won't Predict Iraq Pullout 2008-01-17 15:32:53 Two senior Defense Department officials told a House committee Thursday that Iraq's growing security forces should be able to take full responsibility for internal security sometime between early 2009 and 2012, but they declined to predict when U.S. military personnel could withdraw from the country. In a hearing before the House Armed Services Committee, the officials also said that Iraq would not be able to defend itself against external threats for at least another 10 to 12 years. They said that does not necessarily mean U.S. troops must remain in Iraq until then, although it was likely that forces would at least need to stay in the region for years to come. Lt. Gen. James M. Dubik, commander of the Multi-National Security Transition Command in Iraq, told the committee that the total strength of the Iraqi Security Forces "may exceed 580,000 soldiers, sailors, airmen and police" by the end of 2008. That would represent an increase of about 140,000 from Dec. 1, 2007, when trained and equipped Iraqi forces numbered about 440,000. Iraqi leaders plan to increase their forces' total strength to between 600,000 and 640,000 and have "started growing toward that goal," said Dubik, adding that it may not be necessary for Iraq's forces to reach that size if security continues to improve. Dubik and Mark Kimmitt, deputy assistant secretary of defense for the Middle East, told the committee that while Iraqi forces have increased their capabilities, they still face a number of shortcomings that range from logistics and maintenance to corruption and uncertain loyalties. Read The Full Story British Airways Jet Crash Lands At Heathrow Airport 2008-01-17 14:47:35 All 136 passengers and 16 crew Thursday were evacuated from a British Airways plane after it crash landed and lost its landing gear at Heathrow, one of the world's busiest airports. The British Airports Authority confirmed that 12 passengers suffered minor injuries. They were taken to Hillingdon hospital, west London, a Heathrow spokesman said. BA Flight 38 was arriving in London from Beijing at 12:45 p.m. Two of the plane's giant wheel units were ripped from the craft as it came down. Witnesses said the emergency chutes appeared to have been inflated. An unnamed airport worker said the pilot told him the plane had lost all power as it came in to land. "He told me that the aircraft shut down and he lost all his power and avionics," the worker told BBC News24. "He just glided it in and lifted the nose up and managed to get it down. Read The Full Story White House Routinely Overwrote E-Mail Tapes From 2001 To 2003 2008-01-17 03:40:59 E-mail messages sent and received by White House personnel during the first three years of the Bush administration were routinely recorded on tapes that were "recycled," the White House's chief information officer said in a court filing this week. During the period in question, the Bush presidency faced some of its biggest controversies, including the Iraq war, the leak of former CIA officer Valerie Plame. Wilson's name and the CIA's destruction of interrogation videotapes. White House spokesman Tony Fratto said he has no reason to believe any e-mails were deliberately destroyed. From 2001 to October 2003, the White House's practice was to use the same backup tape each day to copy new as well as old e-mails, he said, making it possible that some of those e-mails could still be recovered even from a tape that was repeatedly overwritten. "We are continuing to analyze our systems," Fratto said last night. The court filing said tapes were recycled before October 2003, and at that point, the White House "began preserving and storing all backup tapes." Two federal statutes require presidential communications, including e-mails involving senior White House aides, to be preserved for the nation's historical record, and some historians responded to the court disclosure Wednesday by urging that the White House's actions be thoroughly investigated. Read The Full Story Economic Woes Hitting U.S. Economy Unevenly 2008-01-17 03:40:35 Inflation spiked in 2007, driven by escalating food and energy costs that more than canceled the wage gains earned by workers over the year. New federal government statistics show the consumer price index rose 4.1 percent over the 12 months ending in December, 2007, compared to a 2.5 percent increase in the 12 months before that. Energy prices, responding to a surge in the cost of oil, rose 17.4 percent over the period. The price of food increased 4.9 percent - the largest rise in 18 years. Excluding volatile food and energy costs, so-called core inflation was more moderate as consumers benefited from lower prices for housing, apparel and other goods. The core inflation rate, closely watched by economists, was 2.4 percent over the 12 month period, slightly below the 2.6 percent increase registered in 2006. Still, the overall rate of inflation left consumers with less money in their pockets by the end of the year - a fact reflected in the poor December retail sales results that helped push markets sharply lower Tuesday. The Bureau of Labor Statistics reported Wednesday that, once discounted for rising prices, the wages of American workers fell 0.9 percent between  December 2006 and December 2007. Read The Full Story Russia, British Crisis Escalating 2008-01-17 03:39:51 "Now we really are experiencing what could be called a crisis." - Russia's man in London on leaving Britain's Foreign Office Wednesday. The diplomatic standoff with Russia entered a dangerous new phase Wednesday as British officials denounced "a pattern of intimidation" by Russia's security services against British Council staff. The Foreign Office complained of unacceptable behavior, after Russians working at British Council offices in St.  Petersburg and Yekaterinburg were called in for questioning by the FSB, the successor to the KGB, and visited at home by interior ministry officials. Stephen Kinnock, the head of the council's St. Petersburg office, was stopped and detained for an hour for alleged drunk-driving and driving the wrong way down a one-way street. British officials Wednesday denied Kinnock, the son of former Labor Party leader, Neil Kinnock, had been drinking, saying he had refused to take a breath test and called for consular assistance in line with Foreign Office guidelines. One official said Kinnock had been followed home after dining with friends in what the official described as "a pattern of intimidation intended to disrupt the British Council". The organization said it was deeply concerned for the safety of its employees. Read The Full Story U.S. Air Strikes In Iraq Up Five-Fold 2008-01-17 03:38:37 The U.S. military conducted more than five times as many air strikes in Iraq last year as it did in 2006, targeting al-Qaeda safe houses, insurgent bomb-making facilities and weapons stockpiles in an aggressive strategy aimed at supporting the U.S. troop increase by overwhelming enemies with air power. Top commanders said that better intelligence-gathering allows them to identify and hit extremist strongholds with bombs and missiles from above, and they predicted that extensive air strikes will continue this year as the United States seeks to flush insurgents out of havens in and around Baghdad and to the north in Diyala province.  The U.S.-led coalition dropped 1,447 bombs over Iraq last year, an average of nearly four a day, compared with 229 bombs, or about four each week, in 2006. "The core reason why we see the increase in strikes is the offensive strategy taken by General [David H.] Petraeus," said Air Force Col. Gary Crowder, commander of the 609th Combined Air Operations Center in Southeast Asia.  Because the United States has sent more troops into areas rife with insurgent activity, he said, "we integrated more air strikes into those operations." Read The Full Story
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