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Friday, March 14, 2008

Free Internet Press Newsletter - Friday March 14 2008 - (813)

Friday March 14 2008 edition
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U.S. Economy Hammered By Toxic Blend Of Ailments
2008-03-14 02:55:04
Almost everything seems to be going wrong for the American economy at once. People are buying less, but most things are costing more. Mortgage rates are rising, the dollar is falling and prices of key commodities like oil are leaping from one record high to the next.

On Thursday, the dollar plumbed new lows against the Japanese yen and several other major currencies; the price of an ounce of gold jumped above $1,000 for the first time; and lenders raised home loan rates once again. Government figures showed retail sales fell in February as consumers cut back on cars, furniture and electronics.

Stocks fell sharply after the retail sales report was released early in the day, and a large investment fund said it was nearing collapse. The volatility that has defined the market lately continued unabated.

The Standard & Poor’s 500-stock index fell 2 percent in the morning, then rebounded partly in reaction to a report that said banks were nearing the end of subprime mortgage losses. It was up nearly 1 percent in the afternoon before paring that gain to close up 0.5 percent, to 1,315.48 points. The Dow Jones industrial average closed up 35.5 points, to 12,145.74 points.

A toxic blend of economic and financial developments is testing policy makers and lawmakers who are struggling to contain the slump brought on by the collapse of the mortgage market, a downturn that now looks sure to push the economy into a recession. Though current conditions are a far cry from the 1970s, resurgent inflation is raising the threat of stagflation - a condition in which unemployment and the price of goods and services both rise.

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EPA Weakened Ozone Rules At Bush's Request
2008-03-14 02:54:12

The U.S. Environmental Protection Agency weakened one part of its new limits on smog-forming ozone after an unusual last-minute intervention by President Bush, according to documents released by the EPA.

EPA officials initially tried to set a lower seasonal limit on ozone to protect wildlife, parks and farmland, as required under the law. While their proposal was less restrictive than what the EPA's scientific advisers had proposed, Bush overruled EPA officials and on Tuesday ordered the agency to increase the limit, according to the documents.

"It is unprecedented and an unlawful act of political interference for the president personally to override a decision that the Clean Air Act leaves exclusively to EPA's expert scientific judgment," said John Walke, clean-air director for the Natural Resources Defense Council. 

The president's order prompted a scramble by administration officials to rewrite the regulations to avoid a conflict with past EPA statements on the harm caused by ozone.

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National Republican Congressional Committee Says Ex-Treasurer Diverted Up To $1 Million
2008-03-14 02:53:19

The former treasurer for the National Republican Congressional Committee diverted hundreds of thousands of dollars - and possibly as much as $1 million - of the organization's funds into his personal accounts, Republican Party officials said Thursday, describing an alleged scheme that could become one of the largest political frauds in recent history.

For at least four years, Christopher J. Ward, who is under investigation by the FBI, allegedly used wire transfers to funnel money out of NRCC coffers and into other political committee accounts he controlled as treasurer, NRCC leaders and lawyers said in their first public statement since they turned the matter over to the FBI six weeks ago.

"The evidence we have today indicated we have been deceived and betrayed for a number of years by a highly respected and trusted individual," said Rep. Tom Cole (R-Oklahoma), the NRCC chairman.

The committee also announced that it has submitted to banks five years' worth of audits and financial documents allegedly faked by Ward, some of which were used to secure multimillion-dollar loans. It is a violation of federal laws to obtain loans through false statements; the crime is punishable by up to $1 million in fines and 30 years in prison.

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Al-Qaeda Sets Deadline For Captive Tourists
2008-03-14 02:52:12
Al-Qaeda's branch for North Africa on Thursday set a three-day deadline to meet conditions for the release of two Austrian tourists it claimed to have kidnapped in Tunisia last month.

In a statement posted on the Internet - which included six photographs purportedly showing Austrians Wolfgang Ebner and Andrea Kloiber - al-Qaeda in Islamic North Africa said it would free the pair if all of the group's members were released from jails in Tunisia and Algeria. The posting gave Austrian authorities three days, starting midnight Thursday, to comply.

The statement, the authenticity of which could not be independently verified although it was posted on a Web site linked to the group, also called on Western tourists to avoid visiting the Maghreb region in northern Africa.

"Austria is responsible for the lives of the two hostages in the event of the expiration of the time period and not responding to our demands," it said and urged families of the two Austrians to pressure their government to meet the group's demands.

The woman in the photographs, said to be Kloiber, was shown wearing a headscarf and her face was obscured. According to extremist Islamist beliefs, showing a woman's face in public and in images is prohibited. Both she and the man, who had a graying mustache and a short beard, were wearing traditional Arab robes.
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Yuma, Arizona, Wants Moat To Keep Out Migrants
2008-03-14 02:50:29

There have been virtual fences, real fences, increased patrols and night-vision cameras. Now the latest initiative by the U.S. to seal its increasingly porous border with Mexico harks back to one of the oldest approaches: dig a moat. City officials in Yuma, in south-western Arizona, have come up with a scheme to create a "security channel" along the nearby border by reviving a derelict two-mile stretch of the Colorado river.

"The moats that I've seen circled the castle and allowed you to protect yourself, and that's kind of what we're looking at here," Yuma county sheriff Ralph Ogden told the Associated Press. The scheme would see engineers dig out a two-mile stretch of a 180-hectare (440-acre) wetland known as Hunters Hole.

Once a haven to anglers, ducks and the Cocopah Indians, the area is now a thicket of tamarisk, forgotten shoes and old cars providing cover for smugglers and border crossers. Under the plan, all that would change. The banks of the river would be replanted with native cattail, bulrush and mesquite, and wells would supply water to the wetlands as well as to a 20-meter-wide, three-meter-deep channel that would run the length of Hunters Hole.

With the replenished river marking the frontier, would-be border crossers would have to scale a 4.5-meter levee - built with the earth excavated from the riverbed - cross a 120-meter-wide marsh and then ascend another levee on the northern side of the wetlands.

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FBI Misused Information Gathering Powers
2008-03-13 16:14:11

The FBI continued to improperly obtain private telephone, e-mail and financial records five years after it was granted expanded powers under the USA Patriot Act, according to a report issued Thursday.

In a review focusing on FBI investigations in 2006, Justice Department Inspector General Glenn A. Fine found numerous privacy breaches by the bureau in its use of national security letters, or NSLs, which allowed the FBI to obtain personal information on tens of thousands of Americans and foreigners without approval from a judge.

The findings mirror a report issued by Fine's office last year, which concluded that the FBI had improperly used the letters to obtain telephone logs, banking records and other personal data for three previous years, from 2003 to 2005.

The pattern persisted in 2006, Fine concluded in the report issued Thursday, in part because the FBI had not yet halted the shoddy record keeping, poor oversight and other practices that contributed to the problems. He also said it was unclear whether reforms enacted by the Justice Department and FBI last year will address all the issues identified by his investigators.

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Southern California Home Prices Still Dropping At Record Rate
2008-03-13 16:13:21
Southern California home prices continued to fall at a record pace in February, and are now at 2004 levels, a real estate information service reported Thursday.

The median price for a Southland home last month was $408,000, down 17.6% from a year ago, according to DataQuick Information Systems. Area home prices have now fallen 19% on average from their peaks last year.

The steep price declines are putting many more homeowners "upside down" - owing more on their homes than their homes are worth. Forecasters say foreclosures will likely continue to rise and prices will fall further.

About one-third of Southern California homes sold in February had been foreclosed since January 2007, according to DataQuick. A year earlier, previously foreclosed homes accounted for 3.5% of sales.
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Study Raises Questions On Hospital Anesthesia Monitors
2008-03-13 16:12:28

Imagine this: You're lying on the operating table, apparently unconscious. The surgeon is cutting. But you're still awake. Not only that, you're paralyzed by the drugs the anesthesiologist gave you and can't speak out.

That horrifying experience happens to between 20,000 and 40,000 Americans every year, leaving many - not surprisingly - severely traumatized.

Now, a study in today's issue of the New England Journal of Medicine is raising questions about a monitor used by about 60 percent of U.S. operating rooms in an effort to prevent these frightening cases.

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U.S. Panel Calls For More Oversight, Tighter Regulations On Mortgage Industry
2008-03-13 16:11:15

A "dramatic weakening" of standards used by the U.S. mortgage industry to evaluate and make home loans touched off the global credit crisis that continues to undermine markets, a presidential panel said Thursday in a report that called for nationwide licensing of mortgage brokers and new consumer protections for home buyers.

Treasury Secretary Henry M. Paulson, Jr., said at a news conference that the report would be used to overhaul a system that had put the global economy at risk by bundling mortgages into a dizzying array of larger investments that had become too complex to be accurately analyzed.

"We will see changes at every step of the securitization process," Paulson said at a news conference Thursday morning, as regulators tighten standards for the people who appraise houses, originate and fund mortgages, and package them into more complex financial products.

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Kidnapped Iraqi Archbishop Found Dead
2008-03-13 16:06:02
The body of the Chaldean Catholic archbishop of Mosul, Paulos Faraj Rahho, who was kidnapped by gunmen in Mosul in northern Iraq late last month as he drove home after afternoon Mass, was discovered Thursday in an area south of the city, said church officials and the Iraqi police.

Cardinal Emmanuel Dali in Baghdad confirmed that Archbishop Rahho’s body had been found and taken to the morgue in Mosul. The body will be released to the archbishop’s family late Friday or early Saturday so they can bury him, said Cardinal Dali.

The body was found buried in Al Intessar, a neighborhood in the southeast part of the city. Iraqi officials in Mosul said that the church had received a phone call revealing where the body was, and that church officials had dug it up with the help of the local police.

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Carlyle Capital Enters Insolvency
2008-03-13 03:51:42

A publicly traded affiliate of the Carlyle Group said Wednesday that lenders were seizing its assets, sending the fund, Carlyle Capital, into insolvency.

The collapse of Carlyle Capital is the first time a Carlyle Group fund has failed and is a stinging embarrassment for the Washington, D.C.-based private-equity powerhouse, which has built an international reputation with a client list that reaches around the world.

The high-profile downfall, part of the broad turmoil in credit markets worldwide, followed a week of frantic negotiations between the Carlyle Group and a number of lenders. Carlyle Group's three founders as recently as Monday were considering injecting cash into the fund as a way to usher it through the credit crisis.

By yesterday the fund had defaulted on $16.6 billion of debt and said it expected to default soon on its remaining debt. The fund's $21.7 billion in assets were exclusively in AAA mortgage-backed securities issued by Fannie Mae and Freddie Mac, traditionally considered secure and conservative investments, which it was using as collateral against its loans.

In a statement, Carlyle Capital said that it had been unable to meet margin calls in excess of $400 million over the past week and that it expected its lenders to take control of its remaining assets. The lenders, headed by Deutsche Bank and J.P. Morgan Chase, began selling the securities last night, according to a report on the Wall Street Journal's Web site.

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U.S. Warning Shot Kills Iraqi Girl
2008-03-13 03:51:12

U.S. forces killed an Iraqi girl when they fired a warning shot near a woman behaving suspiciously in the dangerous Diyala province, the American military has said.

The incident occurred Wednesday while troops were patrolling an area of the province north of Baghdad where roadside bombs had recently been found, said the military.

"Coalition forces fired a warning shot into a berm (small defensive wall) near a suspicious woman who appeared to be signaling to someone while the soldiers were in the area," said a statement.

"A young girl was found behind the berm suffering from a gunshot wound."

It said soldiers rendered immediate medical attention but the girl died on her way to hospital.

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Pentagon Study: Saddam Hussein Had No Ties To Al-Qaeda
2008-03-13 00:30:25

A U.S. military study officially acknowledged for the first time Wednesday that Saddam Hussein had no direct ties to al-Qaeda, undercutting the Bush administration's central case for war with Iraq.

The Pentagon study based on more than 600,000 documents recovered after U.S. and U.K. troops toppled Hussein in 2003, discovered "no 'smoking gun' (ie, direct connection) between Saddam's Iraq and al-Qaeda", its authors wrote.
George Bush and his senior aides have made numerous attempts to link Saddam Hussein and al-Qaeda terror in their justification for waging war against Iraq.

Wary of embarrassing press coverage noting that the new study debunks those claims, the U.S. Defense Department attempted to bury the release of the report Wednesday.

The Pentagon canceled a planned briefing on the study and scrapped plans to post its findings on the internet, ABC news reported. Unclassified copies of the study would be sent to interested individuals in the mail, military officials told the network.

Another Pentagon official told ABC that initial press reports on the study made it "too politically sensitive".

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2 Charged In UNC Student Leader Slaying
2008-03-13 00:29:27
A man charged with murdering the University of North Carolina student body president was arrested Wednesday as detectives hunted for a second suspect.

Police would not say which suspect they believe shot and killed Eve Carson, 22, of Athens, Georgia, who was found a week ago lying on a street about a mile from campus. The biology and political science major had been shot several times, including once in the right temple.

In the days after Carson's death, police focused their investigation on several ATM and convenience store surveillance photos.

The school's Board of Trustees offered a $25,000 reward for information leading to an arrest, and police received hundreds of tips after the first two photos were released over the weekend.

Demario James Atwater, 21, was arrested early Wednesday as he left a home in Durham that police had placed under surveillance after receiving a tip.
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Your High-Tech Gadget May Have A Pre-Intalled Virus
2008-03-14 02:54:35
From iPods to navigation systems, some of today's hottest gadgets are landing on store shelves with some unwanted extras from the factory - pre-installed viruses that steal passwords, open doors for hackers and make computers spew spam.

Computer users have been warned for years about virus threats from downloading Internet porn and opening suspicious e-mail attachments. Now they run the risk of picking up a digital infection just by plugging a new gizmo into their PCs.

Recent cases reviewed by the Associated Press include some of the most widely used tech devices: Apple iPods, digital picture frames sold by Target and Best Buy stores and TomTom navigation gear.

In most cases, Chinese factories - where many companies have turned to keep prices low - are the source.
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EPA Closure Of Libraries Faulted For Curbing Access To Key Data
2008-03-14 02:53:45

A plan by the U.S. Environmental Protection Agency to close several of its 26 research libraries did not fully account for the impact on government staffers and the public, who rely on the libraries for hard-to-find environmental data, congressional investigators reported Thursday.

The report by the Government Accountability Office found that the EPA effort, begun in 2006 to comply with a $2 million funding cut sought by the White House, may have hurt access to materials and services in the 37-year-old library network.

Rep. Bart Gordon (D-Tennessee), chairman of the House Science and Technology Committee, said the report reveals a "grim picture" of mismanagement at the EPA. The panel's oversight and investigations subcommittees held a hearing on the reorganization Thursday.

The libraries provide technical information and documentation for enforcement cases and help EPA staff members track new environmental technologies and the health risks associated with dangerous chemicals.

They also are repositories of scientific information that is used to back up the agency's positions on new regulations and environmental reports and data that are tapped by people such as developers and state and local officials. The collections include hard-to-find copies of documents on federal Superfund hazardous waste sites, water-quality data and the health of regional ecosystems.

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Georgia Students Ponder Future As Schools Court Disaster
2008-03-14 02:52:41
District would be the first in the U.S. since the '60s to lose its accreditation. Students are frustrated and residents of the predominantly black county are embarrassed.

Kyanda Daniels, a junior, ran for miles with the Jonesboro High School track team the other day. When she was done, she stood above the stadium, gasping for air, and wondering what on Earth she was striving for.

"We're in school for nothing, basically," said Daniels, 17. "When I get out my homework, I think to myself, 'Man, why am I doing this?' What college is going to accept us? Who would give us a scholarship?"

Anxiety has engulfed students across Clayton County, a predominantly black area south of Atlanta, Georgia, ever since they learned their school district could become the first in the nation since the 1960s to lose its accreditation.

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Chrysler To Shut Down Company For Two Weeks
2008-03-14 02:51:44
Chrysler, which is restructuring a troubled business under private ownership, told its workers in an e-mail Thursday that almost all of the company will shut down for two weeks in July to save money.

"This year, in order to create better alignment and efficiency across organizational lines and boost productivity, Chrysler will use a corporate-wide vacation shutdown for the weeks of July 7 and July 14," chief executive Robert L. Nardelli  wrote to Chrysler's 71,578 employees.

Sales of new autos are down 5.4 percent this year, as the economy flags and the national average price of gasoline tops $3 per gallon. Chrysler's sales are down 13 percent for the first two months of this year compared with last year. Toyota Motor said Thursday that it would cut production of its Tundra pickup trucks at plants in Texas and Indiana. 

Automakers in recent years have selectively shut down plants or entire manufacturing units, usually during the summer, to save money. General Motors and Ford plan two-week plant shutdowns this summer. During the technology crash of 2001, several Silicon Valley companies, such as Adobe Systems and Sun Microsystems, ordered employees to take a week off to save money.

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Commentary: Rule By Fear Or Rule By Law?
2008-03-13 21:05:32
Intellpuke: The following commentary was written by Lewis Seiler and Dan Hamburg and appeared in the San Francisco Chronicle edition for Monday, February 4, 2008, but the subject is important. We've posted this once before, but I thought we should post it again before it slips into oblivion. Mr. Seiler is president of Voice of the Enviornment, Inc., and Mr. Hamburg, a former U.S. congressman, is VOE's executive director. Their commentary follows:

"The power of the Executive to cast a man into prison without formulating any charge known to the law, and particularly to deny him the judgment of his peers, is in the highest degree odious and is the foundation of all totalitarian government whether Nazi or Communist."

- Winston Churchill, Nov. 21, 1943

Since 9/11, and seemingly without the notice of most Americans, the federal government has assumed the authority to institute martial law, arrest a wide swath of dissidents (citizen and noncitizen alike), and detain people without legal or constitutional recourse in the event of "an emergency influx of immigrants in the U.S., or to support the rapid development of new programs."

Beginning in 1999, the government has entered into a series of single-bid contracts with Halliburton subsidiary Kellogg, Brown and Root (KBR) to build detention camps at undisclosed locations within the United States. The government has also contracted with several companies to build thousands of railcars, some reportedly equipped with shackles, ostensibly to transport detainees.

According to diplomat and author Peter Dale Scott, the KBR contract is part of a Homeland Security plan titled ENDGAME, which sets as its goal the removal of "all removable aliens" and "potential terrorists."

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Unexpected Drop In Retail Sales Spurs Recession Fears
2008-03-13 16:13:44
Consumers, battered by plunging home prices and a credit crunch, stayed away from the malls in February, pushing retail sales down by a larger-than-expected amount. It was another worrisome sign that the country could be falling into a recession.

The Commerce Department reported Thursday that retail sales fell by 0.6 percent last month, far worse than the 0.2 percent increase that analysts had been expecting.

The weakness was widespread with sales of autos, furniture and appliances all down.

It marked the second time in the past three months that retail sales have taken a tumble. Sales had fallen by an even bigger 0.7 percent in December, the largest drop in six months, as the nation's retailers suffered through a dismal holiday shopping season. Sales posted a modest 0.4 percent gain in January.

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Collapse Of Salmon Stocks Endangers Pacific Fishery
2008-03-13 16:12:53

U.S. federal officials have indicated that they are likely to close the Pacific salmon fishery from northern Oregon to the Mexican border because of the collapse of crucial stocks in California's major watershed.

That would be the most extensive closing on the West Coast since the federal government started regulating fisheries.

“By far the biggest,” said Dave Bitts, a commercial fisherman from Eureka, California, who is at a week-long meeting of the Pacific Coast Fisheries Management Council in Sacramento.

“The Central Valley fall Chinook salmon are in the worst condition since records began to be kept,” Robert Lohn, regional administrator for the National Marine Fisheries Service in Portland, Oregon, said Wednesday in an interview. “This is the largest collapse of salmon stocks in 40 years.”

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Pentagon Reviewing Interrogation Videotapes
2008-03-13 16:11:58
The U.S. Defense Department is conducting an extensive review of the videotaping of interrogations at military facilities from Iraq to Guantanamo Bay, and so far it has identified nearly 50 tapes, including one that showed what a military spokesman described as the forcible gagging of a terrorism suspect.

The Pentagon review was begun in late January after the Central Intelligence Agency acknowledged that it had destroyed its own videotapes of harsh interrogations conducted by C.I.A. officers, an action that is now the subject of criminal and Congressional investigations.

The review was intended in part to establish clearer rules for any videotaping of interrogations, said Defense officials.  They acknowledged that it had been complicated by inconsistent taping practices in the past, as well as uncertain policies for when tapes could be destroyed or must be preserved.

The officials said it appeared that only a small fraction of the tens of thousands of interrogations worldwide since 2001 had been recorded.

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Cassini Spacecraft Gets A Cool Shower From A Moon Of Saturn
2008-03-13 16:06:47
No other 310-mile-wide ice ball in the solar system is attracting quite the attention as Enceladus, a moon of Saturn.

NASA's Cassini spacecraft had a deliberate near-miss with Enceladus on Wednesday afternoon, passing about 30 miles above its surface at a speed of more than 32,000 miles per hour. Over the next couple of years, Cassini is to swing by another seven times, scrutinizing this little moon more than all of the 50-odd others circling Saturn, except perhaps Titan.

Then again, no other 310-mile-wide ice-ball moon in the solar system has a geyser of icy particles shooting out of its south pole.

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New U.S. $5 Bill Goes Into Circulation
2008-03-13 16:05:20
Sprinkled with pastel colors and armed with new features to thwart counterfeiters, the latest version of the $5 bill went into circulation Thursday with a gift shop purchase at President Lincoln's newly renovated cottage at the Soldiers' Home.

The portrait of Abraham Lincoln remains front and center on the new bill, and the image of the Lincoln Memorial is still on the back. To honor the 16th president, Federal Reserve Board Assistant Director Michael Lambert completed the first transaction by buying a book of Lincoln's speeches for $2.88.

"We must address counterfeit threats with effective designs for our bills that include easy to use security features," Lambert said. "The features help ensure we stay ahead of counterfeiters and protect your hard-earned money."

For the next three weeks, any commercial bank, savings and loan or credit union that requests $5 bills from a Federal Reserve office will have its order filled exclusively with the new designs. This assures that the new currency will make its way into the mainstream "almost immediately," Lambert said.
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Oil Prices Hit New Highs Above $110
2008-03-13 03:51:24

Oil prices sprung to an all-time high overnight, defying an increase in inventories in favor of tracking the weakening U.S. dollar.

Light, sweet crude for April delivery settled $US1.17, or $US1.1 per cent, higher at $US109.92 on the New York Mercantile Exchange after gliding as high as $US110.20 a barrel as the U.S. dollar continued to sink to new lows. Brent crude on the ICE futures exchange was trading $US1.02, or 1 per cent, higher at $US106.27 a barrel, also an all-time high.

The other benchmark petroleum futures contracts posted all-time highs of their own, underscoring investors' rush into energy in a time of turmoil in other markets and economies.

Crude-oil prices have jumped more than $US17 in the past month as investors moved to hedge against the weakening U.S. dollar. The euro had hit a series of highs against the U.S. dollar overnight and was trading at $US1.5526, on doubts about a new Federal Reserve plan to help lenders, following the close of Nymex pit trading.
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Australian Author Stunned To Win $800,000 Prize For Children's Literature
2008-03-13 03:50:57
Australian author Sonya Hartnett was returning from walking her dogs Wednesday night and wondering how to pay for her home renovations when her mobile phone rang.

It was someone calling from Sweden to inform the Melbourne-based writer she had won the world's richest children's and youth literary award, worth $880,000.

Her first reaction was one of disbelief.  "I went, 'you can't be serious'," she said.

"I knew that I had been nominated but so had 150 other people and you don't expect at all that you are going to win something like that."

Ms. Hartnett won the Astrid Lindgren Memorial Award, a literary prize created by the Swedish government in 2002 to honor the Swedish creator of numerous popular fiction characters including Pippi Longstocking.

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EPA Tightens Smog Standards, But Overrules Advice Of Its Science Advisory Council
2008-03-13 00:29:47
The U.S. Environmental Protection Agency (EPA) announced a modest tightening of the smog standard on Wednesday evening, overruling the unanimous advice of its scientific advisory council for a more protective standard.

The administrator, Stephen L. Johnson, said that, by law, he is forbidden to consider costs in setting the standard, but urged Congress to change the law so future administrators could do just that.

The standard, stated in terms of average concentrations of ozone at ground level over an eight-hour period, is now 84 parts per billion. Johnson’s decision, if it survives court review, would lower that to 75, although implementation could be decades away. Late last year a scientific advisory panel recommended 60 to 70 parts per billion.

“I’ve made the most health-protective eight-hour ozone decision in the nation’s history,” said Johnson. The Clean Air Act requires periodic review, and the announcement Wednesday updates a standard from 1997.

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Apple Hit With Patent Infringement Lawsuit Over iTunes, iPods
2008-03-13 00:28:58
Apple Inc. was sued Wednesday over allegations its iTunes online music store and iPod music players are illegally using a patented method for distributing digital media over the Internet.

Atlanta-based ZapMedia Services Inc. sued Apple in U.S. District Court for the Eastern District of Texas, accusing the Cupertino, California-based company of violating two ZapMedia patents.

ZapMedia wants royalties on Apple's sales of iPods and iTunes music, which reached nearly $11 billion last year. The success of iTunes has helped make Apple the No. 2 music retailer in the U.S. behind Wal-Mart Stores Inc., according to market researcher NPD Group.

The patents in question cover a way of sending music and other digital content from servers to multiple media players, a broad description that could also apply to a wide swath of other companies selling digital media and the devices to play it.

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