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Tuesday, June 10, 2008

Free Internet Press Newsletter - Tuesday June 10 2008 - (813)

Tuesday June 10 2008 edition
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FHA Faces $4.6 Billion In Losses
2008-06-10 02:38:41
The U.S. Federal Housing Administration (F.H.A.) expects to lose $4.6 billion because of unexpectedly high default rates on home loans, officials said Monday.

Brian D. Montgomery, the F.H.A. commissioner, attributed the unanticipated losses primarily to the agency’s seller-financed down payment mortgage program, which has suffered from high delinquency and foreclosure rates in recent years.

Housing officials said the agency was also hurt by poor performance in its traditional mortgage portfolio. Deteriorating economic conditions led some of its core clients - first-time buyers, minorities and lower-income owners - to default, they said.

The projected loss is the highest in the home loan program since 2004, and officials said the F.H.A. had to withdraw $4.6 billion from its $21 billion capital reserve fund in May to cover the costs. They said the agency, which is self-sustaining, would not need appropriations from Congress to remain solvent.

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S. Korean Cabinet Offers To Resign After U.S. Beef Protests
2008-06-10 02:38:14
South Korea’s entire cabinet offered to resign on Tuesday as President Lee Myung-bak struggled to find a breakthrough in the biggest political crisis to face his young government, one set off by fears that an agreement to reopen markets to American beef could expose the public to mad cow disease. 

Prime Minister Han Seung-soo and other cabinet members submitted their resignations to Lee hours before tens of thousands of South Koreans were scheduled to rally in downtown Seoul in what organizers said would be the largest demonstration to be held against the president and his 107-day-old government.

For the past 40 days, downtown Seoul has been rocked daily by demonstrations. What had started as a rally by hundreds of teenage students holding candles to protest the importing of American beef has evolved into a broad demonstration against government policies, with students, homemakers and workers chanting “Out with Lee Myung-bak!”

On Tuesday Cho Hang-nam, a spokesman for Han, said, “The prime minister offered the resignations on behalf of cabinet members when he met President Lee this morning.”

Comment from Lee’s office was not immediately available.

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As Farmers Push For Big Harvest, Worries Increase
2008-06-09 23:11:10
In a year when global harvests need to be excellent to ease the threat of pervasive food shortages, evidence is mounting that they will be average at best. Some farmers are starting to fear disaster.

American corn and soybean farmers are suffering from too much rain, while Australian wheat farmers have been plagued by drought.

“The planting has gotten off to a poor start,” said Bill Nelson, a Wachovia grains analyst. “The anxiety level is increasing.”

Randy Kron, whose family has been farming in the southwestern corner of Indiana for 135 years, should have corn more than a foot tall by now; but all spring it has seemed as if there were a faucet in the sky. The rain is regular, remorseless.

Some of Kron’s fields are too soggy to plant. Some of the corn he managed to get in has drowned, forcing him to replant. The seeds that survived are barely two inches high.

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Commentary: Small Farmers Are Our Best Chance Of Feeding The World
2008-06-09 23:10:34
Intellpuke: The following commentary was written by Prof. George Monbiot and appeared in the Guardian edition for Tuesday, June 10, 2008. Prof. Monbiot writes: "Peasants are detested by both communists and capitalists,  but when it comes to productivity a small far is unbeatable." His commentary follows:

I suggest you sit down before you read this. Robert Mugabe is right. At last week's global food summit he was the only leader to speak of "the importance of land in agricultural production and food security". Countries should follow Zimbabwe's lead, he said, in democratizing ownership.

Of course the old bastard has done just the opposite. He has evicted his opponents and given land to his supporters. He has failed to support the new settlements with credit or expertise, with the result that farming in Zimbabwe has collapsed. The country was in desperate need of land reform when Mugabe became president. It remains in desperate need of land reform today.

But he is right in theory. Though the rich world's governments won't hear it, the issue of whether or not the world will be fed is partly a function of ownership. This reflects an unexpected discovery. It was first made in 1962 by the Nobel economist Amartya Sen, and has since been confirmed by dozens of studies. There is an inverse relationship between the size of farms and the amount of crops they produce per hectare. The smaller they are, the greater the yield.

In some cases, the difference is enormous. A recent study of farming in Turkey, for example, found that farms of less than one hectare are 20 times as productive as farms of more than 10 hectares. Sen's observation has been tested in India, Pakistan, Nepal, Malaysia, Thailand, Java, the Philippines, Brazil, Colombia and Paraguay. It appears to hold almost everywhere.

The finding would be surprising in any industry, as we have come to associate efficiency with scale. In farming it seems particularly odd, because small producers are less likely to own machinery, less likely to have capital or access to credit, and less likely to know about the latest techniques.

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U.S. Treasury Dept. Debuts Social Security Debit Card
2008-06-09 23:09:42

No bank account? No problem. Now you can have your Social Security benefits loaded directly onto an electronic debit card that works like a gift card from Uncle Sam.

The card is part of a push by the U.S. Treasury Department to encourage the 10.5 million people who still get a paper Social Security check once a month to switch to electronic payments. The change could save some recipients hefty check-cashing charges, and it could save the federal government as much as $42 million a year, said Treasury officials.

The only stumbling block: About 2.1 million Social Security recipients don't have bank accounts. Neither do about 1.8 million disabled and low-income people who receive Supplemental Security Income (SSI).

The solution: Direct Express cards, managed by Comerica Bank, which allow recipients to carry their benefits on a piece of plastic that can be used like a debit card at any bank, retail outlet or automatic teller machine that accepts MasterCard. 

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European Leaders Look Forward To Better Times As Bush Makes Farewell Tour
2008-06-09 23:08:36

From a castle in Slovenia to one in Windsor, from the Elysee Palace to the Vatican, George Bush races through Europe this week to bid farewell to traditional U.S. allies whose loyalty has been tested as seldom before during the past eight years of the Republican in the White House.

With Europe fascinated by the unstoppable rise of Barack Obama - "a very beautiful image of America", according to a senior French politician - Bush will get short shrift from pro-American European leaders who are keen to put the strains and disputes behind them and look forward to next year's new U.S. administration, whether Obama beats John McCain or not.

Bush will be hosted by Britain's Prime Minister Gordon Brown, German Chancellor Angela Merkel, Prime Minister Silvio Berlusconi of Italy, and President Nicolas Sarkozy of France - all solidly pro-American unlike the hostile partnership of Gerhard Schroder and Jacques Chirac that bedeviled Bush's first term.

While the leaders will be generous and polite towards a U.S. president who has plumbed unprecedented depths of unpopularity in Europe as well as in America, there is no doubt that the overall mood will be one of good riddance.

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Technology: Fastest Computer In The World Proves One In A Million Billion
2008-06-09 23:07:30

Roadrunner was always expected to be fast out of the blocks, and after a test run one night in the city of Poughkeepsie, New York, its creators are far from disappointed.

Built from microchips originally destined for games consoles, Roadrunner is the world's latest supercomputer. Monday it was officially crowned the fastest computer around, having performed a record million billion calculations per second.

As an indication of how fast this is, manufacturers explained that if 6 billion people were to do one sum a second on calculator, it would take 46 years to do what RoadRunner could do in a day. The world's first supercomputer, the Cray 1 built in the mid-1970s, would take 1,500 years to finish a calculation that Roadrunner would perform in two hours.

David Turek, vice-president of IBM's supercomputing programs, likened Roadrunner to "a very souped-up Sony PlayStation 3". The $120 million (£61 million) supercomputer was named after New Mexico's state bird, and is more than twice as fast as the previous record holder, another IBM machine called Blue Gene.

By harnessing the power of 116,640 processors working in concert, Roadrunner surpassed a milestone in computing power, to enter a new era of what those familiar with such things call petaflop computing. Peta means a million billion, while a flop is a type of calculation.

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Bolivian Protesters March On U.S. Embassy
2008-06-09 23:06:08
Thousands of demonstrators marched on the U.S. Embassy Monday to demand that Washington extradite a former Bolivian defense minister who directed a military crackdown on riots that killed at least 60 people in 2003.

Former Defense Minister Carlos Sanchez Berzain, now a resident of Key Biscayne, Florida, told La Paz-based Radio Fides last week that the U.S. granted him political asylum more than a year ago.

The revelation sparked outrage in El Alto, a sprawling satellite city outside La Paz where dozens of anti-government rioters were gunned down by soldiers in 2003. On Monday, thousands of residents streamed down the hills into La Paz to demand justice for the killings.

"We've come to the doors of the embassy to say 'Enough with the impunity'," said Edgar Patana, head of an El Alto labor union leading the protest. "The United States has to prove that they have the justice they're always showing off in their media and movies. Bolivia wants that justice."

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Obama Deals With Economy And McCain's Views
2008-06-09 15:45:19
Calling Senator John McCain’s approach to economic issues, “a full-throated endorsement of George Bush’s policies,” the presumptive Democratic nominee, Senator Barack Obama, offered a preview of his plan for restoring the health of the American economy.

In a speech in Raleigh, North Carolina, on Monday, Obama made an appeal to those Americans who are suffering the most because of the economic downturn, proposing a $50 billion jolt of fiscal stimulus as well as an expansion of unemployment benefits.

Obama also renewed his call for a $10 billion Foreclosure Prevention Fund to help those at risk of losing their homes and pledged a “get tough” approach to predatory mortgage lenders.

“The principle is simple,” Obama said in prepared remarks. “If the government can bail out investment banks on Wall Street, we can extend a hand to folks who are struggling on Main Street.”

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Editorial: Politics And Hunger
2008-06-09 15:44:26
Intellpuke: This editorial appeared in the New York Times edition for Monday, June 9, 2008.

One might expect that food riots in Egypt and Haiti would convince the world’s wealthy nations of the need to do more to feed the world’s poorest. If not, maybe the threat of 100 million more people falling into poverty due to soaring food prices would spur them to help.

Yet at last week’s United Nations food summit, the world’s more-developed nations proved, once again, that domestic politics trumps both humanitarian concerns and sound strategic calculations.

Over the past year, the prices of grains and vegetable oils have nearly doubled. Rice has jumped by about half. The causes include soaring energy costs, drought in big agricultural producers, like Australia, and rising demand by a burgeoning middle class in China and India. But misguided mandates and subsidies in the United States and Europe to produce energy from crops are also playing an important role.

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Lehman Bros. Post $2.8 Billion 2nd Quarter Loss
2008-06-09 15:43:06
Lehman Brothers, seeking to ally concern that it might become the next Wall Street bank to founder, said Monday that it would raise $6 billion to shore up its weakened finances.

The move came as the investment bank stunned Wall Street with news that it had lost $2.8 billion in the second quarter, its first loss since going public in 1994. The deficit far exceeded even the most pessimistic forecasts and reflected a triple blow of soured assets, bad trades, and hedges that were supposed to cushion losses but instead added to them.

The developments mark a stark turnabout for the scrappy Lehman, which had repeatedly assured shareholders that it was managing its risks well. Many investors have feared for Lehman’s health since Bear Stearns collapsed, and the red ink at the bank could fuel the debate over whether Lehman, one of the smallest players on Wall Street, can survive as an independent firm.

“I am very disappointed in this quarter’s results,” Richard S. Fuld, Lehman’s chairman and chief executive, said in a statement.

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Bush Suggests That History Will Vindicate His Policies
2008-06-09 15:42:19

Meet Geroge W. Bush, time traveler.

He's in Poland in 1939 as Nazi tanks advance on Warsaw, then flying with his Navy-pilot father to battle imperial Japan. He's alongside Abraham Lincoln during the Civil War, William McKinley on his deathbed and Franklin D. Roosevelt on D-Day. He lingers with Harry S. Trueman, another U.S. president deeply unpopular in his time.

President Bush leaps forward as well, envisioning a distant future in which Iraq is a tranquil democracy, Palestinians live peaceably alongside Israelis and terrorism is a tactic of the past.

"Imagine if a president had stood before the first graduating class of this academy five decades ago and told the Cadet Wing that by the end of the 20th century, the Soviet Union would be no more, communism would stand discredited and the vast majority of the world's nations would be democracies," Bush urged graduates at the Air Force Academy  in Colorado Springs nearly two weeks ago.

As the door begins to close on his tenure, Bush is increasingly drawing on selected events of the past to argue that history will vindicate him on Iraq, terrorism, trade and other controversial issues.

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Disabled Earthquake Victims In China Face Social Stigma
2008-06-09 15:40:35
"Feifei, where are you? I'm looking for you."

After nearly three hours of frantic searching, Zhang Qin found her 8-year-old daughter in the rubble that was once Nanba Elementary School in northern Sichuan province. Zhang dug her daughter out with her hands, removing a large beam that had pinned the little girl's right leg.

On the third night after the Sichuan earthquake, Zhang's joy over her rescue was tinged with sorrow as doctors amputated Feifei's leg several inches above the knee.

Zhang, fighting back tears, broke the news to her daughter: "Your leg isn't there. You have to be brave. You have to live well."

The official injury count from the deadly May 12 quake is staggering - more than 370,000 people. Among them, 50,000 are likely to be disabled, including many with amputated limbs, according to government and health industry sources.

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U.S. Supreme Court Rules Against Multiple Royalties
2008-06-09 15:39:54
The U.S. Supreme Court has limited the ability of companies to collect multiple royalties on their patents.

The unanimous decision Monday was helpful to customers of Intel Corp. and is the latest step by the justices to scale back the power of patent-holders.

The case revolves around a long-time Supreme Court doctrine that says the sale of an invention exhausts the patent-holder's right to control how the purchaser uses it.

In 1992, a federal appeals court in Washington, D.C., that hears patent cases from around the country began eroding the doctrine, ruling that patent-holders could attach post-sale conditions to patented products.

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Venezuela's Chavez To Revoke New Spying Law
2008-06-09 15:37:57
Bowing to popular pressure, Venezuelan President Hugo Chavez said he would rescind a new intelligence law that critics said would have forced citizens to spy on one another and would have moved the country toward a police state.

During his Sunday talk show "Alo Presidente", Chavez said he had had second thoughts about the National Intelligence and Counterintelligence Law that he decreed May 28, a law that has been under attack from the nation's human rights and legal experts as unconstitutional.

"All Venezuelans can be sure that this government will never trample on their liberty, regardless of their politics," said Chavez. "To err is human. We're going to correct this law."

Chavez has the constitutional right to make and undo laws by decree, and he previously described the intelligence law as a defensive measure against a possible U.S. invasion but, speaking Saturday in Maracaibo, he acknowledged that it had generated fear.

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HUD's Mortgage Policy Fueled Sub-Prime Crisis
2008-06-10 02:38:30

In 2004, as regulators warned that subprime lenders were saddling borrowers with mortgages they could not afford, the U.S. Department of Housing and Urban Development (HUD) helped fuel more of that risky lending.

Eager to put more low-income and minority families into their own homes, the agency required that two government-chartered mortgage finance firms purchase far more "affordable" loans made to these borrowers. HUD stuck with an outdated policy that allowed Freddie Mac and Fannie Mae to count billions of dollars they invested in subprime loans as a public good that would foster affordable housing.

Housing experts and some congressional leaders now view those decisions as mistakes that contributed to an escalation of subprime lending that is roiling the U.S. economy.

The agency neglected to examine whether borrowers could make the payments on the loans that Freddie and Fannie classified as affordable. From 2004 to 2006, the two purchased $434 billion in securities backed by subprime loans, creating a market for more such lending. Subprime loans are targeted toward borrowers with poor credit, and they generally carry higher interest rates than conventional loans.

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After 100 Years, Tribe's Ancestors Head Home To Canada
2008-06-10 02:37:57
A hushed group of people, nearly four dozen strong, slipped into the American Museum of Natural History early Monday, ahead of the crowds. Their cheeks were smeared with rust-colored dye, red and white woven bands encircled their heads, the men wore ceremonial vests and the women were wrapped in shawls, fringed with red.

They were at the end of a roughly 3,000-mile journey that has, in its way, taken years. Unlike the thousands of fidgety schoolchildren and harried parents that filled the museum’s halls to view its storied exhibits on Monday, these 46 visitors were there for an altogether different purpose: to take their ancestors home.

“Our people are humans; we aren’t tokens,” said Chief Vern Jacks, who heads the Tseycum First Nation, a tiny Native tribe from northern Vancouver Island, in British Columbia.

With the museum’s full consent, the Tseycum tribe will be repatriating the remains of 55 of their ancestors to Canada  this week. On Monday morning, in a quiet first-floor auditorium away from the museum’s crowds, tribe members performed an emotionally charged private ceremony over the 15 sturdy plastic boxes that contained the remains. The ceremony lasted two-and-a-half hours, and the tribe members and elders from related tribes prayed, spoke, wept and sang, saying they wanted to soothe their ancestors’ spirits and prepare them for a return trip from a journey that, the tribe leaders say, should never have happened at all.

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Scientists: Carbon Capture From Power Stations Must Start Soon
2008-06-09 23:10:53

A timetable to fit power stations with carbon dioxide capturing technology should be agreed by next year to avoid "dangerous and irreversible" climate change, some of the world's leading scientists will say Tuesday.

Britain's Royal Society has joined with science academies from other industrialized nations and five further countries, including China and India, to issue the warning in documents that will set the agenda for climate discussions at the G8 summit in Japan next month.

In a joint statement, the scientists lament the slow progress being made in cutting greenhouse gas emissions, and call on industrialized countries to step up their efforts by developing greener housing and transport. They urge the
G8 countries to commit themselves to a timetable of power station upgrades designed to capture CO2 before it is released into the atmosphere.

Emissions of greenhouse gases are currently running at twice that which the Earth can naturally absorb. To stabilize the climate, emissions will have to be halved, the statement says, adding: "Immediate, large-scale mitigation is required."

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Plan To Cut Medicare Equipment Costs Opposed By Equipment Suppliers
2008-06-09 23:10:03
Medicare shells out $1,825 for the same home hospital bed that anyone can buy online for $754, according to government data. It pays $4,023 for a power wheelchair that retails for $2,174.

Outraged over such disparities, Congress in 2003 required the federal health insurance program for the elderly to phase out its outdated fee schedule in favor of a competitive bidding system that would bring its durable medical equipment costs more in line with market prices.

The new system, scheduled to begin in 10 metropolitan areas July 1, relies on bids by accredited suppliers to determine who can sell to Medicare beneficiaries. It promises to cut prices by an average of 26 percent, saving the government about $125 million over the next year, according to the Centers for Medicare and Medicaid Services. Taking it nationwide eventually would generate annual savings of $1 billion, say officials.

"We look forward to the beneficiary and the taxpayer being able to save money and to deal with high-quality accredited suppliers who meet our financial standards," said acting CMMS Administrator Kerry Weems.

Weems may have to wait. An intensive industry lobbying campaign on Capitol Hill threatens to derail the new bidding system weeks before its start.

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U.K. Recession Fears Grow As Home Buyers Vanish
2008-06-09 23:09:22

Britain's estate agents warn Tuesday that a collapse in activity in the housing market could spread to the rest of the U.K. economy amid signs that rising inflationary pressure will force the Bank of England to increase the cost of borrowing this year.

The Royal Institution of Chartered Surveyors (RICS) says the downturn in the property market - nine out of 10 estate agents are reporting falling prices - was likely to spill over into weaker high street spending and job losses for construction workers.

RICS data released Tuesday shows the number of transactions per estate agent - 17.4 over the past three months - is the lowest since 1978 and a drop of almost a third from a year ago. Two of Britain's leading lenders, Halifax and Nationwide, have reported in the past two weeks house prices falling sharply as tighter borrowing conditions curbed demand for property.

The monthly snapshot of the housing market from the RICS follows the release of official government data Monday showing a sharp increase in the cost of goods leaving factory gates in the U.K. manufacturing sector - an early warning sign of higher inflation in the shops.

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Fuel Price Protests Escalate In Europe
2008-06-09 23:08:04

Concerns were growing Monday night over a summer of coordinated European fuel protests after tens of thousands of Spanish truckers blocked roads and the French border, sparking similar action in Portugal and France, while unions across Europe prepared fresh action over the rising price of petrol and diesel.

Spanish hauliers began an indefinite strike, demanding a government aid package to offset the effect of record oil prices. Truck drivers blocked motorways at the border with France and caused 12-mile tailbacks around Madrid and Barcelona in Spain. Long queues formed at Spanish and Portuguese supermarkets after truckers said shops could run out of fresh food in days. Even before the strike began thousands of people formed long lines outside petrol stations and supermarkets.

Supermarket chains Eroski and Carre-four said they had stocked up on food ahead of the strike, but some markets closed Monday. While truck drivers picketed distribution centers, the Spanish government said there would be no electricity or petrol shortages, but as many as 15% of Madrid petrol stations were dry by last night, according to a retailers' association.

Main routes to France through Catalonia and the Basque country were blocked, with reports that lorries crossing picket lines were stoned and their windscreens smashed.

French truck drivers joined the protest to seal off their side of the border. French pickets allowed cars through but around 600 trucks were blocked. Up to 200 French hauliers gridlocked Bordeaux with a go-slow convey that caused nearly 20 miles of backed up traffic in and around the city. Outside Lille farmers on tractors staged protests, and around 500 farmers converged on Toulouse for a demonstration.

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New Zealanders Told To Turn Off Lights As Drought Hits Power Plants
2008-06-09 23:06:52

New Zealanders are to be urged to wash dishes by hand and turn off some of their household lights as the country teeters on the brink of a power crisis caused by drought.

After two years of dry weather the low level of water in lakes that drive New Zealand's hydroelectric power plants is causing concern. The energy minister, David Parker, Monday denied claims that the country was facing rolling power cuts, but said that unless there was significant rainfall soon households would be asked to cut electricity consumption by up to 15% during the peak early evening time.

Hydroelectric stations usually produce about 75% of New Zealand's electricity but lack of rainfall has reduced that output in recent weeks to only 50%. Coal, diesel and gas-fired power plants are trying to make up the shortfall, but more strain is expected to be put on the national grid with the arrival of winter in the southern hemisphere.

Backed by the government, the electricity industry is to launch a power-saving campaign on television.

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Congressional Impasse On Spying Could Lead To Tighter Rules
2008-06-09 15:45:30

That prospect seemed almost inconceivable just a few months ago, when congressional negotiators and the White House promised a quick resolution to a bruising debate over the government’s surveillance powers. But the dispute has dragged on. Though both sides say they are hopeful of reaching a deal, officials have been preparing classified briefings for Congress on the intelligence “degradation” they say could occur if there is no deal in place by the summer.

The deadline is considered critical because of a series of secret one-year wiretapping orders that were approved last August under a controversial temporary wiretapping law. The law allowed the National Security Agency (N.S.A.) to use broad blanket court orders to target groups of suspected al-Qaeda terrorists based overseas, but those orders are growing more stale by the day, said officials, and will begin to expire this August if nothing is done.

“We’ll start losing intelligence capabilities,” Senator Kit Bond of Missouri, the ranking Republican on the intelligence committee, said in an interview.

Civil libertarians who oppose the government’s broadened new surveillance authorities said a return to the more restrictive rules may be just what is needed to restore necessary checks on the government’s powers.

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Salmonella Causes Restaurants, Supermarkets To Remove Tomatoes
2008-06-09 15:45:05
Restaurants, fast-food chains and supermarkets across Southern California removed fresh red Roma, plum and red round tomatoes from their shelves and took them off their menus this weekend as the U.S. government warned of a widening outbreak of salmonella.

The Food and Drug Administration said consumers should avoid raw red plum, red Roma or round red tomatoes, which have been tied to 145 infections reported since mid-April.

Consumers may continue to eat cherry tomatoes, grape tomatoes, tomatoes sold with the vine still attached and tomatoes grown at home, said the FDA statement.

Major supermarket chains including Ralphs, Vons and Albertsons have stopped selling the three kinds on the FDA list. Other types of tomatoes remained for sale, said Brian Dowling, a vice president of public affairs for Vons owner Safeway, based in Pleasanton, California. "It's a precaution."

The Albertsons grocery chain had considered stripping its shelves of all tomatoes, a produce manager said. "At first they told us we had to pull everything, but then they narrowed it down," said Justin Peters at the Albertsons store in Laguna Beach.
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OUCH! Gasoline Prices Hit $4 A Gallon, Continue Record Rise
2008-06-09 15:44:09

After breaking the $4 a gallon barrier during the weekend, nationwide gasoline prices continued their climb Monday, rising to $4.02 a gallon on average for regular, as crude oil prices fell only slightly after last Friday's record surge.

Gasoline prices are now 93 cents a gallon more than a year ago, and the price of diesel, which fuels the nation's trucking fleet, stood this morning at $4.77 a gallon, $1.87 more than this time last year.

"The fear here is that we've crossed a Rubicon," said John Townsend, spokesman for AAA. "Normally prices plateau after Memorial Day. ... But we still have this lag between the price of gasoline and the price of crude. We don't know when these prices will come down. I don't think we're going to get much relief this summer."

Economists fear that the steadily rising price of gasoline is eating into the money consumers have to spend on other items and that fuel prices could be a drag on an economy already weighed down with concerns over housing prices and the stability of financial institutions.

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New York Fed Reserve Chief Calls For Reforms
2008-06-09 15:42:50

One of the nation’s top central bankers called Monday for a significant overhaul in regulation of the financial industry, declaring that the current system of supervision is confusing and susceptible to “perverse” abuses.

The official, Timothy Geithner, the president of the Federal Reserve Bank of New York and one of the chief architects of the Bear Stearns bailout, said banks and government regulators must take pre-emptive steps to prevent future disruptions from snowballing into crises.

Among his recommendations: placing investment banks and other major private-sector financial players under a single regulatory umbrella; “strengthening shock absorbers within institutions” by raising the required levels of capital reserves; and streamlining a system of oversight that, he said, had ballooned into “an enormously complex web of rules.”

The New York Fed will also begin addressing the oversight of credit derivatives, a sophisticated type of financial instrument that led to much of the trouble related to the mortgage crisis of last summer. Geithner said 17 firms, whose business represents more than 90 percent of derivatives trades, would meet at the bank on Monday to discuss a more centralized system for reducing the risks associated with that market.

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Lawyer: Guantanamo Interrogators Told To Destroy Notes
2008-06-09 15:41:06
The Pentagon urged interrogators at Guantanamo Bay to destroy handwritten notes in case they were called to testify about potentially harsh treatment of detainees, a military defense lawyer said Sunday.

The lawyer for Toronto-born Omar Khadr, Lt. Cmdr. William Kuebler, said the instructions were included in an operations manual shown to him by prosecutors and suggest the U.S. deliberately thwarted evidence that could help terror suspects defend themselves at trial.

Kuebler said the apparent destruction of evidence prevents him from challenging the reliability of any alleged confessions. He said he will use the document to seek a dismissal of charges against Khadr.

A Pentagon spokesman, Navy Cmdr. Jeffrey Gordon, said he was reviewing the matter Sunday evening.

The "standard operating procedures" manual that contained the purported instructions was made available to Kuebler last week as part of a pretrial review of potential evidence, said the Navy lawyer.

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Iran's Ayatollah Khameini: U.S. Military Is Iraq's Top Problem
2008-06-09 15:40:16
Iran's supreme leader told the visiting Iraqi prime minister Monday that the U.S. military presence is the main cause of Iraq's problems, according to Iranian state television, making clear his opposition to a U.S.-Iraqi security pact.

Iraqi Prime Minister Nouri al-Maliki's talks with Iranian leaders during his three-day visit here have focused on the proposed security agreement that Iran fears will keep the American military in neighboring Iraq for years.

Al-Maliki has tried to push Iranian leaders to back off their fierce opposition to the proposed pact, promising that Iraq will not be a launching pad for any attack on Iran.

The agreement has become a point of contention as Baghdad tries to balance its close ties to rivals Washington and Tehran.

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Defense Secretary Gates Recommends Gen. Schwartz As Air Force Chief
2008-06-09 15:38:19
Defense Secretary Robert Gates recommended Monday that Gen. Norton Schwartz, a 35-year veteran with a background in Air Force special operations, be the next Air Force chief.

In a sweeping shake up of the Air Force, Gates also formally sent former Air Force official Michael Donley's name to the White House to be the next secretary of the beleaguered service. President Bush quickly announced he would nominate Donley, and designated him as acting secretary until he is confirmed by the Senate.

Gates announced last Thursday that he was removing Air Force Gen. Michael Moseley from the chief's job and Michael Wynne as its top civilian. Gates held them accountable for failing to fully correct an erosion of nuclear-related performance standards.

In an effort to get at least part of the new team in place right away, Gates also asked Bush to designate Donley as the acting secretary effective June 21 - a move that would allow him to begin work without waiting for Senate confirmation. Wynne's resignation is effective that day.

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