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Wednesday, August 20, 2008

Free Internet Press Newsletter - Wednesday August 20 2008 - (813)

Wednesday August 20 2008 edition
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U.S. Is Tracking Citizens At Border Checkpoints
2008-08-20 03:38:36

The U.S. government has been using its system of border checkpoints to greatly expand a database on travelers entering the country by collecting information on all U.S. citizens crossing by land, compiling data that will be stored for 15 years and may be used in criminal and intelligence investigations.

Officials say the Border Crossing Information system, disclosed last month by the Department of Homeland Security in a Federal Register notice, is part of a broader effort to guard against terrorist threats. It also reflects the growing number of government systems containing personal information on Americans that can be shared for a broad range of law enforcement and intelligence purposes, some of which are exempt from some Privacy Act protections.

While international air passenger data has long been captured this way, Customs and Border Protection agents only this year began to log the arrivals of all U.S. citizens across land borders, through which about three-quarters of border entries occur.

The volume of people entering the country by land prevented compiling such a database until recently, but the advent of machine-readable identification documents, which the government mandates eventually for everyone crossing the border, has made gathering the information more feasible. By June, all travelers crossing land borders will need to present a machine-readable document, such as a passport or a driver's license with a radio frequency identification chip.

In January, border agents began manually entering into the database the personal information of travelers who did not have such documents.

The disclosure of the database is among a series of notices, officials say, to make DHS's data gathering more transparent. Critics say the moves exemplify efforts by the Bush administration in its final months to cement an unprecedented expansion of data gathering for national security and intelligence purposes.

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Editorial: No End In Sight
2008-08-20 03:37:59
Intellpuke: This editorial appeared in the New York Times edition for Tuesday, August 19, 2008.

A year into the financial crisis, the news is grim and there are signs of even worse troubles ahead. The mortgage bust continues and has begun to spread to loans for construction and commercial property, as well as credit cards and auto loans.

There may soon be more bank failures and a spate of corporate bankruptcies. That means that unemployment will almost certainly rise - employers have shed nearly half a million jobs this year - and those who keep their jobs will have to cope with fewer hours, measlier raises and evaporating bonuses.

In an election year, sound policy making is almost always trumped by political posturing, making the situation even bleaker. A case in point is the new foreclosure-prevention law. President Bush threatened for months to veto it, before signing it in July. The law’s main feature - allowing the government to guarantee hundreds of billions of dollars in new mortgages to troubled borrowers - won’t take effect until Oct. 1.

The law’s other important feature - a contingency plan for a government bailout of Fannie Mae and Freddie Mac, the nation’s biggest mortgage companies - was a last-minute, crisis-driven addition, the opposite of the ahead-of-the-curve action that is now needed.

The country cannot afford more delay and more posturing. Before the crisis gets any worse, Congress must take several steps.

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World Markets Fall Sharply Amid Fears Credit Crunch Has Further To Run
2008-08-20 03:37:32

Share prices dropped sharply on the world's financial markets Tuesday amid fears that the year-long credit crunch is entering a dangerous new phase marked by a severe economic slowdown and failing banks.

The FTSE 100 index fell by almost 2.5% as financial market traders braced themselves for a fresh bout of turbulence triggered by concern that weakening growth in Europe, North America and Asia would add to the problems of western banks.

Analysts pointed to widening spreads in money markets as a sign that the mood was becoming gloomier after a period in which trading conditions had showed tentative signs of returning to normal. A fall of 129.8 points in the FTSE 100 to 5320.4 was mirrored by a drop of almost 3% in Japan, and declines of well over 2% on the Frankfurt and Paris bourses.

Ken Rogoff, the former chief economist at the International Monetary Fund, added to market jitters by warning that the worst of the crisis was yet to come.

"The U.S. is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say 'the worst is to come'," he told a financial conference in Singapore.

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In U.S. Farm Country's Boom, Hints Of A Bubble
2008-08-20 03:36:54
The trucks rumble down the main drag of this farm town all day long, the ones heading east brimming with grains of No. 2 Yellow Corn, the ones going west filled with Sweet Bran, a cattle feed that looks like breakfast cereal and smells like warm beer.

That eighteen-wheeled evidence of prosperity shows why the Plains states are a bright spot in the otherwise gloomy national economic picture. Here, the housing market is holding up just fine, the banks are making plenty of loans, and employers keep adding jobs.

The good times in farm country show the difficulty facing policymakers grappling with the nation's economic distress, underscored Tuesday by data indicating the steepest rise in monthly wholesale prices in 27 years and a 17 year low for new housing construction.

The numbers are gloomiest for Sun Belt states with eviscerated housing markets, and there, interest rate cuts and stimulus checks are helping ease the pain. Yet in the area stretching from the oilfields of Texas north to the Dakotas, where the economy is holding up fairly well, those government actions may prove unnecessary - and even contribute to new bubbles.

Retail spending in the middle of the country was strong even before the $600 tax rebates this spring, and low interest rates and a tax provision in the economic stimulus bill are helping to goose already booming sales of farm equipment and pickup trucks.

The price of farmland in Nebraska has doubled in the past three years, primarily reflecting the boom in commodity prices. The increase also reflects the impact of rate cuts by the Federal Reserve that enabled buyers to bid up land with borrowed money. If crop prices drop toward historical norms, it could mean sharp decreases in land prices that would devastate some farmers.

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With Musharraf Gone, Sharif Threatens To Pull Out Pakistan Ruling Coalition
2008-08-19 16:18:34
A day after their unified effort ousted President Pervez Musharraf, the two major parties in the governing coalition fell into disarray on Tuesday when they failed to agree on the restoration of the chief justice of the Supreme Court.

The instant deterioration in relations became evident when Nawaz Sharif, the leader of one of the parties, the Pakistan Muslim League-N, walked out of a meeting here in Islamabad and headed back to his home in Lahore, a four-hour drive away.

Party members said Sharif had delivered an ultimatum to the senior coalition party, the Pakistan Peoples Party, led by Asif Ali Zardari,to consent to the return of the chief justice, Iftikhar Mohammad Chaudhry, within 72 hours, or Sharif’s party would leave the government. Chaudhry was among some 60 judges suspended by Musharraf last year.

Even by the standards of Pakistan’s hard-boiled and volatile political scene, the public discord between the political leaders was surprising, said politicians, a sign that opposition to Musharraf may have been the strongest thread tying them together.

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Russian Forces Detain Georgian Soldiers At Port
2008-08-19 16:18:01
Russia showed the first signs of drawing down at least some of its troops in Georgia on Tuesday, but in a pointed reminder of their continued grip on the country, its forces bound and blindfolded 21 Georgian soldiers at the Black Sea port of Poti on Tuesday, displaying them along with five seized American Humvees.

Two days after President Dmitri A. Medvedev promised that the pullout would begin, signs of movement began. A platoon of armored infantry was seen moving away from Georgia through the narrow mountain passes on the Russian side of the border. Near the city of Gori, the Russian and Georgian sides exchanged prisoners, including two Russian pilots who were shot down over South Ossetia.

Meanwhile, however, a Russian engineering platoon was building reinforced trenches for a checkpoint just north of Gori, suggesting that Russian forces expect to be in Georgian territory for some time.

Russian armored vehicles held high ground overlooking Gori and Igoeti, and a network of checkpoints blocked the country’s main highway. Moreover, some of the troops that on Monday had packed up their equipment and said they were ready to leave the city had unpacked and moved back into checkpoints at the city’s edge.

A large part of the conflict area and the region depopulated by civilians fleeing from the fighting remained lawless, and according to several residents in hiding in four villages, in need of water and food.

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Fannie Mae's Perilous Pursuit Of Subprime Loans
2008-08-19 16:17:20

In January 2007, as years of loose mortgage lending were about to send the nation's housing market into devastating decline, Fannie Mae chief executive Daniel H. Mudd wrote a confidential memo to his board.

Discussing the company's successes, Mudd said one of Fannie Mae's achievements in 2006 was expanding its involvement in the market for subprime and other nontraditional mortgages. He called it a step "toward optimizing our business."

A month later, Fannie Mae outlined plans to further expand its activities in the subprime market. The company recognized the already weak performance of subprime loans but predicted that they would get better in 2007, according to another Fannie Mae document.

Internal documents show that even late in the housing bubble, Fannie Mae was drawn to risky loans by a variety of temptations, including the desire to increase its market share and fulfill government quotas for the support of low-income borrowers.

Since then, Fannie Mae's exposure to loosely underwritten mortgages has produced billions of dollars of losses and sent its stock price plummeting, prompting the federal government to prepare for a potential taxpayer bailout of the company. This month, Fannie Mae reported that loans from 2006 and 2007 accounted for almost 60 percent of its second-quarter credit losses.

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10 French Soldiers Killed In Afghanistan Ambush
2008-08-19 16:15:26
In the worst single-incident loss of life in at least three years for Western troops in Afghanistan, insurgents ambushed and killed 10 French soldiers and wounded 21 others in a sustained assault a short distance from the capital, military officials said Tuesday.

Separately, militants made an hours-long attempt to overrun a major U.S. base in southeastern Afghanistan, employing an untried and unnerving new tactic: at least half a dozen suicide bombers blowing themselves up in succession.

It was the second assault in two days against the base, in the city of Khost near the Pakistan border. American troops managed to fend off the assailants.

Taken together, the attacks were a graphic demonstration of the growing reach and power of the Taliban and other Islamic militants in Afghanistan, where this year is fast becoming the most lethal for combatants and civilians alike since the fall of the Taliban to U.S.-led forces in 2001.

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Federal Court Strikes Down Bush Administration Rule On Pollution
2008-08-20 03:38:17

A federal appeals court Tuesday struck down a Bush administration rule that prevented states and local governments from imposing stricter monitoring of pollution generated by power plants, factories and oil refineries than required by the federal government.

In a 2 to 1 decision, a panel of the U.S. Court of Appeals for the District of Columbia Circuit found that the Environmental Protection Agency (EPA) rule violated a provision of the Clean Air Act, which requires adequate monitoring of emissions to ensure compliance with pollution limits.

Judge Thomas B. Griffith wrote for the majority that federal standards often are not sufficient to ensure proper monitoring, so states and local governments must be allowed to fill the gap.

"The question in this case is whether permitting authorities may supplement inadequate monitoring requirements when EPA has taken no action," wrote Griffith.

Environmental groups, which brought the lawsuit, said the decision was a significant victory that will help ensure that pollution levels are accurately tracked and reported.

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American Businesses Feeling Pinch Of Higher Costs
2008-08-20 03:37:51

Prices for goods purchased by American businesses surged more than expected in July and have jumped by nearly 10 percent over the last year - the sharpest increase since 1981.

The data released on Tuesday by the Labor Department underscored how rising prices have seeped into much of the economy, led by higher costs for food and energy. Businesses have been absorbing some of the higher costs themselves while passing much of the increase to consumers, intensifying the strain on households just as joblessness expands and spending power shrinks.

“There is virtually nothing that we have touched in the last six months that hasn’t increased,” said Gary O’Neal, a division manager at Central Plains Steel in Wichita, Kansas, which distributes steel to manufacturers of construction and farming equipment. “The prices have increased so rapidly and so high compared to historically where they’ve been. It’s just been uncharted territory.”

Many economists assert that inflation is already being choked off by a slowing global economy. Oil prices have sharply fallen in recent weeks, filtering through the economy in the form of lower prices for gasoline and heating oil. Economic weakness has spread beyond the United States to Europe and Japan, diminishing demand for basic commodities from iron ore to lumber while taking the edge off lofty price increases.

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Freddie And Fannie Shares Fall Further
2008-08-20 03:37:21

Shares in Freddie Mac and Fannie Mae, the firms that finance more than half the mortgages in the United States, remained under pressure today amid renewed fears that Washington could be preparing an emergency bailout.

Both firms suffered sharp declines on Monday following publication of a report that suggested the U.S. government is pessimistic about Fannie and Freddie's ability to raise further finance on the markets and is preparing to mount a rescue using taxpayers money. According to the report in the U.S. financial weekly Barron's, the injection of capital would be tantamount to a "quasi-nationalization".

Shares in both companies fell to their lowest in two decades on Monday, Freddie dropping 25% and Fannie 22%. By midday on Wall Street today, Freddie shares had fallen a further 6% to $4.14 and Fannie was off 4% at $5.90.

According to Barron's the Treasury is preparing a plan to buy preference shares in the companies that would command such seniority that they would effectively wipe out the value of existing ordinary shares. There would be other conditions tied to the injection of capital. The government would install new management and directors and also curb some of the companies' activities.

Freddie and Fannie occupy a pivotal role in the American financial system. They operate a secondary mortgage market, designed to increase the supply of money available for banks to lend to homeowners, and the collapse of either could provoke systemic failure in the financial markets. The government-sponsored companies buy mortgages from lenders and then package them up and sell them on to financial institutions around the world.

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U.S. Wholesale Prices Rising At Fastest Pace In 27 Years
2008-08-19 16:18:43
U.S. wholesale inflation surged in July, leaving prices for the past year rising at the fastest pace in 27 years, according to government data released Tuesday.

The Labor Department reported that wholesale prices shot up 1.2 percent in July, pushed higher by rising costs for energy, motor vehicles and other products. The increase was more than twice the 0.5 percent gain that economists expected.

Core prices, which exclude food and energy, rose 0.7 percent. That increase was the biggest since November 2006 and more than triple the 0.2 percent rise in core prices that had been expected.

In other economic news, the Commerce Department reported that housing construction fell in July to the lowest pace in more than 17 years. Builders broke ground on 965,000 housing units at a seasonally adjusted annual rate last month - the weakest showing since March 1991 - as the housing industry continues to struggle with falling sales and rising mortgage foreclosures.

The bad news on wholesale prices followed a report last week that consumer prices shot up by 0.8 percent in July, leaving consumer inflation rising at the fastest pace since 1991.

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California's San Onofre Nuclear Power Plant Feels Regulatory Pressure
2008-08-19 16:18:19
San Onofre nuclear plant managers are scrambling to avoid stepped-up oversight from regulators and to resolve worker safety and operational problems that have put the facility's industry ratings significantly below its peers.

The twin-reactor facility ranks among the bottom 25% in overall performance when measured against the nation's other nuclear reactors, according to e-mailed newsletters distributed to plant employees.

The ratings, compiled by an influential industry group, showed that San Onofre's employee injury rates were several times higher than the average at other U.S. facilities and that it lags far behind in areas such as power production and the readiness of backup safety systems.

Injury rates at San Onofre put it "dead last" among U.S. nuclear plants when it comes to industrial safety, plant managers told employees in an Aug. 4 newsletter provided by one of the plant's labor unions.

Officials with Southern California Edison, which operates San Onofre, declined to discuss the newsletters, calling them internal company communications but, in an interview, the plant's top executive defended the facility's safety record.

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NATO Criticizes Russia's Military Action In Georgia
2008-08-19 16:17:44
The Western military alliance Tuesday criticized Moscow for its "disproportionate" military action in Georgia and vowed that relations with Russia would change because of it.

The North Atlantic Treaty Organization (NATO) gathering stopped short in an emergency meeting of agreeing to rearm the beleaguered state as Russian troops continued potentially provocative military operations throughout Georgia and showed little signs of abiding by an agreement signed in Moscow over the weekend to withdraw from the country.

Russian reaction to the NATO summit was harsh. Russia's foreign minister blasted the statement as "un-objective and biased," while Dmitry Rogozin, Moscow's envoy to NATO, dismissed it as irrelevant. "The mountain gave birth to a mouse," he said.

In the Black Sea city of Poti, Russian soldiers in armored vehicles stormed into the country's main civilian port and arrested 20 soldiers guarding the site, said Interior Ministry officials in Tbilisi, the Georgian capital.

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Tropical Storm Fay Floods Florida Roads, Knocks Out Power
2008-08-19 16:15:46
Tropical Storm Fay made landfall on Florida's southwest coast early Tuesday morning, flooding roads, cutting power and knocking down trees but causing less destruction than the hurricanes that slammed the area in 2004 and 2005.

A slow-moving, soggy storm, Fay never achieved hurricane status before coming ashore around 5 a.m. Eastern time near Cape Romano, south of Naples, after shifting slightly east overnight.

“The way the geography of southwest Florida coast is set up, you get just a slight jog to the right and it’s going to come in, and that’s exactly what happened,” said Dennis Feltgin, meteorologist at the National Hurricane Center. “It was so close to the coast.”

Because of that tilt, Fay spent less time over water and less time strengthening than initially forecast. It reached land with sustained winds of 60 miles per hour, too slow to qualify as a hurricane, and with a heavy, soaking rain that could bring as much as 10 inches of water to some areas.

In and around Naples and Fort Myers on Tuesday morning, police officials closed several roads as water reached knee-high depths in some areas. Wind bent street signs and tossed palm fronds and other debris across roads.

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43 Killed In Suicide Attack On Algeria Police Academy
2008-08-19 16:15:08
A suicide car bomb killed at least 43 people at a police barracks in Algeria Tuesday, according to the country's Interior Ministry, which in recent months has been battling a resurgent terrorist group with links to al-Qaeda.

The bomb reportedly exploded near the entrance of a paramilitary police training school in the Les Issers district about 40 miles east of the capital, Algiers. Police said more than 38 people were injured, mostly police recruits and civilians. The Interior Ministry said the casualties were "preliminary estimates."

No group claimed immediate responsibility. The attack followed a bombing earlier this month that killed eight people at a beach resort, and a double bombing in December that targeted a U.N. building and killed about 40 people in Algiers.

An Algerian journalist, who asked not to be named, said by telephone that state TV was restricting coverage of the carnage, and that roads to the site had been blocked.

"Algerian media is showing very little of this," said the journalist. "The government will try to shut coverage down on this. This is very sensitive for them."

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