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Saturday, September 06, 2008

Free Internet Press Newsletter - Saturday September 6 2008 - (813)

Saturday September 6 2008 edition
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U.S. Treasury Plans To Rescue Plan Fannie And Freddie
2008-09-06 03:39:07

The government has formulated a plan to put troubled mortgage giants Fannie Mae and Freddie Mac under federal control, dismiss their top executives and prop them up financially, federal officials told the two companies Friday, according to three sources familiar with the conversations.

Under the plan, which could prompt one of the most sweeping government interventions in financial markets in U.S. history, federal officials would place the firms under a conservatorship, a legal status giving the government the option and time to restructure and revive the companies, said the sources. The value of the companies' common stock would be diluted but not wiped out, while the holdings of other securities, including company debt and preferred shares might be protected by the government.

Instead of giving each company a big capital infusion upfront, the government could make quarterly injections as the companies' losses warrant, said the sources. This would be an attempt to minimize the initial cost of the rescue.

The timing of government action remained unclear last night, and the final details were still under discussion. But as the pace of discussions accelerated, Treasury officials contacted senior congressional leaders yesterday, telling them they might be briefed on the plan this weekend and asking for telephone numbers where they could be reached.

The action would represent a major escalation of the government's role in private lending. The government would be assuming vast obligations it has historically disavowed, potentially using taxpayer money to make up for private business decisions gone wrong.

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Commander: U.S. Needs More Troops In Afghanistan
2008-09-06 03:38:45
A top commander of U.S. forces in Afghanistan said Friday that he needed thousands of additional troops to combat violence along the border with Pakistan, a requirement that appears to be at odds with recommendations from Army Gen. David H. Petraeus on future troop levels in Iraq.

Because of strains on the military, plans to boost the number of troops in Afghanistan depend on reducing the force in Iraq. Petraeus' plan, which President Bush is expected to approve Tuesday in an appearance at the National Defense University, would slow the reduction of combat troops in Iraq, freeing up only one full Army combat brigade for redeployment to Afghanistan. That move would not happen until early next year.

In addition to the combat brigade of about 3,500 to 4,000 troops, U.S. officials also plan to withdraw about 2,000 non-combat support personnel from Iraq and transfer about 1,300 Marines from Iraq's Anbar province to western Afghanistan.

Some in the Pentagon had been pushing for a faster and larger reduction of combat forces from Iraq and a more aggressive troop buildup in Afghanistan. They preferred withdrawing as many as three combat brigades so that additional forces could be sent to Afghanistan before the end of the year.

Pressure from U.S. commanders in Afghanistan for more troops has become the central point in a public debate among senior U.S. military officers and a source of tension among Pentagon planners, who are at odds over how quickly to shift forces from an increasingly stable Iraq to an increasingly violent Afghanistan.
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Machinists Union At Boeing Says It Will Strike
2008-09-06 03:38:18

The union that represents machinists at the Boeing Company said on Friday that it would go on strike early Saturday, potentially delaying the production of an important new aircraft, the Dreamliner.

The International Association of Machinists and Aerospace Workers told 27,000 Boeing employees in an e-mail message on Friday afternoon that “the strike is on”. It said the strike would begin at 3:01 a.m. Eastern Standard Time, though a last-minute agreement could conceivably be reached.

The decision came after the two sides failed to reach agreement on a new three-year contract during negotiations in Orlando, Florida, that were supervised by a federal mediator.

The talks moved to Orlando, where the union was holding a national conference, from Seattle, Washington, the home of Boeing Commercial Airplanes and many of the company’s production sites. The union agreed to extend its contract for 48 hours late Wednesday, even though workers had voted overwhelmingly against Boeing’s offer and in favor of a strike.

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U.S. Home Foreclosures Accelerate To Fastest Pace In Almost 3 Decades
2008-09-05 14:07:49
U.S. home foreclosures accelerated in the second quarter to the fastest pace in almost three decades as interest rates increased and home values fell, prompting more Americans to walk away from homes they couldn't refinance or sell.

New foreclosures increased to 1.19 percent, rising above 1 percent for the first time in the survey's 29 years, the Mortgage Bankers Association said in a report Friday. The total inventory of homes in foreclosure reached 2.75 percent, almost tripling since the five-year housing boom ended in 2005. The share of loans with one or more payments overdue rose to a seasonally adjusted 6.41 percent of all mortgages, an all-time high, from 6.35 percent in the first quarter.

Tumbling home prices are depriving owners with adjustable- rate loans of the ability to sell or get a new loan as financing costs rise, said Jay Brinkmann, MBA's chief economist. Subprime ARMs accounted for 36 percent of new foreclosures and prime ARMs, held by the most creditworthy borrowers, were 23 percent, he said.

"People chose the lowest payment option to get into some of the very expensive housing markets and now that prices are coming way down, they can't sell and they can't afford the higher payments," Brinkmann said in an interview.

The three-year-old housing slump has slowed growth of the world's largest economy, caused more than half a trillion dollars of losses at banks such as Citigroup Inc. and UBS AG, and crimped earnings for companies such as Home Depot Inc. and Lowe's Cos. that rely on home purchases to fuel demand.

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Tropical Storm Hannah Set To Soak U.S. East Coast
2008-09-05 14:07:27
Beach vacationers in the Carolinas packed up and headed inland Friday as Tropical Storm Hanna cruised steadily toward the coast, while others decided to ride out the fast-moving storm that had only a slight chance to become a small hurricane before crashing ashore overnight.

The storm will likely wash out the weekend from the Carolinas to Maine. Tropical storm watches or warnings ran from Georgia to Rhode Island, and included all of Chesapeake Bay, the Washington D.C. area and Long Island, New York.

As the first rain started to fall on the popular barrier island beaches south of Wilmington, Sam Owens packed up the camper he brought from State College, Pennsylvania, to the dunes that line the ocean side of Holden Beach. He had rented a spot for four months, but the campground's owners said the high winds Hanna will bring with her meant it was time to go.

"We have to be out by noon and that is what we are going to do," said Owens, 56-year-old retired Marine. "I hope I can come back because either way I have to pay."

The latest forecast called on Hanna to make landfall on the northern coast of South Carolina around 2 a.m. Saturday before marching quickly up the Atlantic seaboard and pushing into New England by early Sunday morning. Hanna was expected to dump several inches of rain on in North and South Carolina, as well as central Virginia, Maryland and southeastern Pennsylvania.

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McCain Vows To End Partisan Rancor In Convention Speech
2008-09-05 02:40:22
Arizona Sen. John McCain sought to wrest the change mantle from Sen. Barack Obama in his acceptance speech Thursday night at the Republican National Convention, appealing for an end to Washington's partisan rancor and casting himself as someone who has never forgotten that the first mission of elected officials is to serve the public.

"I don't work for a party," the Republicans presidential nominee declared before tens of thousands of cheering, flag waving delegates and party officials. "I don't work for a special interest. I don't work for myself. I work for you."

McCain's staccato speaking style is a far cry from the smooth, soaring rhetoric of Obama, but Thursday night he seemed to work to modulate his speech to add emphasis and emotion to his words. The speech, delivered before a gathering of his party's conservative base, also largely avoided the sort of red-meat rhetoric that might have whipped the live audience into a frenzy but alienate swing voters, who were clearly the target of the address.

But in boasting of his choice of Alaska Gov. Sarah Palin as his running mate, McCain declared: "Let me offer an advance warning to the old, big spending, do nothing, me first, country second Washington crowd: change is coming."

McCain repeatedly cast his life story - from his captivity during the Vietnam War to his storied battles within the halls of Congress - as examples of his willingness to, as his campaign slogan states, put "country first" and act more out of concern for America than for a political party. He portrayed the choice in the fall presidential election between someone who has brought about reform and someone who simply talks about doing so.

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Dow Index Loses More Than 344 Points
2008-09-05 02:39:36

The Dow Jones industrial average plummeted 344.65 points on Thursday on a confluence of poor news about the economy, although investors could not pin the drop on any overriding reason.

Reports showed that retail sales were weak last month, just as more Americans filed for unemployment benefits. Anxiety lingered about a global slowdown. Fears of another financial crisis refused to go away.

None of the news came as a shock to Wall Street. So what pushed the Standard & Poor’s 500-stock index down 3 percent, its worst daily performance in three months?

“Boy, it’s hard to say,” Douglas M. Peta, a market strategist at J.& W. Seligman, said after the market’s close. “All of us were scratching our heads. Why today?”

Explanations were proffered, but rarely proved. Speculation ran rampant that some major hedge funds were rapidly selling assets; Atticus Capital, a $14 billion hedge fund based in New York, was forced to issue a statement denying that it was shutting down.

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Pentagon Urges Extended Delay Of Troop Drawdown In Iraq
2008-09-05 02:39:16

Pentagon leaders have recommended to President Bush that the United States make no further troop reductions in Iraq  this year, administration officials said Thursday.

The plan, delivered this week, calls for extending a pause in drawdowns until late January or early February - after the Bush administration has left office. At that point, up to 7,500 of the approximately 146,000 troops in Iraq could be withdrawn, depending on conditions on the ground there. The reduction would coincide with new deployments to Afghanistan, said officials.

Defense officials described the recommendation as a compromise between those who believed that security gains in Iraq remained too tenuous to contemplate further withdrawals now, and those who proposed continuing the reductions that began this spring.

Gen. David H. Petraeus, the U.S. commander in Iraq, adopted a cautious approach in an assessment he presented last week to Defense Secretary Robert M. Gates and Adm. Michael Mullen, chairman of the Joint Chiefs of Staff.Petraeus cited several areas of ongoing concern, including the postponement of provincial elections initially scheduled for this month, the disputed status of the northern city of Kirkuk, lingering ethno-sectarian conflicts, and questions surrounding the future of a local security force known as the Sons of Iraq.

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Former Lobbyist Jack Abramoff Gets 4-Year Prison Sentence
2008-09-05 02:38:20
Jack Abramoff, the powerhouse Washington lobbyist who admitted running a wide-ranging corruption scheme that ensnared lawmakers, Capitol Hill aides and government officials, Thursday received a reduced sentence of four years in prison because of his cooperation with federal investigators.

Abramoff, 49, already has served nearly two years for his conviction in a related Florida fraud case. The sentence yesterday by U.S. District Judge Ellen S. Huvelle means that the former Republican lobbyist will likely remain in prison until 2012.

More than a dozen people, including an Ohio congressman and a deputy secretary of the interior, have been convicted in the Abramoff lobbying scandal, and Justice Department officials said the investigation is continuing. Still under scrutiny are former House majority leader Tom DeLay (R-Texas) and retiring Rep. John T. Doolittle (R-California). 

With his wife and children sitting just a few feet away in a packed courtroom, Abramoff choked back tears yesterday as he watched lawyers argue over his sentence. He then told Huvelle that he was sorry for his crimes, adding that he was no longer the person "who happily and arrogantly engaged in a lifestyle of political corruption and business corruption."

"I am sorry, so sorry that I have put everyone through this," said Abramoff.

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Detroit Mayor Resigns, Faces Jail Sentence After 2 Guilty Pleas
2008-09-05 02:36:35
Detroit Mayor Kwame M. Kilpatrick (D) resigned Thursday after admitting that he lied to hide an affair with his chief of staff. After months when Kilpatrick's refusal to step aside paralyzed municipal government, City Council President Kenneth V. Cockrel, Jr., prepared to take over.

In an agreement with prosecutors, Kilpatrick pleaded guilty to two felonies and agreed to serve four months in jail, pay $1 million and resign the office that he won twice as one of Michigan's most dynamic young leaders. He also pledged not to run for office for at least five years.

"Yes, I lied under oath," a somber Kilpatrick, 38, told Wayne County Circuit Judge David Groner, abandoning the bravado of his early denials and his promise of "full and complete vindication."

In a televised address later, he vowed to make a triumphant return to politics.

"I know there's another day for me," said Kilpatrick. "I want to tell you, Detroit, that you have set me up for a comeback."

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Palin Appears To Disagree With McCain On Sex Education
2008-09-06 03:38:56
Teen pregnancy and sex education were thrust into the spotlight this week when Republican vice presidential nominee Sarah Palin revealed that her 17-year-old daughter is five months pregnant.

Palin's running mate, John McCain, and the Republican Party platform say children should be taught that abstinence until marriage is the only safe way to avoid pregnancy and disease. Palin's position is less clear.

In a widely quoted 2006 survey she answered during her gubernatorial campaign, Palin said she supported abstinence-until-marriage programs but, weeks later, she proclaimed herself "pro-contraception" and said condoms ought to be discussed in schools alongside abstinence.

"I'm pro-contraception, and I think kids who may not hear about it at home should hear about it in other avenues," she said during a debate in Juneau.

Such statements could raise concerns among social conservatives who have been some of Palin's most enthusiastic supporters since she was tapped for the No. 2 spot on the Republican ticket last week.

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Alaska Legislators To Seek Subpoenas In Palin Inquiry
2008-09-06 03:38:31
Senior lawmakers in the Alaska State Legislature said Friday that they would seek subpoenas to compel seven witnesses to answer questions in an ethics inquiry into whether Gov. Sarah Palin, the Republican nominee for vice president, improperly put pressure on state officials to dismiss her former brother-in-law, a state trooper.

The lawmakers overseeing the inquiry said the investigator would deliver a final report by Oct. 10 to allow both sides ample time to respond before the presidential election. Palin, after pledging for weeks that she would cooperate with the investigation, has in recent days begun to challenge the Legislature’s jurisdiction in the inquiry.

The list of people the investigator is seeking to question - including a top Palin aide, the state personnel director and the cabinet-level commissioner of administration - indicates that the inquiry is focusing on accusations that the governor’s office unlawfully breached the personnel file of the trooper, Mike Wooten. He has had a particularly contentious divorce and custody battle with Palin’s sister.

Separately, the state troopers’ union lodged an ethics complaint this week against Palin and members of her administration, alleging that they had unlawfully gained access to Wooten’s personnel file.

The pursuit of the subpoenas, which are scheduled for a vote before a joint hearing of the Alaska House and Senate Judiciary Committees next Friday, increased tensions in the ethics controversy embroiling Palin as she seeks to become vice president.

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Interest Waived On Rangel's Loan For Villa
2008-09-06 03:36:47

U.S. Representative Charles B. Rangel paid no interest for more than a decade on a mortgage extended to him to buy a villa at a beachfront resort in the Dominican Republic,according to Rangel’s lawyer and records from the resort.

The loan was given to him by the resort development company, in which Theodore Kheel, a prominent New York labor lawyer, was a principal investor. Kheel, who has given tens of thousands of dollars to Rangel’s campaigns over the past decade, had encouraged the congressman to be one of the initial investors in the project.

The loan, which was extended to Rangel in 1988, was originally to be paid back over seven years at a rate of 10.5 percent but, within two years, interest on the loan was waived for Rangel and six other early investors because the resort was generating less income than projected, according to a statement released on Friday by Jose Oliva, director of the resort.

The loan remained interest-free and Rangel eventually paid it off in 2003.

As details about the financing of the villa emerged on Friday, House Speaker Nancy Pelosi, through her spokesman, expressed support for an ethics investigation into Rangel’s failure to report rental income from the vacation home on his federal and state income taxes and financial disclosure forms. On Friday, the New York Times reported that Rangel, chairman of the House Ways and Means Committee, had earned more than $75,000 in rent on the vacation home since 1988, and according to his lawyers probably owed back taxes to New York State and New York City.

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U.S. Jobless Rate Tops 6 Percent For First Time In Five Years
2008-09-05 14:07:38
The unemployment rate spiked to 6.1% in August, much higher than anticipated and the first time in five years that it has topped 6%, the Labor Department reported Friday.

The economy has shed jobs for eight straight months, the data showed, with the losses averaging 76,000 per month since the beginning of the year. The economy must create about 100,000 jobs a month just to keep pace with population growth.

"Over the past 12 months, the number of unemployed persons has increased by 2.2 million and the unemployment rate has risen by 1.4 percentage points, with most of the increase occurring over the past four months," the department reported.

July's unemployment rate was 5.7%, and the August report is significantly worse than most economists had expected. The stock market sank on the news: the Dow Jones industrial average, which lost 344 points on Thursday, dropped another 80 in the first hour of trading Friday.

"The private sector continues to bleed jobs, and there is no sign from the corporate sector that this is going to end any time soon," said Joshua Shapiro, U.S. economist with MFR Inc., a forecasting firm in New York.

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BP Concedes To Russian Partners
2008-09-05 14:06:55
The British energy giant BP and its billionaire partners in Russia's third-largest oil company said Thursday that they had resolved an ugly, high-profile battle for corporate control that had become a test of Moscow's openness to foreign investment.

BP gave in to demands by its partners in Russia to replace the joint venture's American chief executive, Robert Dudley,  after refusing to do so for months. The company also agreed to sell new shares of a key subsidiary of the partnership.

BP retained its 50 percent stake in the joint venture, TNK-BP, an outcome that had seemed uncertain given the Kremlin's interest in consolidating control of the nation's energy sector. BP also said it would be allowed to nominate Dudley's successor.

The accord follows eight months of increasingly bitter accusations between BP executives and the Russian tycoons with whom they went into business in 2003 to develop some of the most promising oil and gas fields in Russia.

The joint venture has been fabulously successful, paying out $18 billion in dividends to the shareholders in just five years. It accounts for as much as a quarter of BP's reserves and annual production.

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John McCain's Acceptance Speech
2008-09-05 02:40:07
Following is a transcript of Senator John McCain's acceptance speech at the Republican National Convention in St. Paul, as recorded by CQ Transcriptions.

MCCAIN: Thank you. Thank you all very much. Thank you.

Tonight, I have a privilege given few Americans: the privilege of accepting our party's nomination for president of the United States.


Thank you. Thanks. And I accept it with...


Thank you. I - and I accept it with gratitude, humility, and confidence.

In my life, no success has come without a good fight, and this nomination wasn't any different. That's a tribute to the candidates who opposed me and their supporters. They're leaders of great ability who love our country and wish to lead it to better days. Their support is an honor that I won't forget.

I'm grateful to the president of the United States for leading us in these dark days following the worst attack in American history.


The worst attack on American soil in our history and keeping us safe from another attack that many - many thought was inevitable.

MCCAIN: And to the first lady...


And to the first lady, Laura Bush, a model of grace and kindness in public and in private.


And I'm grateful to the 41st president and his bride of 63 years for their outstanding example...


... for their outstanding example of honorable service to our country.

As always, I'm indebted to my wife, Cindy, and my seven children. You know, the pleasures of family life can seem like a brief holiday from the crowded calendar of our nation's business. But I have treasured them all the more and can't imagine a life without the happiness that you've given me.

You know, Cindy said a lot of nice things about me tonight. But, in truth, she's more my inspiration than I am hers.


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Editorial: The Real John McCain
2008-09-05 02:39:25
Intellpuke: This editorial appeared in the New York Times edition for Friday, August 5, 2008.

By the time John McCain took the stage on Thursday night, we wondered if there would be any sign of the senator we long respected - the conservative who fought fair and sometimes bucked party orthodoxy.

Certainly, the convention that nominated him bore no resemblance to that John McCain. Rather than remaking George W. Bush’s Republican Party in his own image, Mr. McCain allowed the practitioners of the politics of fear and division to run the show.

Thursday night, Americans mainly saw the old John McCain. He spoke in a moving way about the horrors he endured in Vietnam. He talked with quiet civility about fighting corruption. He said the Republicans “had lost the trust” of the American people and promised to regain it. He decried “the constant partisan rancor that stops us from solving” problems.

But there were also chilling glimpses of the new John McCain, who questioned the patriotism of his opponents as the “me first, country second” crowd and threw out a list of false claims about Barack Obama’s record, saying, for example, that Mr. Obama opposed nuclear power. There was no mention of immigration reform or global warming, Mr. McCain’s signature issues before he decided to veer right to win the nomination.

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Large Arctic Ice Shelf Breaks Away, Adrift In Arctic Ocean
2008-09-05 02:39:01
Canadian scientists are sounding another environmental alarm with word that a massive Arctic ice shelf has broken free and is now adrift in the Arctic Ocean.

The 50-square-kilometer Markham Ice Shelf broke away in early August, say researchers, and two large sections representing 60 per cent of the Serson Ice Shelf have also become detached.

That means some 214-square-kilometers of Arctic ice shelves have been lost this summer, or about a quarter of what was left. It's the equivalent of more than three times the area of the Manhattan island.

“It's astounding what's happening up there right now,” said Derek Mueller, a researcher at Trent University in Peterborough, Ontario.

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U.S. Rep. Rangel Failed To Report $75,000 In Income
2008-09-05 02:36:53

Representative Charles B. Rangel has earned more than $75,000 in rental income from a villa he has owned in the Dominican Republic since 1988, but never reported it on his federal or state tax returns, according to a lawyer for the congressman and documents from the resort.

Rangel, chairman of the House Ways and Means Committee, which writes the federal tax code, bought the beach front villa at the Punta Cana Yacht Club and has received twice-yearly payments from the resort, which rents the property for $500 or more per night.

Records from the development, now called the Punta Cana Resort and Club, indicated that Rangel’s rental profits varied from year to year, from $2,700 in 2004 to $7,600 in 1994.

A lawyer for Rangel, Lanny Davis, said on Thursday that the congressman would most likely file amendments to his tax returns for the years in question.

Davis said Rangel’s accountant believed he would most likely owe back taxes to the state and New York City.

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