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Saturday September 20 2008 edition
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Bush Administration Proposes Historic $500 Billion Bailout 2008-09-20 01:32:27 The Bush administration Friday proposed a historic $500 billion bailout of financial firms that would let the government rather than the cold judgment of the marketplace decide the winners and losers from the crisis that has shaken the U.S. economy for the past year. The plan, which would be the most sweeping government intervention in the markets since the Great Depression, calls for the Treasury to buy the troubled mortgage securities that have been toppling major financial firms and are at the heart of Wall Street's turmoil. Millions of Americans could also benefit from other dramatic stopgap measures. Regulators announced efforts to stabilize the mortgage market; curb stock speculation; and insure money-market mutual funds with government money, seeking to protect ordinary investors and preserve a vital source of corporate finance. The initiatives were precipitated in part by concern that scared investors would race to withdraw their holdings from money-market funds, which hold $3.5 trillion in investments, depleting a major source of short-term funding for corporations. President Bush, who had remained largely silent as the crisis broadened this week, said it is a "pivotal moment for America's economy." In a Rose Garden speech remarkable for its grim language and ominous tone, Bush said: "This action does entail risk. But we expect that this money will eventually be paid back. ... The risk of not acting would be far higher." Read The Full Story Space Shuttle Moved To Launch Pad As Rescue Ship 2008-09-20 01:31:52 In an unprecedented step, a space shuttle was moved to the launch pad Friday for a trip NASA hopes it will never make - a rescue mission. The shuttle Endeavour is on standby in case the seven astronauts who go up on Atlantis next month need a safer ride home. Atlantis and its crew are headed into space for one last repair job on the 18-year-old Hubble Space Telescope. It's a venture that was canceled when first proposed a few years ago because it was considered too dangerous. The risk is this: If Atlantis suffers serious damage during launch or in flight, the astronauts will not be at the international space station, where they could take refuge for weeks while awaiting a ride home. They would be stranded on their spacecraft at the Hubble, where NASA estimates they could stay alive for 25 days. Air would be the first to go. Endeavour and four more astronauts would need to blast off on a rescue flight as soon as NASA determined Atlantis was too damaged to fly home. On Friday, Endeavour was parked at its launch pad just a mile from where Atlantis is tentatively set to lift off on Oct. 10. It is the first time since 2001 - when flights were more closely spaced - that both of NASA's shuttle pads have been occupied. And it will probably be the last. Read The Full Story Commentary: Moguls Steal Home While Companies Strike Out 2008-09-20 01:31:14 Intellpuke: This commentary was written by veteran journalist and commentator Bill Moyers, managing editor of public affairs program "Bill Moyers Journal", and Michael Winslow, the program's senior writer. It appeared on the truthout.org website edition for Friday, September 19, 2008. From our offices in Manhattan, we look out on the tall, gleaming skyscrapers that are cathedrals of wealth and power - the Olympus ruled by the gods of finance, the temples of the mighty, the holy of holies, whose priests guard the sacred texts of salvation - the ones containing the secrets of subprime lending and derivatives as mysterious and elusive as the Grail itself. This last couple of weeks, ordinary mortals below could almost hear the ripcords of golden parachutes being pulled as the divinities on high prepared for soft, safe landings - all this while tossing their workers like sacrificial lambs into the purgatory of unemployment. During the last five years of his tenure as CEO of now-bankrupt Lehman Brothers, Richard Fuld's total take was $354 million. John Thain, the current chairman of Merrill Lynch, taken over this week by Bank of America, has been on the job for just nine months. He pocketed a $15 million signing bonus. His predecessor, Stan O'Neal, retired with a package valued at $161 million, after the company reported an $8 billion loss in a single quarter. And remember Bear Stearns's Chairman James Cayne? After the company collapsed earlier this year and was up for sale at bargain basement prices, he sold his stake for more than $60 million. Daniel Mudd and Richard Syron, the former heads of Fannie Mae and Freddie Mac - aka the gods who failed - are fighting to keep severance packages of close to $24 million combined - on top of the millions in salary each earned last year while slaughtering the golden calf. As it is written in the Gospel According to Me, when the going gets tough, the tough get going. Read The Full Story Bailout To Cost 'Hundreds Of Billions' 2008-09-19 17:34:06 The Bush administration unveiled additional unprecedented steps Friday morning to protect investors and calm the panicky financial markets, and acknowledged for the first time that it seeks to spend "hundreds of billions" in taxpayers' money to help get bad assets off the balance sheets of troubled banks. The Treasury announced Friday that it will provide up to $50 billion for a new insurance program for vital money-market funds, and the Securities and Exchange Commission announced that it's temporarily braking certain kinds of stock-market trading practices that critics say are driving financial companies to the brink of ruin. Treasury Secretary Henry Paulson detailed his plan to create a mechanism under which the government would purchase troubled assets - mostly special bonds backed by U.S. mortgages - and confirmed that it will amount to the largest bank bailout ever. "We're talking hundreds of billions. It needs to be big enough to make a difference and get at the heart of the problem," said Paulson, offering few details. Mortgage bonds, which are called mortgage-backed securities, are at the heart of the housing and banking crisis. Banks hold trillions of dollars in these instruments and can't find buyers for them nor determine what they should be priced at on their balance sheets. That's caused fears of bank collapses, and bankruptcy Monday in the case of investment bank Lehman Bros. Acknowledging those fears, President Bush said Friday that the extraordinary steps were designed to "act as grease for the gears of our financial system, which was at risk of grinding to a halt." Read The Full Story Dow Climbs 369 Points As Bailouts Boost Stocks 2008-09-19 17:33:44 The government's financial rescue plan continued to spur an immense Wall Street rally today as investors rushed back to the market. After shooting up more than 400 points at the opening bell, the Dow Jones industrial average closed up 369 points, a 3.4 percent gain. That is on top of a 400-point gain late Thursday after news of a government program began to emerge and could bring the market to break-even for the week. The technology-heavy Nasdaq rose 75 points, or 3.4 percent, and the Standard & Poor's 500-stock index climbed 49 points, or 4 percent. Global markets also traded up on the news. European markets rose on the order of 5 to 9 percent, while Asian markets overnight added anywhere from 4 to 9 percent. In what amounts to a further restructuring of the financial market, the government said it would take on the bad debts of troubled financial firms, prop up money-market mutual funds and temporarily ban short selling of financial stocks. After watching the demise of Lehman Brothers, the quick sale of Merrill Lynch to Bank of America and a $85 billion loan to salvage American International Group, investors appeared more confident that the government intervention could have a lasting impact. "It's a massive relief rally on the back of the comprehensive plan," said Joseph Brusuelas, chief economist for Merk Investment. "If you have hundreds of millions of mortgage-backed securities on your books that you cannot value -  much less sell - you can now unload them to the U.S. government." Read The Full Story U.S. Treasury To Temporarily Guarantee Money Market Funds 2008-09-19 10:52:50 The U.S. Treasury Friday morning offered temporary insurance for money market funds, attempting to restore confidence in one of the economy's important safe-haven investments, while the Securities and Exchange Commission slapped a two-week ban on short-selling the stocks of 799 financial companies as federal officials continued ramping up efforts to stabilize the global financial system. Coming as federal policymakers and politicians work to craft a broad financial rescue plan, this morning's actions are meant as a short-term firewall against a steep market collapse, and demonstrate the government's willingness to change basic market rules, at a moment's notice, in response to the current crisis. The Treasury's move in particular marks an unprecedented step by federal regulators to guarantee the value of investments in a certain type of securities, suspending for money-market investors one of the basic rules of the marketplace - that value may go down. Previously, that sort of protection was offered solely to bank depositors. Global stock markets soared towards what may prove historic one-day gains. The Dow Jones industrial average  added more than 225 points in the opening minutes of trading, or more than 2 percent. The tech-heavy Nasdaq added more than 5 percent initially while the broader S&P 500 jumped nearly 3 percent. Financial stocks, protected from short selling, enjoyed double digit gains, with investment banks Goldman Sachs and Morgan Stanley saw gains in excess of 20 percent. European markets rose on the order of 7 to 9 percent, while Asian markets overnight added anywhere from 4 to 9 percent. As with other recent steps taken by the government, Treasury's action to bolster money market funds seems to acknowledge that banks no longer stand alone at the core of the financial system. Read The Full Story Commentary: How John McCain Lost Me 2008-09-19 10:52:10 Intellpuke: This commentary was written by Elizabeth Drew and appeared on the politico.com website edition for Thursday, September 18, 2008. Ms. Drew is author of "Citizen McCain", which is now out in paperback with a new introduction. Her commentary follows:  I have been a longtime admirer of John McCain. During the 2000 Republican presidential primaries, I publicly defended McCain against the pro-Bush Republicans' whisper campaign that he was too unstable to be president (aware though I was that he had a temper). Two years later I published a positive book about him, "Citizen McCain." I admired John McCain as a man of principle and honor. He had become emblematic of someone who spoke his mind, voted his conscience, and demonstrated courage in bucking his own party and fighting for what he believed in. He gained a well-deserved reputation as a maverick. He was seen as taking principled positions on such issues as tax equity (opposing the newly elected Bush's tax cut), fighting political corruption, and, later, taking on the Bush administration on torture. He came off as a man of decency. He took political risks. Having emerged, ironically, from his bitter 2000 primary fight against Bush as an immensely popular figure, he set out to be a new force in American politics. He decided to form and lead a centrist movement, believing that that was where the country was and needed leadership. He went against the grain of his party on the environment, patients' bill of rights, and, of course, campaign finance reform. While McCain's movement to the center was widely popular (if not on the right) - and he even flirted with becoming a Democrat - there's now strong reason to question whether it was anything but a temporary, expedient tactic. (In his 2002 memoir, "Worth the Fighting For," he wrote, revealingly, "I didn't decide to run for president to start a national crusade for the political reforms I believed in or to run a campaign as if it were some grand act of patriotism. In truth, I wanted to be president because it had become my ambition to be president.... In truth, I'd had the ambition for a long time.") When he decided to run for president in 2008, he felt he couldn't win without the support of the right, so he adapted. Read The Full Story Gov. Schwarzenegger, Legislators Reach Budget Deal 2008-09-19 10:51:15 California Gov. Arnold Schwarzenegger and state legislative leaders have reached a deal on a new state budget that would allow California to begin paying its bills again, ending a showdown over the governor's vow to veto the spending plan lawmakers approved earlier this week. "It appears we have an agreement," Schwarzenegger spokesman Aaron McLear said Thursday afternoon. He said the governor would meet with legislative leaders this morning to finalize it. Lawmakers are scheduled to vote on the deal - which does not include new taxes - Friday afternoon. The agreement would resolve a months-long fiscal crisis that has left officials unable to make billions of dollars in payments to schools, hospitals, medical clinics, nursing homes and other service providers. While state services would be cut under the new agreement, government spending would increase overall. "Hopefully this will bring an end to the 80-plus days of pain," said Assembly Speaker Karen Bass (D-Los Angeles). Read The Full Story Sarah Palin Said Yes And Thanks For Road To Nowhere 2008-09-19 10:50:42 The 3.2-mile-long partially paved "road to nowhere" meanders from a small international airport on Gravina Island, home to 50 people, ending in a cul-de-sac close to a beach. Crews are working to finish it. But no one knows when anyone will need to drive it. That's because the $26-million road was designed to connect to the $398-million Gravina Island Bridge, more infamously known as the "bridge to nowhere." Alaskan officials thought federal money would pay for the bridge, but Gov. Sarah Palin killed the project after it was ridiculed and Congress rescinded the money. Plans for the road moved forward anyway. Some residents of Ketchikan - a city of 8,000 on a neighboring island where the bridge was to end - see the road as a symbol of wasteful spending that Palin could have curtailed. Some of them even accuse her of deception. "Surely we won't have to commute on the highway if there won't be a bridge," said Jill Jacob, who has been writing and calling the governor's office for the last two years to protest the road. "It's a dead-end highway, a dead-end road." Read The Full Story	We're Paying The Price Today For Decades Of Relentless Dam Building 2008-09-20 01:32:10 Decades ago, three new dams were started every day. But the debts of temporary prosperity are all coming due and payable today. Between 1950 and 1970, three new dam projects were started every single day in the world. Today, primarily in China, Turkey, Brazil, Japan and India, one new dam project begins daily with an average completion date of four years. Fifteen hundred dams are currently under construction worldwide. Dams fragment, divert and subjugate the world's rivers. In one long lifespan, beginning with the inauguration of Hoover Dam in 1936, the engineering marvel of the 20th century, civilization has altered the most important function that makes the earth work, water. Thus, transmuting humanity into something foreign to the earth it inhabits - a stranger to the very system which gave rise to our species. The late Carl Sagan was among precious few visionary humans who shared the extraordinary ability to differentiate between deep thought and deep nonsense and recognized the persistence of a satisfying delusion to perpetuate the latter. Dr. Sagan wrote, "We go about our daily lives understanding almost nothing of the world. We give little thought to the machinery that generates the sunlight that makes life possible, to the gravity that glues us to an earth that otherwise sends us spinning off into space or to the atoms of which we are made and on whose stability we fundamentally depend." Without some sense, some outline of how the earth works and our relationship to it, one is deprived of knowing, let alone of asking, the really important questions that promote regenerative life and prevent massive-scale destruction and degeneration. Read The Full Story Obama: A Time For 'Resolve' 2008-09-20 01:31:41 Barack Obama, after huddling for more than hour with some of the Democratic Party's top economic minds, sought today to calm fears about the integrity of the economy. He laid out broad principles he wants to see included in emergency measures pending in Washington, but said it was premature to outline his own specific prescriptions. "I know these are difficult days, and I know there are a lot of families out there that are feeling anxiety about their jobs, about their homes, and about their retirement savings," he told reporters before a rally at the University of Miami. "But here's what I also know. This is not a time for fear, or for panic. It's a time for resolve. It's a time for leadership." Obama said the immediate need is to get the capital markets working properly again so the economy can continue to hum; but he resisted offering a detailed blueprint, saying he wanted to let officials at the Treasury Department, the Fed, and in Congress work on a bipartisan solution. "You don't do it in a day," he said. "We've gotta do it in an intelligent, systemic, thoughtful fashion. I'm much less interested in scoring political points than making sure we have a structure in place that is sound and is actually going to work." Obama said any plan must target homeowners, not just financial institutions. "For too long this administration has been willing to hit the fast-forward button in helping distressed Wall Street firms while pressing pause when it comes to saving jobs and keeping people in their homes," he said. Read The Full Story China Toxic Scandal Includes Liquid Milk 2008-09-20 01:30:52 The crisis over contaminated milk in China grew Friday after government tests found the industrial chemical melamine in liquid milk produced by three leading dairy companies. The scandal had been thought to be confined to tainted milk powder, blamed for the deaths of four infants and illnesses in 6,200 others. But about 10% of liquid milk samples taken from Mengniu Dairy Group and Yili Industrial Group - the two largest dairy producers in China - contained melamine, according to a report by the General Administration of Quality Supervision, Inspection and Quarantine posted on the agency's website. Milk from Shanghai-based Bright Dairy also showed contamination. The agency will find out the reason for adding the melamine and punish those responsible, said the notice, adding that all the batches which had tested positive are being recalled. Hong Kong's two biggest grocery chains removed all milk made by Mengniu from shelves. On Thursday, the chains had recalled milk, yoghurt, ice cream and other products made by Yili. In Singapore, the sale and import of all Chinese dairy products was suspended yesterday after several items tested positive for a toxic chemical, widening a crisis over tainted food in China. Read The Full Story Poll: Americans Doubt Bailouts Will Stop Economic Chaos 2008-09-19 17:33:56 Despite a massive government effort to shore up the nation's financial system, Americans are deeply pessimistic about whether it will work anytime soon, according to a new Ipsos/McClatchy poll. An overwhelming majority thinks the bankruptcy of investment bank Lehman Brothers and the sudden sale of brokerage firm Merrill Lynch will have a negative effect on jobs and the economy. In this first close examination of popular sentiment on the question, Americans appear skeptical at best about the prospects that the government can fix the mess. A solid majority said they're not confident that the government can restore confidence following the mortgage crisis. And only a sliver thinks the economy will be better six months from now. A plurality  thinks it will be worse. The findings come as the country works to come to grips with the financial turmoil of recent weeks. Rooted in the housing-finance crisis, it's led to rapid-fire government bailouts of several major financial institutions, the bankruptcy of another, Lehman Brothers, and the shotgun marriage of Merrill Lynch - a venerable firm known to millions on Main Streets coast to coast - to Bank of America. Read The Full Story Two Men Arrested In Germany For Alleged Terror Plot 2008-09-19 17:33:22 German police arrested two men near Frankfurt on terrorism charges Friday, alleging they were involved in a cell that had plotted to blow up U.S. targets in Germany a year ago. Federal prosecutors said the two suspects - a German citizen and a Turkish national - had traveled separately to Pakistan last year in an attempt to receive training at camps operated by the Islamic Jihad Union, a terrorist group allied with al-Qaeda. Authorities said the men had shared bank account information and a debit card with three men arrested in September 2007 on suspicion of planning mass bombing attacks on U.S. targets in Germany. Prosecutors identified the German citizen as Omid S., a 27-year-old of Afghan descent, and said he had received training at a militant camp along the Afghan-Pakistan border during the spring and summer of 2007. The Turkish man, identified as 27-year-old Hueseyin O., also traveled to the region last year, prosecutors said. Before he could reach the camp, however, he was detained by Pakistani security forces and forced to return to Germany, according to a statement released by the German federal prosecutor's office in Karlsruhe. Read The Full Story U.S. Proposes To Buy Bad Debt To Boost Lending 2008-09-19 10:52:37 In what could be the biggest bailout since the Great Depression, top U.S. government officials and congressional leaders agreed late Thursday to quickly develop a comprehensive plan aimed at defusing the nation's roiling financial crisis. The plan would relieve financial institutions of the mortgage-backed securities and other bad assets that are threatening the nation's economic health. Under the proposal, details of which were not announced, the U.S. government would buy the distressed assets, allowing banks to resume their usual borrowing and lending, according to people familiar with the plan. The approach could be similar to the formation of the Resolution Trust Corp. during the 1980s to resolve the savings and loan crisis. In a meeting between lawmakers and Treasury Secretary Henry M. Paulson, Jr., and Federal Reserve Chairman Ben S. Bernanke, the top officials suggested that once the financial system was rebooted in this fashion, the government would be able to sell off the assets to recover taxpayers' money and perhaps even turn a profit, according to the people privy to the plan, who spoke on condition of anonymity because they were not authorized to speak publicly. The plan could be unveiled as early as Friday and voted on by Congress by next week. Read The Full Story Commentary: Return Of The Geeks 2008-09-19 10:51:54 Intellpuke: This commentary was written by Chris Mooney, with additional reporting by Jen Phillips. It appeared in the Mother Jones online edition for September/October 2008. Mr. Mooney's commentary follows: If the Bush administration had consciously plotted to leave office with one last jab at American scientists, it could hardly have done better than the North Atlantic right whale incident. This fish tale has everything: attacks on science, appeasement of special interests, delays in government action-even a cameo by Moby Dick Cheney. North Atlantic right whales can grow to 55 feet in length and weigh 70 tons, but that hardly makes them invincible. Because they have a habit of calving amid shipping lanes off the Atlantic coast, the whales sometimes perish in collisions-no small matter when there are fewer than 400 of them left in existence. Accordingly, in 2006 the National Marine Fisheries Service (NMFS) sought to protect these endangered cetaceans by requiring speed limits for ships passing through critical areas at key times of year-in essence setting up the marine equivalent of school crossing zones. But if science is a right whale, the Bush administration is a container ship doing 25 knots. The White House stalled, and continues to stall, the NMFS regulation, and now we know why. Behind the scenes, it has been indulging in opportunistic attacks on whale science that echoed those by the shipping industry, especially the World Shipping Council, a trade group that has lobbied heavily against the NMFS rule. Read The Full Story North Korea Preparing To Restore Nuclear Reactor 2008-09-19 10:51:02 North Korea said Friday it is making "thorough preparations" to restart its nuclear reactor, accusing the United States of failing to fulfill its obligations under an international disarmament-for-aid agreement. It is the first time the communist nation has confirmed a reversal of steps taken since last year to disable its nuclear program because of Washington's refusal to quickly remove it from a U.S. terrorism blacklist. "We are making thorough preparations for restoration" of the Yongbyon nuclear complex, the deputy director-general of North Korea's Ministry of Foreign Affairs, Hyun Hak Bong, told reporters. He did not say when Yongbyon might begin operating again. Hyun spoke in the border village of Panmunjom before talks Friday with South Korean officials on sending energy aid to the North as part of the six-nation disarmament deal. The talks concluded late Friday afternoon. Under the landmark 2007 pact - involving the two Koreas, the U.S., China, Russia and Japan - North Korea pledged to disable its nuclear program as a step toward its eventual dismantlement in exchange for diplomatic concessions and energy aid equivalent to 1 million tons of oil. Read The Full Story
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