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Sunday, September 28, 2008

Free Internet Press Newsletter - Sunday September 28 2008 - (813)

Sunday September 28 2008 edition
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Lending Freezes As Anxiety Grips Capital Markets
2008-09-27 13:39:32
As Congress wrestles with a $700-billion plan to buy up bad mortgages, many on Wall Street say the situation in the banking system has become desperate.

Credit - the lifeblood of the economy - has simply stopped flowing in many parts of the financial system over the last two weeks.

"Figuratively, institutions are putting money in a mattress," said Bill Gross, the chief investment officer of money management giant Pimco in Newport Beach, California.

Many banks have stopped making short-term loans to other lenders. Big investors are hoarding cash, and the only IOUs some will accept are those of the U.S. Treasury. States and cities suddenly face crushingly high interest rates if they try to sell bonds to finance government operations. And for many businesses and consumers, credit is harder to get - if it's available at all.

The root of this crisis is the housing market's collapse, but the shock waves are reaching well beyond the real estate market and are threatening to make a full-blown recession inevitable.

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Commentary: Keating Five Ring A Bell?
2008-09-27 13:39:09
Intellpuke: This commentary was written by Rosa Brooks and appeared in the Los Angeles Times edition for Thursday, September 25, 2008.

Once upon a time, a politician took campaign contributions and favors from a friendly constituent who happened to run a savings and loan association. The contributions were generous: They came to about $200,000 in today's dollars, and on top of that there were several free vacations for the politician and his family, along with private jet trips and other perks. The politician voted repeatedly against congressional efforts to tighten regulation of S&Ls, and in 1987, when he learned that his constituent's S&L was the target of a federal investigation, he met with regulators in an effort to get them to back off.

That politician was John McCain, and his generous friend was Charles Keating, head of Lincoln Savings & Loan. While he was courting McCain and other senators and urging them to oppose tougher regulation of S&Ls, Keating was also investing his depositors' federally insured savings in risky ventures. When those lost money, Keating tried to hide the losses from regulators by inducing his customers to switch from insured accounts to uninsured (and worthless) bonds issued by Lincoln's near-bankrupt parent company. In 1989, it went belly up - and more than 20,000 Lincoln customers saw their savings vanish.

Keating went to prison, and McCain's Senate career almost ended. Together with the rest of the so-called Keating Five - Sens. Alan Cranston (D-California), John Glenn (D-Ohio), Don Riegle (D-Michigan) and Dennis DeConcini (D-Arizona), all of whom had also accepted large donations from Keating and intervened on his behalf - McCain was investigated by the Senate Ethics Committee and ultimately reprimanded for "poor judgment."

But the savings and loan crisis mushroomed. Eventually, the government spent about $125 billion in taxpayer dollars to bail out hundreds of failed S&Ls that, like Keating's, fell victim to a combination of private-sector greed and the "poor judgment" of politicians like McCain.
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Swapping Land In Wildlife Refuge For Road Divides Alaskans
2008-09-27 13:38:42
Among the many bills Congress is considering before it recesses for the November elections is a proposed land swap between the State of Alaska and the federal government that would allow a gravel road to be built through a remote national wildlife refuge.

Environmental groups are lined up against the proposal, saying a road would threaten the pristine wilderness area. Building it would require cutting an approximately 200-acre strip through the Izembek National Wildlife Refuge on the Alaska Peninsula, a resting place for hundreds of thousands of migratory birds and other animals.

Alaska officials, led by Senator Lisa Murkowski, a Republican, say the road is needed to connect one tiny outpost, King Cove, to another, Cold Bay, so that the 800 residents of King Cove have reliable access, particularly in emergencies, to the all-weather airport across the water in Cold Bay.

The issue before Congress is whether to allow Alaska to swap about 43,000 acres of state land for the 200 or so acres in the Izembek refuge needed for the road, which would be a single lane and, though the exact route has not been determined, would require an estimated 17 miles of construction, at $1 million to $2 million per mile.

Though the proposed land swap has been a source of debate for years, some opponents are drawing new attention to it as an example of Congressional excess. They have compared it to the controversial Bridge to Nowhere in Ketchikan, Alaska, which was ultimately abandoned but has proved a thorn for the governor, Sarah Palin, in her campaign as the Republican nominee for vice president. Palin supports the land exchange and the proposed road through Izembek.

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Actor Paul Newman Dies At 83
2008-09-27 13:38:16
Paul Newman, the legendary movie star and irreverent cultural icon who created a model philanthropy fueled by profits from a salad dressing that became nearly as famous as he was, has died. He was 83.

Newman died Friday at his home near Westport, Connecticut, after a long battle with cancer, said publicist Jeff Sanderson.

Stunningly handsome, Newman maintained his superstar status while protecting himself from its corrupting influences through nearly 100 Broadway, television and movie roles. As an actor and director, he evolved into Hollywood's elder statesman, admired as much offscreen for his quiet generosity, unconventional business sense, race car daring, political activism and enduring marriage to actress Joanne Woodward.

Annoyed by the public's fascination with his resemblance to a Roman statue, particularly his Windex-blue eyes, Newman often chose offbeat character roles. In the 1950s and '60s, he helped define the American anti-hero and became identified with the charming misfits, cads and con men in film classics such as "The Hustler," "Hud," "Cool Hand Luke" and "Butch Cassidy and the Sundance Kid."

Newman's poker-game look in "The Sting" - cunning, watchful, removed, amused, confident, alert - summed up his power as a person and actor, said Stewart Stern, a screenwriter and longtime friend.
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Obama, McCain Square Off On Iraq And Economy
2008-09-27 03:49:57
Sen. Barack Obama sharply criticized Sen. John McCain's judgment on the war in Iraq, repeatedly telling his presidential rival "you were wrong" to rush the nation into battle, directly challenging the Republican nominee on foreign policy as the two met in their first debate of the general-election season.

McCain aggressively pushed back, accusing Obama of failing to understand that a new approach employed by Gen. David H. Petraeus in Iraq would lead to victory and mocking him as naive for his willingness to meet with some of the world's most brutal leaders.

With 40 days remaining before Election Day and the U.S. economy teetering, the two clashed on taxes, energy policy, Russian aggression in Georgia and the threat posed by Iran. Neither made a serious mistake in an encounter that capped one of the most chaotic weeks of the campaign, nor was either able to claim a decisive victory.

The debate itself almost did not happen. McCain's dramatic midweek announcement that he was suspending his campaign to focus on the nation's financial crisis left the face-off in limbo as both candidates rushed back to Washington on Thursday and plunged themselves into the acrimonious negotiations over a $700 billion economic bailout.

On Friday, McCain reversed his pledge to stay in Washington until those negotiations concluded. And once on stage at the University of Mississippi,it was the exchanges about how to keep the United States safe that put the starkest differences between the two men on display.

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S.E.C. Concede Oversight Flaws Fueled Collapse
2008-09-27 13:39:21
The chairman of the Securities and Exchange Commission, a longtime proponent of deregulation, acknowledged on Friday that failures in a voluntary supervision program for Wall Street’s largest investment banks had contributed to the global financial crisis, and he abruptly shut the program down.

The S.E.C.’s oversight responsibilities will largely shift to the Federal Reserve, though the commission will continue to oversee the brokerage units of investment banks.

Also Friday, the S.E.C.’s inspector general released a report strongly criticizing the agency’s performance in monitoring Bear Stearnsbefore it collapsed in March. Christopher Cox, the commission chairman, said he agreed that the oversight program was “fundamentally flawed from the beginning.”

“The last six months have made it abundantly clear that voluntary regulation does not work,” he said in a statement.  The program “was fundamentally flawed from the beginning, because investment banks could opt in or out of supervision voluntarily. The fact that investment bank holding companies could withdraw from this voluntary supervision at their discretion diminished the perceived mandate” of the program, and “weakened its effectiveness,” he added.

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Pakistan's Faith In Its New Leader Is Shaken
2008-09-27 13:38:57
A week after the bomb attack on the Marriott Hotel here in Islamabad, Pakistan is struggling to deal with a financial meltdown and a terrorism threat that has moved to the nation’s heart and badly shaken confidence in the new government among Pakistanis, diplomats and investors alike.

In New York on Friday, President Asif Ali Zardari met with representatives of a group of donor countries, including the United States and Saudi Arabia, who were trying to come up with $5 billion to prevent Pakistan from defaulting on its debt.

Secretary of State Condoleezza Rice said afterward that the United States would work toward Pakistan’s economic stability, but no decisions were made, according to participants, except that the donors would meet again in Abu Dhabi next month.

As the financial situation has deteriorated, diplomats here have become increasingly uneasy about the government’s capacity to prevent further attacks on the scale of the hotel bombing, which killed at least 53 people and wounded more than 250 others.

“The cabinet in Islamabad is confronted with a general breakdown of the state,” said an editorial in the Friday issue of the Daily Times, a newspaper that generally supports the government of President Zardari.

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Pirates Of Ukranian Ship Demand $35 Million Ransom
2008-09-27 13:38:28
Somali pirates demanded a $35 million ransom on Saturday for a Ukrainian ship they had seized which was carrying 33 tanks and other military supplies to Kenya, a maritime official said.

"The gunmen are demanding $35 million to release the MV Faina and her crew," said Andrew Mwangura of the Mombasa-based East African Seafarers' Assistance Program.

Kenya's military said they had not yet made contact with the Somali pirates holding the ship, local media reported.

The 21 crew members aboard the ship include 17 Ukrainians, Russians and Latvians.

Mwangura said pirates had released a Malaysian chemical tanker, Bunga Melati 5, on Saturday after a $2 million ransom was paid.

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Car Bomb Near Syrian Intelligence Office Kills 17
2008-09-27 13:37:57
A powerful car bomb exploded outside a Syrian intelligence agency office Saturday morning in Damascus, the Syrian capital, killing 17 people and wounding at least 14 in the worst attack the country has seen since the 1980s.

The bomb, which the authorities said included more than 400 pounds of explosives, detonated at 8:45 a.m. near an intersection crowded with pedestrians and close to a major Shiite shrine. All of the dead and wounded were civilians, the Syrian state news agency reported.

The bombing followed two unusual political assassinations this year in Syria, a police state that generally maintains a tight grip on security, and it contributed to a growing sense of alarm about the possibility of internal subversion or foreign interference.

The bombing also occurred less than three months after Islamist inmates rioted at a prison outside the capital, taking hostages and engaging in gun battles with the authorities, in a confrontation that dragged on for weeks.

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Congress Plows Ahead Drafting The Bailout Bill
2008-09-27 03:49:45

Talks over the Bush administration's plan to stabilize the U.S. financial system lurched forward Friday, as rebellious Republicans returned to the negotiating table and congressional aides began the tortuous work of drafting a bill to execute one of the biggest interventions into the private market in modern history.

One day after they nearly derailed the plan, House Republicans agreed to send their second-ranking leader to negotiate with Democrats and Senate Republicans.

Lawmakers canceled plans to adjourn Friday for the November election and instead prepared to work through the weekend on the proposal, which would authorize the Treasury Department to spend up to $700 billion to take bad assets off the books of faltering financial institutions. Democrats said they hoped to announce an agreement late Sunday before Asian financial markets open, with a House vote on the measure possible by Monday. A Senate vote would follow later in the week.

"Great progress is being made. We will not leave until legislation is passed that will be signed by the president," said House Speaker Nancy Pelosi (D-California).

Added Rep. Barney Frank (D-Massachusetts), an architect of the legislation: "I am convinced that by Sunday we will have an agreement people will understand."

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