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Thursday, September 25, 2008

Free Internet Press Newsletter - Thursday September 25 2008 - (813)

Thursday September 25 2008 edition
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Original Treasury Bailout Plan Is Dead, But Revised Plan Is Emerging
2008-09-24 20:55:56
The Treasury's plan to spend up to $700 billion of taxpayers' money to bail out the nation's financial system was recognized as dead Wednesday as lawmakers in Congress made clear that they're going to make significant changes.

Treasury Secretary Henry Paulson, who has spent two days urging members to pass legislation quickly and cleanly, conceded Wednesday that any bill will have to have limits on executive pay at troubled firms and hinted he would accept other changes.

"The American people are angry about executive compensation and rightfully so," Paulson told the House Financial Services Committee.

His willingness to publicly agree to the pay provision was another strong sign that Congress and the administration were working toward the same goal - enactment of a major financial bailout package, and soon.

"It means we are closer," said Financial Services Committee Chairman Barney Frank, D-Massachusetts. He predicted that House and Senate Democrats would have an agreement by Thursday to present to Republicans.

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Commentary: Trust Us? In A Pig's Arse, I Say
2008-09-24 20:55:30
Intellpuke: This commentary was written by McClatchy Newspapers writer Joseph L. Galloway, and appeared on the McClatchy website edition for Wednesday, Sept. 24, 2008.

"Trust us!" the earnest Capitol Hill staffer told me.

I'd wandered into a trendy watering hole not far from the marble halls where our nation's legislators gather regularly in apparent violation of parole board regulations, which forbid felons from consorting together. A McCain campaign meeting was going on in one back room. Who knows what was going on in the other back rooms?

All I wanted was a quiet drink after a long day. What I got was ambushed by said staffer, who was all hot and bothered over a recent column of mine taking both Republicans and Democrats to task for passing an expanded and extended FISA act legalizing illegal wiretapping and surveillance of every American citizen with a cell phone or a computer.

He claimed to have labored mightily on said Act, and declared that even though the NSA (No Such Agency) was gulping down terabytes of data every hour, there was no way the National Security Agency could misuse that information.

They were really only sifting and sorting it for pinpointed terrorism targets, he said, so we were just as safe from their snooping as if, well, as if they weren’t snooping at all.

"Trust us," he asked most earnestly.

I howled with laughter. "Trust you? Trust YOU? After all that's gone down in the last seven-plus years?"

He at least had the decency to begin laughing along with me at so ludicrous a suggestion falling out of his own mouth.

Now they're at it again. The Bush administration is telling Congress and the president himself is on television telling the American people: Trust us.

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U.S. House Removes Timber Payments From Spending Bill
2008-09-24 20:55:03
The U.S. House on Wednesday rejected a Senate-backed measure extending a multi-year program of payments to rural counties hurt by federal logging cutbacks.

The House removed the provision from a huge spending bill after the White House objected to the legislation. A White House statement said the timber program should be phased out, as the Bush administration had previously proposed.

Rep. Peter DeFazio, D-Oregon, was outraged at the removal of the timber program, which was approved Tuesday by the Senate.

He called the vote extraordinarily disappointing and devastating to counties in southwest Oregon.

"It is outrageous that the president is willing to borrow $465 million for foreign aid, the majority of which is going to the Republic of Georgia, and $700 billion to bail out his Wall Street buddies, but he is turning his back on schools, law enforcement and other vital public services in rural communities," said DeFazio.

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Obama Rejects McCain Call To Delay Debate
2008-09-24 20:11:07
The financial crisis on Wall Street overwhelmed the 2008 presidential race today, as Republican presidential nominee John McCain this afternoon said he would suspend his presidential campaign tomorrow to return to Washington to work on the proposed $700 billion bailout plan. Democratic rival Barack Obama declined to follow suit, saying he would return only if congressional leaders requested his presence and said there was no reason to suspend the campaign or delay Friday night's presidential debate.

A president, Obama said, "is going to have to deal with more than one thing at a time."

The dramatic events on the campaign trail began after Obama called McCain early this morning to seek a joint statement on on their goals for the bailout measure now being negotiated between Congress and the Bush administration. Yet before that statement was issued, McCain went before television cameras to say he was putting the campaign on hold and wanted to delay Friday night's presidential debate on foreign policy. Among other things, McCain senior adviser Steve Schmidt said McCain would begin unilaterally pulling down his campaign ads and cease fundraising.

"It has become clear that no consensus has developed to support the Administration's proposal,'' McCain said in a brief statement to reporters. "I do not believe that the plan on the table will pass as it currently stands, and we are running out of time.''

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N. Korea Bars International Nuclear Inspectors
2008-09-24 20:10:38
North Korea plans to restart nuclear fuel processing next week and has banned international inspectors from its Yongbyon reactor, the International Atomic Energy Agency (IAEA) announced Wednesday.

Acting on a North Korean request, inspectors from the Vienna, Austria-based agency removed all their surveillance equipment and seals from the reactor Wednesday and will have no further access to the reprocessing site, said the IAEA .

Mohamed ElBaradei, chief of the IAEA, told his board that North Korea intends "to introduce nuclear material to the reprocessing plant in one week's time."

North Korea's action comes after several weeks of increasingly defiant threats that it would soon restart its nuclear program. The United States and five other nations are trying to persuade the reclusive and poverty-stricken Stalinist state to abandon its nuclear program in return for food, fuel and a phased end to diplomatic isolation.

Earlier this month, though, North Korea angrily announced that it is no longer interested in being removed from a U.S. list of states that sponsor terrorism. Press reports in South Korea said last week that North Korea was testing a new engine for an intercontinental missile with sufficient range to hit targets on the West Coast of the United States.

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FBI Investigating Companies At Heart Of Financial Meltdown
2008-09-24 02:35:18
The FBI is investigating four major U.S. financial institutions whose collapse helped trigger a $700 billion bailout plan by the Bush administration, The Associated Press has learned.

Two law enforcement officials said Tuesday the FBI is looking at potential fraud by mortgage finance giants Fannie Mae and Freddie Mac, and insurer American International Group Inc. Additionally, a senior law enforcement official said Lehman Brothers Holdings Inc. also is under investigation.

The inquiries will focus on the financial institutions and the individuals that ran them, said the senior law enforcement official.

The law enforcement officials spoke on condition of anonymity because the investigations are ongoing and are in the very early stages.

Officials said the new inquiries bring to 26 the number of corporate lenders under investigation over the past year.

Spokesmen for AIG, Fannie Mae and Freddie Mac did not immediately return calls for comment Tuesday evening. A Lehman spokesman did not have an immediate comment.

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Poll: Economic Fears Give Obama Clear Lead Over McCain
2008-09-24 02:34:48

Turmoil in the financial industry and growing pessimism about the economy have altered the shape of the presidential race, giving Democratic nominee Barack Obama the first clear lead of the general-election campaign over Republican John McCain, according to the latest Washington Post-ABC News national poll. 

Just 9 percent of those surveyed rated the economy as good or excellent, the first time that number has been in single digits since the days just before the 1992 election. Just 14 percent said the country is heading in the right direction, equaling the record low on that question in polls dating back to 1973.

More voters trust Obama to deal with the economy, and he currently has a big edge as the candidate who is more in tune with the economic problems Americans now face. He also has a double-digit advantage on handling the current problems on Wall Street and, as a result, there has been a rise in his overall support. The poll found that, among likely voters, Obama now leads McCain by 52 percent to 43 percent. Two weeks ago, in the days immediately following the Republican National Convention, the race was essentially even, with McCain at 49 percent and Obama at 47 percent.

As a point of comparison, neither of the last two Democratic nominees - John F. Kerry in 2004 or Al Gore in 2000 - recorded support above 50 percent in a pre-election poll by the Post and ABC News.

Last week's near-meltdown in the financial markets and the subsequent debate in Washington over a proposed government bailout of troubled financial institutions have made the economy even more important in the minds of voters. Fully 50 percent called the economy and jobs the single most important issue that will determine their vote, up from 37 percent two weeks ago. In contrast, just 9 percent cited the Iraq war as their most important issue, its lowest of the campaign.

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U.S. Defense Secretary Pessimistic On Pakistani Support
2008-09-24 02:33:50
Pakistan's leaders and military cannot publicly support U.S. cross-border operations against militant groups in Pakistan's western tribal areas, but such strikes are needed to protect American troops in Afghanistan and defend the United States against its gravest terrorist threat, U.S. Defense Secretary Robert M. Gates said Tuesday. 

"We will do what is necessary to protect our troops," Gates told the Senate Armed Services Committee. Asked whether Pakistan's government would back unilateral U.S. military operations into Pakistan, he said: "I don't think they can do that."

Gates said that despite a growing insurgency in Afghanistan, fueled by fighters from Pakistan, the spring of 2009 is the earliest the Pentagon would be able to send as many as three more U.S. combat brigades there to meet a request of American commanders for about 10,000 more troops.

"I believe we will be able to meet that commanders' requirement, but in the spring and summer of 2009," Gates said.

Western Pakistan has surpassed Afghanistan and Iraq as the base for al-Qaeda and other Islamist extremist groups that now pose the biggest terrorist threat to the United States, Gates said. "If you ask me today, after the successes that we've had against al-Qaeda in Iraq, where the greatest threat to the homeland lies, I would tell you it's in western Pakistan," he said.

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No Regrets For Bush In Last U.N. Speech
2008-09-24 02:33:01

George Bush stood unrepentant and unbowed before the 192 member countries of the United Nations General Assembly Tuesday to deliver a valedictory address devoted almost entirely to terrorism, which he described as an evil that must be defeated.

In his eighth and final address to a largely silent hall of world leaders, the U.S. president sounded a note that has changed remarkably little since he first spoke to the general assembly in the wake of the September 11, 2001,  attacks on New York and Washington, D.C. He said the global movement of violent extremists remained a challenge as serious as any since the foundation of the U.N. in 1945: "Like slavery and piracy, terrorism has no place in the modern world," he said.

Bush took the opportunity to assess his two terms in power that contained no regrets and no apology.

Afghanistan and Iraq had been transformed, he said, "from regimes that actively sponsor terror to democracies that fight terror".

Libya had renounced its backing of extremists and dropped its pursuit of nuclear weapons, and Pakistan and Saudi Arabia were engaged in the struggle to root out extremism. Democracy, too, had spread around the world under his watch. "Whenever or wherever people are given the choice, they chose freedom," he said.

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Gov. Schwarzenegger Signs $145-Billion California State Budget
2008-09-24 02:32:22
Gov. Arnold Schwarzenegger signed the state's tardiest budget on record Tuesday after eliminating $510 million in spending, including financial aid for elderly renters and homeowners and a program he championed to lower prescription drug prices for low-income Californians.

His signature allows more than 80,000 state vendors' outstanding bills to be paid. Some providers have gone nearly three months without promised funding.

The final version of the budget spends $145 billion. It sets aside a $1.7-billion reserve fund - nearly $1 billion more than the Legislature approved. Schwarzenegger said his desire for a bigger financial cushion was the motivation for most of his vetoes.

"It's painful," he told reporters at an unrelated event Tuesday. "I had to think about it, rethink about it, but we needed the money, and I just wanted people to understand that the Legislature gave me no choice but to make those cuts to be fiscally responsible.

"Our economy, not in this state alone but in the country and worldwide, is in a situation where we have to be very, very careful with our spending," he said.

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Democrats: Republican Clerk Discouraging Colorado Students From Voting
2008-09-24 20:55:44
Colorado Democrats accused a Republican county clerk Wednesday of falsely informing Colorado College that students from outside the state could not register to vote if their parents claimed them as a dependent on their tax returns.

At a news conference in Colorado Springs, Democrats also charged that county clerk Robert Balink took several steps to dampen voter registrations among college students, who are likely to favor Democrat Barack Obama. Balink was a delegate to the Republican National Convention.

"When election officials spread false information about who is eligible to vote and remove, not add, polling places, we need to be concerned that eligible voters will be denied their right to vote," said Pat Waak, chairwoman of the Colorado Democratic Party.

Balink's actions marked the second time in recent weeks that local election officials have sought to discourage college students from voting. Democrats recently have made a series of accusations that Republicans are attempting to suppress the Democratic voter turnout in the November presidential election.

The New York Times reported on Sept. 8 that a local registrar at Virginia Tech University in Blacksburg, Virginia, issued two releases that incorrectly suggested dire consequences for students who registered to vote, including the possibility they no longer could be claimed as dependents on their parents' tax returns.

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Guantanamo Prosecutor Resigns Over Detainee Case
2008-09-24 20:55:13
A U.S. military prosecutor at Guantanamo Bay has quit because his office suppressed evidence that could clear a young Afghan detainee of war crimes charges, defense lawyers said Wednesday.

The prosecutor, Army Lt. Col. Darrel Vandeveld, is now supporting a defense bid to dismiss war crimes charges against Mohammed Jawad because of the alleged misconduct, according to Michael Berrigan, the deputy chief defense counsel for the Guantanamo tribunals.

The chief prosecutor, Army Col. Lawrence Morris, denied that his office withheld evidence and said Vandeveld told him he was leaving his post for "personal reasons".

"All you have is someone who is disappointed because his superiors didn't see the wisdom of his recommendation in a case," said Morris.

Jawad, who was captured in Afghanistan when he was 16 or 17, is facing trial for allegedly throwing a grenade that injured two American soldiers and their Afghan interpreter in December 2002. He faces a maximum life sentence.

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In Televised Address, Bush To Ask Nation To Back Wall Street Bailout
2008-09-24 20:11:19

President Bush will address the nation Wednesday night on the financial crisis in hopes of persuading a skeptical public to support a $700 billion plan to rescue America's financial system.

The prime-time, televised speech, scheduled for 9 p.m. Eastern time, was announced by the White House, which said the administration and Congress are moving toward agreement on legislation enabling the bailout.

Republican presidential candidate John McCain disputed that assertion and announced he would suspend his campaign Thursday and return to Washington, D.C., to help work out a deal.

The senator from Arizona also called for the postponement of a debate scheduled for Friday night in Mississippi with his Democratic opponent, Sen. Barack Obama (Illinois), but Obama rejected that idea this afternoon.

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Congressional Budget Office Chief: Rescue Plan Could Worsen Economic Crisis
2008-09-24 20:10:53

The director of the Congressional Budget Office said Wednesday that the proposed $700 billion Wall Street bailout could actually worsen the current financial crisis.

During testimony before the House Budget Committee, Peter R. Orszag - Congress' top bookkeeper - said the bailout could expose the way companies are stowing toxic assets on their books, leading to greater problems.

"Ironically, the intervention could even trigger additional failures of large institutions, because some institutions may be carrying troubled assets on their books at inflated values," Orszag said in his testimony. "Establishing clearer prices might reveal those institutions to be insolvent."

In an interview later, Orszag explained using the following example: Suppose a company has Asset X, whose value is recorded on the books as $100. Because of the current economic decline, Asset X's real value has dropped to $50. If the company takes part in the government bailout and sells Asset X for $50, the company has to report a $50 loss on its books. On a scale of millions of dollars, such write-downs could ruin a company.

Such companies "look solvent today only because it's kind of hidden," said Orszag. "They actually are insolvent" already, he said.

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Southeastern U.S. Sees Widespread Gasoline Shortages
2008-09-24 02:35:26
When the gas gauge on Jada Burns' Kia wagon was on empty Tuesday afternoon, she lucked out, catching her neighborhood Chevron station at a time when its pumps were open.

The clerk, Mamadou Diallo, said he expected to be sold out by rush hour. With drivers already forming a line, it was about 20 minutes before Burns could fill up.

"This is the first time I've had to actually wait," said Burns, 33, who earlier had passed by a station where the line was much longer. "This is crazy, isn't it?"

The impact of hurricanes Gustav and Ike was being felt far beyond the wind-battered Gulf Coast this week: In Southeastern states, gas shortages and long lines were widespread due to oil industry interruptions and damage to the energy infrastructure in the Gulf of Mexico.

At least half of the total gas stations in Georgia, Virginia, Tennessee and the Carolinas ran out of gas over the weekend, said Tom Kloza, an analyst with the Oil Price Information Service.

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In U.S. Era Of Offshore Drilling Ban Draws To A Close
2008-09-24 02:35:05
A long-standing congressional ban on new offshore oil drilling will expire in seven days, with Democratic leaders conceding Tuesday they stand no chance of renewing it this year over President Bush's opposition - and in an election year in which gasoline prices have become a hot campaign issue.

With the moratorium lapsing, the issue will gain greater prominence in the election because it will be up to the next president and Congress to decide whether to renew all or part of the ban, which was imposed in 1981 to put much of the California coast off-limits to new oil rigs and expanded to much of the rest of the U.S. coasts in 1985.

"This next election will decide what our drilling policy will be," said Rep. David R. Obey (D-Wisconsin), chairman of the House Appropriations Committee.

Republican presidential nominee John McCain, like President Bush, has called for lifting the ban entirely, whereas Democratic nominee Barack Obama has said he would consider limited offshore drilling as a compromise in a comprehensive energy policy.

Once the ban expires, oil companies could seek federal approval to drill three miles offshore or farther. Congressional supporters of the moratorium hope that before any new drilling can begin they can renew it or at least win approval of compromise legislation that would forbid energy exploration up to 50 miles off the coast but let states decide whether to allow it beyond that.

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Poll: Americans Reluctant To Fund Bailout
2008-09-24 02:34:37
Most Americans don't believe the government has responsibility for bailing out financial firms with taxpayer money, a core part of the rescue plan Congress is considering to halt the near-meltdown of the nation's financial markets, a Los Angeles Times/Bloomberg poll has found.

Reluctance to use public money to rescue private firms runs across the population, the poll found: Democrats and Republicans, high-income and low-income families alike.

Asked whether the government should use taxpayer dollars to rescue financial firms whose collapse could have adverse effects on the economy, 55% of the poll's respondents said they did not believe the government should be responsible for funding a bailout plan.

However, opinions about the bailout plan appear to be malleable, perhaps because voters are still learning about the proposal. When some of those who opposed a bailout were interviewed, several said they would reluctantly accept a bailout plan if Congress decided one was necessary.

"It sticks in my craw," said Camille Woyak, 82, a retired office worker in Appleton, Wisconsin, who said she opposed a bailout. "There should be some other solution. But I think the taxpayers are going to have to cover it. I don't know any other way out.

"I lived through the Depression as a little girl," she added. "I don't want to go through that again."
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Warren Buffett To Invest $5 Billion In Goldman Sachs
2008-09-24 02:33:34

Warren Buffett has agreed to invest $5 billion in Goldman Sachs, giving the bank a strong vote of confidence after the tumultuous events on Wall Street of the past few weeks.

Goldman said it would also raise another $2.5 billion in a public offering of shares.

The investment follows the decision over the weekend by both Goldman and Morgan Stanley to change their status from investment banks to more traditional banks, ending an era on Wall Street.

Buffett, one of America's richest men, is widely admired for his astute, common sense approach to investment and the annual meetings for his company Berkshire Hathaway in his hometown of Omaha, Nebraska draw huge crowds. His decision to invest in Goldman will likely be received as a welcome backing for the broader financial markets, which have been devastated by mortgage-related securities that turned sour.

Treasury secretary Henry Paulson was in Washington Tuesday defending a planned $700 billion bailout of Wall Street.

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Taro Aso Readies To Become Japan's New Prime Minister
2008-09-24 02:32:43
Ruling Liberal Democratic Party leader Taro Aso readied to take over as Japan's prime minister in a parliamentary vote Wednesday, piecing together a Cabinet expected to include a fellow outspoken hawk as finance chief.

Aso, who was chosen as president of the long-ruling LDP on Monday, faced an afternoon ballot in a politically split parliament. Aso was all but ensured of winning because of the LDP's power in the lower house.

The right-leaning former foreign minister will confront a country wracked by political divisions and concerns over the economy, which has stalled in recent months amid the ballooning financial crisis in the United States.

"If you look at the current period, it's not a stable one," he told reporters. "These are turbulent times with the financial situation and everything else."

The vote on Wednesday was to reflect that turbulence.

Aso, 68, was expected to win easily in the LDP-controlled lower house, but the opposition-dominated upper house was expected to vote for Democratic Party of Japan leader Ichiro Ozawa. Then, after a lengthy conference, the lower house was to formally override the upper house vote, installing Aso as premier.

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