Free Internet Press Newsletter - Saturday February 21 2009 - (813)

Saturday February 21 2009 edition
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Experts: Bottom For Investors Not Yet In Sight 2009-02-21 03:35:14 With the Dow Jones industrial average plunging past its lowest point since the financial crisis began, panicked investors are asking: How much uglier can it get? Many market analysts and technicians armed with reams of historical data say that even though the Dow has given back all its gains - and more - from the five-year bull market that ended in 2007, it is unlikely the market has hit bottom. Mark Arbeter, chief technical strategist at Standard & Poor's Equity Research, said the current market environment is showing few of the signs that have characterized previous lows - high price volatility, high volumes of trading and even higher levels of fear. "Bear market bottoms tend to be violent affairs," he said. "You sell hard, you rally hard, you go down hard and then you're off to the races. And that's not what were seeing right now. Until this week, the market was really drifting sideways." For all the jitteriness out there, Arbeter added, the options market, where investors trade contracts that bet on the future direction of the stock market, is not showing the fear that signals that true capitulation has arrived. Many market participants think capitulation - when investors take their losses and get out of the market altogether - must precede a major market recovery. Read The Full Story Obama Widens Missile Strikes Inside Pakistan 2009-02-21 03:34:19 With two missile strikes over the past week, the Obama administration has expanded the covert war run by the Central Intelligence Agency inside Pakistan,attacking a militant network seeking to topple the Pakistani government. The missile strikes on training camps run by Baitullah Mehsud represent a broadening of the American campaign inside Pakistan, which has been largely carried out by drone aircraft. Under President Bush, the United States frequently attacked militants from al-Qaeda and the Taliban involved in cross-border attacks into Afghanistan, but had stopped short of raids aimed at Mehsud and his followers, who have played less of a direct role in attacks on American troops. The strikes are another sign that President Obama is continuing, and in some cases extending, Bush administration policy in using American spy agencies against terrorism suspects in Pakistan, as he had promised to do during his presidential campaign. At the same time, Obama has begun to scale back some of the Bush policies on the detention and interrogation of terrorism suspects, which he has criticized as counterproductive. Mehsud was identified early last year by both American and Pakistani officials as the man who had orchestrated the assassination of Benazir Bhutto, the former prime minister and the wife of Pakistan’s current president, Asif Ali Zardari. Bush included Mehsud’s name in a classified list of militant leaders whom the C.I.A. and American commandos were authorized to capture or kill. Read The Full Story Economy, Political Turmoil Cause Latvia's Government To Fall 2009-02-21 03:33:57 Lativia's center-right coalition government collapsed Friday, a victim of the country’s growing economic and political turmoil. It was the second European government, after Iceland, to disintegrate because of the international financial crisis. The government in Riga, faced with forecasts of a severe drop in the economy this year, was the first in Eastern Europe to succumb to turmoil caused by the crisis. Its collapse rounded out a week in which worries about feeble investment and output and shaky banks in Central and Eastern Europe coursed through international markets. Latvia has had a history of revolving-door politics and complex coalitions since pulling free of the Soviet Union in 1991. Prime Minister Ivars Godmanis, who presented his resignation to President Valdis Zatlers on Friday, had been in power only since December 2007. But the precipitous plunge of Latvia’s economy, which helped provoke riots last month that were the country’s worst since 1991, played a major part in the government’s downfall. Godmanis said he would continue to govern until a new coalition was formed. His departure comes at a critical juncture for Latvia, a country of 2.2 million people. After entering the European Union in 2004, Latvia and its neighbors Estonia and Lithuania posted Europe’s highest growth figures, earning the moniker the Baltic Tigers. Now Latvia shows the Continent’s biggest losses. Read The Full Story Markets Attempt To Overcome Bank Fears 2009-02-20 16:25:30 Wall Street’s fears about a government takeover of major banks eased somewhat on Friday afternoon after the White House reaffirmed its belief in a privately owned banking system. The Dow climbed back from a 200-point loss, and the technology-heavy Nasdaq was essentially unchanged after the Obama administration tried to reassure nervous investors that it wanted to avoid nationalizing troubled banks. “This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring that they are regulated sufficiently by this government,” said a spokesman for President Obama, Robert Gibbs. “That’s been our belief for quite some time, and we continue to have that.” At 3:30 p.m., the Dow Jones industrial average was down 96 points to 7,369, while the broader Standard & Poor’s 500-stock index was 1.1 percent lower. As the recession drags on and banking losses pile up, investors have been concerned that the Obama administration could step in and take over some large banks, effectively wiping out stockholders, analysts said. Senator Christopher J. Dodd, of Connecticut, chairman of the Senate Banking Committee, told Bloomberg Television that a short-term nationalization might be necessary. Read The Full Story GM's Saab Unit Files For Protection From Creditors 2009-02-20 16:25:06 General Motors Corp.'s Swedish-based subsidiary Saab went into court protection from creditors Friday so the unit can be spun off or sold by its struggling U.S. parent, said officials. The move is a last-ditch effort to get Saab in order for sale, but the danger of a collapse still hovers over the ailing brand because neither GM nor the Swedish government appears ready to provide enough money to keep it going as a freestanding entity. An application to reorganize the brand was filed at a district court in Vanersborg, in southwestern Sweden, Saab spokeswoman Margareta Hogstrom said. It was approved later Friday. GM, which is seeking help from the U.S. government to avoid bankruptcy at home, hopes the three-month reorganization process will put the Swedish brand into shape for a sale, said GM spokesman Chris Preuss. "We fully intend to be out of Saab by the end of the year," he said. Preuss said $1 billion was needed to keep the company running, of which GM was ready to pay $400 million. The U.S. automaker had asked the Swedish government to guarantee the rest, but "the guarantees have not materialized," he added. Read The Full Story Russia Reopens Case Of Murdered Journalist Politkovskaya 2009-02-20 16:24:34 A day after a Moscow jury acquitted all three suspects in the murder of the prominent investigative journalist Anna Politkovskaya, the presiding judge ordered the case reopened Friday. The judge, Yevgeni Zubov, ordered the Russian Investigative Committee to reopen the case and told the Interfax news agency that he would give investigators material evidence. The jury ruled unanimously on Thursday to acquit the three suspects , frustrating hopes that the process would bring to justice those responsible for ordering the killing. Prosecutors have said they will appeal the decision, and must do so in the next 10 days. The trial, which has cast a shadow over Vladimir V. Putin's Russia, left Ms. Politkovskaya’s supporters discouraged at what they saw as the government’s failure to pursue the case to its core. Coming exactly a month after the killing in broad daylight of a human rights lawyer and a 25-year-old reporter, the verdict was more cause for pessimism in human rights circles about political violence. “The fact that no one at all has been held accountable for this murder sends a very clear message to potential perpetrators: You can do it, and you can get away with it,” said Tatyana Lokshina, deputy director of the Human Rights Watch Moscow bureau. “Brazen killings have become almost routine in the Russian Federation.” Read The Full Story U.S. Soldier Guilty Of Murder In Deaths Of 4 Iraqis 2009-02-20 16:24:01 A U.S. Army medic was convicted of murder Friday for his involvement in the execution-style slayings of four bound and blindfolded Iraqi detainees shot in the back of the head in the spring of 2007. Sgt. Michael Leahy, Jr., was found guilty on charges of murder and conspiracy to commit murder by the nine-person jury who had heard testimony about the killings at the court-martial at the Army's Rose Barracks Courthouse since Wednesday. A sentencing hearing was scheduled later Friday, and Leahy could receive a life sentence and a dishonorable discharge, pending the judge's decision. Leahy, 28, was acquitted of murder in a separate incident involving the death of another Iraqi in January 2007. Wearing his dress uniform, he sat impassively as the verdicts were handed down by the foreman of the jury made up of officers and enlisted personnel. Leahy pleaded not guilty to charges of premeditated murder, conspiracy to commit premeditated murder and obstruction of justice in the deaths of a total of four Iraqi prisoners who were dumped in a Baghdad canal in 2007 after they were killed. Read The Full Story FBI Finds Stanford: 'We Said, Are You This Guy? He Said Yes' 2009-02-20 02:23:43 A two-day global hunt to find the cricket tycoon Sir Allen Stanford in the wake of allegations that he masterminded a massive financial swindle came to an end last night, when the FBI said it had tracked him down to Virginia. The discovery of the Texas billionaire in Fredericksburg, about 50 miles south-west of Washington, D.C., spared the American financial regulators further embarrassment after they issued charges against Stanford on Tuesday without being certain of his whereabouts. It allowed the Securities and Exchange Commission to serve papers on the businessman, thus rendering its proceedings against him active in what it claims to be a financial fraud of "shocking magnitude". The FBI said last night that he had been found as he was driving a car in Fredericksburg, noting he was not a fugitive and had been very co-operative. "He wasn't hard to find," the FBI said. "We said, 'Are you this guy?', he said, 'Yes', and we served the papers on him." Read The Full Story	Bank Shares Topple On Talk Of Nationalization 2009-02-21 03:34:33 The specter of bank nationalization is driving a historic fire sale of stocks including Citigroup and Bank of America,  making it harder for those firms to survive and imperiling the efforts of the Obama administration to keep banks in private hands. A burgeoning chorus of prominent economists and members of Congress has concluded that some banks lack the money to solve their own problems and charges that the government has not yet announced an effective plan to help and that time is running short. The administration has publicly and repeatedly denied that the banking system will be nationalized; but some experts and lawmakers say the government may be forced to take temporary control of the most crippled firms to scrub their books of troubled assets. "I don't welcome that at all, but I could see how it's possible it may happen," Christopher J. Dodd (D-Connecticut), chairman of the Senate Banking Committee, said on Bloomberg Television Friday. "I'm concerned that we may end up having to do that, at least for a short time." Read The Full Story Agencies Form Task Force In Maryland On Mortgage Fraud 2009-02-21 03:34:10 Maryland U.S. Attorney Rod J. Rosenstein Friday announced the formation of a task force linking federal, state and local agencies in the fight against mortgage fraud, a group whose goals will include seizing assets from scam artists and paying restitution to victims. "None of our agencies alone has the resources to be able to confront this crisis," Rosenstein said at a news conference in Baltimore. "But working together, we think we've been very effective at targeting some of the significant offenders in the mortgage fraud industry here in Maryland." Such frauds come in many forms; a common scheme targets homeowners who are facing foreclosure by falsely promising to help them keep their homes. Prince George's County has the largest number of foreclosures in the state, said officials. The task force aims to fight a "tide of misery that's been brought upon homeowners" across the state, said Glenn F. Ivey, the state's attorney for Prince George's. "The American dream has been under assault for some time now," he said. "This task force represents the counteroffensive, the coordinated counteroffensive to that attack." Read The Full Story Obama Cautions Mayors To Use Stimulus Funds Wisely 2009-02-20 16:25:41 President Obama warned the nation's mayors Friday that he will "call them out" if the federal stimulus money is wasted on pork projects that do not generate jobs for the struggling economy. "If a federal agency proposes a project that will waste that money, I will not hesitate to call them out on it and put a stop to it," Obama told a gathering of 80 mayors at the White House. After meeting with Obama and several of his Cabinet officials in a closed-door meeting in the East Wing of the White House, the mayors said they welcomed the added scrutiny. "We get called out every day at the local level," said Miami Mayor Manuel A. Diaz, the president of the United States Conference of Mayors. "We have plenty of constituents that will be doing that before the president does." Passage of the $787 billion stimulus plan means that money will soon begin flowing to the states, and is already setting off political scrambles in states and cities over who controls how that money is spent. Read The Full Story U.S.-China Trade Ties Erode Amid Protectionism Accusations 2009-02-20 16:25:17 The global financial crisis is bringing out the worst in the trade relationship between the United States and China. After three years of largely friendly talks about economic issues, both in the past few weeks have blamed the other for the world's problems. U.S. Treasury Secretary Timothy F. Geithner accused China of "manipulating" its currency, vowing in written testimony submitted for his confirmation hearing that the United States would act "aggressively" to remedy the situation. The U.S. Trade Representative's office, in a harshly worded and wide-ranging complaint to the World Trade Organization in December, alleged that China uses cash grants, cheap loans and other subsidies to illegally aid its exporters. China, for its part, has bashed the "Buy America" program embedded in the just-passed stimulus package, calling it "poison to the solution" of the global economic crisis. At the World Economic Forum meeting in Davos three weeks ago, Chinese Premier Wen Jiabao, without naming the United States explicitly, blamed the financial crisis on unsupervised capitalism. "The crisis has pushed the China-U.S. relationship to a flash point. From now on, it will either become more stable or more confrontational," said Mei Xinyu, a trade expert with the Chinese Commerce Ministry's research arm. Read The Full Story Illinois Gov. Quinn: Burris Should Resign From U.S. Senate 2009-02-20 16:24:50 Illinois Gov. Pat Quinn (D) said Friday that the time has come for Sen. Roland W. Burris (D-Illinois) to resign and allow a special election to be held for the seat once held by President Obama. Quinn said Burris never should have accepted the appointment from then-Gov. Rod Blagojevich and erred when he failed to disclose fully his contacts with some of Blagojevich's closest advisers, including the governor's brother. He praised Burris as a "wonderful human being" and a "dear friend." He called him "inspirational" and "God-fearing." But he said a decision to resign would be seen as "an act of fortitude and doing what's right for the common good." "To step aside would be a heroic act," Quinn told reporters in Chicago, "and I ask Roland to do it." Quinn backed a new proposal in the state legislature to change the way vacancies are filled. Under the proposal, the governor would appoint a temporary senator until voters could fill the seat in an election about 120 days later. The temporary pick would be required to agree in advance not to run in the election. Read The Full Story Netanyahu Tapped To Form Israel's New Government 2009-02-20 16:24:24 Benjamin Netanyahu, leader of the conservative Likud Party, was invited by Israel's president, Shimon Peres, on Friday to take the lead in assembling the next government. Whatever form that government takes, Netanyahu, 59, is widely expected to return as prime minister a decade after the last government he led fell apart. In a brief but statesmanlike speech at the presidential residence on Friday afternoon, Netanyahu accepted the mandate and immediately called on the centrist Kadima Party, led by Tzipi Livni, and the center-left Labor Party, led by Ehud Barak, to join him in a unity government. He said national unity was necessary in order for Israel to contend with the formidable challenges ahead. “Let us unite to secure the future of the State of Israel,” said Netanyahu, adding that he wanted to discuss the possibility of forming a broad government “for the good of the people and the state.” Netanyahu and Livni have agreed to meet on Sunday, but the negotiations between them are likely to be tough and the chances of success are unclear. Livni, the current foreign minister and Netanyahu’s main rival for the premiership, has so far refused the idea of joining a government led by Netanyahu and including several ultra-orthodox and far-right parties. Committed to the peace process with the Palestinians, she has said she would rather go into the opposition than serve as a fig-leaf for a coalition of the right. Read The Full Story IAEA: Iran Has Enough Enriched Uranium To Build Nuclear Weapon 2009-02-20 02:23:54 The United Nation's nuclear watchdog reported Thursday that Iran had managed to enrich a metric ton of low enriched uranium (LEU), which U.N. officials say is technically enough to build a nuclear weapon. U.N. officials cautioned that there remained many practical obstacles to the production of a bomb, and pointed out that the uranium is under close surveillance, and the report issued by the International Atomic Energy Agency (IAEA) said Iran appeared to have slowed down the rate at which its uranium enrichment capacity is expanding. The report is likely to raise further the already high tensions surrounding the Iranian nuclear program. One respected U.S. analyst said that the tonne milestone meant that Iran had reached "breakout capacity" - the theoretical ability to produce the 20-25 kilogram highly enriched uranium needed for one functioning warhead. Others were more cautious but said there was plenty more in the report to raise the level of international concern. The IAEA said that Iran had put a roof over a "heavy-water" nuclear reactor being built near the town of Arak, capable and was preventing agency inspectors from carrying out ground inspections, meaning that they no longer had any way of seeing what was being done at the facility, which could potentially produce plutonium. Iran is also refusing to tell the IAEA where it is manufacturing the centrifuges used to enrich uranium, so the agency cannot confirm how many are being produced and where they are being installed. Read The Full Story Bailout Adds 1.5 Trillion Pounds To Britain's Public Debt 2009-02-20 02:23:33 Gordon Brown suffered a double blow Thursday when government statisticians recalculated Britain's national debt at £1.5 trillion and the CBI accused the prime minister of lacking a coherent economic recovery strategy. As the prime minister warned in Rome, Italy, that the world was being hit by an "economic hurricane", his fightback plan at home was complicated when the Office for National Statistics raised the prospect of Britain's national debt rising to 150% of national income from its current 48%. The ONS classified Lloyds and Royal Bank of Scotland as public corporations and thus added all their liabilities - up to £1.5 trillion - on to the taxpayers' balance sheet. The ONS said the recapitalizations of Royal Bank of Scotland and Lloyds Banking Group meant they had in effect become public corporations, which would have to add the full extent of their liabilities to the national debt. The move, which the Treasury dismissed as a "technical classification" with few policy implications, prompted Tory warnings that Britain was now facing a debt crisis. Kenneth Clarke, the shadow business secretary, called on Alistair Darling, the Chancellor of the Exchequer, to introduce a dramatic reduction in the growth in public spending from this April, rather than waiting until next year. "We are going to quite staggering levels of public debt," Clarke told the BBC. "The voters are going to have to pay the interest on all this mounting debt. " Read The Full Story
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