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Saturday, February 28, 2009

Free Internet Press Newsletter - Saturday February 28 2009 - (813)

Saturday February 28 2009 edition
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Economic Downturn Threatens To Undermine Government Spending Plan
2009-02-28 00:40:19
The economy is spiraling down at an accelerating pace, threatening to undermine the Obama administration’s spending plans, which anticipate vigorous rates of growth in years to come.

A sense of disconnect between the projections by the White House and the grim realities of everyday American life was enhanced on Friday, as the Commerce Department gave a harsher assessment for the last three months of 2008. In place of an initial estimate that the economy contracted at an annualized rate of 3.8 percent - already abysmal -  the government said that the pace of decline was actually 6.2 percent, making it the worst quarter since 1982.

The fortunes of the American economy have grown so alarming and the pace of the decline so swift that economists are now straining to describe where events are headed, dusting off a word that has not been invoked since the 1940s: depression.

Economists are not making comparisons with the Great Depression of the 1930s, when the unemployment rate reached 25 percent. Current conditions are not even as poor as during the twin recessions of the 1980s, when unemployment exceeded 10 percent, though many experts assert this downturn is on track to be significantly worse.

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Gov. Schwarzenegger Declares Drought Emergency In California
2009-02-28 00:39:48
Gov. Arnold Schwarzenegger proclaimed a statewide drought emergency Friday, urging Californians to cut water use by 20% and easing the way for water sales from Northern California to Southern California cities and San Joaquin Valley farms.

The proclamation amplifies a drought emergency that Schwarzenegger declared last year in several agricultural counties, where more than 100,000 acres of farmland have gone unplanted for lack of water.

The drought declaration stops short of mandatory water rationing; but it asks urban water users to step up conservation efforts and it directs state agencies to cut back on landscape irrigation, including along highways.

The directive also orders the state to streamline permitting for water projects, such as recycling or desalination operations, and expedite water transfers to needy irrigation districts and urban areas in Southern California.

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Federal Court Rejects Obama Administration Bid To Stop Wiretapping Suit
2009-02-28 00:39:19
The Obama administration has lost its argument that a potential threat to national security should stop a lawsuit challenging the government's warrantless wiretapping program.

A federal appeals court in San Francisco on Friday rejected the Justice Department's request for an emergency stay in a case involving a defunct Islamic charity.

Yet government lawyers signaled they would continue fighting to keep the information secret, setting up a new showdown between the courts and the White House over national security.

The Obama administration, like the Bush administration before it, claimed national security would be compromised if a lawsuit brought by the Oregon chapter of the charity, Al-Haramain Islamic Foundation, was allowed to proceed.

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U. Of Florida Professor Accused Of Pocketing NASA Money
2009-02-28 00:38:47
Federal investigators are accusing a University of Florida professor and three members of his family of fraudulently receiving millions of dollars from NASA and then funneling money to their personal bank accounts, court documents show.

Agents from the Federal Bureau of Investigation raided the office of the university’s Innovative Nuclear Space Power and Propulsion Institute, which was founded by the professor, Samim Anghaie, who is its director and teaches radiological engineering.

According to court documents, Dr. Anghaie and his family members set up a company called New Era Technology, or Netech. His wife, Sousan Anghaie, was its president.

Court documents assert that the company submitted fraudulent proposals to the National Aeronautics and Space Administration for research contracts. As a result, the company received several NASA contracts. The company is also accused of submitting fraudulent invoices to NASA for hours it said were worked by employees.

Investigators say Dr. Anghaie and his wife diverted hundreds of thousands of dollars of illegally obtained government money from their corporate bank account to personal accounts. The government says some money was diverted to their sons, Ali Anghaie and Hamid Anghaie.

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U.S. Shares Move Lower, Dow Closes Down 119 Points
2009-02-27 17:13:37

Investors steadied themselves Friday after initially dumping stocks when Citigroup announced details of its plan to turn over more of the company to the government.

Financial shares still dragged on the market Friday afternoon and shares turn lower in the last hour of trading. Other worries about the economy, and a report that the General Electric Company cut its dividend by 68 percent also weighed on traders.

At the close, the Dow Jones industrial average was down 119.15 points or 1.6 percent to 7,062.93.

Broader stock indicators were also down. The Standard & Poor’s 500-stock index fell 17.74 points, or 2.3 percent, to 735.09. The index breached its Nov. 21 trading low of 741.02, which came during the height of the credit crisis.  Investors had hoped would mark the bottom of the market’s fall from October 2007.

The Nasdaq composite index fell 13.63 points or 0.98 percent, to 1,377.84.

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U.K. Police Hunt Radioactive School Principal Wanted On Child Pornography Charges
2009-02-27 17:12:50

British police appealed Friday for help hunting a "dangerously radioactive" college principal wanted on child porn charges.

Seriously-ill Thomas Leopold, who had been given large doses of radiation for a thyroid condition, skipped bail shortly before his trial two weeks ago.

He then drove on to a ferry heading for Rosslare in County Wexford, southeast Ireland.

The 42-year-old head of a tutorial college in Harrow, Middlesex, has not been seen since.

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U.S. Recession Deepens As GDP Shrinks 6.2 Percent In Last Quarter
2009-02-27 12:19:22
The depths of the recession became much clearer Friday morning as the government announced that the economy shrank at a dramatic pace of 6.2% in the final three months of last year, the country's worst economic performance since 1982.

The Commerce Department sharply revised its earlier estimate of a 3.8% contraction in the fourth quarter for gross domestic product, the value of all goods and services produced by the economy. That initial figure was more optimistic than the 5% to 6% drop that most economists had predicted.

Given those predictions, Friday's announcement wasn't too surprising, said Diane Swonk, chief economist of Mesirow Financial, but it still represents a sobering view of the depths of the recession, she said.

"It's one thing to know reality. It's another thing to actually be faced with it," she said.

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Obama Administration To Rescind 'Conscience' Regulation
2009-02-27 12:18:57

The Obama administration has begun the process of rescinding sweeping new federal protections that were granted in December to health-care workers who refuse to provide care that violates their personal, moral or religious beliefs.

The Office of Management and Budget (OMB) announced this morning that it was reviewing a proposal to lift the controversial "conscience" regulation, the first step toward reversing the policy. Once the OMB has reviewed the proposal it will published in Federal Register for a 30-day public comment period.

"We are proposing rescinding the Bush rule," said an official with the Health and Human Services Department, which drafted the rule change.

The administration took the step because the regulation was so broadly written that it could provide protections to health-care workers who object not only to abortion but also to a wide range of health-care services, said the HHS official, who asked not to be named because the process had just begun.

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U.S. Senate To Investigate CIA's Actions Under Bush
2009-02-27 12:18:05
The U.S. Senate Intelligence Committee is preparing to launch an investigation of the CIA's detention and interrogation programs under President George W. Bush, setting the stage for a sweeping examination of some of most secretive and controversial operations in recent agency history.

The inquiry is aimed at uncovering new information on the origins of the programs as well as scrutinizing how they were executed - including the conditions at clandestine CIA prison sites and the interrogation regimens used to break al-Qaeda suspects, according to Senate aides familiar with the investigation plans.

Officials said the inquiry was not designed to determine whether CIA officials broke laws. "The purpose here is to do fact-finding in order to learn lessons from the programs and see if there are recommendations to be made for detention and interrogations in the future," said a senior Senate aide, who like others described the plan on condition of anonymity because it had not been made public.

Still, the investigation is likely to call new attention to the agency's conduct in operations that drew condemnation around the world. It is also bound to renew friction between Democrats and Republicans who have spent much of the last five years fighting over the Bush administration's prosecution of the war on terrorism.

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Rocky Mountain News, Colorado's Oldest Newspaper, Shuts Down
2009-02-27 12:17:04

Colorado's oldest newspaper, the Rocky Mountain News, is shutting down Friday, and industry analysts say it won't be the last to be pulled under by a rising tide of financial woes.

E.W. Scripps announced Thursday that it is closing the 150-year-old Rocky, which has won four Pulitzer Prizes in the last decade, leaving Denver, like most American cities, a one-newspaper town.

These are dark days for the struggling news business. Hearst threatened this week to close the San Francisco Chronicle unless major budget cuts are imposed or a buyer is found, and is also prepared to close the Seattle Post-Intelligencer if it cannot be sold. The Philadelphia Inquirer and Daily News filed for bankruptcy protection this week, joining Chicago's Tribune Co. and the Minneapolis Star-Tribune in Chapter 11 status.

Industry analyst John Morton called the Rocky's failure to find a buyer unsurprising. "The market is awash in newspapers for sale, and nobody is buying them," he said. "This recession has so impacted advertising revenue, particularly classifieds, that it's driven into unprofitability those who are in a precarious position."

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Vatican Says Bishop's Holocaust Apology Fell Short
2009-02-27 12:16:36
The Vatican said on Friday that an apology by a bishop who has denied the scope of the Holocaust was not sufficient to restore him to full communion with the Roman Catholic Church.

Last month, Pope Benedict XVI provoked worldwide outrage when he revoked the excommunication of four schismatic bishops, including Richard Williamson, who in a television interview broadcast a few days earlier had denied the existence of the Nazi gas chambers.

In a statement published Thursday by the Zenit Catholic news agency, Bishop Williamson apologized to the pope, the church and “survivors and relatives of victims of injustice under the Third Reich.” But he did not address the substance of his views on the Holocaust.

In an informal statement to reporters on Friday, the Vatican spokesman, the Rev. Federico Lombardi, said that Bishop Williamson’s apology “does not seem to meet the expectations” set forth by the Vatican earlier this month.

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Democrats In Congress Complain About Iraq Withdrawal
2009-02-27 03:47:47

President Obama sought Thursday to quell growing complaints from members of Congress about his plans for drawing down troops in Iraq, inviting lawmakers to a White House meeting on the eve of a North Carolina speech in which he is expected to announce that he will pull out many combat troops by August of 2010.

After House Speaker Nancy Pelosi (D-California) complained that the level of troops - 50,000 - who would remain in Iraq is too high, other senior Democrats voiced similar concerns. Not one member of the Democratic leadership, except for Sen. Richard J. Durbin (Illinois), defended the new Obama plan, which will take three months longer than he promised and still leave a significant force structure on the ground.

White House officials said Obama had reached his decision after consulting with military commanders and would unveil the details in his address today during a trip to Camp Lejeune, North Carolina. Yet even before making the plan official, Obama faced stiff resistance from members of his party as well as from some Republicans who said the idea of a withdrawal would not have been possible without the additional troops - or "surge" - that he opposed.

Most lawmakers left the White House quickly after the event. Aides later said that Democrats seemed no more pleased during the meeting than before. Sen. John McCain (R-Arizona) issued a positive statement, saying he "supports the plan to leave 50,000 troops in Iraq as briefed by Admiral Mullen and Secretary Gates at the White House this afternoon."

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U.S. Soldiers In Iraq React Cautiously To Obama Pullout Plan
2009-02-28 00:40:07
Soldiers here at Forward Operating Base Warhorse, a dusty base in one of Iraq’s most volatile provinces, knew that at some point, the American war would end, but few here said they thought it would happen anywhere close to the deadline President Obama  announced Friday.

“At some point, we have to draw a line,” Sgt. First Class Michael C. Miller said as he waited, for hours, for a helicopter ride that never came because of winds that churned fine dust into the sky. “But I still think they need our help.”

President Obama’s plan echoed those sentiments, but the resoluteness of his deadlines - removing American combat troops by Aug. 31, 2010, and the rest by the end of 2011 - still caught some by surprise.

“I thought the war would go on and on,” said Pvt. John R. Brown, a mechanic with the First Stryker Combat Brigade of the 25th Infantry Division. He watched the president’s speech on the Armed Forces Network in a recreation building named after a soldier who died here in Diyala Province more than five years ago. “I thought it would never end.”

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Editorial: President Obama's Budget - Finally, Some Honesty About Taxes
2009-02-28 00:39:36
Intellpuke: This editorial appeared in the New York Times edition for Friday, February 27, 2009.

President Obama’s first budget recognizes what most of Washington has been too scared or ideologically blind to admit: to recover from George W. Bush’s reckless economic policies, taxes must go up.

Mr. Obama’s blueprint, released on Thursday, commits to cutting by more than two-thirds, by 2013, the $1.75 trillion budget deficit that Mr. Bush dumped on the nation.

A credible pledge to reduce the deficit is imperative. Without it, foreign lenders - who financed the Bush-era deficits and are now paying for the stimulus and bailouts - could lose faith in the nation’s ability or willingness to repay in anything other than rapidly depreciating dollars. That would send interest rates up and the economy down, the worst-case scenario. Controlling the deficit is also necessary to sustain a recovery - when it comes.

The collapse of the Bush-era economy is ample and awful evidence of the folly of unconstrained debt-fueled growth. The Obama administration has acknowledged the need for deficit spending to stimulate the economy but has vowed that unpaid-for government will not become the norm. Judging from the blueprint, Mr. Obama is not just talking the talk.

A lot of the projected budget improvement is premised on economic recovery beginning in 2010, which may or may not happen. But much of it is premised on raising taxes. The proposed increases signal a serious attempt to tame deficits in a way that restores fairness to a tax code that has for too long been tilted in favor of the wealthiest Americans, resulting in budget shortfalls that disproportionately burden everyone else. At the same time, Mr. Obama has proposed a separate, targeted increase to help pay for health care reform in a way that doesn’t dig a deeper budget hole.

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California's Unemployment Rate Hits 10 Percent
2009-02-28 00:39:05
More than 1 in 10 California workers were unemployed in January, the largest percentage in nearly 26 years, the state reported Friday.

The 10.1% jobless rate is the highest since June 1983 and not far below the 11% record set in November 1982 at the worst point of a severe recession, according to the governor's office. Job losses escalated in January, with the state's unemployment rate jumping by 1.4 percentage points from a revised 8.7% for December.

The grim California job numbers tracked closely with data released earlier in the day by the U.S. Commerce Department that showed that the national economy contracted by 6.2% in the last three months of 2008, the biggest slowdown in 26 years.

Both numbers underscore that the U.S. and California economies are locked up because of a wrenching drop in demand for goods and services from businesses and consumers alike, said economists.

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Obama Details Iraq Pullout Plan To Marines At Camp Lejeune
2009-02-27 17:13:53
President Obama declared Friday that the United States has now “begun the work of ending this war” in Iraq as he announced the withdrawal of most American forces by the summer of next year while leaving behind as many as 50,000 troops for more limited missions.

Nearly six years after American troops crossed the border into Iraq to topple Saddam Hussein, said Obama, “renewed cause for hope” produced by improved security would allow Americans to begin disentangling militarily and turn the country over to the Iraqis themselves.

“Let me say this as plainly as I can,” the president told thousands of Marines stationed here at Camp Lejeune, North Carolina. “By August 31, 2010, our combat mission in Iraq will end.”

The “transitional force” he will leave behind will no longer participate in major combat missions but instead train and advise Iraqi security forces, hunt down terrorist cells and protect American civilian and military personnel working in Iraq. Obama promised that all of them will leave as well by December 2011 in accordance with a security agreement with Iraq negotiated by President George W. Bush before he left office last month.

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Lloyds Banking Group Heading For 75 Percent Government Ownership
2009-02-27 17:13:29

The taxpayer could end up with a near 75% stake in Lloyds Banking Group it emerged Friday after the U.K.'s biggest high street bank admitted the HBOS mortgage lender it rescued had incurred £10.8 billion of losses last year.

Already 43% owned by the taxpayer, Lloyds bank could end up having to relinquish more control to the government as a result of its negotiations to buy insurance for its most troublesome assets - mainly those acquired when it took over HBOS in a deal brokered by the prime minister.

The City (London's financial district) was disappointed after Lloyds admitted it was yet to reach agreement with the Treasury about the terms of participating in the so-called asset protection scheme. Its shares lost almost a quarter of their value to close at 58.3p amid anxiety that the talks had stalled even though chairman Sir Victor Blank insisted there was nothing untoward. The delay was merely because the treasury's negotiators were "absolutely and completed knackered, if you'll excuse the expression" after three days of intense discussion with Royal Bank of Scotland, Blank said.

RBS could end up 95% owned by the taxpayer which is on course to inject another £25.5bn in to the Edinburgh-based bank in return for insuring £325 billion of its toxic assets in an agreement announced on Thursday.

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Man Sets Self Afire In Front Of British Parliament
2009-02-27 17:12:42

A man was taken to a hospital Friday after setting himself afire outside Britain's Houses of Parliament, said police.

Police and ambulance crews were called to Parliament Square, which faces the Palace of Westminster, at about 4 p.m.. The area is popular with demonstrators but it is not known at this stage if the injured man was a protester.

A Metropolitan Police spokesman said: "We were called at around 4 p.m. to a man ablaze in Parliament Square. He has been taken to a south London hospital."

The man is believed to be in his 40s, said police.

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Oil Below $43 On Record Lows
2009-02-27 12:19:11
A record U.S. economic contraction dragged oil prices below $43 a barrel Friday after a surge in crude just a day earlier on evidence that protracted weak U.S. demand could be recovering.

Thursday's bullish crude price path turned bearish as reports by the Commerce Department showed the economy shrank by 6.2 percent in the last quarter of 2008 - a 26 year record low.

Benchmark crude for April delivery slid $2.42 cents to $42.87 a barrel by mid-afternoon in Europe on the New York Mercantile Exchange.The contract jumped $2.72 Thursday to settle at $45.22.

The Commerce Department report released Friday showed the economy sinking much faster than the 3.8 percent annualized drop for the October-December quarter first estimated by the government last month. It also was considerably weaker than the 5.4 percent annualized decline economists expected.

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FDIC To Raise Fees To Replenish Bank Fund
2009-02-27 12:18:35
Declaring the decline in its insurance fund to be an emergency, the Federal Deposit Insurance Corporation (FDIC)  board is scheduled to vote Friday morning to impose an historic one-time $15 billion increase in insurance fees that will be collected from the nation’s banks.

When combined with a longer term fee increase that will also be voted on Friday, the new fees would mean that banks must pony up $27 billion to replenish the insurance fund this year, compared with $3 billion last year, a jump that is certain to draw protests.

FDIC officials said Friday morning that such a drastic step was necessary because the insurance fund - with the surging number of bank failures in the last year - has dropped below a legally mandated minimum.

The agency, which insures deposits at 8,300 banks, now estimates it will lose $80 billion from 2008 to 2013 as a result of bank failures, double the losses estimated in the fall.

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Mexico To Send 5,000 More Troops To Ciudad Juarez
2009-02-27 12:17:26
Amid growing alarm over drug violence in Ciudad Juarez, Mexico, the Mexican government will deploy as many as 5,000 more troops to the border city, officials said Thursday.

The increase would triple the number of troops and federal police officers operating there as part of President Felipe Calderon's offensive against drug traffickers.

Ciudad Juarez Mayor Jose Reyes Ferriz said the added troops would give the military a higher profile by taking control of police functions, including street patrols. Currently, soldiers tend highway checkpoints, guard crime scenes and take part in special operations, such as house searches.

The city is without a police chief. Roberto Orduna Cruz quit last week after several officers were slain and someone posted threats saying more would be killed unless he stepped down.

On Wednesday, top Mexican security officials traveled to Ciudad Juarez to reassure local leaders and vowed to significantly boost the federal presence.
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Computer Maker Dell Income Drops 48 Percent
2009-02-27 12:16:51
During past downturns in technology spending, Dell tended to boast about its ability to weather the conditions better than competitors bogged down by higher-priced goods and cumbersome business models.

In 2009, no such gloating has been heard.

Like its peers, Dell has watched as businesses and consumers have sharply curtailed technology purchases. The decline in sales has proved so severe that Dell’s earnings have fallen to the lowest level since 2002.

On Thursday, Dell reported that net income for the fourth quarter, ended Jan. 30, fell 48 percent, to $351 million from $679 million reported in the fourth quarter of the prior year. Revenue tumbled 16 percent, to $13.4 billion from $16 billion.

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U.S. Plans Bigger Stake In Citigroup
2009-02-27 03:47:57

The federal government plans to take a substantial ownership stake in Citigroup, launching the Obama administration's new strategy to prevent the failure of any more large banks, according to sources familiar with the matter.

The deal, which the sources said was still being negotiated Thursday night, is designed to reassure investors that Citigroup has the resources needed to survive the recession by increasing the company's reserves against future losses.

The deal would not involve new money from taxpayers. The government already has invested $45 billion in the troubled New York bank. Citigroup now will be allowed to repay up to $25 billion by issuing the government shares of its common stock, which carry ownership rights. The government could end up owning about a third of the company, said the sources, who spoke on condition of anonymity because the talks were ongoing.

A key feature of the deal is that Citigroup must find private investors to match the public support. The government will accept common shares equal to the amount accepted by those investors, up to a limit of $25 billion, on a one-for-one basis.

Under the plan, the government would forgo billions of dollars in dividend payments that Citigroup was required to make on the existing investments, which paid annual interest of 5 percent. However, taxpayers would benefit if Citigroup's shares rise in value.

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Fannie Mae's Red Ink Prompts U.S. Aid
2009-02-27 03:47:32
Fannie Mae, the federally run mortgage giant, said last night that it lost $59 billion in 2008, prompting a government cash injection of $15 billion.

The Washington, D.C.-based company said it lost $25.2 billion in the fourth quarter of 2008 on the decline of mortgage-related investments.

The cash injection came in at the higher range of what Fannie Mae said it would need late last month. It represents the first government money invested in Fannie Mae; Freddie Mac, its McLean, Virginia, sibling, has already received $14 billion and said recently that it may need up to $35 billion more when it reports earnings in the coming days.

Fannie Mae's losses are likely to continue, the company said. "We expect the market conditions that contributed to our net loss for each quarter of 2008 to continue and possibly worsen in 2009," the company said. "We now expect that we will experience a peak-to-trough home price decline of 20 percent to 30 percent, rather than the 15 percent to 19 percent decline we predicted last year," the company said.

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