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Wednesday, February 11, 2009

Free Internet Press Newsletter - Wednesday February 11 2009 - (813)

Wednesday February 11 2009 edition
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U.S. Stocks Plunge 382 Points After Geithner Unveils Financial Plan
2009-02-10 20:25:55
A lack of details in the financial rescue plan unveiled today by the Obama administration sent the stock market down sharply. The Dow Jones industrial average tumbled almost 400 points.

Financial stocks were hit the hardest as investors vented frustration at the dearth of specifics in a morning speech by Treasury Secretary Timothy Geithner.

The speech, billed as a major policy prescriptive, gave little more than the broad contours of the plan, many of which already had leaked out in recent days.

That raised not only the specter of a substantial delay in the long-awaited recovery of the banking sector but also doubt about the ability of President Obama's economic team to deal with the challenges posed by the deteriorating economy and faltering markets.

"What plan?" asked Bert Ely, an Alexandria, Virginia, banking consultant. "The devil is in the details, and the details are hiding in the bushes or deep underground."

The Dow, which was down only about 70 points before Geithner's speech, fell sharply as soon as he began talking.

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California Budget Deficit Imperils 10,000 State Worker Jobs
2009-02-10 20:25:23
California Gov. Arnold Schwarzenegger will move to lay off as many as 10,000 state workers if lawmakers fail to pass a plan to close California's nearly $42-billion deficit by the end of the week, an administration spokesman said this morning.

Schwarzenegger's press secretary, Aaron McLear, said at a media briefing that the administration would send out pink slips Friday, absent a budget deal. The layoff process generally takes about six months for state employees due to union rules and other legal considerations, and bureaucratic procedures the state must follow. The move would save the state $150 million annually if the jobs are eliminated by July 1, according to McLear.

He said that about 20,000 workers could receive layoff notices, even though only half as many positions would ultimately be eliminated. Many of the job eliminations would happen with layoffs, but some could take place through attrition. Administration officials said the extra notices must be sent because the administration might not be able to legally lay off some of the workers who get them; other employees would be moved into other state jobs. The layoffs would affect mostly workers with the least seniority.
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Israeli Election Exit Polls Indicate Slender Victory For Livni
2009-02-10 20:24:50

Israeli elections Tuesday night produced the tightest of races with early television exit polls putting Tzipi Livni, Israel's  centrist foreign minister, narrowly ahead of the right-wing opposition leader Binyamin Netanyahu.

Polls from three main television stations, broadcast moments after voting closed, all put Livni's Kadima party ahead by two seats, but they also predicted that rightwing parties had fared best overall. Livni was predicted as winning either 29 or 30 seats in the 120-seat Knesset.

Avigdor Lieberman, the far-right leader, came in third, ahead of Ehud Barak, the Labor leader and defense minister, whose party was headed for one of its worst election results.

If the exit polls are accurate, and in the past they have not always been reliable, it suggests a long, drawn-out period of negotiations to form a coalition. Even if Livni emerges with the largest party she may not become prime minister if the right wing parties can together muster a larger coalition.

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Hundreds Of U.S. TV Stations Ignore Congress, Proceed With Digital TV
2009-02-10 20:24:23

With millions of U.S. viewers still apparently unprepared for the nation's switch to digital TV, hundreds of television stations across the nation are preparing to forge ahead with the transition anyway and drop traditional over-the-air broadcasts next week.

The loss of signals in those markets means that some people - generally those who have older TVs and receive the analog signal over the air - will no longer get television reception unless they have installed a digital converter box and, in some cases, purchased a new antenna.

The Nielsen Company has estimated that 6.5 million households are unprepared for the "digital transition." Elderly, Latino and low-income households are believed to be most affected.

"If we have a serious natural disaster and folks don't have a TV on which to receive updates, that's a problem," said Christopher Murray, Consumers Union senior counsel.

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33 Arrested In Drug Sting On Military Housing In San Diego
2009-02-10 20:23:47

Thirty-three people have been arrested in an undercover operation targeting suspected drug dealers selling narcotics in off-base military housing, the San Diego County district attorney’s office announced today. Of those arrested, 31 were civilians, one was active-duty Navy and one was a former Navy sailor, said officials.

Operation Endless Summer began last fall when civilian and military officials became concerned about an apparent increase in drug trafficking in military housing. As part of the operation, law enforcement personnel seized $19,000 in cash, 2 pounds of methamphetamine, half a pound of cocaine, more than 75 Oxycontin pills, 100 Ecstasy pills, more than 400 marijuana plants and seven guns.

Officials declined to specify which military housing complex was the center of the investigation. The Navy owns several off-base housing projects in the San Diego, California, area.

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Geithner Details New Bank Rescue Plan
2009-02-10 15:10:15
Acknowledging that Americans have “lost faith” in the government’s effort thus far to rescue the banking system, the Treasury secretary, Timothy F. Geithner, outlined a sweeping overhaul and expansion of the program on Tuesday.

The new program will attempt to marshal as much as $2 trillion from the Treasury, private investors and the Federal Reserve.

Geithner left major questions unanswered about the workings of many components of the new plan, and officials acknowledged that they had yet to decide many of the thorniest issues.

As a result, it remained unclear whether the Obama administration would be able to attract the large volume of private investment that Geithner sketched out in his speech.

With banks and Wall Street firms buckling under the potentially trillions of dollars in unsellable assets, many of them tied to the collapse of the mortgage market, lobbying associations for the banking and financial service companies praised Geithner’s plan as bold and far-sighted.

Investors were far more restrained. The stock market dipped almost as soon as Geithner began speaking, with the Dow Jones industrial average down about 350 points, or more than 4 percent, at 1:30 p.m. And analysts and private investors said they simply did not know enough yet to make a judgment on the plan’s prospects.

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U.S. Senate Approves $838 Billion Stimulus Plan On 61-37 Vote
2009-02-10 15:09:48
The U.S. Senate voted on Tuesday to approve an $838 billion economic stimulus plan that stands to become the most expansive anti-recession effort by the United States government since World War II.

Congressional leaders said they would immediately begin to work out the differences between the Senate measure and an $820 billion version passed by the House, with President Obama also likely to have a strong voice in the talks.

As the Senate voted on the recovery package, President Obama told an audience at a town meeting in Fort Myers, Florida: “Doing nothing is not an option. You didn’t send me to Washington to do nothing.”

Obama, who took to the road for the second straight day to push for Congressional approval of his economic recovery package, appeared alongside Florida Gov. Charlie Crist, a Republican, in an effort to show that his plan has attracted bipartisan support in economically troubled parts of America. On Monday he traveled to Elkhart, Indiana, where the unemployment rate is 15.3 percent.

Despite numerous differences in the two bills approved in the Senate and the House, the overall scope of the economical recovery effort is now clear - sprawling in its reach, with tax cuts for individuals, families and businesses, assistance for jobless and low income Americans, aid to states, and huge spending on education, health care, energy and technology.

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Interpol Issues Alert For 85 Terrorist Suspects
2009-02-10 15:09:17
Interpol put out an international security alert Tuesday for 85 alleged terrorists suspected of plotting attacks against Saudi Arabia in the largest single batch of wanted notices ever sent to police agencies worldwide.

Saudi authorities asked Interpol for help in locating the 83 Saudis and two Yemenis after releasing a new most-wanted list last week. Documents profiling the suspects show that they include a man married to Osama bin Laden's daughter and another who was suspected of involvement in a plot to kill the U.S. ambassador in Yemen.

Interpol, based in Lyon, France, said the men are all wanted on terrorism-related charges, including links to al-Qaeda in Saudi Arabia, Iraq and Afghanistan.

It was the first time the international police agency has issued a single so-called orange notice for so many suspects at once. An orange notice is sent to all of Interpol's 187 member countries and includes identifying details of each suspect to aid in arrests.

Interpol did not release details about the suspects.

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French President Sarkozy Visits Iraq, Urges Closer Ties With Europe
2009-02-10 15:08:55
President Nicolas Sarkozy paid the first visit to Iraq by a French head of state Tuesday, smoothing over lingering resentment about France's opposition to the war and positioning his country to cash in on lucrative arms and oil deals.

The one-day visit, part of a Persian Gulf tour, took place as the Obama administration is preparing to draw down the 144,000-strong U.S. military force and signaled France's intention to play a diplomatic role in a region dominated by the United States.

"I want to underscore France's desire to participate in the economic development of Iraq, the rehabilitation of its infrastructures," Sarkozy told reporters after meeting Iraqi President Jalal Talabani. "Our collaboration has no limits."

The French leader, who met later with Prime Minister Nouri al-Maliki, praised Iraq for dramatic improvements in security, including provincial elections held last month without major bloodshed.

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Britain's Prime Minister Seeks Obama-Style Cap On Bankers' Bonuses
2009-02-10 03:34:56

Britain's bankers would face a £25,000 ($40,000) cap on cash bonuses under plans being examined by the Treasury Monday night in a bid to silence the public outcry over the City's culture of huge rewards and dangerous risk-taking.

The move to stifle growing anger over bonuses at the Royal Bank of Scotland was in danger of being overshadowed as Prime Minister Gordon Brown's righthand man in the cabinet, Ed Balls, said the world was facing the most serious recession in a hundred years.

Balls' remarks, the most alarming to be made by a senior government minister, interpret the crisis as worse than the great depression of the 1930s.

The Treasury wants RBS - now 68% owned by the government - to rein in large bonuses in a year when it is scheduled to post losses running to billions of pounds. Government ministers are trying to negotiate a £25,000 cap on cash bonuses, with the remainder being taken in share options.

The government's effort to show that it is responding to public anger over the bonus culture was undermined yesterday however when it emerged that the man appointed by the government to conduct a review of City pay was himself given multi-million pound bonuses while serving as European chairman of U.S. bank Morgan Stanley. (Note: The City is London's equivalent of Wall Street in the U.S.)

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Sound Familiar? Justice Dept. Uses 'State Secrets' Defense On Rendition
2009-02-10 03:34:28

The Obama administration invoked the same "state secrets" privilege as its predecessor in federal court in San Francisco yesterday in opposing the reinstatement of a lawsuit that alleges that a Boeing Co. unit flew people to countries where they were tortured as part of the CIA's "extraordinary rendition" program.

The Justice Department's stance on the case came despite a pledge by Attorney General Eric H. Holder,  Jr., first at his confirmation hearing and again Monday in a statement, to review all assertions of the state secrets privilege.

The American Civil Liberties Union (ACLU) brought the case on behalf of five foreigners who were allegedly transferred to countries where they were tortured under interrogation. One of the five, Binyam Mohammed, a British resident, claims in court papers in the United States and in Britain that he was flown to Morocco and held there for nearly two years after his capture in Pakistan. He is now in the U.S. military prison at Guantanamo Bay, Cuba.

Mohammed and the others are seeking unspecified damages.

Leon E. Panetta, Obama's nominee to head the CIA, told Congress that he would end the practice of transferring suspects to countries where they are at risk of being tortured.

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Popular Rage Grows As Global Financial Crisis Worsens
2009-02-10 20:25:44
As the global economic crisis deepens, tempers around the world are getting shorter. French and British trade unions are organizing strikes, Putin is sending troops into the streets and Beijing is trying to buy itself calm.

In the cabinet of French President's Nicolas Sarkozy, there was talk of a "Black Thursday," and from Sarkozy's perspective, that was exactly what Jan. 29, 2009, turned out to be. Schools were closed, and so were railroads, banks and stock markets. Theaters, radio stations and even ski lifts were shut down temporarily. Trash receptacles were set on fire in Paris once again, and a crowd gathered on the city's famed Place de l'Opéra to sing the "Internationale," the anthem of revolution.

The global financial crisis has already reached France, bringing business failures, mass layoffs for some workers and reduced working hours for others. On that infamous Thursday, it drove up to 2.5 million people into the streets, in cities from Marseilles to Brest and Bordeaux. The situation was not like in May 1968, when France was in a state of emergency. Nevertheless, the country's unions called the demonstrations "historic," characterizing them as the most important protest movement to date against the current French president.

Paris is not the only place plagued by unrest. Across the English Channel in Britain, workers protested at a refinery near Immingham in Lincolnshire, triggering solidarity strikes in 19 other locations in the United Kingdom. The demonstrations became a symbol for the fears of the British lower classes, because the country - according to the International Monetary Fund - faces the worst downturn among all highly developed economies. Prime Minister Gordon Brown's approval rating is following the decline of the British pound.

In Russia, dismal labor statistics have driven Communists and anti-government protesters into the streets from Pskov to Volgograd in recent days, and in Moscow members of the left-wing opposition even ventured onto Red Square. They ripped up pictures of Prime Minister Vladimir Putin, until police arrested and removed them.

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German Chancellor Merkel's Authority Under Fire
2009-02-10 20:25:10
German Chancellor Angela Merkel's authority within her conservative ranks is slipping away just as Germany is experiencing its worst economic crisis since the war. The center-left Social Democrats are already preparing their campaign against a chancellor increasingly seen as weak.

There are moments when nothing protects against humiliation, not even power. German Chancellor Angela Merkel was looking forward to a pleasant evening last Wednesday. She had traveled to the Bavarian city of Nuremberg to attend the opening ceremony of the International Toy Fair. The Nuremberg Symphony had provided the music, and the event organizers had expected the chancellor to be their most prominent guest. But her enjoyment was suddenly cut short when Horst Seehofer stepped onto the stage.

The broad grin on his face revealed his thrill of anticipation over the jokes he was about to make at Merkel's expense. He began by telling the audience about the large model railroad in his basement, a miniature replica of the world. "I'm looking for a spot for the chancellor at the moment," he said, inviting everyone in the room to imagine him as the train's engineer, the man responsible for making sure the trains are running, while little Angela stands on the platform, looking forlorn.

The audience laughed enthusiastically.

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Floods, Snow And Gales Batter Britain
2009-02-10 20:24:35

Britain was battered by wintry weather again Tuesday, as a storm brought gale force winds, torrential rain and snow that caused flooding, power cuts and widespread travel disruption in England and Wales.

Some 3,000 homes were left without electricity and about 200 schools were closed for the day after almost a month's rain fell in 24 hours in some parts of southern England and a band of snow hit a swath of the country from south Wales to the Midlands.

Fire brigades took hundreds of emergency calls from residents whose homes had been flooded and motorists stranded in floodwater. Other travelers found their plans thrown into chaos as flights and trains were canceled and roads shut, and melting snow added to flooding fears.

After a week-and-a-half of severe disruption, forecasters said the worst weather appeared to be over, with drier conditions predicted for the rest of the week.

By mid-afternoon Tuesday the Environment Agency had issued more than 100 flood warnings, and London's Thames Barrier was expected to remain shut until late afternoon to protect the capital from a rising tide.

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Germany's High Court To Decide If European Union Is Constitutional
2009-02-10 20:24:10

There are those in Germany who think the Lisbon Treaty transfers too much responsibility to Brussels. The Constitutional Court is hearing the case this week. Should it agree, then the treaty is dead.

As trivia questions go, it's not an easy one: What four European Union countries have yet to ratify the Lisbon Treaty?

A couple of them are obvious. Ireland, of course, rejected the treaty in a referendum last June, but will likely give the document a second chance in a new poll. And the Czech Republic is no surprise either, given the country's reputation as a Euro-skeptic. Even Poland might be clear given Warsaw's tendency in the past to try and leverage as many last-second concessions as possible out of any E.U. agreement.

The fourth, though, is not so obvious. After all, the German parliament has already rubber-stamped the treaty and German Chancellor Angela Merkel has signed it.

Yet not all in Germany are in favor of the Treaty of Lisbon. There are some who worry that it violates the German constitution by exporting core governmental competencies from Berlin to Brussels. President Horst Kohler has withheld his approval of the treaty until the legal questions are clarified. On Tuesday and Wednesday, the German Constitutional Court will hear arguments in the case. And given the fundamental nature of the complaints involved, it is not at all clear that the justices will side with the E.U. If they don't, then the Treaty of Lisbon is dead.

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United Bank Of Scotland Loses 11.3 Billion Pounds, To Cut 2,300 Jobs
2009-02-10 20:23:33

The once-mighty UBS Tuesday confirmed investors' worst fears by declaring an £11.3 billion loss for 2008 and announcing it would axe around a further 2,000 jobs at its shrunken investment bank.

The bank made Swiss corporate history by losing a record 19.7 billion Swiss francs after running up a further net loss of Sfr8.1 billion in the final quarter of last year, including Sfr3.7 billion in exposures to toxic assets. It has scrapped the dividend.

Confirming it had cut bonuses by 85%, UBS said it planned to reduce staff at the investment bank to 15,000 by the end of this year, after shedding more than 1,700 in the last three months of 2008 alone.

This means almost 2,200 staff will leave as the investment banking arm, which lost Sfr7.5bn pre-tax in the final quarter, is cut back even further. It has shed 5,500 jobs in the last 15 months and Jerker Johansson, its head, indicated more could go. But it has taken on 400 client advisers in the U.S.

Marcel Rohner, chief executive, told journalists the bank had cut bonuses to the "bare minimum". They declined from Sfr7.9 billion to Sfr1.16 billion, with the bulk made up of contractual payments. UBS has radically altered its remuneration model, with any bonuses paid deferred for up to four years - and clawed back if losses are incurred.

Rohner said: "The environment will remain very difficult and volatile as the real economy has not seen the worst yet."

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Stocks Fall Sharply As Outline Of New Bailout Emerges
2009-02-10 15:10:03

For jittery investors, the government’s latest plan to stabilize the financial and credit markets with up to $2 trillion in public and private funds provided cold comfort.

Stock prices fell sharply on Tuesday after Treasury Secretary Timothy F. Geithner unveiled the government’s latest tactics to address the troubled banking system. Primary among those was an expanded efforts ease consumer and commercial credit and a new program to buy up hard-to-sell assets that have bogged down banks.

Around 1:15 p.m., the Dow Jones industrial average was down more than 300 points, dropping below 8,000, and the broader Standard & Poor’s 500-stock index was down about 3.8 percent.

Despite the size and scope of the Obama administration’s plans, investors said Geithner’s proposal raised more questions than it answered. The way out of the financial crisis, said analysts, looked as murky as ever.

“We’re not impressed, and I don’t think the market’s impressed either,” said Ryan Larson, head equity trader at Voyageur Asset Management. “It’s clear the administration is still trying to work on something concrete. I think the market sensed that, too.”

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Texas Peanut Plant Shuts After Tests
2009-02-10 15:09:31
Private lab tests show there may have been salmonella at a second plant operated by the peanut company at the center of a national outbreak, Texas health officials said Tuesday.

The Peanut Corp. of America temporarily closed its plant in Plainview, Texas, Monday night at the request of health officials after the tests found ''the possible presence of salmonella'' in some of its products, the Texas Department of Health said in a statement.

It does not appear that any of the possibly contaminated products from the Texas plant reached consumers, officials said. The Texas plant produces peanut meal, granulated peanuts and dry roasted peanuts.

The company is being investigated in connection with an outbreak has sickened 600 people and may have caused at least eight deaths. It also has led to the recall of more than 1,800 consumer products. Peanut Corp. closed its plant in Blakely, Georgia, last month after federal investigators identified that facility as the source of the salmonella outbreak.

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Media Group Asks U.S. To Stop Detaining Journalists
2009-02-10 15:09:04
A media watchdog group is urging President Barack Obama to end the U.S. military's practice of detaining journalists without charges, and asked Tuesday for a full investigation into killings of journalists by U.S. military forces.

Officials with the Committee to Protect Journalists said the detention of journalists without trial by U.S. authorities in such countries as Iraq has emboldened other countries to do the same.

Paul Steiger, the group's chairman, said he sent a letter to Obama's transition team last month, pointing out that 14 journalists have been held without due process for long periods in Iraq, Afghanistan and Guantanamo.

"America has always stood as a beacon for freedom of the press, and it would be a great time to reaffirm those principles," said Steiger.

A freelance photographer working for Reuters, Ibrahim Jassam, is the only one who remains jailed. He was detained by U.S. forces in Baghdad on Sept. 2, Steiger said in his letter to Obama dated Jan. 12.

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Obama: Economic Crisis Comes First
2009-02-10 03:35:09

President Obama declared Monday night in his first prime-time news conference that the task of saving and creating jobs is more important than cultivating the bipartisan cooperation he promised to bring to Washington, and he pressed his case for the massive economic stimulus plan working its way through Congress.

Warning that inaction could "turn a crisis into a catastrophe," Obama rejected criticism from Republicans about the legislation's effect on the federal deficit, noting that government debt had ballooned on his predecessor's watch. Although he called for lawmakers to break out of their "ideological rigidity," he was unapologetic as he pushed a package with a cost of more than $800 billion that has so far drawn only nominal Republican support.

"I can't afford to see Congress play the usual political games. What we have to do right now is deliver for the American people," Obama said just hours after the legislation narrowly cleared a key procedural hurdle in the Senate, where it is likely to gain final passage Tuesday. The bill will then become the subject of potentially contentious negotiations between House and Senate leaders. It is unclear whether it will reach the president's desk before a scheduled congressional recess next week.

Obama repeatedly stressed the need for swift and aggressive action on the economy, pitting his plan against those who he said would "do nothing" to assist a desperate public.

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Newsblog: 12 Questions That Bank Bosses Must Answer Today
2009-02-10 03:34:45

The next 36 hours could prove a watershed in the history of the financial crisis. Over three political hearings on both sides of the Atlantic, the heads of 16 of the world's largest banks will be called to account. Some, such as Sir Fred Goodwin of the Royal Bank of Scotland (RBS), will be speaking in public on the subject for the first time.

The U.S. House of Representatives has summoned Goldman Sachs, Morgan Stanley and Citigroup Tuesday to discuss how they are using federal bail-out money. Britain's Treasury select committee has a broader remit: quizzing the government-owned RBS and HBOS about the wider banking crisis Tuesday, then Lloyds, Barclays and HSBC on Wednesday.

Until now, the British Parliament's financial watchdog has been accused of giving our banks a softer ride than the notoriously robust congressional hearings.

Since the committee of backbench Parliament members first started tackling the private equity industry two years ago, critics have questioned its ability to home in on the key financial issues.

Today, there are at least a dozen questions that need to be answered:

Why did your risk models not show up the dangers?

Banks pride themselves on being able to measure risk. But the mystery is that their models all failed to anticipate what would happen if banks no longer had access to wholesale funding sources such as the securitization market, even though these were a relatively recent invention.

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Livni Closes In On Netanyahu In Israeli Polls
2009-02-10 03:34:11

Israelis go to the polls Tuesday in one of the tightest elections in years, with the right-wing opposition leader Benjamin Netanyahu only narrowly ahead of his rival, Tzipi Livni, the centrist foreign minister.

Up to a fifth of voters were thought to be undecided hours before voting began, an unusually high number that reflects disillusionment with all candidates.

Netanyahu, leader of Likud, has led the opinion polls for months. Most analysts believe he has the best chance of leading a new coalition government, even though his lead has shrunk in recent days. The bloc of right-wing parties that will support him looks set to be enough for a majority in the Israeli parliament, the Knesset.

Even if Kadima emerges slightly ahead, with the most seats, most analysts think that Livni would struggle to put together a like-minded majority coalition.

"Netanyahu has the biggest bloc," said Yossi Verter, a political commentator for the left-leaning Ha'aretz newspaper. "It will be very, very difficult for Livni to form a government, even if Kadima turns out to be the bigger party, because every government would depend on a right-wing party and the right-wing always will quit the coalition whenever there is some progress with the Palestinians or the Syrians."

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