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Chart showing National Debt & Annual Deficits with Presidents. Democrat administrations are blue, Republican in Red. Green reflects projected Bush debt. Click chart for larger image.

2008 update (10.14.08)

The Chart Showing the National Debt above is far more than projected, of about $11.3 trillion. See "The debt to the penny," publicdebt.treas.gov.
The Deficit for 2006 was $423 Billion; 2007 was $354 billion; 2008 is $451 billion
OMB Budget FY2005>>
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Federal Debt 2003-09 (estimated in 2004)
Fed. Budget Summary 2003-2009, as estimated

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News Headlines & Trends

10.17.08 Markets fluctuate as investors digest weak housing data

October 17 - Stocks fell dramatically but then regained some ground in morning trading today despite a new government report that found home construction has sunk to its slowest pace in more than 15 years. After falling more than 200 points at the opening, the Dow Jones industrial average was up about 2 percent, or 184 points, at 1pm. The Standard & Poor's and tech-heavy Nasdaq were also up about 2 percent.

It appears Wall Street is going to end the week with another volatile session. Yesterday the Dow surged in the last hour of trading, closing up 400 points, after falling more than 700 points on Wednesday and Tuesday and scoring a historic gain of more than 900 points on Monday. Speaking before the markets opened, President Bush defended his response to the financial crisis and urged Americans to be patient and allow time for the government's market interventions to work. [More>>washingtonpost.com; See update:

cnn.com, October 17, "Stocks down for day, up for week"
: NEW YORK - Stocks ended a choppy session lower Friday — at the end of a turbulent week — as ongoing recession fears vied with Google's earnings and bullish comments from Warren Buffett. Treasury prices advanced, lowering the corresponding yields, and the dollar gained versus other major currencies. The credit market showed some signs of loosening, as several key lending rates declined. The Dow Jones industrial average (INDU) fell 127 points, or 1.4%. The Dow fell as much as 261 points in the morning and rose as much as 301 points in the afternoon. The Standard & Poor's 500 (SPX) index lost 0.6% and the Nasdaq composite (COMP) lost 0.4%. Stocks seesawed Friday as a report showing housing starts fell to a 17-year low was countered by Google's earnings and bullish comments from influential investor Warren Buffett....

10.17.08 'Scandalous' to cut oil supply now

October 17 - It is "absolutely scandalous" that oil exporting nations are thinking of cutting production to drive prices back up, Gordon Brown has said. The Prime Minister's comment follows his call for oil firms to be quicker in passing on price falls to motorists. Crude has recently dropped to around $70 a barrel but Mr Brown says this is not being reflected at the pumps. He has urged the likes Esso and Total to follow supermarkets and charge no more than a pound for a litre of unleaded.

Mr Brown told business leaders in Nottingham he wants to reduce Britain's dependence on oil.

"I think the oil price rose because long-term demand looked like it would exceed the supply. People thought, looking ahead, that there was no way other than the price going up. We have the same with food: more demand for food, therefore the food prices go up. In the last year we have seen particularly hard hit people's standard of living as a result of (rising) prices. I think it is absolutely scandalous that Opec is thinking of meeting in the next few days to cut oil production so they can push up the price of oil again." The Prime Minister added: "We will certainly try and prevent this happening." [More>>sky.com]

Editorial note: I don't think anyone will disagree that the major reason for the increases in food prices, etc. during the past six months is due to the increase in the price of crude oil. A major cost of the production of food is fertilizer, which is made from petroleum. Another huge factor in the cost of food is transportation, also driven up by the cost of petroleum. One might think that the Saudis and the UAE, in particular — who depend upon other countries for food — would understand the connection between the higher cost of their food and their exorbitant (sic. "scandalous") rises in oil prices.

The UAE complained about the rising cost of food and other essentials that they themselves cannot produce and must import. Their solution to curbing their rising costs on imported necessities was to force major stores and supermarket chains to roll back their prices to 2007 levels! See:

Maravot News 5.03.08: 4.29.08 UAE ministry signs latest food price-fixing deal, "...Inflation in the world's fifth-largest oil exporter probably hit 10.9 percent last year, according to an estimate from the National Bank of Abu Dhabi. So far this year, the UAE's Union Cooperative Society, which operates about 16 stores, French supermarket retailer Carrefour, and Abu Dhabi-based Lulu Hypermarket Group have agreed to fix prices of some food items to curb inflation." [end]

Saudi Arabia is also feeling some pain from their exorbitant oil price hikes. See:

alarabiya.net, October 13, "Saudi fast food chains are making "illegal" price hikes": DUBAI - As the financial meltdown continues to affect world markets a group of fast food restaurants in the Saudi capital used the crisis as an excuse to increase their prices much to the ire of local residents, local press reported Sunday. Fast food eateries in an east Riyadh town hiked their prices by 40 percent after store managers signed an agreement to increase prices, the Saudi newspaper al-Jazirah reported...Earlier this year, fast food chains in the UAE raised their prices by as much as 30 percent. Fast food eateries such as KFC, Pizza Hut and Hardees registered an average increase of 10 percent, while other outlets like Burger King increased their prices by up to 30 percent, UAE's Gulf News reported...

It is unfortunate that the Saudi king and his innumerable family dependents — with their exorbitant life styles in palaces and yachts, supported by the "unreasonable" oil revenues — will not themselves notice the affect of rising oil prices to rising food and commodity prices and their affect upon common people, particularly the rising number of starving masses around the world. The same is apparent in the UAE lords.

If the Food Exporting Nations were to match dollar for dollar every price rise in oil, no doubt such a rise would not be a discomfort to the sheiks of the Middle-East. If the West were to boycott visiting their glittering, oil-built cities and resorts, causing their ambitious projects for the rich to be abandoned, perhaps they might then understand the relationship between exploitative rises in the price of oil and its consequences. We should hope that Prime Minister Brown et. al, who are dealing with our economic crisis that was aggravated by oil gouging, will apply more than words to persuade the kings and sheiks to curb their appetite for gouging the West. Perhaps a special oil tax upon food and commodity exports to the Saudis and UAE might be explored. Something has to be done to show them how their price rises relate to the world economic crises since 1973.

Mel Copeland

10.17.08 Pakistan: Separating the facts from the myths

October 17 - (By Thomas Houlahan, special to the Middle East Times) For a country that is so central to the war on terror, there is an awful lot of misinformation about Pakistan floating around, so as a military and Pakistan analyst, I figure it might be a good idea to clear up a few myths with some facts.

Myth 1: Pakistan's failure to deal with unruly tribesmen in its tribal region facilitated a Taliban comeback that has thrown Afghanistan into turmoil.

Facts: The Taliban's resurgence has been fueled by drug money. Some 93 percent of the world's opium now comes from Afghanistan. Afghan President Hamid Karzai, NATO and U.S. military leaders in Afghanistan have all opposed systematic opium crop eradication. This is unfortunate, because the Taliban has been making money by taxing opium growers 10 percent of their proceeds and/or charging for protection. They also get a piece of the action on smuggling, protecting the labs that turn opium into heroin, and every other activity involved in the production and movement of opium and heroin. Most of the drug trade takes place in southern Afghanistan, which is largely a no-go area for government and coalition forces, so the Taliban is able to make its financial demands stick...Our failure to take matters in hand in Afghanistan is causing problems for Pakistan, not the other way around...
[Full story>>metimes.com]

10.17.08 Afghan mayor turns Taliban leader

October 17 - The former mayor of Afghanistan's Herat province is now the most powerful local Taliban commander. Ghullam Yahya Akbari told Al Jazeera that he will not negotiate with the Afghan government as long as foreign troops are on Afghan soil. Given exclusive access to one of his 20 mountain bases hidden deep inside rugged terrain that Akbari says were also used to fight the Russians, Al Jazeera's Qais Azimy found a group of at least 60 well-armed Taliban fighters.

Akbari's steely resolve to fight foreign forces comes amid reports of many soldiers defecting to the Taliban. Many are unhappy with the "un-Islamic" ways of the foreign troops. Some in Akbari's camps were just teenagers, others old enough to be enjoying retirement, but all had left families behind and were committed to the fight to push international troops out of Afghanistan..."We are not doing jihad for our stomachs, we are doing jihad for Allah," another fighter said. Akbari said the 20 mountain bases under his charge were also used by some of the same fighters to drive out the Russians in the 1980s. "People may wonder why we live up in the mountains. That's because we want to avoid civilian casualties and fight with guerrilla tactics," he said. [Full story>>aljazeera.net]

10.17.08 Bomb blast near Baghdad mosque kills 3

BAGHDAD, October 17 - A bomb planted near a north Baghdad mosque has killed three persons and wounded seven others as they were leaving after Friday prayers, officials said. Police say some homes have also been damaged. Health officials say the wounded have been taken to Baghdad's Kindi and Medical City hospitals. [>thenews.com.pk]

10.17.08 Fraudsters' website shut in swoop

October 17 - A website used by criminals to buy and sell credit card details and bank log-ins has been shut down after a police operation, the BBC has learned. International forum Darkmarket ran for three years and led to fraud totalling millions of pounds. Nearly 60 people connected with the site have been arrested in cities including London and Manchester as well as in Germany, Turkey and the US...Darkmarket was strictly invitation-only and gave criminals access to a wide range of valuable personal information. The data held on the magnetic strip of an ordinary credit card was available to buy for as little as one pound. Most prized were corporate credit cards belonging to frequent business travellers...Soca deputy director Sharon Lemon said these were highly sought after because they could be used by criminals all over the world to spend large sums without arousing suspicion. [More>>bbc.co.uk]

10.16.08 This time, stocks surge in last hour

October 16 - For once, fear fled the markets at 3pm. An hour that has become known for its heartbreaking declines proved a boon on Thursday, as stocks gained 400 points in the final minutes, despite a rash of weak reports on the health of the economy. The Dow Jones industrial average, which had swung wildly throughout the day, mounted its recovery on shares of energy companies and consumer favorites like McDonald's. The index finished up 401.35 points at 8,979.26, but not before lurching more than 800 points up and down the chart.

For much of the day, investors seemed at a loss. Promising signs on the inflation front — including a tame Consumer Price Index and a $4.69 drop in the price of oil — were undermined by weak reports on the manufacturing industry. At 9:50am, the Dow was up 150 points; by 11, it was down 300. The rest of the afternoon was a bumpy ride in and out of negative territory, until the last hour brought a critical mass of buyers back into the market. The broader Standard & Poor's 500-stock index rose 4.3 percent and the Nasdaq gained about 5.5 percent as technology shares staged a rebound from this week's heavy losses.

...But lending of commercial paper — short-term financing that many businesses depend on to fund their daily operations — shrank in the week ended Wednesday, declining by 2.6 percent from a week earlier to its lowest level since the summer of 2005. That means that many banks and businesses remain reluctant to lend, even for very short amounts of time, starving some businesses of critical cash...

In Europe, the major stock indexes in London, Paris and Frankfurt all ended more than 5 percent lower as investors reacted to Wednesday's 733-point drop in the Dow. Oil prices dropped $4.69 to settle at $69.85 a barrel. Gold prices dropped more than $42 to $804.60 a Troy ounce... [Full story>>nytimes.com; See also:

cnn.com, October 16, "Stocks fight back" : ...The dollar strengthened versus other major currencies and the credit market showed some signs of loosening, as several key lending rates declined. While investors have welcomed many of the steps the government and world banks have taken to get money flowing again, the tone of the market has remained pretty negative.

Dow Jones largest daily loss (See djindexes.com)
net change
% change
1 10/19/1987 1738.74 -508.00 -22.61
2 10/28/1929 260.64 -38.33 -12.82
3 10/29/1929 230.07 -30.57 -11.73
4 11/06/1929 232.13 -25.55 -9.92
5 12/18/1899 58.27 -5.57 -8.72
6 08/12/1932 63.11 -5.79 -8.40
7 03/14/1907 76.23 -6.89 -8.29
8 10/26/1987 1793.93 -156.83 -8.04
9 10/15/2008 8,570.19 -733.00 -7.96
10 07/21/1933 88.71 -7.55 -7.84
11 10/18/1937 125.73 -10.57 -7.75
12 10/09/2008 8579.19 -678.91 -7.33
13 02/01/1917 88.52 -6.91 -7.24
14 10/27/1997 7161.15 -554.26 -7.18
15 10/05/1932 66.07 -5.09 -7.15
16 09/17/2001 8920.70 -684.81 -7.13
17 09/24/1931 107.79 -8.20 -7.07
18 07/20/1933 96.26 -7.32 -7.07
19 09/29/2008 10,365.45 -777.68 -6.98
20 07/30/1914 71.42 -5.30 -6.91
21 10/13/1989 2569.26 -190.58 -6.91

That's partly because a lot of the programs won't kick in until several months from now. Investor fear is at an all-time high, with the CBOE Volatility (VIX) index, or the VIX, rising to a record 81.17 Thursday afternoon before pulling back a bit. "To a certain extent, we're in the middle of a hurricane," said Gary Flam, portfolio manager, Bel Air Investment Advisors. "It will pass eventually and we will get through it, but there's been a lot of damage." Year-to-date, the Dow, S&P and Nasdaq are all down between at least 30%.

Recession talk sent the Dow tumbling 733 points Wednesday, its second worst session ever on a point basis. The slide of 7.9% was the Dow's 9th worst ever. Declines for the S&P 500 and the Nasdaq were comparable. The decline Wednesday wiped out $1.1 trillion in market value on the Dow Jones Wilshire 5000, the broadest measure of the stock market.

Oil: Oil prices continued to slide after the government's weekly inventory report showed a bigger-than-expected gain in crude and gas supplies. US light crude oil for November delivery fell $4.65 to settle at $69.85 a barrel on the New York Mercantile Exchange. The contract fell as low as $68.57, the lowest level since August 2007...

10.16.08 Citigroup posts another loss amid credit woes

NEW YORK (AP) October 16 - Citigroup Inc. is suffering its fourth straight quarterly loss due to credit-related missteps, and has cut another 11,000 jobs. The bank lost US$2.8 billion, or 60 cents per share, in the third quarter compared with a profit of $2.2 billion, or 44 cents per share, a year ago. Analysts polled by Thomson Reuters expected a loss of 70 cents per share. Citi wrote down $4.4 billion in investments, recorded $4.9 billion in credit losses, and took a $3.9 billion charge to boost reserves. The big four US banks — Citigroup, JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. — are each slated to receive $25 billion from the government. Citi recently lost a bid for Wachovia Corp. to Wells Fargo. [>thejakartapost.com; See related stories,

thestar.com.my, October 16, "US banks borrow record amount from Fed":
WASHINGTON (AP) - Banks borrowed in record amounts from the Federal Reserve's emergency lending facility over the past week, while investment banks drew loans at a brisk — though slightly lower — pace, further evidence of the credit stresses hobbling the country. The Fed's report, released Thursday, showed commercial banks averaged a record $99.7 billion in daily borrowing over the past week. That surpassed the old record — a daily average of $75 billion — from the prior week...The Fed report also showed that over the last week $129.6 billion worth of loans were made to money market mutual funds — via banks — to help the funds, which have been under pressure as skittish investors demand withdrawals...

nytimes.com, October 16, "Banks are likely to hold tight to bailout money": Even as the government moves to plug holes in the nation's banks, new gaps keep appearing. As two financial giants, Citigroup and Merrill Lynch, reported fresh multibillion-dollar losses on Thursday, the industry passed a grim milestone: All of the combined profits that major banks earned in recent years have vanished. Since mid-2007, when the credit crisis erupted, the country's nine largest banks have written down the value of their troubled assets by a combined $323 billion. With a recession looming, the pain is unlikely to end there. The problems that began with home mortgages, analysts say, are migrating to auto, credit card and commercial real estate loans.

The deepening red ink underscores a crucial question about the government's plan: Will lenders deploy their new-found capital quickly, as the Treasury hopes, and unlock the flow of credit through the economy? Or will they hoard the money to protect themselves? John A. Thain, the chief executive of Merrill Lynch, said on Thursday that banks were unlikely to act swiftly. Executives at other banks privately expressed a similar view...

10.16.08 Asian markets open higher Friday

TOKYO, October 17 - Japan's key stock index has risen 3.1 percent, rebounding from its second-worst loss in history the previous day. The benchmark Nikkei 225 stock average advances 262.11 points to 8,720.56 in early trading Friday. The gains follow another volatile session on Wall Street, where a late surge pushed the Dow jones industrials up 4.7 percent, or 400 points, after falling 380 points in the opening minutes of trading.

Australia and New Zealand's stock markets opened higher Friday following a rebound on Wall Street. Australia's benchmark S&P/ASX200 was up 137 points, or 3.41 percent, to 4,150.4 in early trading, and the Australian dollar climbed to 69.13 U.S. cents, up from Thursday's close of 66.5. Trading in Australia could give an early indication of how trading will go across Asia. [More>>thestar.com.my]

10.16.08 Pakistani politicians divided over action on terror

October 16 - A deep rift over anti-terror policy has opened up within Pakistan's political class, as extremist violence and an economic crisis push the country to the verge of collapse. A special session of parliament called by the government to forge a political consensus on the "war on terror" has backfired spectacularly as parties, including some in the ruling coalition, denounced the alliance with Washington and NATO rather than backing the army to take on the Pakistani Taliban.

A party in the coalition government, the religious Jamiat-Ulama-I-Islam party, has even demanded that, as parliamentarians had received a presentation from the army, Pakistan's Taliban movement should also be allowed to address them. It comes as the political and economic situation worsens, with intensified suicide bomb attacks and an alarming depletion in Pakistan's foreign exchange reserves.

The country is seeking an emergency $10bn bailout from the international community, while a severe shortage of electricity is crippling business and punishing households. Critics of the government, which is led by controversial president Asif Ali Zardari, complain that there is a paralysis of decision-making and policy. A leaked US top secret National Intelligence Estimate on Pakistan concludes that the country is "on the edge." A US official was quoted summing up the assessment as "no money, no energy, no government."

10.16.08 US missile strike targeting Taliban leader kills 6, Pakistan says

KABUL, October 16 - A suspected US missile strike near the headquarters of a top Taliban leader in Pakistan's tribal areas Thursday killed six people and injured five others, according to Pakistani intelligence officials and residents. The attack occurred late Thursday morning, said Ikramullah Mehsud, a resident, when a US Predator drone fired several missiles on two homes in the town of Ladha, in the tribal area of South Waziristan. A Pakistani intelligence official who spoke on the condition of anonymity said the bombardment had killed at least two extremist commanders believed to be of Arab origin. [More>>washingtonpost.com]

10.16.08 US army arrests Al-Qaeda members in Mosul

BAGHDAD (AFP) October 16 - The US military said on Thursday it has arrested four al-Qaeda members in Mosul, the group's last urban stronghold in Iraq. The news comes the day after the military announced the death of Abu Qaswarah, al-Qaeda's number two in Iraq. "Coalition forces continued to drive al-Qaeda in Iraq out of the country Wednesday and Thursday, targeting terrorists during operations in Mosul," US military command said.

During two related operations in Mosul ending on Wednesday, one wanted man and one additional suspect were detained by coalition forces, the statement said. "The wanted man is believed to have associated with a terrorist killed October 5," it said. Two more suspected terrorists were detained by coalition forces on Thursday during an operation targeting regional al-Qaeda leadership in Mosul, the military said. [More>>khaleejtimes.com]

10.16.08 Spanish police arrest 13 suspects in terror raids

MADRID, October 17 - Spanish police on Thursday arrested 13 men accused of harboring extremists, including several suspects in the Madrid terror bombings of 2004, and helping them flee the country, the Interior Ministry said. Police made the arrests in pre-dawn raids in four northeastern towns near Barcelona. Raids also occurred in Madrid and Algeciras in the south. At least 8 of the detainees are Moroccan. The identities of the rest were not immediately provided. The arrests stemmed from a 2005 police operation during which Spain broke up a terror cell that allegedly recruited people to stage suicide attacks against US led forces in Iraq and other targets set by al-Qaeda, the ministry said in a statement. The 13 men arrested are suspected of giving shelter to Islamic extremists, including at least five suspects in the March 11, 2004, train bombings that killed 191 people in Madrid, and helping them to flee the country. [>thenews.com.pk;See more details, aljazeera.net.]

10.14.08 World stocks soar as credit markets ease

October 14 - Stock markets in Europe and Asia rose strongly for a second straight day Tuesday after Wall Street rallied from its worst week ever on mounting evidence that government attempts to shore up the world's battered financial system are beginning to thaw frozen credit markets. The gains on Europe's markets came in the wake of the strongest ever daily performance on Japan's benchmark Nikkei 225 index, which surged 1,11.14 points, or 14.15 percent, to close at 9,447.57. Tokyo financial markets were playing catch-up to recent developments because they were closed Monday for a holiday.

In London, the FTSE 100 index of leading shares was up 255.08 points, or 6.0 percent, at 4,511.98, despite news that inflation in Britain is running at a 16-year high. Germany's DAX was up 257.46, or 5.1 percent, at 5,319.91 even though a group of leading German economic think tanks said Tuesday that Europe's largest economy is on the "brink of a recession." The CAC-40 in France was 199.21 points, or 5.6 percent, stronger at 3,730.71. Wall Street closed 11 percent higher Monday, its biggest daily jump since 1933, and is expected to open solidly later. Dow Jones industrial average futures rose 176, or 1.85 percent, to 9,684.

The resurgence in the markets followed the announcement Monday by European government of euro1.7 trillion set of national packages to save ailing banks, and the confirmation that the U.S. will follow suit and buy stakes in nine US financial institutions. Late Monday in the US, government officials and industry executives said the Bush administration would use US$250 billion of the $700 billion bailout program recently passed by Congress to buy into American banks. The government initially will buy stock of nine large banks, but the program is expected to be expanded to many others.
[More>>thejakartapost.com ; See related stories:

japantoday.com, October 14, "Nikkei index more that 14%
: TOKYO - Japan's most-watched stock index surged more than 14% Tuesday—its biggest single-day gain in history — as investors cheered global stock market rallies and widespread government efforts to shore up the world's battered financial system. The Nikkei 225 stock average soared 1,171.14 points, or 14.15%, to 9,447.57 — a sharp reversal after the market plunged nearly 10% Friday and a staggering 24% last week, its worst week ever. Tuesday's result surpassed the previous record single-day rise of 13.2% on Oct 2, 1990. Because of a national holiday Monday, this was the first chance for investors in Japan to react to a raft of emergency measures by governments around the world to thaw frozen credit markets and bolster funding to banks...

koreaherald.co.kr, October 14, "Won, stocks continue comeback" : Korea's currency and stocks continued to climb yesterday as global markets rallied, buoyed by a US-led effort to pump liquidity into the global financial system, analysts said. The won rose 2.17 percent to 1,208 per dollar in Seoul. The advance pared this year's loss to 22.5 percent, still the biggest drop among Asia's 10 most-traded currencies. The benchmark Korea Composite Stock Price Index jumped 6.14 percent to 1,367.69 points. Tech-heavy Kosdaq climbed 7.65 percent to 396.32 points. Foreign investors bought more local shares than they sold for the first time in two weeks, according to the Korea Exchange...

timesonline.co.uk, October 14, "US pledges to curb 'fat cat' pay in $250 billion rescue" : The US Treasury today pledged to clamp down on "excessive" executive pay as part a $250 billion banking package aimed at rescuing the country's financial system. America's scheme, where it will invest in nine US banks in exchange for preferred shares, echoes a package unveiled by Gordon Brown yesterday, which also detailed proposals to buy stakes in leading lenders as well as curbing "fat cat" pay deals.

The US Treasury said that it would keep a close eye on the pay and bonuses of senior executives at the firms participating in the American infusion programme. It said banks must ensure that senior compensation does not "encourage unnecessary and excessive risks that threaten the value of the financial institution." The US Government also said it may take back bonuses at a future date if the bank underperforms and banned so-called golden parachute payments — a severance agreement that offers a payout in the event of sudden dismissal — to senior executives...

independent.co.uk, October 14, "Nationalized banks' shares slump on fear of central control" : While stock markets around the world soared yesterday as the international authorities battled to get to grips with the credit crisis, there was one sector notably missing out on the rebound. Shares in Britain's three nationalized banks fell heavily as investors shied away from lenders controlled by the Government with restrictions on their freedom to operate. The announcements by Royal Bank of Scotland, Halifax Bank of Scotland and Lloyds TSB setting out £37bn of share issues to be bought by the Government prompted a sell-off in the shares of all three banks. HBOS suffered particularly badly after admitting the terms of its takeover by Lloyds had been renegotiated in the latter's favour.

RBS will raise £20bn, with HBOS getting £11.5bn and Lloyds asking for £5.5bn, all in a mix of ordinary and preference shares paying a heavy 12 per cent interest rate. RBS's shattered share price fell another 8.4 per cent, Lloyds dropped 14.5 per cent and HBOS closed down 28 per cent. All the shares fell below or near the prices set for the sales of new ordinary stock to the Government. But investors said that even after the capital raisings are complete the Government's terms could make the banks unattractive investments, especially for their traditional income fund investors..

cnn.com, October 14, (Commentary by Jeffrey A. Miron) "Why this bailout is as bad as the last one": CAMBRIDGE, Massachusetts - Ten days after passage of its $700 billion bailout of the financial sector, the US Treasury has announced that it will implement this program, in part, by giving banks $250 billion in return for shares of their stock. In other words, the US government will acquire a significant ownership stake in the banking sector. The goal of this stock purchase is to "inject liquidity." This will, in principle, improve bank solvency and increase bank lending, thereby minimizing the chance of a recession.

This approach appears to be favored by the Treasury over the previously announced strategy of buying "troubled assets" from banks. The Treasury is also planning to guarantee new bank debt and expand insurance of bank deposits. Alas, the new approach is no better than the first. Here's why. If banks were fundamentally sound but temporarily in need of cash, they could sell stock on their own to private investors. Few investors now want bank stock, however, because they cannot tell which banks are merely illiquid — short of cash for new loans because their assets are temporarily sellable only at fire-sale prices — and which are fundamentally insolvent — short of cash and holding assets whose fundamental values are less than the bank's liabilities. This lack of transparency is a crucial impediment to new investment, and therefore to new lending...

10.14.08 Highest budget deficit ever

WASHINGTON (AP) October 14 - Red ink hits $454.8 billion in 2008, more than double that of 2007; economists say bailout to weigh on next year. The federal budget deficit soared to $454.8 billion in 2008 as a housing collapse and efforts to combat the economic slowdown pushed the tide of government red ink to the highest level in history. The Bush administration said Tuesday the deficit for the budget year that ended Sept. 30 was more than double the $161.5 billion recorded in 2007. It surpassed the previous record of $413 billion set in 2004. Economists predicted a far worse number next year as the costs of the government's rescue of the financial system and the economic hard times hit the government's balance sheet. Some analysts believe that next year's deficit could easily top $700 billion, giving the next president a formidable challenge.

A litany of economic woes

The administration blamed this year's record deficit on a litany of economic woes. The prolonged housing slump sharply reduced economic growth and has sent the unemployment rate rising, developments that reduce tax revenues. "This year's budget results reflect the ongoing housing correction and the manifestation of that in strained capital markets and slower growth," Treasury Secretary Henry Paulson said in a statement accompanying the deficit report. "While it will take time to work through this period, we will overcome the current challenges facing our nation." [More>>cnn.com]

Editorial note: If our current national debt is $10.1 trillion, then adjusted with the deficit the debt should be reported as $10.6 Trillion. If we add the $850 billion bailout (700=150) to the national debt, the new president will confront $11.45 trillion. The cost to service the ~$10 trillion debt in fy2008 (interest) was reported 10.14.08 by the Treasury department as $451 billion. (Note that the Treasury department had previously reported the interest debt as $431 billion, as recorded in Maravot News 9.24.08, editorial note to article, 9.20.08 Administration is seeking $700 billion for Wall Street bailout) Interest outlays Maravot News listed 9.24.08 include the following:

National Debt reported by Dept. Treasury * = estimated
Interest outlay ($ billions)
($ billions) * = estimated
National Debt reported ($ trillions)

Top central banks that own
US Public Debt. $ Billions
(From http://www.ustreas.gov/tic/mfh.txt )
Japan 591.9
China 467.7
UK 120.3
oil exporters 137
Brazil 110.5
Carib. banking centers 99.1
Luxembourg 58.4
Russia 31.8
Hong Kong 52.6
Switzerland 37.0

For those who are curious as to why interest on the national debt increased by $20 billion between the period 9.24.08 and 10.14.08, the answer is that our interest outlays are over $1 billion per day. The people that receive our interest payment — this first of all outlays in the US budget, since we have to pay our creditors first — include agencies, institutions and foreign governments' central banks, such as China, Japan and the oil exporting nations, the group of which hold about 20 percent of the US public debt. When Paulson listed the reasons for the deficit he did not include in his reasons the cost to service the national debt, which coincidentally is a similar number, $451 vs 454 billion, as the 2008 deficit!

As was familiar in the Reagan and Bush era, the deficits and interest outlays were about the same; that is,Reagan and Bush I borrowed the equivalent of interest on their debts, thus each doubling our debt during their administrations. The Clinton administration is the only administration that balanced the budget and actually paid down the debt, leaving Bush II a $700 billion surplus. (See chart, Maravot News)

In January 2009 the new president will be facing at least a $575 billion interest obligation against a $11.45 trillion national debt. If interest outlays in 2008 against $10 trillion were $451 billion, then we can project a similar proportion of about 5 percent interest against $11.45 trillion. Since the Bush administration has apparently been borrowing to pay off interest expenses (like using one credit card to pay off another), we can expect an accrued interest debt of $1 billion per day between 10.14.08 and 1.20.09 (inauguration of the new president) — about 90 days from now. The national debt at the time of the inauguration of our new president should be at least $12.35 trillion. Interest expense (using a 5 percent interest rate) would then be $617 billion, making the new projected national debt of ~$13 trillion. If borrowing ceases, the Interest expense against $13 trillion, assuming the new presidential candidate can balance the federal budget, would be $650 billion. Because we are dealing with the cost to service the public debt, the actual total debt is always changing, where unpaid interest is added to the principal amount owed, eventually burying the borrower and possibly the creditors who are relying on interest and principal owed to them.

The slight-of-hand artists in Washington will continue babbling reasons for their ever increasing deficits, never mentioning the devil with a broad-rimmed fedora with a slick mustache and black cape half covering his dripping lips who has his hand out for our hard-earned tax revenues. He, of course, will not spend a dime on us but turn the payments back into Reagan's ponzi scheme "Reagonomics," aka "deficit spending," a rewrite of Hoover's economic program for 1929, of trickle down economics. Hoover believed that by funding the rich the rich will spend, letting the funds trickle down to the desperate masses. Under Hoover and once again under Bush II we learned that the rich pocket the money, hoarding all of it to themselves. The masses weep. We discussed this caped creature with his hand out with Wm. F. Buckley Jr. (deceased 2008) between 1992 and 1995. Buckley argued that we can't be too hard on those who lend us money. Maybe the man with the cape in the end is Reagan and the two Bush borrowers.

Mel Copeland

10.14.08 Whistleblower: Oil watchdog agency 'cult of corruption'

HONOLULU< Hawaii, October 14 - Bobby Maxwell kept a close eye on the oil industry for more than 20 years as a government auditor. But he said the federal agency he worked for is now a "cult of corruption" -- a claim backed up by a recent government report. "I believe the management we were under was showing favoritism to the oil industry," Maxwell told CNN. Maxwell is referring to a tiny agency within the Department of the Interior called the Minerals Management Service, which manages the nation's natural gas, oil and other mineral resources on federal lands.

A report, conducted by the Interior Department's inspector general and released earlier this month, found that employees at the agency received improper gifts from energy industry officials and engaged with them in illegal drug use and inappropriate sexual relations. It looked at activities at the agency from 2003 through 2006. Maxwell said the report doesn't surprise him. The agency, he said, is corrupt "top to bottom."

"It sounds like they forgot they work for the government," he said. "It's disgusting. ... There's no excuse for that. Those people should not be working in those positions at all. They crossed a lot of lines that should never have been crossed<" he said. "They lost all objectivity."

Maxwell was in charge of keeping track of the millions in royalty payments owed taxpayers by oil and gas companies who explored and found oil on US government lands. He estimates he and his team were responsible for saving the government close to $500 million in royalties, either underpaid or somehow skipped by oil and gas companies, over the years. He received the Interior Department's highest award in 2003 for his work. But not long afterward, his job was killed. [More>>cnn.com]

10.14.08 Pakistan Muslim clerics declare suicide bombings un-Islamic

LAHORE, October 14 - A conference of Islamic clerics from across Pakistan on Tuesday issued a fatwa declaring suicide bombings as "un-Islamic." The edict issued unanimously by the Muttahida Ulema Council during a meeting at the Jamia Naeemia here is significant as it came in the wake of devastating suicide bomb attacks in the country that have claimed hundreds of lives. Suicide bombers linked to the Pakistani Taliban have struck at heavily guarded targets like high-value military installations in the garrison city of Rawalpindi and the Marriott Hotel in Islamabad. While declaring suicide attacks as un-Islamic, the members of the Muttahida Ulema Council called on the government to prevent such attacks. The clerics also said the government should stop operations in Pakistan's tribal areas and conduct negotiations with people there to end militancy, TV channels reported. [More>>timesofindia.indiatimes.com]

10.14.08 Syria issues decree to establish Lebanon ties

DAmASCUS, October 14 - Syria recognized Lebanon's sovereignty for the first time on Tuesday, with President Bashar Assad issuing a decree paving the way for the opening of full diplomatic ties with Lebanon, following six decades of independence, the official SANA news agency said on Tuesday. The decree provides for "the establishment of diplomatic relations between the Syrian Arab Republic and the Lebanese republic and the creation of a diplomatic mission at ambassador level in the Lebanese capital Beirut," it said.

Syria and Lebanon announced on August 13 their intention to open diplomatic ties for the first time since independence some 60 years ago, following up on a pledge made by Assad and Lebanese President Michel Suleiman in Paris in July. Assad said last month he expected full diplomatic relations between Damascus and Beirut by the end of this year.

10.12.08 Failing Lehman in $100m payout plan

October 12 - The Lehman Brothers board signed off on more than $100m (£59m) in payouts to five top executives just three days before the bank went bankrupt leaving thousands of employees out of work in London. The payoffs, approved on September 12 by the Wall Street giant's compensation committee, included over $24m in severance packages to the collapsed firm's top three London executives. The committee agreed a $16.2m pay-off for Benoit Savoret, chief operating officer for Europe. This payment had been guaranteed by the firm after Savoret had turned down an approach to join a rival firm. Andy Morton, the fixed-income business head, was set for a $2m golden goodbye.

Both were forced out in a shake-up orchestrated from New York in the waning days at the troubled bank. A $5m package for Jeremy Isaacs, the European chief executive who also left, was approved as well. The executives never received the payments — detailed in internal Lehman documents seen by The Sunday Times — because the company filed for bankruptcy protection the next working day, September 15. According to Tony Lomas, the lead administrator, they will now be treated as unsecured creditors.

The committee also signed a $41m retention package for Eric Felder, the head of global fixed income in New York, and a $40m two-year deal for Jerry Donini, the US-based head of equities. These are understood to have been voided, replaced by new contracts under Barclays which bought the US business. The pay deals will further inflame the debate raging about executive pay as the global financial crisis accelerates. In the two years prior to Lehman's collapse, the executives were generously remunerated while overseeing forays into risky commercial real-estate investments that helped to bring the company down. [More.>timesonline.co.uk; See related story:

thestar.com.my, October 12, "Singapore investors decry losses from Lehman bonds."
: Hundreds of distraught Singaporean investors flooded a park Saturday to express their anguish at losses from structured notes issued by Lehman Brothers Holdings Inc. that they say were sold to them by banks as safe investments. Among the crowd that gathered were retired, middle class and working class investors who told a similar story. During the past few years as their other fixed-income instruments matured local bank officials pushed a 5 to 7-year bond that would yield about 5 percent, higher than the 0.5 percent interest rate banks pay on checking or savings account deposits..

washingtonpost.com, October 12, "Retirement wreck" : For many Americans, 401(k) plans were supposed to be their own little golden parachutes into retirement. Now, it seems, those parachutes may not open in time. The global financial crisis that revealed the flaws of Wall Street has also exposed the vulnerability of America's retirement system. Employers have increasingly abandoned traditional pensions, forcing workers to rely on 401(k)s and similar plans that have a lot more exposure to the stock market.

The assumption was that even if the market suffered short-term losses, over time it would rise, allowing workers to recoup their savings. But the steepness of this year's market collapse and the still-uncertain depth of the economic downturn has prompted lawmakers, academics and economists to question the wisdom of letting workers hitch their retirement fortunes to the precariousness of the stock market. So far this year, the Dow Jones industrial average is down 36 percent, eroding the savings of millions of Americans and forcing those who had planned to retire in the next few years to reconsider their plans...

nytimes.com, October 12, "New York Times chart: 'How this bear market compares"

Editorial note: The New York Times chart says it all; See also Maravot News 10.09.08, story 10.09.08 Wall Street's dizzy session with table,"Dow Jones largest daily loss" that shows the years 1932 and 2008 as years in which two record daily losses are registered. "If you compare the largest percentage loss for a day in the Dow, the Dow Jones index (djindexes.com) shows some interesting data with 2008 holding so far two positions in the table, as is the case with 1932! [1929 had 3 of the largest daily losses]."

Mel Copeland

10.12.08 Council salaries hit by bank collapses

LONDON, October 12 - Treasury urged to defer £1bn business-tax demand as this month's payroll for hundreds of thousands of workers is frozen in Icelandic accounts. Hundreds of thousands of council workers may not be paid this month because their earnings are frozen by the Icelandic bank collapse, it emerged last night. The Local Government Association has just eight days to avert a catastrophe, senior sources warned. The LGA has urged the Treasury not to insist on prompt payment of nearly £1bn in business taxes owed by councils, and due on 20 October, to free up cash and allow staff to be paid.

It is understood that dozens of the 100-plus local councils that are victims of the Iceland banking crisis use their accounts for the payroll of everyone from the chief executive to frontline staff. Until now it was thought only capital savings, worth £840m, were locked in the failed banks. But the accounts were also used as a quick way to earn interest to pay wages. And in a fresh blow to the banking industry, The Independent on Sunday has learnt that seven councils are to withdraw a total of £2bn from British and foreign banks because they fear the crisis could claim more victims. The money will be transferred to government bonds, leaving a gaping hole in UK banking assets at a time when the Treasury is struggling to prop them up with its £500bn bailout. [More>>independent.co.uk]

10.12.08 China agrees land reform package

October 12 - China's Communist Party leaders have agreed a package of rural reforms that could shape the country's economic policy over the coming years. A four-day enclave including President Hu Jintao had approved "major issues" on reform, Xinhua news agency said. No details were given but it is thought farmers will now have more power to transfer or rent out their land. Leaders have said they want to lift the income of China's 740m rural population to boost growth and ease social unrest. "The Communist Party of China Central Committee on Sunday approved a decision on major issues concerning rural reform and development," Xinhua said.

...Reports suggest a key consideration was to enshrine in law the rights of rural citizens to transfer or rent out their land leases to other individuals or companies. Since the break-up of massive communal farms three decades ago, individual families have been permitted to farm their land under 30-year government contracts. The farms are small, however, averaging about 1.66 acres (0.67 hectare) in size, according to government figures, making it hard to run the farms profitably. To maximise production, many farmers swap chunks of land to be held in common by the village. People leaving the village to work in richer coastal areas often lease farming rights to others in informal arrangements.
[Full story>>bbc.co.uk; See more details, xinhuanet.com, October 12, "CPC closes major meeting with decision on rural reform." and related story:

xinhuanet.com, October 12, "Chinese grain output expected to rise for 5th consecutive year"
: BEIJING, China's Ministry of Agriculture (MOA) on Saturday said it expects an increase in grain output for the fifth consecutive year. The country has harvested nearly 80 percent of its autumn crops and expects 2008 to be a bumper year, the ministry stated. The State Grain Information Center earlier estimated that this year's grain output would reach 511.5 million tons, up 10 million tons from 2007. Higher grain production happened in spite of natural disasters and troubled domestic and international economic environments, the MOA noted. The output increase was attributed to government subsidies, pest control and more advance agricultural techniques, the ministry said. The central government allocated 102.86 billion yuan (15.1 billion US dollars) in agriculture subsidies this year, doubling the money from 2007...

10.12.08 Pakistan loyalists take on militants

October 13 - The threat of civil war intensified in Pakistan's FATA region yesterday after unprecedented violence between government-supporting tribal lashkars (armies) and militants from al-Qaeda and the Taliban. The beheaded bodies of four tribal elders who had raised a local lashkar to fight the militants in the Bajaur region were found yesterday amid reports of tribal fighting across the Federally Administered Tribal Areas. Battles erupted after a suicide bomb blast aimed at a tribal peace jirga (council) in the relatively peaceful Orakzai Tribal Agency. More than 80 elders were killed and 165 injured when militants drove an explosives-laden truck into the meeting.

The clashes coincided with reports that the Pakistan army — already involved in a huge military offensive centred on Bajaur — was mobilizing tens of thousands of troops to attack militants in the North Waziristan Agency, believed to be the base for many of al-Qaeda's leaders, including Osama bin Laden. The Pakistan army is convinced that it has displaced al-Qaeda leaders from Bajaur and that they have fled to North Waziristan. The army had been mobilised, a leading commentator reported last night. Earlier, a US drone missile attack missed its targets — al-Qaeda and Taliban leaders meeting in North Waziristan — but killed nine people, including six Arabs. [More>>theaustralian.news.com.au; Related stories:

thenews.com.pk, October 12, "Two commanders among 27 militants killed in operation in Orakzal"
: ORAKZAI AGENCY, Pakistan - Twenty-seven militants including their key commanders were killed in security forces’ action here on Sunday. According to sources, those killed included two key commanders besides 12 alleged suicide bombers. [end]

khaoleejtimes.com (AFP) October 12, "US drones fly after missile strike in Pakistan": MIRANSHAH, Pakistan - US pilotless spy planes on Sunday flew over a Pakistani tribal town bordering Afghanistan just hours after a missile strike killed at least four people, residents said. Two missiles from suspected US drones overnight struck a compound just outside Miranshah, the main town in the restive North Waziristan district, which is seen as a safe haven for al-Qaeda and Taliban militants. The targeted compound was the residence of Taliban militant Omar Daraz, a security official told AFP, giving no further details. There was no reaction to the attacks from the Pakistan government, though the military said they were aware of the strike...A similar suspected US missile strike on a house in the same district on Thursday killed nine people including six Arab militants, according to security officials...

10.12.08 More than 100 Taliban killed in Afghan clashes

KANDAHAR, Afghanistan (AP) October 12 - Taliban militants launched a surprise attack on a key southern Afghan town, sparking a battle that killed some 60 insurgents, an Afghan official said Sunday. A second clash in the same region killed another 40 militants. Taliban fighters used rockets and other heavy weapons to attack Afghan forces on the outskirts of Lashkar Gah, the capital of Helmand province, said Daud Ahmadi, the spokesman for Helmand's governor.

Militants attacked the city from three sides starting just after midnight and were pushed back only after a battle that involved airstrikes, Ahmadi said. Rockets landed in different parts of the city but there were no civilian casualties, he said. NATO said its aircraft bombed insurgents after they observed them gathering for a major attack, killing "multiple enemy forces," the military alliance said in a statement. [More>>khaleejtimes.com]

10.12.08 Several killed by Baghdad car bomb

October 12 - A bomb planted in a parked car has killed nine people and wounded 13 others after it exploded in a busy commercial street of Baghdad, police say. The death toll could rise from the blast, which took place on Sunday in Bayaa, a neighbourhood in the south of the Iraqi capital, they said. In a separate attack, two soldiers were killed by sniper fire in Mansour district, General Qassim Moussawi, spokesman for Baghdad's security operations, told the Reuters news agency.

Elsewhere in the country, a roadside bomb hit an Iraqi army patrol and wounded an army official. The blast occurred in a main street near the town of Sulaiman Pak, 160km northeast of Baghdad, police said. Five policemen and two civilians were wounded when a roadside bomb exploded near a police patrol in the New Baghdad district of eastern Baghdad, police said. In yet another incident, a roadside bomb wounded three policemen and one civilian when it exploded near a police patrol in Qahira district of northern Baghdad, police said. [>aljazeera.net]

10.12.08 Yemen puts on trial 25 Iranian fishermen

SANAA, Yemen, October 12 - Twenty-five Iranian fishermen accused of drug trafficking have gone on trial in the Yemeni capital, judicial sources said on Sunday. Twelve men whose case opened on Saturday are said to have smuggled 3.5 tons of hashish into Yemen, while 13 others who went on trial on Sunday are charged with illegal entry and possession of 20 kilos of hashish. The group of 13 was arrested by U.S. navy personnel who discovered three tons of the narcotics aboard the Iranian men's vessel, according to the prosecution.

The suspects were handed over to the Yemeni authorities after the destruction of all but 20 kilograms of the drugs, the court was told. These men, whose statements to the court in Farsi were translated into Arabic, denied the charges and said the U.S. sailors threw a large quantity of fish into the sea from the hold and that there were no drugs on board. Yemeni authorities say they have seized a total of 27 tons of drugs in the past nine months, mostly from Iranian traffickers trying to move them via Yemen to Saudi Arabia and other Arab countries in the Gulf.
[>alarabiya.tv (alarabiya.net)]

10.12.08 Al Arabiya attack garners debate among users

DUBAI, October 12 - As Al Arabiya pursued legal remedy to regain control of its website domain messages poured into the comments forum as users debated why the site had been hacked, whether it was part of a broader Sunni-Shiite cyberwar, and who might be behind the attacks. Most of the comments left on the English site condemned the attacks and voiced support for AlArabiya.net, although several accused the site of partiality towards Sunnis and debated whether or not the site was biased...Many also condemned the divisive cyberwar that has pitted Sunni hackers against Shiia hackers in tit-for-tat cyberattacks that have disabled more than 1,200 websites over the past three weeks...Al Arabiya site, www.alarabiya.net, is registered through Network Solutions but on Thursday night hackers managed to re-register the domain name through a US-based company, GoDaddy. [Full story>alarabiya.tv; See earlier story, alarabiya.tv, October 11, "Al Arabiya hunts for hackers in US courts."]

10.11.08 Lehman Brothers demise triggers huge default

October 11 - Lehman Brothers, the bust investment bank, triggered one of the biggest corporate debt defaults in history yesterday as it emerged that the US Federal Reserve is harbouring grave concerns about whether Washington's $700 billion (£413 billion) bailout fund will avert a financial meltdown. An auction of Lehma's bonds yesterday determined that the bank's borrowings were worth only 8.625 cents on the dollar. The valuation leaves the insurers of the debt a bill of about $365 billion. It is not clear whether the insurers, which are required to settle the bill in the next two weeks, will be able to pay – a development that could further undermine increasingly stressed capital markets.

The $365 billion default came as stock markets around the world suffered one of their worst days since the crash of 11 years ago. Panicking about the prospect of global recession, the FTSE 100 index of leading shares in London crashed within seconds of opening, losing 8.9 per cent of its value, its worse fall since October 1987. The index recovered to close down 225 points, marking a 5 per cent decline, but more than a fifth was wiped off London shares this week alone. Issues in New York fluctuated wildly as the Dow Jones industrial average slumped by 312.14 points at lunchtime before closing at 8,451.19, down 128.00. Both markets had been scared by losses in Tokyo, where the Nikkei lost 10 per cent of its value. [More>>timesonline.co.uk]

10.11.08 US removes North Korea from terror blacklist

WASHINGTON, October 11 - The Bush administration announced on Saturday that it was removing North Korea from a list of state sponsors of terrorism and said the country had agreed to adhere to concessions on its nuclear program, in a bid to salvage a fragile nuclear deal that seemed on the verge of collapse. Sean McCormack, the State Department spokesman, said that North Korea had agreed to resume disabling its plutonium plant at Yongbyon, replace the seals on its nuclear equipment and allow international inspectors to return.

But almost immediately, the move brought expressions of concern from Republican lawmakers, including the presidential nominee, Senator John McCain. In the most significant part of the agreement, North Korea agreed to a verification regime that would allow United States inspectors access to all of its declared nuclear facilities. But the deal puts off decisions on the thorniest verification issue: what happens if international experts suspect the North is hiding other nuclear weapons facilities. [More>>nytimes.com]

10.11.08 Mexico: Gunment posing as police slaughter 11

CUIDAD JUAREZ, Mexico, October 11 - Attackers dressed as police officers opened fire in a bar in Mexico's northern Chihuahua state, killing 11 people, authorities said yesterday. "Last night (Thursday), a group of armed people entered the Rio Rosas bar in Chihuahua city and shot indiscriminately on the patrons," an official from the state attorney's office said. "At the moment there are 11 dead," the official said, adding that four others were seriously wounded. "The attackers arrived in several vans, in false federal uniforms, wearing balaclavas."

Police were searching for the trucks used in the attack, which were caught on the bar's security cameras. At least 19 people died in separate attacks overnight in Chihuahua State, Mexico's most violent, including four police. Suspected drug-related attacks have claimed almost 3500 lives this year across Mexico. [>news.com.au; See also banderasnews.com]

10.11.08 500 Christian families flee Mosul

BAGHDAD (AP) October 11 - Insurgent attacks against Christians in the Iraqi city of Mosul have forced 500 families from their homes in just the past week, the governor of northern Iraq's Ninevah province said Saturday. Duraid Mohammed Kashmoula put the total flight at about 3,000 people, and said most have left for churches, monasteries and the homes of relatives in nearby Christian villages and towns. In a telephone interview with The Associated Press, Kashmoula described the last seven days as a period of "major displacement." He said provincial security officials were meeting with Christian leaders to protect the community "from the terrorists, the killers."

The violence in Mosul is occurring despite U.S.-Iraqi operations launched over the summer aimed at routing al-Qaeda in Iraq and other insurgents from remaining strongholds north of the capital...The Christian community has been estimated at 3 percent of Iraq's 26 million people, or about 800,000 Christians, and has a significant presence in the northern Ninevah province.
[Full story>>thejakartapost.com]

10.11.08 Turkish planes hit PKK targets in N. Iraq

ANKARA / ARBIL (Reuters) October 11 - Turkish warplanes and artillery attacked 31 Kurdish rebel bases on Friday as part of a week-long operation in northern Iraq after an attack that killed 17 Turkish soldiers, the military said. Ahmed Danees, spokesman for the rebel Kurdistan Workers Party (PKK) in Iraq, said that new shelling had taken place in mountainous areas inside Iraq for about an hour on Saturday but gave no further details. The Turkish president said on Saturday for the first time publicly that Ankara was talking to the Iraqi Kurdish government about acting against the PKK, which launches attacks on Turkey from bases in northern Iraq. [More>>khaleejtimes.com]

10.11.08 Arab leaders to condemn Acre man who drove on Yom Kippur

October 11 - After an extended weekend of clashes between the Jewish and Arab residents of Acre, leaders of the Arab community met with the commander of Israel Police's Northern District and the commander of the Acre station. They agreed that the Arab leaders will publicly condemn the driver who sparked the riots when he drove into a Jewish neighborhood of the city on Wednesday evening, after the beginning of Yom Kippur.

MK Abbas Zakhur (United Arab List) said that the Arab leadership in the city met on Saturday morning and discussed ways to avoid similar violence in the future. He said that an announcement condemning the driver for entering a Jewish neighborhood on Yom Kippur will be issued, because despite the fact that the driver didn't intend to intentionally hurt the feeling of observant Jews, he "should have thought of a thousand ways to get home and avoid using his car at all costs." [More>>jpost.com; See also aljazeera.net, October 11, "Houses torched in Israeli riots."]

10.11.08 Light carbon material discovered

LONDON, October 11 - Chinese and American researchers have discovered a new carbon material that is potentially lighter and stronger than conventional carbon fibres. Huisheng Peng and his colleagues at Shanghai-based Tongji University have found that a carbon vapor made by heating ethylene and paraffin oil can condense into tubes of pure carbon, tens of micrometers wide and up to several centimeters long. The researchers say that individual tubes have a tensile strength greater than that of conventional carbon fibres, and that they show ductile behavior just like metal wires when pulled...Porous forms of carbon have been made before, but not in this fibrous form. The porous tubes also conduct electricity rather well, and thus can find uses in flexible "textile electronics." [Full story>>timesofindia.indiatimes.com]

10.11.08 Army orders Pain Ray trucks; new report shows 'potential of death'

October 11 - After years of testing, the Active Denial System — the pain ray which drives off rioters with a microwave-like beam — could finally have its day. The Army is buying five of the truck-mounted systems for $25 million. But the energy weapon may face new hurdles, before it's shipped off to the battlefield; a new report details how the supposedly non-lethal blaster could be turned into a flesh-frying killer. The contract for the pain ray trucks is "expected to be awarded by year's end," Aviation Week notes. "A year after the contract is signed, the combination vehicle/weapons will start to be fielded at the rate of one per month."

...The announcement arrives on the same day as a new report from less-lethal weapons expert Dr. Jürgen Altmann that analyzes the physics of several directed energy weapons, including Active Denial, the Advanced Tactical Laser (used as a non-lethal weapon), the Pulsed Energy Projectile (a.k.a. "Maximum Pain" laser) and the Long Range Acoustic Device (a.k.a. "Acoustic Blaster").

Dr. Altmann describes the Active Denial beam in some detail, noting that it will not be completely uniform; anyone unlucky enough to be caught in the center will experience more heating than someone at the edge. And perhaps more significant is his thorough analysis of the heating it produces — and the cumulative effect if the target does not have the chance to cool down between exposures.
[Full story>>abcnews.go.com; See also aviationweek.com, October 9, "High power microwave nearly operational."]

10.10.08 Darling calls on G7 to act amid market panic

LONDON, October 10 - Alistair Darling called on G7 nations today to get behind a global rescue plan to rescue the banking sector as the FTSE 100 endured its steepest one-day fall since the crash of October 1987. Speaking ahead of an emergency meeting of G7 finance ministers in Washington, the Chancellor said that he hoped the talks would produce concrete agreements on the need to protect savers, recapitalize banks and provide liquidity to markets.

Earlier, in a televised statement from the White House lawn, President Bush had promised concerted international action to tackle the crisis. "The world is sending an unmistakable signal: we're in this together and we'll come through this together," he said. That was not enough to calm nerves on either Wall Street or Europe, where investors appeared to have resigned themselves to an impending worldwide recession...The FTSE 100 index of leading London shares closed 366 points down at 4,947.78, a fall of 8.48 per cent, its largest one-day percentage fall since October 20, 1987.
[Full story>>timesonline.co.uk; Update, cnn.com, October 10, "Vertigo on Wall Street" : Volatile Dow plunges as much as 697 points, rises as much as 322, as panicky investors try to find their footing. Stocks ended with slim declines Friday, as investors fought back from a decline of as much as 697 points on the Dow amid the global market meltdown. Credit markets remained tight, although short-term lending showed some improvement from recent days. Treasury prices fell, raising the corresponding yields. The dollar gained versus the yen and fell against the euro. Oil, gas and gold prices fell.

The Dow Jones industrial average (INDU) lost 128 points, or 1.5%, while the Standard & Poor's 500 (SPX) index lost 1.2%. The Nasdaq composite (COMP) ended 0.3% higher, following a seven session losing streak. For the week, the Dow fell just over 1,874 points, or 18%, its worst weekly decline ever on both a point and percentage basis. Wall Street lost roughly $2.4 trillion in market value during the week...See related stories:

nytimes.com, "US stocks slide in turbulent trading"
: Amid unrelenting pessimism about the health of the global economy and world governments’ ability to solve the financial crisis, stocks swung wildly on Friday, with the Dow Jones industrial average down 403 points, or 4.7 percent , by early afternoon in New York, continuing this week's aggressive sell-off. At the opening of trading, Wall Street had seemed in a free-fall. The Dow Jones industrial average fell almost 700 points or about 8 percent in the first 10 minutes, dipping briefly below 8,000. The broader Standard & Poor's 500-stock index, declined almost 8 percent. By mid-afternoon, the S.&P. was down 5.16. Then the turnaround began, and shortly after 10 a.m., the Dow actually slipped into positive territory, briefly, before again pushing lower. Another day, another series of violent swings in a week that has seen large sell-offs in the last hour of the trading day..

japantoday.com, October 10, "Nikkei tumbles 9.6% on crisis fears" : TOKYO - Japan’s key stock index plunged a stunning 9.6% Friday to close out its worst week in history as frantic investors worried about a global recession dumped stocks after huge losses on Wall Street. The benchmark Nikkei 225 index tumbled 881.06 points to 8,276.43, its lowest since May 2003. It was its biggest one-day percentage loss since the stock market crash of October 1987.

"Selling is unstoppable in New York and Tokyo," said Yutaka Miura, senior strategist at Shinko Securities Co Ltd. “Investors were gripped by fear.” The index dropped by more than 11% at one point but recovered modestly in the afternoon. Still, investors reeled from a brutal week. On Wednesday, the index had plunged 9.4%. Since last Friday, the Nikkei has lost nearly a quarter of its value...

thejakartapost.com (AP) October 10, "Wall Street seen adding to global rout": Investors looked to extend the frenetic selling on Wall Street on Friday, adding to yet another global sell-off on concerns that even low interest rate cuts won't help end the worsening credit crisis. Dow Jones industrials futures plunged 250 points before the opening bell in New York. Frozen credit markets and a loss of confidence in the world's financial system have caused the Dow to drop 21 percent in just 10 trading days. The blue chip index plunged 678 points Thursday, and is heading to its worst weekly point drop, and one of its biggest weekly percentage drops, since being created 112 years ago.

Going into Friday's session, losses for the year add up to a staggering $8.3 trillion, according to preliminary figures measured by the Dow Jones Wilshire 5000 Composite Index, which tracks 5,000 US-based companies representing almost all stocks traded in the US.

Global markets continued the intense selling Friday. European bourses were hammered, with Britain's FTSE-100 down 6.9 percent, German's DAX down 8.5 percent, and France's CAC-40 down 8 percent. Asian stock markets plunged, with the Nikkei 225 down 9.6 percent and the Hang Seng lower by 7.2 percent. A stream of selling forced exchanges in Austria, Russia and Indonesia to suspend trading, and the rout in Australian markets caused traders to call it "Black Friday."...

10.10.08 Iran appoints successor to Mughniyeh

October 10 - Eight months after he was assassinated in a meticulously-planned car bombing in Damascus, Hezbullah arch-terrorist Imad Mughniyeh has been succeeded by a senior Iranian intelligence official, an Italian newspaper reported Thursday, indicating an Iranian determination to consolidate its control over the Lebanese group. According to the report in the Italian daily Corriere della Sera, Hezbullah's new chief military commander is Muhammad Riza Zahdi, aka Hassan Mahdawi, who in the late 1980s served in the Iranian Embassy in Beirut.

According to the report, Zahdi will be in charge of coordinating weapons smuggling to Hezbullah from Syria as well as the construction of military positions in southern Lebanon. The paper said that the appointment was part of an Iranian plan to restructure Hezbullah in the wake of the Second Lebanon War. [More>>jpost.com; See related story:

metimes.com, October 10, "Israel caught between Islamist crossfire: Lebanon pays price"
: ...Bear in mind that Hezbollah has obtained a number of medium range missiles capable of hitting Tel Aviv and possibly farther south. Together with Hamas, the Islamic Resistance Movement dominant in the Gaza Strip, Israel appears caught between the crosshairs of the two Islamist movements, both backed by Iran. The distance from the Lebanese border to Tel Aviv is 77 miles or 126 kilometers, roughly the same as Baltimore, MD., to Fredericksburg, VA.; while the distance from northern Gaza to Tel Aviv is a mere 32 miles, or 57 kilometers, about the same from downtown San Diego to Oceanside, CA.

It is believed that most of Hezbollah's arsenal consists of relatively inaccurate Soviet era Katyushas. Those have a short range of only 25 kilometers, or 15.6 miles. But Hezbollah is also believed to have been supplied with Fajr-5 missiles, with a range of 75 kilometers, enough to hit the area around Hadera. The real threat to the security of Israel comes from the Zelzal-2 missile, with a range of 200 kilometers. Those can easily reach Tel Aviv, the most densely populated area of Israel...The Israeli officers have warned Lebanon of "disproportionate firepower," stating that Israel would be prepared to "wipe out villages in the south" believed to harbor Hezbollah missile launch sites...

10.10.08 Corruption blamed as cholera rips through Iraq

October 10 - A deadly outbreak of cholera in Iraq is being blamed on a scandal involving corrupt officials who failed to sterilize the local drinking water because they were bribed to buy chlorine from Iran that was long past its expiration date. The centre of the epidemic is in Babil province, south of Baghdad, in the marshy lands east of the Euphrates river, not far from the ruins of ancient Babylon. In Baghdad, where half the six million population has no access to clean drinking water, people are now drinking only bottled or boiled water.

The Iraqi Prime Minister, Nouri al-Maliki, has appointed a commission of inquiry to find out why ineffective chlorine was being used. He is also refusing to release three officials under arrest despite demands from the Islamic Supreme Council of Iraq (ISCI) to which they are linked. In the town of al-Madhatiya, in southern Babil, a councillor involved in buying the chlorine was reportedly released after militiamen connected to ISCI intimidated police into freeing him.

The scandal over the contract is becoming a test case of the Maliki government's willingness to tackle the pervasive corruption in Iraq where officials see their jobs primarily as a way of enriching themselves through bribes. It is also a test of his ability to exercise central control over ISCI and parties which have been hitherto dominant outside Baghdad. Cholera is endemic in Iraq but last year there was an epidemic in northern Iraq which was far more serious than anything seen for years. Some 4,700 people, mostly in Sulaimaniyah province, were struck. [More>>independent.co.uk; See related story, nytimes.com, October 10, "As fears ease, Baghdad sees walls tumble."]

10.10.08 Suicide attack on Pakistani tribal council kills 20

PESHAWAR, Pakistan (Reuters) October 10 - A suicide bomber killed at least 20 people in an attack on a tribal council meeting in Pakistan's northwest Orakzai region on Friday, an official and a tribal elder said. Seventy people were wounded in the attack, which comes a day after a suicide bombing at the heavily guarded police headquarters in the Pakistani capital in which 8 policemen were wounded. Pakistani tribesman backed by authorities were trying to raise militia groups in Orakzai to drive out militants from areas regarded as safe havens for al-Qaeda fighters and their Taliban allies when the bomber struck.

"We were busy in raising a lashkar (a tribal militia) to evict Taliban from the region when this attack took place," Qeemat Khan Orakzai, a member of the council, told Reuters. Kamran Zeb, top government administrator of Orakzai, said the death toll could rise further. "The lashkar had taken a decision to destroy militants' headquarters in the region. Shortly afterwards, this attack took place," he told Reuters. Orakzai has been the most peaceful of Pakistan's seven semi-autonomous tribal regions. Unlike most of the others, Orakzai does not border Afghanistan. [More>>khaleejtimes.com; See related story, thenews.com.pk, October 10, "Peace Jirga decides to take action against Taliban."]

10.10.08 NATO to attack Afghan opium labs

October 10 - NATO has agreed its troops will be allowed to attack opium factories for the first time in Afghanistan. Alliance spokesman James Appathurai said troops will act with Afghan forces "against facilities and facilitators" using drugs to finance the Taleban. Afghan forces have taken the lead in the fight against the drugs industry until now. The US wants more aggressive tactics against the opium trade. NATO defence ministers reached agreement at a meeting in Budapest. NATO'S International Security and Assistance Force (ISAF) and US-led troops have until now concentrated on eradicating poppy crops, rather than attacking opium factories and distribution networks.

The BBC's Martin Patience in Kabul says anti-drug efforts by the Afghan National Army and police have been largely ineffective so far, but the Nato move could end up aggravating the security situation. While not the focus of this new strategy, many Afghan farmers could see a drop in income. And a number of senior Afghan officials who are heavily involved in the drugs trade will not take kindly to any interference in what for them is a lucrative business, our correspondent says. Afghanistan supplies more than 90% of the world's illicit opium, the main ingredient of heroin.(See a map of opium production) [More>>bbc.co.uk]

10.10.08 Afghan intelligence officers killed

October 10 - Three Afghan intelligence officers have been killed in a bomb attack in eastern Afghanistan. Provincial officials confirmed to Al Jazeera that three officers had died and two other people had been injured in the attack in Khost on Friday. Sayed Ahmad Khan, the provincial district governor, told Reuters news agency that it was a suicide attack. "The suicide bomber on foot attacked the detective while he was going to work," he said. "No civilians were killed or wounded." [>aljazeera.net]

10.10.08 100 Somalis feared dead off Yemen coast

GENEVA (AP) October 10 - Around a 100 migrants believed to be mainly Somalis are missing and feared dead after being forced overboard by smugglers off the coast of Yemen, the United Nations refugee agency said on Friday. Survivors of the latest tragic crossing reported that a smuggling boat carrying about 150 passengers had left the Somali port of Marera near Bossaso on Monday and spent three days crossing the Gulf of Aden, it said. Most passengers were forced overboard about 5 kms from the Yemeni shore, and many are feared to have drowned, the UN High Commissioner for Refugees (UNHCR) said.

"Survivors said they counted a total of 47 people reaching the beach and later saw Yemeni authorities burying five bodies," UNHCR spokesman Ron Redmond told a news briefing. Most of the migrants were believed to be Somalis, although some boats have also transported Ethiopian or Eritrean migrants from Somalia, he said.

As many as 32,000 people have arrived from war-torn Somalia in Yemen so far this year after making the perilous voyage aboard smugglers' boats, according to the agency. At least 230 people have died and an estimated 365 remain missing, including those from the latest incident, it said. Piracy is also rife off Somalia, which has been mired in anarchy since 1991. Gunmen have boarded more than 30 vessels this year and received sizeable ransoms. A ship laden with cement was hijacked on Thursday night in the waters between Somalia and Yemen, a Somali government official said on Friday. The NATO military alliance decided on Thursday to join anti-piracy operations along Somalia's 3,300 km (2,060 mile) coastline.

10.10.08 'Ethiopia on brink of starvation'

October 10 - The call comes as the Ethiopian government prepares to announce that the number of people in need of emergency assistance has leapt from 4.6 million to 6.4 million since June. Oxfam called on rich countries to redouble the aid effort to avert disaster. According to the UN, there is a £150m funding shortfall for the next six months. While the numbers in need of help have risen, not enough food is reaching the country and monthly cereal rations have been cut by a third.

Another 7.2 million Ethiopians already receive cash or food aid each year under the government's Productive Safety Net Programme (PSNP). Oxfam's country director Waleed Rauf said: "Today's figures, terrible as they are, show only half the picture. "Over 13.5 million Ethiopians are in need of aid in order to survive." [More>>news.sky.com; See also oxfam.org]

10.10.08 Saudi-owned TV website hit by cyber attack

DUBAI (AFP) October 10 - Computer hackers claiming to be Shia shut down the website of Saudi-owned satellite channel Al-Arabiya on Friday, a month after Iran reported similar attacks on many of its websites by hardline Sunnis. The website of the Dubai-based channel was taken over by the hackers who displayed a message which warned that "if attacks on Shia websites continue, none of your websites will be safe."The page also displayed a picture of an Israeli flag on fire.

Al-Arabiya issued a statement saying that its website had "come under organized cyber piracy performed by extremists." The statement said that Al-Arabiya will continue to adhere to its policy of being "moderate, balanced and objective." Iran's Fars news agency reported last month that Wahhabi hackers had attacked 300 Shia websites, including Shia Islam's most popular site linked to the faith's Iraq-based spiritual leader, Grand Ayatollah Ali Sistani. It was referring to the ultra-conservative doctrine of Sunni Islam that prevails in Saudi Arabia. [More>>khaleejtimes.com]


09.11.05 When a nation lacks a competent leader it invites disaster – the legacy of Bush
"Using force the George W. Bush way – Bush's crusade"
11.25.04 Why the Crusade & Jihad?


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