Oil-rich Nigeria enjoys 'brain gain'
LAGOS, Nigeria: They speak in the clipped tones of the British upper class or the soft drawl of southern California. They boast degrees and work experience from elite overseas institutions. And now they're coming home.
Nigerians who left their homeland to seek riches abroad are increasingly returning as Africa's biggest oil producer rides an energy bonanza that is opening up unprecedented opportunities.
Abiola Lawal, 41, is part of this "brain gain."
He was earning a six-figure salary with business software giant SAP AG in southern California before he returned to Nigeria in 2005 after 17 years abroad, joining a major Nigerian energy firm, Oando PLC, as chief strategy officer.
"There are lots of 30- and 40-something-year-olds who are CEOs in this country, and that would never be in the States or the U.K. because the experience pool is much deeper there," said Lawal. "In the States I will have opportunities, but not at the level we are getting them in Nigeria, and that's the reality."
While most of Nigeria's 140 million citizens are deeply impoverished, some parts of the waterfront commercial capital of Lagos are becoming mini boomtowns.
With petrodollars strengthening the economy and the government deregulating key industries, Nigeria's telecommunications, banking and energy sectors are growing at double and sometimes triple digit rates, with stock prices to match. The overall economy is forecast to grow at about 9 percent in 2008.
This growth has created a growing appetite for internationally business savvy recruits. Many companies now organize career fairs in major cities in the U.S. and Europe, seeking to personally woo Africans with overseas training and work experience.
For many Nigerian expatriates, it's a tempting proposal: the chance to contribute to the development of their country while enjoying compensation packages that often include fast-track promotion, housing, a maid, a car and a driver.
No firm figures exist for how many Nigerians educated or working overseas are coming home. But recruitment companies report hundreds of applications for each job they advertise and up to 85 percent of the applicants are Nigerians working in the West.
Shola Ajani, who runs recruitment company Maximise Potentials, says that in the last three years the company has placed 700 Nigerian expatriates in professional jobs in their homeland. Their portal, nigeriajobsonline.com, has a database of some 10,000 Nigerians living overseas who have registered their interest in repatriating, he says.
Nigeria has always seen some of its diaspora return home, a process kick-started by the end of three decades of military rule in the country in 1999. But brain gain "has taken a new dimension in the past year," as the economy booms, says Ade Odutola of another recruitment site wazobiajobs.com, which has grown nearly threefold in the past year. "We are seeing greater awareness of the opportunities in Africa by Africans in the diaspora."
Word is spreading fast. Internet communities such as the Move Back Club put new "repats" in touch with those hoping to make the move.
Recruitment companies say brain gain is running at the highest levels in Nigeria. But they say flagging Western economies are pushing more young professionals toward other fast growing, if sometimes volatile, markets such as South Africa and, more recently, Ghana.
The contrast between the often high-living ways of repats and other rich elite such as politicians and oil tycoons and the circumstances of ordinary Nigerians can be jarring.
Misuse of government funds and widespread corruption has left Nigeria's infrastructure crumbling. Few people have access to reliable electricity, decent schools and health clinics or flushing toilets.
In the few comparatively posh sections of Lagos, high security gated compounds have sprung up, roads have been resurfaced and glistening shopping malls opened. The elite can be seen quaffing champagne and dining on sushi in air-conditioned restaurants while outside, beggars and street children guard their immaculate SUVs.
Nigeria's government isn't complaining. It has set up groups such as the "Nigerians in the Diaspora Organisation" to encourage Nigerians living and working overseas to come back and share their skills.
"These people are interested in staying and rebuilding their homeland, not just seizing the opportunity and then leaving back for overseas," says John Ejinaka, a senior consular official involved in the multimillion dollar effort. "It's a great opportunity for all of us."
Erabor Okogun, a 34-year old business consultant, studied in Britain and held a job with Transport for London, the government body that runs London transport system. He returned to Nigeria in 2003 to work for the Transnational Corporation of Nigeria PLC a vast conglomerate with interests across the hospitality, energy, telecommunications and trade sectors.
He said salaries are high in Nigeria, but that companies get what they pay for.
"Yes, we command above and beyond what is normally expected for employees in Nigeria," he said, swirling a glass of cognac. "But in terms of work output, ethics, ideas and concepts the company gets a lot of value. The economy gets a lot of value."
Of course, he said, there are drawbacks to moving back to a deeply corrupt country that receives only a couple of hours of state-provided power each day. Roads are filled with potholes and snarled with traffic. Rates of gun crime are high in the disorderly city.
"In the U.K. everything has its place, there's an order to things: That's what I miss most," says Okugun. "And that's what I want to create here."
For some Nigerian repats being able to watch, and participate in, the development of their nation is sufficient reward. But for most there's another message that trumps all: "You can write your name in gold in Nigeria," says Okogun with a smile.
Britain and France take "fat cat" bonus culture to task
LONDON: Britain and France took aim at wealthy bankers and traders on Sunday, describing the bonus culture as "perverse" and "unacceptable" as officials sought culprits in the global financial crisis.
The prime minister, France's economy minister and the chief regulator of London's financial markets all pointed the finger at the pay structure among investment banks and brokerages and called for a reining in of excess.
"There's been a great deal of irresponsibility," Prime Minister Gordon Brown told BBC television on the second-day of Labour's annual conference, where he is trying to revive his dented political fortunes.
"Mistakes have been made in the City. There's an element of the bonus system that is unacceptable... Everyone knows there is going to have to be changes in that."
So-called "fat cats" in the City -- London's financial centre -- are a frequent target of the media.
But they have come in for particular criticism in the past week as banks that paid multi-million-dollar bonuses last year moved to the brink of collapse in the stock market meltdown.
France too has been quick to denounce the big-money bonus culture of the banking industry, especially since the turmoil at Societe Generale at the start of this year, when rogue trader Jerome Kerviel cost the bank billions of euros.
"The pay structures of a certain number of notably investment banks were perverse and their effects caused greedy and blind behaviour," Christine Lagarde, France's economy minister, told Europe 1 radio on Sunday.
"When the pay mechanism, calculated over short periods, causes behaviour that has been particularly harmful... I think it is legitimate for the public authorities to make proposals," she said, without detailing what she hoped to do.
She said the issue would be on the agenda of the next meeting of European Union finance ministers in October as government officials seek to take charge of the crisis.
"It is in crisis periods, in difficult periods, that the agents of change tell themselves it is time to shift the boundaries," she said.
Joining the Franco-British line was Adair Turner, the newly appointed chairman of the Financial Services Authority, the chief financial regulator, who said serious questions had to be asked about the bonus culture and how bankers were paid.
"There are some very important issues to be questioned about the time periods over which bonuses are paid out, the information on which they are measured," Turner told Sky TV.
He stopped short of saying pay needed to be regulated, saying such a system would be unworkable, but said there were issues with how bonuses were determined.
"What is appropriate for regulators to do... is to ask searching questions about the nature of people's remuneration and to ask questions of institutions as to whether they are paying out bonuses before they are really sure whether the profits are really there," Turner said.
While the aggressive stance on bankers' pay is likely to go down well in some quarters -- the Labour Party draws a large amount of support from labour unions -- Brown cannot afford to isolate the financial services sector entirely.
London is one of the world's foremost financial centres, with major international banks headquartered here. The City is a cornerstone of the economy, making one of the largest single contributions to the country's gross domestic product.
Yet in the wake of the market turmoil, which has seen two U.S. investment banks collapse and a major mortgage lender forced into a $20 billion (11 billion pound) takeover by a retail bank, getting to grips with City excess has become a priority.
Pope's trip highlights church-state struggle in Europe
ROME: Is the Roman Catholic Church a beleaguered underdog, fighting for a voice in secular Europe, or still a mighty power, wielding its influence on European law through friendly center-right governments?
That question, which has been building throughout Pope Benedict XVI's three-year-old papacy, came to the fore in his recent trip to France.
Yet even as the pope called for more animated discussion of church and state and more interreligious dialogue, no one, probably not even at the Vatican, expects Europe to become newly devout anytime soon. Mass attendance is at record lows, as is the number of priests.
And no one expects France to overturn its dearly held tenet of laïcité, or strict separation of church and state, despite the pope's admonition that secularism leads to nihilism and President Nicolas Sarkozy's calls for a more "positive laïcité."
But Benedict's insistence that religion and politics be "open" to each other - coupled with his strong renewal while in Lourdes of the church's opposition to same-sex couples, communion for the divorced and euthanasia - sends a direct message: The church doesn't want European law to be at odds with church teaching, and he wants Roman Catholics to make some noise about it.
This pope is looking to reconquer Europe, if not in numbers, then at the political table.
"Let's not make mistakes, there are laws in Europe that the Vatican would like to change," said John Allen Jr., a columnist for the National Catholic Reporter in the United States. Benedict's remarks in France were "not an apolitical reflection," Allen said.
The Vatican, he added, is concerned about "a progressive secularization of European institutions" that is "heavily influenced by the French model."
For one, European Union legislation forbids discrimination on the basis of sexual orientation. In Britain, Roman Catholic orphanages have said they will have to shut down or break ties with the church if they are required to place orphans with same-sex couples. Spain legalized same-sex marriage in 2005, following the Netherlands and Belgium.
The pope's reception in France was "encouraging," the Reverend Federico Lombardi, the Vatican spokesman, said in an interview. The climate in France, he said, indicated that "the church has a contribution to make and it's accepted and respected as a cultural and moral force, a force of moral commitment."
Benedict ostensibly traveled to France for the 150th anniversary of the year a 14-year-old peasant girl, Bernadette Soubirous, said she had visions of the Virgin Mary in a Lourdes grotto that this year is expected to draw a record eight million pilgrims.
Lourdes always has epitomized "a kind of Catholic counterculture" and "the power of faith over science," said Ruth Harris, a professor of modern history at Oxford and author of "Lourdes: Body and Spirit in the Secular Age." Over the years, she said, the town's popularity "gets strengthened in these periods where the republic is seen as persecuting the church."
Sociologically, "I think papal trips perform the same function as gay pride parades," Allen said. "It's about a group that perceives itself as a minority that has been in their view closeted for too long and wants to take it to the streets and proclaim that 'We're here."'
In Paris, an estimated quarter-million people turned out to hear the pope celebrate Mass at the Esplanade des Invalides. That is half the number at the Paris gay pride parade in June.
France, Germany and Italy are governed by church-friendly center-right coalitions. Last spring, the right made unprecedented challenges to Italy's 30-year-old law legalizing abortion. In 2005, Italy passed a law restricting artificial insemination.
"So how can you say that you're an oppressed minority?" asked Paolo Flores d'Arcais, editor of a leftist Italian journal, MicroMega. "That's madness."
French Senate remains a rightist bastion
PARIS: The opposition left won 23 new seats in the French Senate on Sunday, a larger than expected advance, nearly complete results indicated. But the left could not gain control of the chamber, a longtime bastion of the right.
Ballots were cast by delegates of city councils as well as some lawmakers and regional counselors in the indirect voting for a third of the 343 seats in the upper chamber, which has been controlled by the right for a half-century. About 50,700 delegates were eligible to vote.
The Socialists and their allies won at least 23 new seats in the voting for 114 seats, including two snatched from the right in Corrèze, the one-time political fiefdom of former President Jacques Chirac. Results from overseas regions were not included.
Roger Karoutchi, minister in charge of parliamentary relations, said the governing UMP party of President Nicolas Sarkozy had "resisted well."
With no real suspense, the focus was on who would succeed Christian Poncelet as Senate president. That would not be clear until Wednesday, when the governing party chooses its candidate - the only one with a serious chance to win - in a primary. The Senate president will be formally elected Oct. 2.
The most likely contenders are Prime Minister Jean-Pierre Raffarin and a former labor minister, Gérard Larcher.
Under the Constitution, power temporarily devolves to the Senate leader if the head of state becomes incapacitated.
France's real political action is centered in the National Assembly, the lower chamber, not the Senate. That chamber is also controlled by the right.
Some Socialists felt bitter that leftist gains in March 2008 municipal elections failed to translate into real change in the upper house because the voting system favors small rural areas traditionally held by the right.
"I am not proud for the democracy in our country," said Jean-Pierre Bel, president of the Socialist group in the Senate. "France gives lessons on parliamentary democracy to the entire world and we should start sweeping in front of our own door. One of our two chambers is totally locked up."
A lively Baghdad, back from the dead
BAGHDAD: At first, I didn't recognize the place.
On Karada Mariam, a street that runs over the Tigris River toward the Green Zone, the Serwan and the Zamboor, two kebab places blown up by suicide bombers in 2006, were crammed with customers. Farther up the street was Pizza Napoli, the Italian place shut down in 2006; it, too, was open for business. And I'd forgotten altogether about Abu Nashwan's Wine Shop, boarded up when the black-suited militiamen of the Mahdi army had threatened to kill its owners. But there it was, flung open to the world.
Two years ago, when I last stayed in Baghdad, Karada Mariam was like the whole of the city: shuttered, shattered, broken and dead.
Abu Nawas Park - I didn't recognize that, either. By the time I had left the country in August 2006, the three-kilometer, or two-mile, stretch of riverside park was a grim, spooky, deserted place, a symbol for the dying city that Baghdad had become.
These days, the same park is filled with people: families with children, women in jeans, women walking alone. Even the nighttime, when Iraqis used to cower inside their homes, no longer scares them. I can hear their laughter wafting from the park. At sundown the other day, I had to weave my way through perhaps 2,000 people. It was an astonishing, beautiful scene - impossible, incomprehensible, only months ago.
When I left Baghdad two years ago, the nation's social fabric seemed too shredded to ever come together again. The very worst had lost its power to shock. To return now is to be jarred in the oddest way possible: by the normal, by the pleasant, even by hope.
The questions are jarring, too. Is it really different now? Is this something like peace or victory? And, if so, for whom - the Americans or the Iraqis?
There are plenty of reasons why this peace may only amount to a cease-fire, why it's fragile and reversible. The "surge" of American troops is over. The Iraqis are moving to take their country back, yet they wonder what might happen when the Americans' restraining presence is gone. The Awakening, a poetic name for paying former Sunni insurgents not to kill Americans or Iraqis, could fall apart, just as the Shiite Mahdi army could reanimate itself as quickly as it disappeared.
Politics in Iraq remains frozen in sectarian stalemate; the country's leaders cannot even agree to set a date for provincial elections, which might hand power to groups that never had it before. The mountain of oil money, piled ever higher by increased oil prices, may become another reason to spill blood.
But if this is not peace, it is not war, either - at least not the war I knew. When I left Iraq in the summer of 2006, after living three and a half years here following the collapse of Saddam Hussein's regime, I believed that evil had triumphed, and that it would be many years before it might be stopped. Iraq, filled with so many people living so close together, nurturing dark grievances, seemed destined for a ghastly unraveling.
And now, in the late summer of 2008, comes the calm. Violence has dropped by as much as 90 percent. A handful of the five million Iraqis who fled their homes - one-sixth of all Iraqis - are beginning to return. The mornings, once punctuated by the sounds of exploding bombs, are still. Is it possible that the rage, the thirst for revenge, the sectarian furies, have begun to fade? That Iraqis have been exhausted and frightened by what they have seen?
"We are normal people, ordinary people, like people everywhere," Aziz al-Saiedi said to me the other day, as we sat on a park bench in Sadr City, only recently freed from the grip of the Mahdi army. The park was just a small patch of bare ground with a couple of swing sets; it didn't even have a name, yet it was filled to the bursting.
"We want what everyone else wants in this world," he said.
Everything here seems to be standing on its head. Propaganda posters, which used to celebrate the deaths of American soldiers, now call on Iraqis to turn over the triggermen of Al Qaeda in Mesopotamia and the Mahdi army. "THERE IS NOWHERE FOR YOU TO HIDE," a billboard warns in Arabic, displaying a set of peering, knowing eyes. I saw one such poster in Adamiyah, a Sunni neighborhood that two years ago was under the complete control of Al Qaeda. Sunni insurgents - guys who were willing to take on the Qaeda gunmen - are now on the American payroll, keeping the peace at ragtag little checkpoints for $300 a month.
In Sadr City, the small brick building that served as the Mahdi army's headquarters still stands. But not 50 feet away, a freshly built Iraqi Army post towers above it now. Next to the post, perhaps to heighten the insult to the militia, the Iraqi government has begun installing a new sewer network, something this overcrowded ghetto sorely needs. "Wanted" posters adorn the blast walls there, too, imploring the locals to turn in the once-powerful militia leaders.
Inside the Sadr Bureau, as it is called, the ex-militia gunmen speak in chastened tones about moving on, maybe finding other work, maybe even transforming their once ferocious army into a social welfare organization. I didn't see any guns.
"Please don't print my name in your newspaper," one former Mahdi army commander said to me with a sheepish look. "I'm wanted by the government."
As for the Americans, they are still here, of course, but standing ever more in the background. Early this month, I joined a convoy carrying Tariq al-Hashemi, one of Iraq's vice presidents. Hurtling through Baghdad at high speed, we came upon a caravan of American Humvees. I waited for Hashemi and his men to slow down, but the Iraqis - guns bristling, sirens wailing - barreled past. The Americans hurriedly pulled over and made way. Never in three and a half years in Iraq did I see anything like that.
The other day, I rode in a helicopter to Ramadi, the capital of Anbar Province, the big slice of desert west of Baghdad. Two years ago, 30 marines and soldiers were dying there every month. In 2005, Al Qaeda in Mesopotamia declared Anbar the seat of its "caliphate." Since then, violence in Anbar has plummeted. Al Qaeda has been decimated. I was coming in for a ceremony, unimaginable until recently, to mark the handover of responsibility for security to the Iraqi Army and the police.
Standing in the middle of the city center, I found myself disoriented. I had been here before - I was certain - but still I couldn't recognize the place. Two summers ago, when I'd last been in Ramadi, the center of the city lay in ruins. Only one building stood then, the offices of the Anbar provincial government, and the Americans were holding onto it at all cost. For hundreds of meters in every direction, everything was destroyed: streets, buildings, cars, even the rubble had been ground to dust. Insurgents attacked every day.
And then, suddenly, I realized it: I was standing right in front of the government offices. It was sporting a fresh concrete facade, which had been painted off-white with brownish trim. Over the entrance hung a giant official seal of Anbar Province. The road where I stood had been recently paved; it was black and smooth. American marines were walking about, without helmets or flak jackets or even guns.
In the crowd, I saw a face I recognized. It was Mowaffak al-Rubaie, Iraq's national security adviser. He is a warm, garrulous man, a neurologist who spent years in London before returning to Iraq. But he is also a Shiite, and a member of Iraq's Shiite-led government, which, in 2005 and 2006, was accused of carrying out widespread atrocities against Iraq's Sunnis.
Anbar Province is almost entirely Sunni.
Rubaie made his way through the crowd, I noticed he was holding hands with another Iraqi man, a traditional Arab gesture of friendship and trust. The man was Brigadier General Murdi Moshhen al-Dulaimi, the Iraqi Army officer taking control of the province - a Sunni. The sun was blinding; Rubaie was wearing sunglasses, but finally he spotted me.
"What on earth are you doing here?" he asked over the crowd.
I might have asked him the same thing.
In Iraq, the calm is very fragile. The arrangements that keep the peace here are, by their nature, extremely tentative. You don't have to be a pessimist to recognize that.
I got a good sense of the fragility the other night in Adamiyah, the big Sunni neighborhood in northern Baghdad. I was standing on Al Camp Street as a wedding procession, made up of perhaps 25 cars, suddenly turned my way.
An Iraqi bride and groom sat in the back seat of the lead sedan, a black Mercedes-Benz, while a mass of revelers danced and tooted their horns. Two years ago, like the scene in Abu Nawas park, such a sight was inconceivable.
Spotting me, an American in ordinary clothes, the wedding train halted. The groom, dressed in a dark suit, climbed out of the Mercedes, leaving his bride, in flowing whites and heavy rouge, inside.
"It's wonderful, wonderful," said the groom, Yassin Razzaq, 25, shaking my hand. And then Razzaq pointed to a group of plainclothes Iraqi gunmen who had gathered at the roadside to watch. "It's all thanks to them."
Razzaq was referring to the members of the local Awakening Council, the name given to the Sunnis, many of them former insurgents, who now keep the peace in Sunni neighborhoods.
"Did you hear that - did you hear what he said?" asked Abu Safa al-Tikriti, a mustachioed former officer in Saddam's army and a member of the tribe that dominates the executed dictator's hometown. "Without us, there would be chaos."
Chaos, indeed. Prime Minister Nuri Kamal al-Maliki has expressed an intention to dismantle the Awakening Councils, which employ about 100,000 men, most of them Sunnis.
Maliki doesn't like the idea of paying people who used to be shooting at him. But many American and Iraqi officials worry that firing these men would drive them underground, and back to the gun. Tikriti, the Awakening leader, doesn't make much of a secret of that.
"I've come too far to turn back now," Tikriti said. "It's this or death."
For obvious reasons, almost no one in Baghdad seems willing to predict the future anymore. Ask anyone, and you are likely to get to the all-purpose Arabic expression, "Insha'Allah" - "God willing." Everyone, it seems, is trying to enjoy the calm while it lasts.
But if people here do not want to talk about the future, they still have to plan for it.
Sadiya Salman's four sons and their families, for instance, returned home to Adamiyah recently after two years away. I found them crowded into their small, dimly lit home in Zhrawaya, Adamiyah's only Shiite neighborhood.
Like so many other of Baghdad's mixed neighborhoods, Zhrawaya was the scene of terrifying sectarian violence in 2006 and 2007. As Shiites in predominantly Sunni Adamiyah, the Salman brothers - Wajdi, Luay, Rushdi and Feraz - considered themselves likely targets.
Then came the men in black masks one day, who spray-painted a warning on the wall: "Rafida," Arabic for "rejectionist." It is a derogatory word that some militant Sunnis use for Shiites.
And so the brothers left, taking their wives and children with them, 13 in all. Sadiya Salman, an intense and energetic woman of 68 years, stayed behind with her four daughters; as a female, she thought, she would be safe.
"I never did get a look at them because they always wore masks," Salman, seated on the couch in her home, said of the gunmen who took over Zhrawaya. "But the accents were Iraqi."
Every other Shiite family also fled Zhrawaya, and it is still largely empty. To slow the death squads, the Americans built a cement wall stretching more than three kilometers around the outskirts of her neighborhood. It's 6 meters high, or 20 feet, and painted baby blue. It gives the neighborhood a bleak and claustrophobic feel.
In the two years that her sons were gone, Salman said, she rarely ventured outside. The exception, she said, was when she saw American soldiers.
"Oh, I love them," Salman said, brightening in her darkened house. "I always knew I was safe with them."
With life returning to normal in Adamiyah, the Salman brothers and their families recently returned.
"We are the first Shia to come back," Feraz Salman said. "The rest of the families are still too afraid."
Life is difficult; during the day, the temperature can soar above 49 degrees Celsius (120 Fahrenheit). For most of the day there is no electricity. When the sun goes down, the interior of the Salman house goes dark.
Yet for all the hardship endured by the Salmans, they appear to have lost neither their generosity nor their sense of grace. As I sat in their darkened apartment, Zaineb, one of Sadiya's daughters, served me tea. Her son Luay held a flashlight over my shoulder for well over an hour while I took notes. As I talked and scribbled, another son, Rushdi, stood behind me, waving a fan to keep me cool.
Dexter Filkins, who covered Iraq for The New York Times from 2003 to 2006, is the author of "The Forever War."
Two bombs kill six in north Iraq
BAGHDAD: Two bomb blasts killed six people and wounded 29 others in northern Iraq on Sunday, police said.
In Baghdad, gunmen killed a senior Interior Ministry official, Brigadier-General Adel Abbas, along with his driver in a drive-by shooting.
A suicide truck bomb killed three people and wounded 23 when it exploded at a police checkpoint in the northern city of Kirkuk, Brigadier-General Sarhat Qader, a local police chief, told Reuters. Kirkuk is 250 km (155 miles) north of Baghdad.
Further south, a roadside bomb struck a minibus, killing three occupants and wounding six others on a road near the town of Jalawla in volatile Diyala province, police said.
Violence in Iraq has been hovering at four-year lows.
But insurgents have shown they are still capable of launching deadly attacks, especially in northern Iraq where al Qaeda militants regrouped after being pushed out of other parts of the country.
Promoting a vision of tourist bliss in Baghdad's dusty rubble
BAGHDAD: Humoud Yakobi gazes at the rubble-strewn parking lot, the maze of blast walls and the clusters of dusty palm trees on the island around him and sees hotels, restaurants and shopping malls, with throngs of people enjoying refreshments by the swimming pool or playing a round of golf.
"I always imagine it as some kind of heaven," he said.
Yakobi, the chairman of Iraq's Board of Tourism, is charged with attracting foreign visitors to his beleaguered country. Jazirat A'aras, an island in the Tigris that is just across from the fortified Green Zone and the new American Embassy, is central to his plans. He is seeking investors who might want to spend $2.5 billion to $4.5 billion to build on the island, which was a honeymoon resort before it was bombed and looted in 2003 and then taken over by the Americans for use as a construction yard for the new embassy.
As Yakobi and his colleagues envision it, the development would include "a six-star hotel," spas, a yacht club, an amusement park, a shopping center and luxury villas, built in the architectural style of the Ottoman Empire-era buildings in Old Baghdad. The complex would also have an 18-hole golf course, the "Tigris Woods Golf and Country Club," as it is called in preliminary sketches prepared by the Tourism Board.
Some might argue that Yakobi's vision is premature, if not absurd. Despite a drop in violence in Baghdad in recent months, Yakobi still cannot leave his office on Haifa Street without a convoy of armored cars and bodyguards. During an hourlong interview at his office recently, the lights blinked off, then on again, as the building's generator kicked in, an event repeated many times a day throughout Iraq. It was not so long ago that American forces sometimes had to escort the workers at the Tourism Board home, shielding them from the firefights in the street.
Yakobi, however, is by his own description an optimist, and he says he has some reason to believe that Iraq, known for its holy sites and antiquities, will once again be a tourist mecca.
"Tourism depends on political stability more than security," he said, adding that he believed the security situation would continue to improve. "Tourists want entertainment, rest, relaxation. If they find that in any place, they will come."
Captain Thomas Karnowski, an enthusiastic navy officer with the Civil Engineer Corps in the Green Zone, has been providing technical support to the Tourism Board on the island project.
"I look at the risk and say he who gets here first with the best idea gets the best opportunity," Karnowski said recently as he led visitors on a tour of a jetty with a view of one of Saddam Hussein's eight presidential homes across the Tigris.
Yakobi, 47, seems in some ways an unlikely candidate for the task he has been given. In his black suit and maroon checked tie, he looks far more like a bureaucrat than a visionary. Asked what he wakes up worrying about at night, he said, "I never wake up."
The tourism board, he said, will hold a weeklong conference in Baghdad in November to promote the island which is a little more than a mile long by less than a mile wide and other projects. Those include a hotel expected to open soon in the ancient city of Babylon in Babel Province, where cholera cases have recently been reported. He also has plans for a hotel, a sports complex and a medical center in the holy city of Najaf, and resorts in Anbar Province and the marshlands in the south.
The island development has no investors so far, though Yakobi believes the project might be two-thirds completed within five years. He said representatives from the tourism industry around the world had been invited to the conference, though it was unclear how many would attend.
"They will bring the message to all other countries that Iraq is secure," he said. "I am depending on them."
Hassan al-Fayadh, head of the tourism board's media relations department, was more skeptical.
"Western visitors are very sensitive to bombings and things like that," he said. "You can't achieve the tourism industry without security."
In fact, the State Department strongly warns Americans against travel to Iraq. "Despite recent security improvements, Iraq remains dangerous, volatile and unpredictable," its Web site says, noting that bombings, kidnappings and mortar fire are common and that "such attacks can occur at any time."
Still, even in Iraq's precarious state, tourism has not entirely vanished. Pilgrims from Iran, Pakistan, India and even Canada travel to the country's major religious shrines. Yakobi said their numbers had increased in the past year as large bombings and ground battles between militias and Iraqi and American forces had diminished.
He said about 1,500 Iranians arrived every day for religious tours that include three days in Najaf to visit the shrine of Imam Ali, the Prophet Muhammad's son-in-law, and four days in Karbala, the site of the gold-domed shrine of Imam Hussein, Imam Ali's son. Both shrines are revered by Shiite Muslims. The tours are supervised by the tourism board, a self-financed agency of the Iraqi government, and the visitors are provided with security, Yakobi said.
The autonomous Kurdish region in the north, where rapid development is taking place and violence is far lower, also attracts travelers, though most go there for business. Between meetings, they visit Erbil's citadel and the Kurdish Textile Museum, dine at restaurants in Sulaimaniya and sometimes venture into the mountainous countryside.
Distant Horizons, a travel company based in Long Beach, California, has begun offering excursions to the Kurdish region.
"We operated our first trip in June of this year (which went out full with 18 travelers and a wait list) and will be offering several departures in 2009," Janet Moore, a spokeswoman for the company, said in an e-mail message.
She said that although the Kurdish government was more prepared for such trips than she expected, "the concept of tourism is a very new one."
Before the American invasion in 2003, Westerners wandering the capital with cameras were not an uncommon sight. A Bradt travel guide to Iraq published in 2002 noted that "Iraqis tend to be very friendly, hospitable people, but most will not discuss politics or controversial topics."
It suggests, among other expeditions, a day trip from Baghdad to see the shrine at Samarra, which was bombed in 2006, setting off a wave of sectarian violence that brought Iraq to the brink of civil war; a visit to the Christian churches in Mosul, now emptied of most of their worshipers; and a stroll down the streets of the oil-rich city of Kirkuk, currently at the center of a struggle among Arabs, Kurds, Turkmens and other groups.
But if Yakobi has his way, the old days of tourism will soon return, and at least one intrepid traveler is ready for them.
Charles MacDonald, an adviser to a member of the provincial Parliament in Ontario, met Iraq's ambassador to Canada at a luncheon and decided to spend his vacation in Kurdistan. When he arrived, he said, Kurdish officials were astonished that he had come as a lone tourist, but they showed him the sights and arranged meetings with government leaders.
MacDonald, however, wanted to see more. So he hired a private security firm and set up a two-day trip to the Green Zone in Baghdad.
"This is modern history, and I wished to experience it first-hand," he said.
Al Qaeda suspected of Pakistan's Marriott bombing
ISLAMABAD: A suicide bomb attack that killed 53 people at the Marriott Hotel in Pakistan's capital bore the hallmarks of an operation by al Qaeda or an affiliate, Pakistani and U.S. intelligence officials said on Sunday.
Teams combing the burnt shell of the hotel found more charred bodies after the blast on Saturday evening ignited a blaze that swept through the hotel, part of a U.S.-based chain and a favourite haunt of diplomats and wealthy Pakistanis.
Internal security in nuclear-armed Pakistan, a country vital to the war against al Qaeda and other Islamist militant groups, has deteriorated alarmingly over the past two years.
"The sophistication of the blast shows it's the work of al Qaeda," a Pakistani intelligence officer told Reuters.
Four foreigners were killed including the Czech ambassador, his Vietnamese partner and two members of the U.S. armed forces assigned to the U.S. embassy. Denmark's security service said one of their staff, attached to the Danish mission in the capital, was missing, presumed dead.
An American State Department employee was also missing, a spokesman said.
The Interior Ministry said 266 people were wounded, 11 of them foreigners, after the bomber blew up a truck packed with 600 kg (1,320 lb) of explosives including artillery shells, mortar bombs and shrapnel.
Pakistan's army is in the midst of an offensive against al Qaeda and Taliban fighters in the Bajaur region on the Afghan border. The United States has intensified attacks on militants on the Pakistani side of the border, alienating many Pakistanis.
Militants have launched bomb attacks, most on security forces in the northwest, in retaliation. Security analysts said the militants wanted to show they could strike anywhere unless the government changed its policies.
"(It) underscores the ability of these groups to really challenge the authority of the state in the heart of the capital," said Riffat Hussein, a professor of defence studies.
An al Qaeda video, released to mark the seventh anniversary of the Sept 11, 2001, attacks in the United States, included a call for militants in Pakistan to step up their fight.
ATTEMPT TO DESTABILISE PAKISTAN
"They want to destabilise the country. They want to destabilise democracy. They want to destroy the country economically," Prime Minister Yousaf Raza Gilani told reporters.
A civilian government led by Gilani was sworn in six months ago after nine years of rule by former army chief and firm U.S. ally Pervez Musharraf. It is also facing an economy on the verge of collapse.
The attack will be a big blow for foreign investment and will lead to further weakening of the rupee which is already trading at a record low, dealers and analysts said.
The attack was staged hours after new President Asif Ali Zardari, widower of assassinated former prime minister Benazir Bhutto, made his first address to parliament, a few hundred metres from the hotel, calling for terrorism to be rooted out.
Zardari called the bombing cowardly.
"This is an epidemic, a cancer in Pakistan which we will root out," he said in a televised address.
Army chief General Ashfaq Kayani said the army stood with the nation in its resolve to defeat the forces of extremism and terrorism.
Saturday's attack was the worst in the capital.
The blast left a crater 24 feet (7 metres) deep and 59 feet (18 metres) wide, ministry official Rehman Malik told a news conference.
Malik showed security camera footage from the front of the hotel, which had been bombed twice before, showing a truck trying unsuccessfully to force its way through security barriers.
A small blast could be seen going off in the truck cab, apparently as the bomber blew himself up with a grenade, which started a fire. Minutes, later, after a guard tried to put out the fire with an extinguisher, the truck blew up.
Flames and smoke poured out of the 290-room, five-storey hotel located in a high security zone. Dozens of cars were destroyed and windows shattered hundreds of metres away.
Survivors said hotel security men had warned guests to move to the back of the building shortly before the bomb went off.
Most people managed to flee from the fire before it spread but a Reuters photographer saw a body lying on a top floor balcony on Sunday morning.
Malik suggested the investigation would end up pointing to al Qaeda and Taliban militants based in the Federally Administered Tribal Areas (FATA) on the Afghan border
"In previous attacks, all roads led to FATA," he said.
The United States was ready to assist with the investigation if requested, said U.S. embassy spokesman Lou Fintor.
Some Islamabad-based expatriates were considering leaving, after shrugging off smaller blasts in the city.
"I'll be speaking to my boss tomorrow," said Steve, a Briton working in Islamabad who did not want to give his full name.
Zardari, who won a presidential election this month, left for the United States on Sunday and is scheduled to meet President George W. Bush in New York on Tuesday before the U.N. General Assembly.
Yemen rounds up Qaeda-linked group
SANAA: Yemen has arrested six members of an Islamic militant group which claimed an attack on the U.S. embassy that killed 17 people, a state-run website said on Sunday.
Abu al-Ghaith al-Yamani -- who signed the Islamic Jihad group's statements and was thought to be its leader -- was among the six arrested, it said.
But the website, in detailing the arrests, did not mention the attack on the U.S. embassy, saying only that the six were detained for threatening to target other foreign embassies including the Saudi and British embassies.
On Thursday, the Islamic Jihad group had said it was behind Wednesday's twin car bombings of the U.S. embassy but the authenticity of the statement, which bore no seal, could not be independently verified.
The group had said it belonged to al Qaeda and threatened to attack the British and Saudi embassies and assassinate high state officials unless the government freed its jailed members.
"This cell was involved in releasing statements on the Internet in the name of Islamic Jihad ... and threatening to target embassies (including) those of Saudi Arabia, Britain, United Arab Emirates and Netherlands," the September 26 website (26sep.net), which is run by Yemen's armed forces, said.
It quoted security sources as saying the group was drawing up a list of women working at some embassies, without elaborating.
Wednesday's bombings were the biggest militant operation in Yemen since the attacks on the U.S. warship Cole in 2000 and the French tanker Limburg in 2002.
The U.S. State Department has said the bombings bore "all the hallmarks" of an al Qaeda attack.
The Yemeni government joined the U.S.-led war against terrorism following the September 11 attacks on U.S. cities in 2001.
It has jailed scores of militants in connection with bombings of Western targets and clashes with authorities, but is still viewed in the West as a haven for Islamist militants.
Bush administration wants $700 billion for Wall St. bailout
WASHINGTON: The Bush administration on Saturday formally proposed a vast bailout of financial institutions in the United States, requesting unfettered authority for the Treasury Department to buy up to $700 billion in distressed mortgage-related assets from the private firms.
The proposal, not quite three pages long, was stunning for its stark simplicity. It would raise the national debt ceiling to $11.3 trillion. And it would place no restrictions on the administration other than requiring semiannual reports to Congress, granting the Treasury secretary unprecedented power to buy and resell mortgage debt.
"This is a big package, because it was a big problem," President George W. Bush said Saturday at a White House news conference, after meeting with President Álvaro Uribe of Colombia. "I will tell our citizens and continue to remind them that the risk of doing nothing far outweighs the risk of the package, and that, over time, we're going to get a lot of the money back."
Roger Cohen: The fleecing of America
NEW YORK: World leaders converge on a battered New York this week for the United Nations General Assembly and my advice to them is: Think Damien Hirst.
It's not that I expect them to dwell on the British artist's giant tanks of dead sharks, zebras and piglets at a time when the U.S. economy is being socialized to the tune of $700 billion ($2,000 for every person in the country) as a result of a giant mortgage-related Ponzi scheme.
It's that the Hirst bull market in the midst of the most convulsive week for financial markets since 1929 says something important about the global economy and America's declining place in it. In case you missed it, Hirst sold 223 works last week for just over $200 million, well above Sotheby's pre-auction estimate.
Oliver Barker, the auctioneer, identified the Russians as major buyers. Sotheby's took a preview of the sale to New Delhi, where it received a number of pre-auction bids. Jose Mugrabi, a New York dealer, told my colleague Carol Vogel that Hirst is a "global artist" who can defy "local economies."
For local, read American.
Yes, folks, the cash is elsewhere. Asians have been saving rather than spending. Their consumers are in better shape. Their banks are in better shape. The China Investment Corp. (CIC), a sovereign wealth fund, is sitting on $200 billion (and a 9.9 percent stake in Morgan Stanley) while China's central bank is managing another $1.8 trillion in reserves.
And what have we heard from the new centers of wealth and power - China, India, Brazil, Russia, the Gulf states - about America's financial agony over the past week? Zilch. Well, not quite. When asked about the crisis, Luiz Inácio Lula da Silva, the Brazilian president, said: "What crisis? Go ask Bush."
Thanks, Lula. Brazil is sitting on $208 billion of its own in reserves, so perhaps Lula would say his flippancy is justified. But I don't think it is.
Remember the last financial crisis in 1998? With the Russian economy in a free fall, Moscow officials scurried to the U.S. Treasury to secure vital American support for $17.1 billion in new International Monetary Fund loans. That steadied things.
The world has changed in the past decade. There's been a steady transfer of wealth away from the United States in a shift most Americans have not yet grasped. But there has been no accompanying transfer of responsibility. New powers are free-riding as if it were still the American century.
It's not. Imagine if Hu Jintao, the Chinese president, had declared this week: "China has a deep interest in the stability of the U.S. economy and the dollar. We stand ready to help in the essential return of confidence to financial markets. Talks with the U.S. Treasury are ongoing." Or perhaps the BRIC countries (Brazil, Russia, India and China) might have put out such a joint statement.
Let's be clear: This is an American mess forged by the American genius for newfangled financial instruments in an era where the mantra has been that government is dumb and the markets are smart and risk is nonexistent. The responsibility for undoing the debacle is chiefly American, too.
But toxic mortgage-backed securities were pedaled by plenty of foreign banks. And the decision to pour $85 billion of U.S. taxpayers' money into the rescue of American International Group (AIG), the insurance giant, followed appeals from foreign finance ministers to Henry Paulson, the Treasury secretary, to save a global company.
Representative Barney Frank, Democrat of Massachusetts and chairman of the House Financial Services Committee, told me: "Paulson said he was getting calls from finance ministers all around the world saying, you have to save AIG. Well, they should have been asked to contribute to the pot."
Frank has a point. (He should coach Barack Obama for the debates on how to put economics in plain language.) As Frank said on the Charlie Rose show, "I don't think the European Central Bank should be free to spend the Federal Reserve's money and not put any in."
I know, you reap what you sow. Nobody loves to help the Bush administration. World central banks did inject billions in concerted action to help stabilize money markets, but the U.S. has essentially been on its own. Now foreign banks with U.S. affiliates will want a slice of the $700 billion bailout. That doesn't make sense until the burden of this rescue starts reflecting a globalized world.
I asked Frank why Paulson and Ben Bernanke, the Federal Reserve chairman, did not get more foreign support. "I think it's a perverse pride thing," he said. "We don't ask for help. We're the big, strong father figure. But let's be realistic: We're no longer the dominant world power."
It's time for a responsibility shift. Call it the Hirst reality check. If he can sell a formaldehyde-pickled sheep with gold horns for millions while Lehman goes under, perhaps it's time for everyone to help a little when Americans get fleeced.
Will the bailout work?
NEW YORK: As the U.S. government steps to the center of the financial crisis, crafting plans to take ownership of up to $700 billion worth of bad mortgages, a pair of simple questions rises to the fore: Will this intervention finally be enough to restore order? And what will this grand rescue cost U.S. taxpayers?
The Treasury Department, as overseer of the American financial system, has in recent weeks unleashed an astonishing array of initiatives in a bid to stave off catastrophe. It took over the country's largest mortgage finance companies and put untold billions of taxpayer dollars on the line to prop up other lenders.
Now, although the details are still being worked out, the government is dispensing with rescuing one company at a time, and instead taking on a vast pile of bad debt in one gulp. If it all comes to pass - if Uncle Sam becomes the repository for the radioactive leftovers of bad real estate bets - will the crisis lift? Will the fear that has kept banks clinging to their dollars, starving the economy of capital, give way to free-flowing credit?
There are many skeptics of the Treasury's proposal, though there is wide agreement that some kind of broad intervention is necessary.
"It goes a long way. It ameliorates it very substantially," said Alan Blinder, an economist at Princeton and a former vice chairman at the Federal Reserve, who has said for months that the government must step in forcefully to buy mortgage-linked investments. "We're deep into Alice in Wonderland's rabbit hole," he said.
But significant skepticism confronts the initiative. Under a proposal circulating Saturday, the Treasury could spend as much as $700 billion to buy mortgage-linked investments, then sell what it can as it works out the messy details of the loans. But no one really knows what this cosmically complex web of finance will be worth, making the final price tag for the taxpayer unknowable. One may just as well try to predict the weather three years from Tuesday.
Some question the prudence of adding to the nation's overall debt at a time when the Treasury relies on the largess of foreigners to cover the bills. Most broadly, what are the longer-term costs of the government stepping in to restore order after so many wealthy financiers have become so much wealthier through what now seem like reckless bets on real estate - bets now covered with public dollars?
Also, what message does that send to the next investment bank caught up in the next speculative bubble and contemplating the risks of jumping in while wondering who is ultimately on the hook if things go awry?
Many economists say such questions are beside the point. The United States is gripped by the worst financial crisis since the Great Depression.
Before Thursday night, when the Treasury secretary, the Federal Reserve chairman and leaders on Capitol Hill proclaimed their intentions to take over bad debts, the prognosis for the American financial system was sliding from grim toward potentially apocalyptic.
"It looked like we might be falling into the abyss," Blinder said.
As the details of the government's plans are hashed out, no hallelujah chorus is wafting across Washington, down Wall Street or through the glistening condos of the United States. Too many households are having trouble paying their mortgages. Too many people are out of work. Too many banks are bloodied.
Still, the prospect that the government is preparing to wade in deep - perhaps sparing families from foreclosure and banks from insolvency - has muted talk of the most dire possibilities: a severe shortage of credit that would crimp the availability of finance for many years, effectively halting economic growth, both in the United States and around the globe.
"The risk of ending up like Japan, with 10 years of stagnation, is now much lessened," said Nouriel Roubini, an economist at the Stern School of Business at New York University. "The recession train has left the station, but it's going to be 18 months instead of five years."
If the plan works, it will attack the central cause of American economic distress - the continued plunge in housing prices. If banks resumed lending more liberally, mortgages would become more readily available. That would give more people the wherewithal to buy homes, lifting housing prices or at least preventing them from falling further. This would prevent more mortgage-linked investments from going bad, further easing the strain on banks. As a result, the current downward spiral would end and start heading up.
"It's easy to forget amid all the fancy stuff - credit derivatives, swaps - that the root cause of all this is declining house prices," Blinder said. "If you can reverse that, then people start coming out of their foxholes and start putting their money in places they have been too afraid to put it."
For many Americans, the events that have transfixed and horrified Wall Street in recent days - the disintegration of supposedly impregnable institutions, government bailouts with 11-figure price tags - have been less stunning than inscrutable. The headlines proclaim that the taxpayer now owns the mortgage finance giants Fannie Mae and Freddie Mac, along with the liabilities of a mysterious colossus called the American Insurance Group, which, as it happens, insures against corporate defaults. Much like the human appendix, these were organs whose existence was only dimly evident to many until the pain began.
And yet these institutions are deeply intertwined with the American economy. When the financial system is in danger, it stops investing and lending, depriving ordinary people of financing for homes, cars and education. Businesses cannot borrow to start and expand.
"Wall Street isn't this island to itself," said Jared Bernstein, senior economist at the labor-oriented Economic Policy Institute. "Even people with good credit histories are having a very hard time getting loans at terms that make sense. If that gets worse, we're going to be stuck in the doldrums for a very long time, because that directly blocks healthy economic activity."
For the failed investment giant Lehman, roads not taken
NEW YORK: Early last Monday morning, Richard Fuld Jr., the longtime chief executive of Lehman Brothers, put his 158-year-old firm into bankruptcy, burying a company where he had spent his entire career.
Several hours later, John Thain, the chief executive of Merrill Lynch, climbed a stage in Manhattan and told his employees, most of whom he had barely gotten to know during his brief tenure, that he was selling the troubled company to Bank of America.
Although both men played starring roles in a cataclysm that has threatened to break the economic backbone of the United States and has rearranged the financial landscape, their companies are hardly the only ones wounded in the crisis.
Thain and Fuld made different strategic decisions over the past year that shaped radically diverse outcomes for their employees and shareholders. But the chaotic backdrop also spelled death for some companies and unlikely survival for others. Indeed, had the government bailout arrived sooner, Lehman, like Merrill, might still exist.
A reserved and almost robotic executive, Thain approached Merrill's fate like a technocrat, coolly assessing his options and selling the company before the pain got worse. Fuld, a passionate, dedicated and combative leader, kept struggling to survive until his company finally ran into the ground.
"We are all prisoners of where we have been. The longer you are attached to a place, the harder it is to see it without rose-colored glasses," said James Cox, a professor at the Duke University School of Law. "When Thain got to Merrill, he started moving quickly to put the problems behind him."
"But Fuld helped build Lehman," he added. "He had spent his entire career there and helped build some of the assets that ended up causing so many problems. It's almost impossible to force yourself to completely reconceptualize your career and your life, and undo the company you built."
Other than being in the same business, Thain, 53, and Fuld, 62, appear to have little in common. Fuld is a classic Wall Street trader - taking big risks, reaping huge rewards, exuding intensity and demanding loyalty. A University of Colorado graduate, he stumbled into the industry and through sheer determination rose from a trading floor to the highest ranks of his profession.
Thain is cautiously amiable and seemed to act out, rather than inhabit, the role of chief executive. A graduate of the Massachusetts Institute of Technology, he spent his career at Goldman Sachs and the New York Stock Exchange before Merrill's board asked him to calm a company rife with palace politics and glaringly lax risk management.
In the end, the technocrat brought Merrill a measure of safety, though only by the narrowest of margins.
And the defiance and independence that marked Fuld's tenure and made him one of Wall Street's most admired chief executives served him poorly when - like many - he misjudged the severity of the financial upheaval.
"Everyone on Wall Street is navigating uncharted waters right now," said Jeffrey Sonnenfeld, a professor at the Yale School of Management. "No one could have dreamed it would have gotten this bad, and now that it is, no one is completely certain which choices were right and which were wrong."
In October, E. Stanley O'Neal, the ambitious chief executive of Merrill Lynch, was pushed to resign after reporting a $2.3 billion loss and making a desperate and unapproved attempt to find a merger partner. About two weeks later, the board announced that it had hired Thain.
At the time, Thain said he took the job because Merrill had the best wealth management business in the world and a premier investment banking franchise. Privately, he told friends that he wanted to resurrect the "MGM" days when Merrill, Goldman Sachs and Morgan Stanley dominated investment banking.
But his immediate needs were more prosaic: raising money to fill the company's dwindling coffers. Even before Thain arrived, Merrill executives concluded that they needed to raise money to survive.
Thain argued to investors that he hadn't created the debacle enveloping Merrill and that he came to the company to fix its problems.
On Christmas Eve, he announced that he had raised $6.2 billion; a few weeks later, he announced an additional $6.6 billion.
Just as important, he began an internal charm offensive. In January, a day before Merrill announced its annual earnings, Thain traveled to Arizona to meet with 800 of the company's wealth managers. He warned them that the firm's results would be bad. But he promised that the company was on the right track. As he exited the stage, he was followed by Money, a live bull who was a flesh-and-blood embodiment of Merrill's ubiquitous corporate logo.
The next day Merrill announced a huge hit: $9.8 billion in losses and $16.7 billion in write-downs. Speaking to investors, Thain said he was "confident that we have the capital base we need to go forward with 2008." A few weeks later in a private meeting with a group of investors at the company's headquarters in New York, Thain reassured them that he would take a tough-love approach.
"We've got fresh eyes on these problems, and we're not wedded to believing this company has done everything right for years," he said, according to two participants in that meeting, who requested anonymity because the talks were confidential.
"Look at Citi," he said, referring to Citigroup, the banking giant. "If the 800-pound gorilla has to raise money, then everyone should be asking if it isn't time to do the same."
As Merrill wrestled with its financial demons, Lehman seemed in better shape.
Earlier this year, Fuld, who started as a Lehman intern 42 years ago and had run the company since 1994, was basking in two quarters of surprisingly good results. Investors were hammering his stock, but he saw those downturns as opportunities to dole out more shares to employees he believed would benefit when the storm passed.
After all, he was fond of noting, life on Wall Street was war.
"Every day is a grind, every day we're in it, really trying to trudge through the stuff, and don't think this is a walk through the park," he said during an interview last autumn. "Every day is a battle: think about the firm, do the right thing, protect your client, protect the firm, be in it, be a good team member."
Lehman executives took comfort in the fact that their balance sheet was heavily weighted with commercial real estate - which they felt was immune to the mess in residential housing. Moreover, Lehman did not hold the same type of bundled mortgages, known as collateralized debt obligations, that had hamstrung Merrill.
This year, when Lehman's chief financial officer, Erin Callan, met with some investors at the company's headquarters in Midtown Manhattan, she exuded confidence.
In the meeting an investor challenged Callan, according to two participants who requested anonymity because they did not want to jeopardize their relationships with senior executives. With companies like Citigroup and Merrill raising capital, the investor asked, why wasn't Lehman following suit?
Callan was brusque, the two participants recalled. Glaring at her questioner, she said that Lehman didn't need more money at the time - after all, it had yet to post a loss during the credit crisis. The company had industry veterans in the executive suite who had perfected the science of risk management, she said.
According to both investors, she said Lehman's real estate investments were top-notch. "This company's leadership has been here so long that they know the strengths and weaknesses," participants recalled her saying. "We know when we need to be worried, and when we don't."
During an interview, Callan challenged that version of events and said that she was never defensive with investors. While conceding that she may have said those things, she thinks that investors who met with her took her comments out of context.
Lehman had been searching for a strategic partner for almost two years to buy a 10 percent or 15 percent stake in it - a transaction that would have made its stock less volatile and expand its business - according to people briefed on the discussions.
In 2006, it had unsuccessfully tried to team up with American International Group, the insurance behemoth. A year later it considered links with state investment agencies in Kuwait and China.
Fuld and other Lehman executives also held discussions with Mizuho Corporate Bank of Japan, these people said.
But those deals had not panned out. And as the credit crisis grew, investors were increasingly wary of the company.
After U.S. government regulators intervened to stop a collapse of Bear Stearns in March, Lehman's stock fell 45 percent in two days. Shortly after, it reported meager profits of $489 million and write-downs of $1.8 billion - and soon after, it raised $4 billion in new capital.
With Bear gone, Lehman became the smallest investment bank on Wall Street. A chorus of whispers began: Lehman is next. Critics began opining that a world of woe lurked on its balance sheet. In May, David Einhorn, a well-regarded hedge fund manager, began publicly questioning the company's accounting and mocking Callan's self-assurance.
As the stock declined, Fuld authorized his executives to seek a minority investment from a deep-pocketed investor, which would give the market confidence, according to people briefed on the discussions. Potential investors were said to include General Electric, HSBC and Barclays.
Top executives still believed Lehman could remain independent. The market, however, disagreed.
As Lehman tried to make a case with the media and regulators that investors betting against its stock were unfairly going after the company, top executives increasingly realized that their strategy was failing and assets were withering.
In June, Lehman was pushed to present its second-quarter earnings early - an unexpected loss of $2.8 billion. Fuld replaced the president, Joseph Gregory, his closest friend at the company, and demoted Callan, who later left. Lehman raised $6 billion more in capital and explored selling parts of its business. But neither management shake-ups nor promises of a drastic turnaround stopped the stock from dropping.
As Lehman publicly struggled, Merrill was quietly trying to right its ship.
Knowing he was caught in this web, Thain announced in July that he would sell some assets, including the company's stake in Bloomberg, the financial data and media company, for $4.4 billion. Merrill also raised $8.5 billion in a deal that severely diluted Merrill's shareholders. It reported a second-quarter loss of $4.6 billion and $9.7 billion in write-downs.
A few weeks later, Thain announced a deal that stunned the markets: he sold $31 billion of toxic mortgage assets to Lone Star, a small investment company, for 22 cents on the dollar. Merrill had to finance 75 percent of the sale. Analysts uniformly agreed that Lone Star got a sweet deal.
"We have over 60,000 people working every day," Thain said during an interview at the time, responding to criticism that he had sold the assets for a song. "All the efforts of these people were overwhelmed by the write-downs in the mortgage-related assets."
Within months it would become clear that the Lone Star deal had, in fact, helped give Merrill extra time by untethering it from a block of ugly assets that might have stood in the way of a merger.
Citigroup: Above the fray?
Yet, historic as last week was, there is something familiar about what is happening. Once again, we are seeing the puncturing of a speculative bubble that was the result of asset prices soaring high above the underlying value of the assets. For as long as markets have existed, bubbles have formed. And whenever one of those bubbles begins to leak, it typically needs years to deflate, causing enormous economic damage as it does.
Only now, for instance, are the bubbles of the past decade and a half, first in the stock market and then in real estate, starting to go away. It is easy to think of the turmoil of the past 13 months as being unconnected to the stock bubble of the 1990s, which appeared to end with the dot-com crash of 2000 and 2001. That crash brought down the overall stock market by more than a third, its worst drop since the 1970s oil crisis. Corporate spending on new equipment then plunged and employment fell for three straight years.
But drastic though it was, the dot-com crash did not actually come close to erasing the excesses of the 1990s. Indeed, by some of the most meaningful measures, Wall Street after the crash looked a lot more like it was in a bubble than a bust.
As late as 2004, financial services companies earned 28.3 percent of corporate America's total profits, according to Moody's Economy.com. That was somewhat lower than it had been over the previous few years, but still almost double the financial sector's average share of profits throughout the 1970s and '80s. By 2007, the share had fallen only marginally, to 27.4 percent.
Meanwhile, the share of wages and salaries earned by employees of financial services companies continued to climb and reached a peak last year. Of every dollar paid to the U.S. work force in 2008, almost 10 cents went to people working at investment banks and other finance companies, up from about 6 cents or 7 cents throughout the 1970s and '80s.
How did this happen? For one thing, the population of the United States (and most of the industrialized world) was aging and had built up savings. This created greater need for financial services. In addition, the economic rise of Asia - and, in recent years, the increase in oil prices - gave overseas governments more money to invest. Many turned to Wall Street.
Nonetheless, a significant portion of the finance boom also seems to have been unrelated to performance and thus unsustainable.
Benjamin Friedman, author of "The Moral Consequences of Economic Growth," recalled that when he worked at Morgan Stanley in the early 1970s, the company's annual reports were filled with photographs of factories and other tangible businesses. More recently, Wall Street's annual reports tend to highlight not the businesses that companies were advising so much as finance for the sake of finance, showing upward-sloping graphs and photographs of traders.
"I have the sense that in many of these firms," Friedman said, "the activity has become further and further divorced from actual economic activity."
Which might serve as a summary of how the current crisis came to pass. Wall Street traders began to believe that the values they had assigned to all sorts of assets were rational because, well, they had assigned them.
Traders sliced mortgages into so many little pieces that they forgot what they were really trading: contracts based on increasingly shaky loans. As the crisis has spread, other loans have started going bad as well. Hyun Song Shin, an economist at Princeton, estimates that banks have thus far absorbed only about one-third to one-half of the losses they will eventually be required to take.
One of the few pieces of good news is that Wall Street finally seems to be coming to grips with the depth of its problems. You can see that most clearly, perhaps, in stock prices, which have at long last fallen from the stratospheric levels of the past decade.
The classic measure of whether the stock market is overvalued is the price/earnings ratio, which divides stock prices by annual corporate earnings. At the height of the bubble, in 2000, companies in the Standard & Poor's 500-stock index were trading at 36 times their average earnings over the previous five years. It was the highest valuation since at least the 1880s, according to the economist Robert Shiller.
By 2004, the ratio had dropped only to about 26, still higher than at any point since the 1930s. At the start of last year, it was still 26. But after the market closed Friday, the ratio was down to roughly 17, which happens to be about its post-World War II average.
Stocks may continue to fall. For one thing, corporate profits could decline, particularly if households begin pulling back on spending. The rapid rise of consumer spending over the past two decades is arguably the third bubble confronting the economy. It has happened thanks in part to a huge increase in debt, which may now be coming to an end, just as Wall Street's love affair with debt appears to be ending as well.
And even if the economy does better than expected, investors may still turn pessimistic. There can be long periods of over-exuberance, in which investors worry that they are missing the next great thing, followed by crises that make those same investors fear that the world as they know it is coming to an end.
But bubbles inevitably produce insanity, both on the way up and the way down. On Friday, the formerly laissez-faire administration of President George W. Bush, along with the Federal Reserve, announced that the only way to restore sanity was for the government to buy an enormous pile of mortgage-related securities.
A guiding principle of economic policy in recent years has been that nobody is smart enough to diagnose a bubble until it has already deflated. This was one of Alan Greenspan's mantras during his tenure as the chairman of the Fed. His successor, Ben Bernanke, said much the same thing when he took office in 2006. As they saw it, no matter how high stock prices rose relative to profits, or no matter how high house prices rose relative to rents, regulators deferred to the collective wisdom of the market.
The market is usually right, after all. Even when it isn't, Greenspan maintained, pricking a bubble before it grew too large could stifle innovation and hurt other parts of the economy. Cleaning up the aftermath of a bubble is easier and less expensive, he argued. We're living through that cleanup now.
India and China hoping to gain talent as Wall Street lays off bankers
MUMBAI: Within hours of Bank of America's agreeing to buy Merrill Lynch this week, the Indian financial services firm Ambit hired five Merrill executives, a sign that Asia hopes to gain from the huge Wall Street layoffs.
The mortgages of the future
In this time of economic crisis, help for troubled homeowners often arrives late, when it arrives at all. All too frequently, American families are going into default on their mortgages, facing foreclosures and evictions that may have traumatic consequences.
It doesn't need to be this way. Mortgages could be structured differently, so that adjustments in payments would be made as a matter of routine — systematically, automatically and continuously — starting even before any distress is perceived by borrower or lender. By avoiding thousands and even millions of individual family crises, we might also make institutional crises, like the collapse of Lehman Brothers and Bear Stearns, less likely.We need to innovate, with the creation of "continuous-workout mortgages." Such mortgage contracts, when originally signed, would specify a program for steady adjustment of the balance and payment schedule over the life of the mortgage, enabling most homeowners to continue to afford to make payments and maintain some home equity, even in harsh economic circumstances. These contracts might become the standard, with automatic adjustments based on shifts in national housing-cost indexes and futures markets (I've been involved in creating both), as well as economic indexes like the unemployment rate.
Pope urges U.N. poverty drive despite banking crisis
CASTELGANDOLFO, Italy: Pope Benedict on Sunday urged world leaders at this week's U.N. general assembly not to allow the global financial crisis to distract them from efforts to try to wipe out poverty and disease .
"I would like to invite them again to take up and implement with courage the measures needed to wipe out extreme poverty, hunger, ignorance and the scourge of pandemics, which especially affect the most vulnerable," he said after his regular Sunday mass.
The United Nations General Assembly will study what progress has been made towards reaching the Millennium Development Goals set in 2000, which aim to reduce poverty and hunger and improve education, equality, health care and the environment by 2015.
The pope acknowledged that such efforts require sacrifices at this time of global economic difficulties but said they would produce great benefits for needy countries "and for the peace and well-being of the entire planet".
Speaking to pilgrims at his summer residence Castelgandolfo, in the hills outside Rome, the pontiff also sent a message to the countries around the Caribbean and the southeast United States damaged by hurricanes Ike and Gustav this month.
The pope singled out Haiti, Cuba, the Dominican Republic and Texas as the worst-hit areas and told their populations he had remembered them in his prayers and that he hoped "solidarity and brotherhood will prevail over other factors" in relief efforts.
Bomb wounds 10 in north Spain
ONDARROA, Spain: A car bomb exploded outside a police station in the Basque region of northern Spain early Sunday, causing heavy damage and wounding 10 people, hours after another explosion in the regional capital, officials said.
The police attributed the attacks to the separatist group ETA, which has been fighting since 1968 for an independent Basque state in northern Spain and southwestern France. The bombings occurred three days after a Spanish court banned a pro-independence Basque political party for its links to ETA.
The first car bomb exploded next to the headquarters of the Caja Vital Kutxa bank on the outskirts of the Basque regional capital, Vitoria, causing light damage, a regional Interior Ministry official said. No one was reported wounded.
Several hours later, a car bomb detonated outside a police station in the port town of Ondarroa, another regional ministry official said. Three police officers and seven civilians were wounded and were treated for cuts and hearing damage.
Two people remained hospitalized, officials said: a 15-year-old girl with a serious head injury and a policeman with hand injuries and hearing problems. The girl was transferred to a larger hospital for special treatment.
Each bomb contained about 100 kilograms, or 220 pounds, of explosives, officials said.
The second explosion blew four large holes in the front wall of the police station. The force of the blast shattered windows in nearby buildings and damaged parked cars. Police officers examined charred debris that ended up in a river next to the station.
Two suspected bombers parked a vehicle close to the outside wall of the station, threw a Molotov cocktail to attract attention and then detonated the car bomb, the second regional ministry official said.
A person claiming to speak on behalf of ETA telephoned in a warning before the first blast, allowing the authorities to clear the area. No warning was given before the second blast, the official said.
On Thursday, the Supreme Court banned the pro-independence Communist Party of the Basque Lands.
Last week, the court outlawed another pro-independence party, Basque Nationalist Action, as well as Gestoras Pro Amnistia, an advocacy group for imprisoned ETA members.
Philip Bowring: Imagining the next North Korea
HONG KONG: Forecasting what might happen should Kim Jong Il die or become incapacitated in the near future is mostly futile. The Pyongyang leadership is as secretive about its internal politics as the Kremlin or the Forbidden City was in the heyday of Stalin or Mao.
The vacuum of real information has enabled some of the wilder scenarios to flourish. One is that the death of the "Dear Leader" will be the end of the Kim Il Sung dynasty and that the government will collapse as quickly as the Ceaucescu regime in Romania in 1989. That will lead to the reunification of North and South, just as the collapse of the Berlin Wall quickly led to the reunification of Germany.
Desirable as this might be in principle, it would create devastating economic and social problems for the South, and upset the strategic balance in northeast Asia.
Alternatively, a collapse of the regime would cause a broad breakdown in governance, a collapse of institutions that would make North Korea a failed state in political as well as economic terms, creating huge humanitarian problems.
Another scenario is that a ruthless civil war will ensue between factions of the Communist Party and army. Without a firm hand, North Korea might become more reckless, reneging on existing nuclear commitments agreed upon at the six-party talks. Factions would compete in nationalistic displays toward South Korea or Japan and perhaps provoke military action, even, as a last resort, using its nuclear arsenal.
For sure, uncertainty is discomforting. But there are several reasons why none of the above scenarios are likely to occur. Change in the post-Kim era, at least in the initial phase, is likely to be gradual. It is more probable that there will be a repeat of the sustained period of diplomatic inaction and domestic stasis that followed the death of Kim Il Sung in 1994. Back then, Kim Jong Il - despite his parenthood - needed plenty of time to assure his grip on power before taking any initiatives.
This time around the process could be more difficult. Kim Il Sung spent many years preparing for his son's succession. But Kim Jong Il has done nothing publicly, whether out of belief in his own longevity or because he is too uncertain of his power to choose a successor - whether it be his own son or someone from outside the family.
A clouded succession would mean that progress on nuclear issues would come to a halt, just as Kim Il Sung's death delayed the first North-South summit meeting by several years. But given that Pyongyang is already a nuclear power of sorts, stasis does not imply enhanced danger, merely more frustration for the United States and other great powers.
The alarmist scenarios ignore the fact that the Communist Party and North Korean Army are large, disciplined organizations. Their senior ranks are primarily interested in their own survival and in guarding their privileges. A new leadership may conclude that there are better ways of prospering than by continuing existing economic and diplomatic policies. North Korea's leaders have shown for years that they are cruel and calculating, but not messianic or self-destructive. Power struggles there may well be. But, as in China after Mao's death - which saw the arrest of the Gang of Four and the gradual sidelining of Mao's appointed successor - the struggle took place within the party, not on the streets. For most Chinese, post-Mao changes began gradually.
In North Korea, the middle ranks of the military will need to be assured that they can morph into money-making managers. They have many reasons to accept change, so long as it follows the Chinese path, ensuring that they remain an elite with a future.
Many people in the West, and some in South Korea, would love to see the sudden collapse of the Kim regime. But the governments of both China and South Korea have every interest in an orderly transition. While Beijing's direct influence is limited, China, with its long and porous border with North Korea, will put its weight and money behind any outcome that avoids chaos and floods of refugees.
Indeed, Beijing might even take on an informal protector status, helping Pyongyang to keep order and provide support for the new regime. That would infuriate Seoul and be ill-received in Tokyo, Washington and Moscow. But it would avoid chaos and effectively put an end to Pyongyang's nuclear ambitions. It would also make re-unification with the South even more difficult. But knowing the strength of Korean nationalism on both sides of the DMZ, none of the non-Korean neighbors is likely to be worried by that.
Events are unpredictable, yet it is a reasonable assumption that a post-Kim North Korea is unlikely to move fast on economic or political reform, let alone reunification. But it also unlikely to be any worse than it is now.
Technology doesn't dumb us down
Everyone has been talking about an article in The Atlantic magazine called "Is Google Making Us Stupid?" Some subset of that group has actually read the 4,175-word article, by Nicholas Carr.
To save you some time, I was going to give you a 100-word abridged version. But there are just too many distractions to read that much. So here is the 140-character Twitter version (Twitter is a hyperspeed form of blogging in which you write about your life in bursts of 140 characters or fewer, including spaces and punctuation marks):
Google makes deep reading impossible. Media changes. Our brains' wiring changes too. Computers think for us, flattening our intelligence.
If you managed to wade through that, maybe you are thinking that Twitter, not Google, is the enemy of human intellectual progress.
With Twitter, people subscribe to your "tweets." Those who can make life's mundane details interesting garner a large audience. Several services have been created to compete with Twitter. Others have been started to help people manage the prodigious flow of information from Twitterers.
There is even a version, Yammer, for use inside companies. You follow the word bursts of particular employees. ("In the weekly staff meeting. Good bagels. Why is everyone wearing khakis? All staff must file their T.P.S. reports on time, O.K.?") As if there weren't already enough to distract us in the workplace between meetings, phone calls, instant messages, e-mail messages and those Google searches.
If people question the benefit of Google, which has largely liberated us from the time-wasting activities associated with finding information, there is outright hostility to a tool that condenses our lives into haiku. The co-founder of Twitter, Jack Dorsey, was asked by MIT's Technology Review magazine — in a tweet, of course — why when people who aren't familiar with Twitter are told about it, they are "uncomprehending or angry." His response was brief and unsatisfying: "People have to discover value for themselves. Especially w/ something as simple & subtle as Twitter. It's what you make of it."
It is hard to think of a technology that wasn't feared when it was introduced. In his Atlantic article, Carr says that Socrates feared the impact that writing would have on man's ability to think. The advent of the printing press summoned similar fears. It wouldn't be the last time.
When Hewlett-Packard invented the HP-35, the first hand-held scientific calculator, in 1972, the device was banned from some engineering classrooms. Professors feared that engineers would use it as a crutch, that they would no longer understand the relationships that either penciled calculations or a slide rule somehow provided for proficient scientific thought.
But the HP-35 hardly stultified engineering skills. Instead, in the last 36 years those engineers have brought us iPods, cellphones, high-definition TV and, yes, Google and Twitter. It freed engineers from wasting time on mundane tasks so they could spend more time creating.
Many technological advances have that effect. Take tax software, for instance. The tedious job of filing a tax return no longer requires several evenings, but just a few hours. It gives us time for more productive activities.
But for all the new technologies that increase our productivity, there are others that demand more of our time. That is one of the dialectics of our era. With its maps and Internet access, the iPhone saves us time; with its downloadable games, we also carry a game machine in our pocket. The proportion of time-wasters to time-savers may only grow. In a knowledge-based society in which knowledge is free, attention becomes the valued commodity. Companies compete for eyeballs, that great metric born in the dot-com boom, and vie to create media that are sticky, another great term from this era. We are not paid for our attention span, but rewarded for it with yet more distractions and demands on our time.
The pessimistic assumption that new technologies will somehow make our lives worse may be a function of occupation or training. Paul Saffo, the futurist, says he could divide the technology world into two kinds of people: engineers and natural scientists. He says the world outlook of the engineer is by nature optimistic. Every problem can be solved if you have the right tools and enough time and you pose the correct questions. Other people, who can be just as scientific, see the natural order of the world in terms of entropy, decline and death.
Those people aren't necessarily wrong. But the engineer's point of view puts trust in human improvement. Certainly there have been moments when that thinking has gone horribly awry — atonal music or molecular gastronomy. But over the course of human history, writing, printing, computing and Googling have only made it easier to think and communicate.
Blaze in Chinese dance club kills 43
SHENZHEN, China: A fire at a dance club in this southern city, apparently started by fireworks, left 43 people dead, many of them killed in a panicked stampede as they tried to escape, state media and government officials said.
The fire, which broke out just before midnight Saturday at the packed King of the Dancers club, also injured at least 88 people, an official with the Shenzhen Work Safety Bureau said. As is common with Chinese officials questioned by reporters, the man refused to give his name.
The owner of the club was being questioned by the police, but no charges had been filed, the official news agency, Xinhua, reported.
RTHK, the Hong Kong government-run broadcaster, reported that the Shenzhen authorities had detained 12 people.
Shenzhen is just across the border from Hong Kong, in the southern province of Guangdong
An injured Hong Kong man said the fire started after a performer onstage set off fireworks. "I saw one of the performers shoot fireworks to the ceiling. I had no idea what the performance was, but the fire started," the man, whose surname was given as Cheng, told ATV news in Hong Kong from his Shenzhen hospital bed.
"Many people fell to the floor. They shouted for help and cried. It was like in hell," he said.
Witnesses said the main hall quickly filled with smoke after the ceiling tiles caught fire, and the lights went off soon after that, plunging the panicking revellers into darkness. Many partygoers were hurt in a stampede to escape down "a narrow aisle," a club staff member, Yang Zhi, was quoted by Xinhua as saying. Yang suffered burns to his neck, Xinhua said.
"The fire wasn't that big, but there was a lot of smoke," said a man named Zhang, who said he worked at the club.
"Everyone was crowding toward the front entrance, because they didn't know about the one in the back," said Zhang. "We tried to tell them, but nobody would listen."
Video footage aired Sunday by ATV showed the smoke-filled nightclub after the fire. Overturned tables, broken glass and shoes littered the floor.
Guangdong's provincial governor, Huang Huahua, blamed poor ventilation for the deaths.
"There was something wrong with the architectural design," Huang told Hong Kong news media after inspecting the nightclub.
"If there was a better ventilation system, there wouldn't be so many deaths in the fire," he said.
The Communist Party chief of the province, Wang Yang, has ordered an immediate investigation, according to Xinhua.
Fires and accidents in bars, theaters and other public places are common in China, despite government pledges to improve safety. Many are caused by negligence and lax safety procedures, like a lack of fire extinguishers and emergency exits.
In China's worst recent nightclub disaster, a fire laid to a welding accident tore through a discothèque in the central city of Luoyang in December 2000, killing 309 people.
South Asia floods kill 33 and displace thousands
Rescue workers evacuated some 200,000 people after flooding by one of India's largest rivers killed 16 people at the weekend, while overflowing rivers inundated parts of Nepal and killed 17 people, officials said on Sunday.
Large parts of India's coastal Orissa state were inundated after authorities were forced to open dozens of sluice gates of a dam on the Mahanadi river following heavy rain in the catchment area.
Monsoon rains and flooded rivers have brought huge devastation across South Asia this year, killing more than 1200 people, mostly in India and Nepal.
"At least 200,000 people were evacuated from their homes and moved to safer places," G.V. Venugopala Sarma, a revenue official in Orissa, told Reuters. He said more people were being moved.
TV stations showed people fleeing the floods with whatever they could carry. Some took shelter on roads and inside school buildings.
Most of the deaths were caused by drowning.
The Mahanadi river had breached its banks in several places and floodwaters had swept away highways in some areas.
In Nepal, overflowing rivers originating from the Himalayas washed away homes and inundated dozens of villages in the west, killing at least 17 people and displacing thousands.
Local media reports put the overnight death toll in Kailali, Kanchanpur and Doti districts in southwest Nepal at more than 24 and at least 40 others were missing.
"We have reports still coming in from remote areas and the toll could rise later," Thir Bahadur G.C., a home ministry official said.
Most of those killed were either drowned or crushed under mudslides. Many people had taken shelter on rooftops and in trees waiting for rescuers.
The Kosi river, which burst a dam in Nepal, has heaped massive suffering on millions of people in downstream Bihar state in India. Water levels were now receding there.
But millions were now living on embankments, roads and in overcrowded camps in filthy conditions, exposing them to infections and water-borne diseases, aid agencies say.
In Orissa, the government was using helicopters to drop food and water packets.
Authorities warned of more floods in the state's coastal belt once more water is released from the Hirakud dam on the Mahanadi.
The floods in Bihar, the worst there in 50 years, destroyed 100,000 ha (250,000 acres) of farmlands. Rice crop in Orissa had also been damaged.
The monsoon usually hits India on June 1 and retreats in September, and is key to irrigating some 60 percent of farmland. But it leaves in its wake massive destruction, killing hundreds of people, destroying homes, crops, roads and bridges every year.
'The L word' makes its campaign debut As the Democratic presidential nominee in 2004, John Kerry sometimes used 50 words to make a point when 25 would do. And he had a knack for foot-in-mouth verbiage, most famously when he declared, "I actually did vote for the $87 billion before I voted against it." But there was one word he was very careful not to utter.
During the first presidential debate, when the moderator, Jim Lehrer, noted that Kerry had repeatedly accused President Bush "essentially of lying" about his Iraq war strategy, Kerry instantly demurred.
"I've never, ever used the harshest word as you did just then, and I try not to," he said, before going on to argue that Bush "had not been candid" and had "misled" voters, and to assert that "it is important to tell the truth to the American people."
Ah, euphemisms: So 2004. So quaint.
Once considered politically out of bounds, the word "lie" - stated bluntly and unapologetically - has had its unveiling in the 2008 campaign. Rarely does a day go by when aides to the Democratic nominee, Barack Obama, do not accuse the Republican ticket - John McCain, Sarah Palin, or both - of lies and lying. And in a bit of psychological warfare, the Obama camp also usually charges that the lies tarnish the honor of McCain - a virtue McCain, as a war hero, particularly cherishes - in the hope of triggering his temper, Obama aides say.
On Thursday, for instance, an Obama spokesman denounced, as "another flat-out lie from a dishonorable campaign," a McCain television advertisement citing a newspaper report that Franklin Raines, the former leader of Fannie Mae, was advising Obama on housing issues.
The McCain camp has accused Obama far less of outright lying, saying instead that he has been "misleading" when he champions Second Amendment rights and "deceitful" and "not being honest" about his tax proposals.
Politicians have long referred to "lie" as "the L word" - in part because using the word could itself create a distracting dust-up - and instead have substituted words such as "disinformation" and "spin" and phrases like "a tactical view of the truth." But cable television now chews over so-called political lies all the time, helping to make the word part of the news cycle vernacular. And partisanship can be so intense that lying, as a denunciation, has flattened into just another charge.
"Cable TV and the Internet have contributed to a really polarized system where each side sees the other side lying almost as a matter of course," said Fred Greenstein, an emeritus professor of politics at Princeton and the author of "Personality and Politics." "As a result, civility breaks down and the euphemisms fade into outright accusations of lying - which can be refreshingly honest, in fact, since each side does truly see the other side as lying."
The incriminating word had long been a land mine because of its potential to damage the presidential candidate making the accusation.
In 1988, Senator Bob Dole, running for the Republican nomination, appeared on an NBC interview with his rival, Vice President George Bush, and snapped at him, "Stop lying about my record." It cemented an image of Dole as a meanie - which he had to wrestle with as the party's nominee in 1996, when, for instance, some television viewers bristled as he accused Katie Couric of carrying water for the Democrats.
Neither Couric nor Tom Brokaw, the NBC interviewer in 1988, tried to be an arbiter in those moments, leaving viewers to make up their own minds about Dole. Kerry, meanwhile, hoped that the news media would judge a lie as a lie when he was battered by the Swift Boat Veterans for Truth over his military record in Vietnam, but the media only did so much.
"When politicians ignore a lie and it doesn't go away, they can be tainted, and when they deny it, they can sound defensive," said Geoff Stone, a University of Chicago law professor and an informal adviser to Obama. "Americans need someone who many people watch who has credibility and can be an independent arbiter - a Walter Cronkite, say - and there isn't one."
Kerry's hesitancy may have been related to his constitutional disposition for Marquess of Queensbury rules; the prep-school-bred, Yale-educated Brahmin was never comfortable with slashing attacks. But mostly his concern was strategic: Bush enjoyed approval ratings of 50 percent or more in the fall of 2004, and he was often ahead in the polls of a closely divided electorate.
"We wanted to force a general election vote around the issues, especially domestic issues, and calling Bush a liar would have taken us off in a different direction," said Bob Shrum, Kerry's chief strategist.
Some Obama advisers were gun-shy early on about calling out an alleged lie - especially against Senator Hillary Rodham Clinton - but they snapped to it with McCain. Obama himself, who has often spoken of elevating the political debate, still acts a little hesitant in his accusations: in Nevada last week, he would only say that a variety of McCain ads were "patently wrong."
Whether he drops the L bomb in the televised debates over the next three weeks is now a point of discussion within the Obama campaign, aides say. Saying that word in front of tens of millions of viewers could be a very risky proposition for the candidate running on a platform of hope. No lie.
CAIRO: An illegal migrant boat carrying 83 Egyptians headed for Europe has gone missing off the coast of Greece after leaving Egypt three days ago, Egypt's foreign ministry said on Sunday.
"The foreign ministry has learned that the boat left Damietta (on the northern coast) three days ago and that communications were cut off, and there has been nothing to suggest it reached the Greek shore," the ministry said in a statement.
The ministry said it had been alerted to the disappearance by Egypt's embassy in Athens, and that Egypt was coordinating with the Greek rescue authorities to locate the vessel.
Greek authorities said they were unaware of any such incident off the Greek coast.
Egyptian authorities have warned citizens of the dangers of trying to cross the Mediterranean illegally, saying many of the boats are overcrowded and unseaworthy. At least 21 Egyptians drowned in two incidents off the Italian coast in October 2007.
But people are willing to pay around $2,000 (1,100 pounds) for the chance of a new life, and authorities in Egypt and other Mediterranean countries have had to rescue survivors or locate the bodies of illegal migrants after several failed attempts
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