Food prices help tip 75 million into hunger in 2007
ROME: Rising food prices are partly to blame for adding 75 million more people to the ranks of the world's hungry in 2007 and lifting the global figure to roughly 925 million, the U.N.'s food agency said on Wednesday.
Jacques Diouf, head of the U.N. Food and Agriculture Organisation (FAO), presented the figure to Italy's parliament ahead of the release of an official report on Thursday.
The latest data further distances the international community from reaching U.N. Millennium Development Goals that include halving hunger and poverty by 2015.
Diouf estimated that 850 million people were hungry before the 2007-2008 spike in food prices, which sparked widespread protests and even riots in the most affected nations.
The FAO hosted a food crisis summit in Rome in June to discuss ways to combat high food prices, blamed on poor harvests, high oil costs, biofuels and rising demand for basic staple crops, especially from fast-growing Asian countries.
Next week, world leaders gathering at the United Nations are due to review an updated assessment of progress in meeting the Millennium Development Goals -- eight social and economic development benchmarks.
Beyond hunger and poverty, they include increasing universal education and fighting the spread of HIV/AIDS.
Slow delivery of financial aid by some of the world's richest nations is one of the reasons the goals are in danger of being missed by the 2015 deadline, U.N. officials and aid agencies say.
Donor countries have increased assistance since 2000, but in 2006 and 2007 aid levels declined by 4.7 and 8.4 percent respectively, according to a U.N. report published earlier this month that U.N. Secretary-General Ban Ki-moon called a "wake-up call."
EU backs more food aid for Europe's poor
BRUSSELS: The European Commission backed a plan on Wednesday to pour more cash into an EU scheme to feed millions of poor people across Europe.
The plan was drafted after radical policy changes ended the infamous grain mountains and milk lakes of the 1980s and 1990s.
With most of those stocks gone, EU Agriculture Commissioner Mariann Fischer Boel recommended raising spending on the EU's food aid scheme, set up in 1986 to distribute its surplus food stocks to a wide range of people living in poverty.
"Now that surplus stocks are extremely low and unlikely to increase in the foreseeable future, the scheme should allow market purchases on a permanent basis, to complement remaining intervention stocks," the European Commission said on Wednesday as it backed the proposal.
Under the plan spending on the scheme would rise to 500 million euros (398 million pounds) in 2009 from the 310 million euros earmarked in 2008.
The scheme will provide millions of meals to people including families, the elderly and asylum seekers in 19 of the EU's 27 countries.
Before the EU's reform of its Common Agricultural Policy (CAP) in 2003, public intervention stocks of cereals, beef, butter, milk powder, olive oil, rice and sugar were usually plentiful and stored around Europe at taxpayers' expense.
But those large surplus stocks, for which the EU was heavily criticised by its trading partners for exporting with subsidies, are now mostly non-existent, with the exception of sugar.
If ministers agree, food distribution plans will be set up for three-year periods, in cooperation with charities and local social services, and with EU countries choosing the food they want, based on nutritional criteria. Priority will be given to intervention stocks where these are available.
For the three-year plan starting in 2010, EU states would get 75 percent of the costs paid by Brussels but have to pay the remaining 25 percent themselves. More economically disadvantaged areas would get 85 percent of their bill paid by EU money.
From 2013, EU countries would have to match, euro for euro, the cash they get from Brussels. Poorer regions would pay 25 percent of their costs and EU money would cover 75 percent.
Around 43 million people across the European Union are believed to be at risk of food poverty, based on their inability to afford to buy a meal with meat, chicken or fish every second day, the Commission says.
Farmers and factories fight over land in India
SINGUR, India: Barely a month before the introduction of the world's least expensive car from a new factory on these former potato and rice fields, a peasant uprising has prompted Tata, one of the most powerful Indian conglomerates, to suspend work on the plant and consider pulling out.
The standoff is the most prominent example of a dark cloud hanging over India's economic transition: How to divert scarce fertile farmland to industry in a country where more than half of the people live off the land?
At the heart of the challenge, one of the most important facing the Indian government, is not only how to compensate peasants who make way for India's industrial future, but also how to prepare them - in great numbers - for the new economy India wants to enter.
In recent years, clashes over land have dogged several major industrial projects in almost every corner of this crowded democracy of 1.1 billion people, most of them rural and poor.
In the eastern state of Orissa, betel leaf farmers have held up a $12 billion project by Posco, the South Korean steel maker, occasionally kidnapping company officials. In western Goa, several proposed Chinese-style special economic zones were scrapped after sustained public protests. And outside Mumbai, India's commercial capital, village councils have insisted on a referendum this month on an economic zone proposed by Mukesh Ambani, the country's richest man.
In nearly all of these cases, the peasants who resist most intensely are often those who know they are qualified to do little beyond eke out a living off of the land.
If that fundamental anxiety feeds their protests, farmers and farmhands, often egged on by the politicians who seek their support, also stage protests to ratchet up the price of the land or to renegotiate deals.
The target of their ire is often the government, which in most cases acquires the land and turns it over to industrial developers. The central government has not finished a long-awaited national policy on compensating those who lose their land.
"If the price is right, people will sacrifice the emotional attachment, but if you no longer have the guarantee of living off the land, then what do you do?" said Subir Gokarn, chief economist for Standard & Poor's in India. "The people who are being displaced are not the people who see themselves as benefiting immediately from the employment opportunities."
Medha Patkar, one of the best-known opponents of large industrial projects in India, said, "Land is livelihood, it's not just property."
Last month, in this rich farm belt in the state of West Bengal, protesters laid siege to the new Tata Motors plant, on one occasion preventing workers from leaving.
The protesters want the government to return roughly a third of the 997 acres, or 403 hectares, that the state acquired for the Tata factory. Some of the land was taken by force from farmers.
Their demands have since led the state government, controlled by an elected Communist administration, to sweeten the deal without taking apart the factory site.
On Sunday, in a bid to assuage protesters, the government announced a more generous compensation package for those who had been evicted. It included a 50 percent increase in the price paid for the property and job training for one member of each displaced family. The governing party and its opponents have been staging competing protests this week.
That new deal only revealed the deep wedge of anxiety that the factory has driven through this cluster of villages.
"We are farmers," said Tayab Ali Mandal, of the village of Joymolla. "We know only farm work, we don't know any paper-pencil work." He gave up his land last year, but bitterly. Now he wants it back, and he rejected the government's latest offer of a job in the plant.
He said he would rather have his 16-year-old son continue to work in a small factory embroidering clothes, a traditional craft in his community. "I won't go inside that place, even to urinate," he said. "We are disgusted by that place."
Gopal Santra and his clan, who refused to accept money for the land they lost, said they hoped the renewed agitation would prompt the state to raise its offer even more.
The Santras owned land across the street from the Tata plant, which they sold a month ago for more than four times the price the state is now offering. Still others, like Sheik Muhammad Ali, who welcomed the Nano, Tata's flat-faced, pint-size car, to his fields, threatened to put the naysayers in their place.
Ali had readily given up his land and through his contacts with government officials, started a business supplying cement to the developer.
On Sunday, he was seething at the protesters who had halted work on the plant for the past two weeks and in turn, his business.
"There's a limit to our patience," he said. "If you take my plate of rice, will I just let you go off with it?"
Bidyut Kumar Santra, a rare high school graduate in Joymolla, was among the lucky few to get a job on the assembly line, and, in turn, realize how poorly equipped he was to keep up with events on the factory floor. The engineers all spoke English, to him an alien tongue.
"I feel ashamed, like what kind of education did I get?" Santra said the other day. He vowed to make certain that his son, who is in first grade, learned to speak English.
The villages of Singur, where the Nano was to be produced, stand at the crossroads of two Indias.
For Tata, it is ideally located along a new national highway heading north to New Delhi, the capital, and near an important east-west artery.
For farmers, it is ideally located on the fertile delta plains of the Ganges River and fed by irrigation canals, making the earth so rich and red that it yields two rice harvests a year, in addition to potatoes, cucumbers and squash.
West Bengal lured Tata here with heavy incentives, including a generous land lease and tax breaks from the state's industrial development agency.
Some of the details of the company's contract with the government have emerged in recent days, prompting the company to go to court, where it blocked further disclosures.
If Tata were required to give back 300 acres of land from the factory site, as the opposition demands, it would have to evict auto parts makers who are setting up shop next to the main Nano plant.
Their proximity allows Tata to save on the cost of production. Those savings and the generous land and tax deal allow Tata to sell the Nano at a price of less than $2,500.
The plant's fate is uncertain. Tata, while welcoming the government's proposed compensation package, has remained silent on its plans.
The company has several other plants where it could produce the Nano in time for the Hindu festival season in October, traditionally a time of big spending.
Tata has dangled the possibility of making the Nano elsewhere if the cost of production and the price of car rise too high.
Tesco takes on discounters with new low-cost range
LONDON: Tesco , the nation's No.1 retailer, announced a new low-cost range of products and price cuts on Wednesday, as it fights back against budget supermarket rivals that have eaten into its market share.
Tesco said the new range of 350 goods, called Discount Brands at Tesco, would span tea bags, biscuits, shampoos and washing up liquid, and was its biggest package of money-saving measures since the launch of its Value range 15 years ago.
It also pledged to invest more than 100 million pounds in cutting prices of "hundreds" of existing Tesco and branded products.
The move comes hours after arch-rival Asda, which is owned by U.S. group Wal-Mart Stores , announced plans to cut prices on more than 5,000 goods this autumn and escalates the battle between Britain's top grocers as they seek to gain a greater share of cash-strapped shoppers' purses.
Britons are curbing spending amid rising food and fuel costs, sliding house prices and mounting economic gloom, and growing numbers have been switching to shop at cheaper outlets.
Researchers TNS Worldpanel said on Tuesday that budget-focused Asda reached its highest ever UK grocery market share of 17.3 percent in the 12 weeks to September 7, while discount group Aldi achieved its best ever sales growth of 20.8 percent.
Tesco, meanwhile, grew at 6.7 percent, just below the market rate of 7.3 percent, and saw its market share dip to 31.5 percent from 31.7 percent a year ago.
"As customers tighten their belts in hard times, they tend to shop around for the best prices," Tesco Commercial Director Richard Brasher said in a statement. "Our research shows just how keenly they are feeling the need to watch their budgets."
J Sainsbury , the No.3 supermarket group, announced a "Switch and Save" drive earlier this month in a bid to persuade shoppers to switch to its own-brand products, while No.4 Wm Morrison Supermarkets Plc said last week it was cutting prices on 4,000 products this month.
Shore Capital analyst Clive Black said the latest moves by Tesco and Asda were another turn of the screw in the competitive environment between supermarkets but that because they appeared to be planned measures they were unlikely to hit profit margins.
"However, the leading two players' activities do pose greater challenges for the competition; especially the higher-category players Sainsbury and Marks & Spencer ," he said in a research note.
A political punch line is dinner in Alaska
ANCHORAGE, Alaska: Sarah Palin, the Alaska governor and Republican nominee for vice president, lists moose stew and moose burgers among her favorite foods. Republican leaders point to her ability to field dress a moose as a qualification for office.
Just like that, moose meat has become a political issue and a punch line.
Here in Alaska, residents are less annoyed than one might imagine at having a freezer staple treated as just another piece of Arctic kitsch. For one thing, many Alaskans don't care what bloggers or late-night television joke writers think.
Alaskans themselves enjoy making fun of their relationship with moose. This is a state where people varnish pieces of moose excrement and sell them as earrings.
Besides, it's not the first time Alaska's love of moose meat has been the butt of jokes.
"You learn to shake your head and laugh because it really is a regional food, just like black-eyed peas or grits or rattlesnake," said Robbie Graham, a hunter who is also the chief executive of Bernholz & Graham, a public relations firm here.
To understand the role moose meat plays in the Alaskan kitchen, it helps to understand a little bit about the state. It is nearly three times the size of Texas, with a population of 670,000. Only a third of it is accessible by road.
In a state that collected $7.5 million in fees from big game tags and hunting licenses in 2007, moose meat can be as abundant as zucchini at the end of a New Jersey summer. For hunters who live around Anchorage or Wasilla, where Palin helped butcher moose as a child, there's a tacit understanding that bagging one is nearly a birthright.
"People will say, I've got to get my moose," said Mike Dunham, the arts and entertainment editor of the Anchorage Daily News and a veteran of several moose hunts.
In Anchorage, where grocery stores carry plenty of beef but never moose meat (it's illegal to sell wild game), people consider moose an important part of their annual supply of food, said Rick Sinnott, a wildlife expert with the Alaska Department of Fish and Game.
"They aren't going out looking for the head or a trophy," he said. "They are looking for the meat."
State law requires that all the meat from a hunted animal be salvaged for eating. If a moose is hit by a vehicle, which happens with increasing frequency as winter darkness sets in, state troopers consult an official road kill list.
In the greater Anchorage area, where about 160 moose are killed on the road each year, the list is filled with the names of dozens of nonprofit organizations. When a dispatcher calls, volunteers rush to the scene and start butchering. The meat is taken to churches, which distribute it to needy families, and soup kitchens make stew.
In more rural parts of the state, individuals are on the distribution list. In remote areas, accessible only by plane, dog sled or boat, shooting a moose often means surviving the winter.
"That's all we eat in the village," said Delores Field, 42, an Inupiat from Noorvik, a village of 700 above the Arctic Circle. "If my parents could afford food from the store then we'd have that, but we always had moose meat jerky or hot dogs or sausage."
In most Alaska Native villages, moose meat is an important part of social events and funerals. Often the soft parts of the moose, including the liver and the coveted nose, go to village elders, said Dunham, who is not Native but whose school teacher parents raised him in the Yukon-Kuskokwim delta on the west coast of Alaska.
The nose, which can be about the size of a volleyball, is shaved, much the same way bristles are removed from a pig. A sharp knife will do the job, but a disposable razor like a Bic also works, Dunham said. Then the nose is boiled in salt water for several hours. The result, he said, is not unlike beef tongue.
"You can cube it and add to soup with noodles and rice or whatever is in the pantry," he said. "It does get quite gelatinous and tender."
The sense that hunting moose is as much a right as a way for people to fill their freezers led in part to a controversial state program that allows hunters in planes to shoot wolves from the air. The theory is that fewer wolves mean more moose for Alaskans to hunt.
Since the program began in 1993, about 800 wolves have been shot. In 1996 and again in 2000, voters approved a ban on the practice, but state legislators reinstated it. In August, Alaskans again voted to stop it. Palin is an ardent supporter of aerial hunting.
Even for the cosmopolitan Alaskan, who might be more likely to go to the Anchorage Opera than to a hunting camp, moose is not foreign.
Moose stew often turns up at the office potluck. At a party, moose salami on a cracker might be passed around with the other appetizers.
Diane Moxness, executive director of the Nordic Skiing Association of Anchorage, was charged by a moose during a run through a city park earlier this month. Although she doesn't hunt, she said friends who do sometimes serve her moose. She recalls a particularly good pizza topped with ground moose.
"It was like hamburger but with a lot of flavor," she said.
With the exception of the big back straps and a few other sections that can be cut into steaks or roasts, most moose meat in Alaska becomes hamburger, sausage or stew meat. Spaghetti and stroganoff are popular uses.
Moose is more coarse-grained than beef, has a deeper flavor and is very lean. Younger cows are considered tastier than older bulls.
"Moose is, in my mind, much better than caribou," said Sinnott, the biologist. "But it's what you've grown up with. People in villages who eat caribou think moose tastes a little strange. It'd be like eating a white-tailed deer if you grew up on beef."
In the kitchen, moose can be stringy and overcooks in a flash. For hamburger and sausage, the meat is usually mixed with fat. Although some hunters like to reserve the tallow for that purpose, others prefer pork fat.
Moose survive largely on tree bark, marsh grass and, as many people in Anchorage and Fairbanks can attest, the contents of carefully tended flower beds. While their diet can affect flavor, so can the way the animal is killed and dressed. Shoot an animal that is running down the road in fear, or fail to take it down with the first shot, and its adrenaline-filled meat will be dark and unpleasant to eat, hunters say.
Unlike caribou, which tend to run in herds across wide open spaces, moose prefer to hang out in very small groups in ponds, marshes or brush. For animals that weigh as much as 1,600 pounds, they can be surprisingly hard to see and are often difficult to get to once they've been shot.
Now that field dressing has entered the national vocabulary, an understanding of the process may be in order.
Once an animal is killed, it must be quickly bled, and the gut sack, lungs, windpipe and other parts removed. The animal must then be skinned and quartered so that the meat can cool quickly. In the field, meat is hung for a day or more so that a tough crust can form to protect it from bacteria.
A dressed moose can produce about a third of its weight in edible meat. To get hundreds of pounds of meat out of the wilderness, hunters need an all-terrain vehicle, a small plane or lots of strong friends with backpacks.
"You can see the bullet going out of the gun and you're thinking, what did I just do?" said Dunham, who has killed two moose himself and helped field dress and pack out several more.
But his moose hunting days are over. It's just too much work. At the end of the day, beef is just fine.
"I found it is a lot cheaper and a lot easier to go to the grocery stores and get this stuff that was already taken care of," he said.
Arctic ice retreats less than last year
The annual summer retreat of the sea ice cloaking the Arctic Ocean appears to have ended with the ice not quite matching last year's extraordinary recession, polar scientists said.
Still, the scientists, at the National Snow and Ice Data Center in Boulder, Colorado, said that the ice in the Arctic this summer was 33 percent below the average extent tracked since satellites started monitoring the region in 1979 and that the long-term trend is toward an ice-free Arctic Ocean within a few decades.
This summer was also notable because scientists confirmed that two fabled shipping routes, the Northwest Passage over Canada and the Northern Sea Route over Russia, were briefly open simultaneously.
The ice, which is now expanding as the sun dips toward the horizon for the winter, hit a minimum extent of about 1.74 million square miles, or 4.5 million square kilometers, on Sept. 12, said Dr. Walter Meier, a research scientist at the center. In 2007, the minimum extent was 1.59 million square miles, he said.
Federal biologists have said that this long-term ice retreat is the main reason they had concluded that polar bears, which hunt seals from the ice, deserved protection under the Endangered Species Act. In May, the Bush administration listed the species as threatened with extinction.
Global warming from the buildup of human-generated greenhouse gases almost certainly contributes to the Arctic ice retreats, according to a host of Arctic specialists. But many say natural variations in Arctic winds and cloud cover probably had a role in shaping the particularly large ice losses in the past two summers.
Meier said that small variations from one year to the next were less significant than the long-term trajectory, which remained toward progressively more open water. "It's hard to see the summer ice coming back in any substantial way," he said.
Chrysler pushing Ram in market cold to trucks
Instead of focusing on price, Chrysler is selling the workingman truck narrative as it begins advertising the first revamped Dodge Ram pickup truck in six years.
NEW YORK: Fuel prices are falling but still high, big vehicles are unpopular and Chrysler, known for big vehicles, is struggling. So it may seem surprising that it is putting all of its marketing muscle behind a new truck.
This month, Chrysler, which is owned by Cerberus Capital Management, will begin advertising the first revamped Dodge Ram pickup truck in six years.
Instead of focusing on price, Chrysler is selling the workingman truck narrative with a Web-based, reality-style competition showing the trucks hurtling through off-road courses that brings to mind television shows like "Ice Road Truckers" or "America's Toughest Jobs."
"Now is not the time to do the typical truck launch," said David Lubars, chief creative officer of BBDO North America, part of the Omnicom Group, which created the campaign. "We know the amount of people out there who are going to buy a truck is going to shrink.
"It's a smaller group than usual, and we have to get all of them," Lubars said.
Three workers killed in Medgaz accident
MADRID: Three workers have been killed, four badly injured and one other is missing after an accident during the construction of an undersea gas platform between Spain and Algeria, the Medgaz consortium said on Wednesday.
The accident occurred in international waters after a crane on the Saipem 7000 platform suffered a mechanical failure, Medgaz said in a statement.
All but one of the workers affected were employed by the Italian oil services group Saipem.
The Medgaz project is a deepwater gas pipeline running from Beni Saf, on the Algerian coast, to southern Spain, and is scheduled to be completed by 2009. Medgaz is a consortium of Algerian state company Sonatrach, Spanish groups Cepsa, Iberdrola and Endesa and France's GDF Suez.
Nigeria militants threaten broader delta "oil war"
PORT HARCOURT, Nigeria: Nigerian militants threatened on Wednesday to broaden their "oil war" to offshore oilfields and announced attacks on a crude oil pipeline in the Niger Delta and another Shell-operated facility.
The Movement for the Emancipation of the Niger Delta (MEND), responsible for attacks that have cut a fifth of OPEC member Nigeria's oil output, said it would launch attacks outside Rivers state for the first time since clashes began on Saturday.
Oil traders on Wednesday began to take notice of the rise in violence and that helped push prices above $94 a barrel in early trading. The market has fallen sharply this week on the impact of the credit crisis on the global economy.
The heaviest fighting between militants and security forces in more than two years has spread to about 10 villages in Rivers state, home to oil city Port Harcourt. Some private security sources estimate dozens have died.
"After Rivers, the hurricane will be heading to the neighbouring states in the Niger Delta," MEND said in an e-mailed statement.
Experts believe the clashes could continue for weeks as the military tries to capture or kill top militant leaders and regain control of the region's oil resources.
"The fight is over control of oil resources and the right to tap those resources," said Antony Goldman, an analyst at London-based risk consultancy PM Consulting.
Russian court denies parole to pregnant YUKOS lawyer
MOSCOW: A Russian court denied parole to a pregnant mother-of-two who supporters say was swept up in a Kremlin campaign to punish oil tycoon Mikhail Khodorkovsky, the judge who heard the case said on Wednesday.
Svetlana Bakhmina, a former lawyer with Khodorkovsky's now-defunct YUKOS oil company, requested early release after serving over half of her 6-1/2 year sentence for embezzlement and tax evasion.
Yevgeny Kuzmin, judge at the court in the Zubovo-Polyansky district of the Mordovia region in central Russia where Bakhmina is being held in a penal colony, said he had heard her parole application on September 10.
"She was denied release," Kuzmin told Reuters by telephone. "The reason for the denial is in the court's resolution, but this resolution is only available to parties in the case."
Supporters of 38-year-old Bakhmina say she was the victim of an indiscriminate campaign to jail YUKOS employees and that the judge who sentenced her did not take into account the fact she was raising two young sons.
Australian mining boom linked to HIV spike
SYDNEY: Australia's mining boom may be fuelling an alarming rise in HIV infections among cashed-up heterosexual outback miners and businessmen in resource-rich states who holiday in Asia, say researchers.
Rates of HIV infections in Australia have increased by almost 50 percent in the past eight years, according to a new national HIV-AIDS report released on Wednesday.
In the year to December 2007, Australia had 27,331 cases of HIV infection and 10,230 cases of AIDS, said the report by the National Centre in HIV Epidemiology and Clinical Research.
"The annual number of new HIV diagnoses in Australia has steadily increased over the past eight years, from 718 cases in 1999 to 1,051 in 2007," it said.
Homosexual men still account for most new infections, but a large number of new infections are amongst heterosexual men in the country's mining rich states of Western Australia and Queensland.
Many miners work fly-in, fly-out shifts consisting of several weeks straight of work followed by a few weeks off and researchers say some are visiting Asia for their downtime.
"A small but significant number (of new infections) are among heterosexual men from the richest resource states, who are clearly taking holidays in Asia and having unprotected sex," said Don Baxter, executive director of the Australian Federation of AIDS.
Baxter said Western Australia men most likely visit Southeast Asian countries, with the state capital Perth about five hours flying time from Asia, while those in Queensland visit neighbouring Papua New Guinea, which experts say is on the verge of an African-style HIV-AIDS epidemic.
"Among heterosexual males in Western Australia there has been a 68 percent increase over the last three years. That's about the same number of heterosexual men as gay men in Western Australia to be infected in 2007," said Baxter.
Baxter said the Western Australia state government and AIDS council was working with mining companies to implement safe sex education programmes for miners.
Health authorities said on Wednesday that a cluster of men in the tropical city of Cairns in Queensland state had contracted HIV after having unprotected sex with women in Papua New Guinea, a short flight north of Queensland.
The Cairns Sexual Health Service said six men, all businessmen aged between 47 and 66, tested HIV positive in the past 10 months.
"This small cluster could just be the beginning of a very large outbreak," Dr Darren Russell, director of the Cairns Sexual Health Service, told local media.
"It indicates the HIV epidemic in PNG is becoming more generalised which puts these men at greater risk, and in that climate the numbers will only rise."
Australia's AIDS federation called on the government to increase funding for AIDS prevention programmes to stem the rising rate of infections.
Australia's most populous state New South Wales, home to Sydney's largest homosexual population, recorded little change in infection rates in the past decade because it had maintained funding for safe sex programmes, said Baxter.
In contrast, infection rates soared in states that reduced funding, with the southern state of Victoria experiencing a 131 percent increase and Queensland a 55 percent rise.
"We have pretty clear evidence that investment in the programmes at least stabilises the rate of HIV infections," said Baxter.
U.S. House approves plan to ease offshore drilling ban
WASHINGTON: The U.S. House has approved a measure that would ease a longstanding ban on offshore oil drilling and try to spur greater use of alternative fuels as Democrats and Republicans engaged in a bitter pre-election clash over the nation's energy future.
Under the Democratic legislation, adopted Tuesday night by a vote of 236-189, oil companies would lose some tax benefits, utilities would be required to produce 15 percent of their electricity from renewable sources by 2020 and a ban on developing fuel from Rocky Mountain shale would be lifted.
The legislation, which faces significant hurdles to becoming law before Congress breaks at the end of the month, would allow drilling as close as 50 miles, or 80 kilometers, from the coastline if adjacent states agree and 100 miles out no matter a state's position. It would impose stricter oversight on the agency that handles oil leasing and royalty payments after recent disclosures of improper relationships between its employees and oil industry representatives.
"We are opening up to 400 million acres off the Atlantic and Pacific coasts to drilling and expanding the availability of oil by at least two billion barrels," said Representative Nick Rahall, the West Virginia Democrat who leads the Natural Resources Committee. "And we have done so in a balanced, reasonable and responsible manner."
Republicans, who have made political gains by portraying Democrats as flatly opposed to new drilling, said the measure was a sham intended to provide Democrats cover from voters furious over gas prices. They faulted it for failing to add incentives for coal and nuclear power and for not limiting environmental suits against drilling proposals.
16 killed in bombing of U.S. Embassy in Yemen
BEIRUT: Militants disguised as soldiers ambushed the U.S. Embassy compound in Sana, Yemen, on Wednesday morning with rocket-propelled grenades and at least one suicide car bomb, in an attack that left 16 people dead, including 6 of the attackers, Yemeni officials said.
No American officials or embassy employees were killed or wounded in the attack, embassy officials said. Six of the dead were Yemeni guards at the compound entrance, and four were civilians waiting to be allowed in.
It was the deadliest terrorist attack in years in Yemen, a poor south Arabian country of 22 million people where militants aligned with Al Qaeda have carried out a number of recent bombings.
The attack began at 9:15 a.m. when gunmen dressed in camouflage uniforms drove up and began firing rifles and rocket-propelled grenades at a checkpoint outside the heavily fortified U.S. Embassy compound, said one Yemeni official, who spoke on condition of anonymity because he was not authorized to comment.
As the embassy guards began firing back, the suicide bombers drove through the checkpoint and detonated their car nearer to the compound's front gate, the official said.
Twin bombings in Baghdad kill 8
BAGHDAD: Eight people were killed and 25 wounded Wednesday in double bombings in a busy section of central Baghdad filled with currency exchange shops and medical clinics, according to an official with the Interior Ministry.
The first bomb exploded at about 11:20 a.m. and appears, according to several witnesses, to have been placed in a pickup truck that belonged to Raad al-Maliki, a former member of the local municipal council and owner of one of the money-changing businesses that dot the area. Maliki, who was inside his shop at the time, survived the bombing.
About five minutes after the first blast, a second bomb planted next to a kiosk that sells cigarettes and soft drinks about 100 meters away exploded. Iraqi and U.S. soldiers immediately cordoned off the area and cut off traffic.
Smashed storefronts, burned vehicle remains and scattered debris were reminiscent of scenes Baghdad residents have been eager to forget.
A spokesman for the U.S. military, who blamed the attack on Al Qaeda in Mesopotamia, put the toll at 3 killed and 16 wounded, while a source at Yarmouk Hospital, where some of the casualties were taken, cited 5 killed and 20 wounded.
"The security improvement is just in the media; it has nothing to do with reality," said Ali Mahmoud, a grocery owner caught up in the bombings. His shirt was stained with the blood of a victim he had helped.
Earlier, a roadside bomb in Baghdad's Zayouna district killed one passerby. The bomber's apparent target was the municipal council chief of the Jadida district of Baghdad, according to the Interior Ministry official, who asked not to be named because he was not authorized to speak to the press. Another roadside bomb in Zayouna, near the Culture Ministry, killed one and wounded five, according to the official.
The bombings in Baghdad come two days after a twin car bombing in another central neighborhood killed 12 and wounded 37. Bomb attacks, assassinations and shootings in all of Iraq, including Baghdad, have claimed the lives of at least 90 people and wounded dozens of others over the past week.
Still, overall levels of violence countrywide stand at their lowest in four years. In August there were 101 attacks in Baghdad, compared with 800 in August 2007, according to Lieutenant Colonel Steve Stover, a spokesman for the U.S. military unit in charge of the capital.
But the bombings in central Baghdad underscore the fragility of the situation and reversibility of the recent security gains, which General Raymond Odierno, the incoming commander of American troops here, warned of Tuesday during a handover ceremony as he took over from General David Petraeus.
In other violence Wednesday, a minibus traveling between the oil-rich northern city of Kirkuk and the mainly Sunni Arab town of al-Rashad was attacked by gunmen, resulting in the death of three of the occupants and the wounding of one, according to Lieutenant Abdullah al-Obeidi of the al-Rashad police.
In Baghdad, deputies in Parliament continued to wrangle over a proposal on postponing elections in Kirkuk Province, a hotly contested area with populations of Kurds, Turkmen and Sunni Arabs. This issue has held up agreement on a new provincial election law
Gates apologizes for Afghan deaths
KABUL: The U.S. defense secretary, Robert Gates, expressed "sincere condolences and personal regrets" Wednesday for the deaths of Afghan civilians during recent airstrikes and announced a series of new measures designed to make amends when innocents are killed.
Gates accepted a proposal from Afghan officials to establish a permanent joint investigative group to rapidly determine the facts surrounding incidents of civilian casualties.
And he pledged that even before all the facts are known, the United States would apologize for civilian casualties and offer compensation to survivors.
"I think the key for us is, on those rare occasions when we do make a mistake, when there is an error, to apologize quickly, to compensate the victims quickly and then carry out the investigation," Gates said.
He said he ordered the new measures "so people know most of all that we care about them" and to prove that when there are civilian casualties, "We are sorry for that and we are going to make amends as quickly as possible."
Geoff Morrell, the Pentagon press secretary, said that the idea to create a permanent joint investigative body for incidents of civilian casualties was raised by senior Afghan officials and that Gates, during a day of meetings here Wednesday, officially agreed to the plan.
In several recent cases of civilian casualties, separate investigations by the Afghan government, U.S. military and international organizations have returned with conflicting assessments.
On his fourth visit to Afghanistan as defense secretary, Gates acknowledged the need for more troops here.
On Tuesday, the senior American commander, General David McKiernan, said for the first time that he needed three combat brigades of 3,000 to 4,000 soldiers each over and above the one extra battalion of 500 to 1,500 soldiers and one extra brigade that President George W. Bush has ordered to arrive here by early next year.
"My expectation is that we will be able to meet the requirements the commanders have here during the course of 2009," Gates said.
But he did not give exact figures for reinforcements, nor did he say whether any additional increases would come from the American military or if allies would be pressed to fill the short-fall in troops identified by McKiernan.
The defense secretary gave an impassioned restatement of the American commitment to the Afghanistan conflict, which often has been described as the forgotten war since vastly more resources were committed to U.S. forces in Iraq.
"You have seen the face of the enemy, the ruthlessness and the determination," he said.
"Let there be no doubt that the United States and our many partners around the world are just as determined to help you win the peace and freedom you deserve."
U.S. missile strike in Pakistan kills five
ISLAMABAD: A U.S. missile strike killed five militants in northwest Pakistan on Wednesday, a Pakistani official said.
Another official said the attack on a container loaded with ammunition and explosives was the result of better U.S.-Pakistani intelligence sharing and both countries had worked together on the attack.
The latest U.S. missile strike by a pilotless drone came at dusk over Baghar village in the South Wazirstan region. The drone fired four missiles at a tented camp.
Three of the dead were Arabs, according to a Pakistani intelligence officer who declined to be identified.
A new government in nuclear-armed Pakistan has promised support for the U.S.-led campaign against Islamist militancy even though the campaign is deeply unpopular with many Pakistanis.
RESPECT FOR SOVEREIGNTY
Hours before the missile strike, Admiral Mike Mullen, chairman of the U.S. Joint Chiefs of Staff, assured army commander General Ashfaq Kayani and Prime Minister Yousaf Raza Gilani of U.S. support.
"Admiral Mullen reiterated the U.S. commitment to respect Pakistan's sovereignty and to develop further U.S.-Pakistani cooperation and coordination," the U.S. embassy said.
Bomb kills four U.S.-led troops in Afghanistan
KABUL: A roadside bomb killed four soldiers from the U.S.-led coalition force and an Afghan national in eastern Afghanistan on Wednesday, the U.S. military said.
The military did not identify the victims, but most foreign troops serving under coalition force in eastern Afghanistan are Americans.
The toll is the bloodiest in a single attack in recent weeks in Afghanistan, where the al Qaeda-backed Taliban have stepped up their campaign of suicide attacks and roadside bomb blasts against the government and foreign troops backing it.
At least 194 foreign soldiers have been killed in Afghanistan in 2008, the deadliest year for the foreign forces since U.S.-led troops removed the Taliban from power in 2001.
The resurgent Taliban have made a come back since 2005 and have gradually extended the depth of their attacks despite the increase in number of foreign troops, now standing at more than 71,000.
Separately, the guerrillas freed a member of the upper house of the parliament who they had kidnapped more than two months ago from a province to the south of Kabul, the parliament said on Wednesday.
It said the release was secured following the mediation of the area's tribal chiefs, but the Taliban said the government had freed three of their jailed militants in a deal.
France wants Europe to lift Afghan troop restrictions
CANBERRA: France on Wednesday asked its European allies to relax restrictions on troop deployment and operations in Afghanistan just a month after losing 10 soldiers in a Taliban ambush.
Limits on troop operations and years of military underspending in Europe outside the United Kingdom and France were damaging the coalition war effort, French Defence Minister Herve Morin said on a visit to Australia.
"Most of Europe has made NATO responsible for their security. Therefore, the weakness of Europe is typified by what you see in Afghanistan," Morin told journalists.
NATO has struggled to get major nations to contribute more to its Afghan force, and as the death toll rises the challenge only gets greater.
Last month was the deadliest for foreign troops since the conflict began, according to independent website icasualties.org. Forty-three troops were killed, including the 10 French soldiers hit in a single Taliban ambush.
Many NATO countries with troops in Afghanistan have "national caveats" that restrict how their troops may be used, limiting their flexibility.
U.S. Defence Secretary Robert M. Gates last year compared the problem to a chess game in which one side enjoyed full freedom of movement and the other could only move a single space in a single direction.
Australia and the United States, both close allies, have been critical of European countries for not doing enough to combat the Taliban in their mountain havens.
Australia, an original member of the U.S-led coalition that arrived in 2001 to topple the Taliban, still has around 1,000 troops in the restive Oruzgan province, including special forces.
Morin said "not a cigarette paper in width" separated his own views from those of his Australian counterpart Joel Fitzgibbon after 10 French troops were killed and 21 wounded by the Taliban on August 18.
"We share the point of view that the effectiveness of the forces in place in Afghanistan depends very heavily on the conditions that are applied for their use. Caveats prevent the best possible application of the forces," he said.
Morin said he and Fitzgibbon, and German Defence Minister Franz Josef Jung, hoped to visit Afghanistan in December to inspect security for themselves.
Jung visited the country earlier this month to meet with tribal leaders and express sympathy after German troops shot and killed a woman and two children who failed to stop at a roadblock, leading to fears of reprisal attacks.
Morin said "rumours and lies" in media reports, and an "almost obsessive denigration of what is being done on the ground" were also damaging the coalition war effort and eroding public support for the war in western countries.
France has 3,300 troops serving in the NATO-led International Security Assistance Force in Afghanistan and after last month's ambush said it may send special forces troops back for the first time since 2007.
Morin is in Australia for two days to discuss Afghanistan and boost security cooperation between France and Australia in the South Pacific.
Australia police charge 11 after Aborigine riots
CANBERRA: Aborigines wielding machetes, spears and boomerangs rioted at a remote community in central Australia resulting in 11 people being charged, police said on Wednesday.
Around 200 people gathered on Tuesday around the central store in Willowra, 250 km (155 miles) west of Alice Springs, with around 40 arming themselves and hurling stones and weapons at each other and police, authorities said.
One man was treated for head injuries, while 10 men, a woman and two male youths were arrested. Eleven were charged with rioting and carrying arms in public.
"It is totally unacceptable and it puts police and other community members at risk," Northern Territory Police Deputy Commissioner Bruce Wernham said in a statement, adding the cause of the melee was unclear.
Australia's 460,000 Aborigines are the country's most disadvantaged group, with high rates of alcohol and drug abuse, unemployment and imprisonment, often while living in outback communities with poor access to health and education.
Local Walpiri Aboriginal elder Christopher Poulson said the riot stemmed from a dispute between two families, but told local radio that police escalated the conflict by taking photographs of the rioters.
Anti-Jewish and anti-Muslim attitudes rise in Europe
WASHINGTON: Anti-Jewish and anti-Muslim attitudes have been rising nearly in tandem in several European countries, apparently reflecting concerns over immigration, globalization and economic ills, according to a new international survey.
Anti-Jewish feelings were particularly strong in Spain, Poland and Russia - with negativity up significantly since 2006, according to the Pew Research Center's polling. Anti-Muslim views were also strong in those three countries, as well as in Germany and France.
"There is a clear relationship between anti-Jewish and anti-Muslim attitudes," said the report from Pew, released Wednesday. "Publics that view Jews unfavorably also tend to see Muslims in a negative light."
Negative views of Muslims were also strong in several Asian countries: Half or more of the Japanese, Indians, Chinese and South Koreans surveyed said they had negative impressions of Muslims.
Negative feelings about Jews were somewhat less strong, from 32 percent in India to 55 percent in China, with Japan and South Korea falling in between.
The survey also underscored rising concerns in several predominantly Muslim countries, including Indonesia, about a struggle for dominance between Islamic fundamentalists and those favoring modernization.
In Europe, negative views of Jews and Muslims were strongest among older people, the less educated and those of the political right.
In some countries, including Germany, negative feelings toward Jews had risen along with favorable feelings - fewer people were left undecided.
Moreover, positive views toward Jews outweighed negative ones in every European country surveyed but Spain.
Still, 46 percent of the Spanish held negative opinions of Jews, as did 36 percent of Poles and 34 percent of Russians. The three countries on average were 6 points more negative than in 2006.
"There may be some backlash toward minority groups going on in Europe as a consequence of the EU's expansion and globalization," said Andrew Kohut, director of the Pew Research Center. As for the Spanish, "I think they're on the cutting edge of globalization - with Muslim immigrants" in large numbers.
In contrast to the other countries, 77 percent of Americans held favorable views toward Jews, compared with 7 percent unfavorable. Britain stood out among Europeans, with 73 percent favorable toward Jews, compared with 9 percent unfavorable.
Views of Muslims tended to be more negative than those of Jews.
Fully half of the Spanish and Germans surveyed had unfavorable opinions of Muslims, as did nearly half the Poles and 32 percent of Russians.
One in four British and American respondents had negative views of Muslims.
There seemed to be a closer correlation with immigration and economic trends in the most negative societies than with the size of resident Jewish or Muslim populations. Germany and France have large Muslim populations, while Poland has a small one. Spain has a tiny Jewish population.
"Some of this ethnocentricity is obviously related to attitudes toward immigration, which is a big issue," Kohut said.
In predominantly Muslim countries, negative views of Jews were particularly high: 96 percent in Jordan and 97 percent in Lebanon.
Large numbers of Muslims - including majorities in Turkey and Tanzania, and nearly half of Indonesians - said that Islamic fundamentalists and modernizers were locked in struggles for dominance in their countries.
Support for terrorism continued a six-year decline, particularly in countries that have suffered from terror attacks. In Lebanon, the view that suicide bombing was always or sometimes justified plummeted from 74 percent in 2002 to 32 percent. But significant minorities still endorse such tactics in Lebanon, Jordan and Nigeria.
Skepticism over U.S. motives was strong in Pakistan, where tensions are high over U.S. pressure for a crackdown on Qaeda and Taliban militants, and in Turkey, which has continuing frictions with the United States over Iraq.
The survey was conducted in March and April in 24 countries, with average samples of about 1,000 respondents in each. Statistical margins of error ranged from 2 to 4 percentage points.
Europe and Asia see U.S. as no longer practicing what it preaches
PARIS: Is the United States no longer the global beacon of unfettered, free-market capitalism?
In extending a last-minute $85 billion lifeline to AIG, the troubled insurer, Washington has not only turned away from decades of rhetoric about the virtues of the free market and the dangers of government intervention, it has also likely undercut future American efforts to promote such policies abroad.
"I fear the government has passed the point of no return," says Ron Chernow, a leading American financial historian. "We have the irony of a free-market administration doing things that the most liberal Democratic administration would never have been doing in its wildest dreams."
While they acknowledge the shock of the collapse of Lehman Brothers, the bailout package for AIG on top of earlier government support for Bear Stearns, Fannie Mae, and Freddie Mac has stunned even European policy makers accustomed to government intervention in the economy.
"For opponents of free markets in Europe and elsewhere, this is a wonderful opportunity to invoke the American example," said Mario Monti, the former antitrust chief at the European Commission. "They will say that even the standard-bearer of the market economy, the U.S, negates its fundamental principles in its behavior."
Monti noted that past financial crises in Asia, Russia, and Mexico brought government to the fore, "but this is the first time it's in the heart of capitalism, which is enormously more damaging in terms of the credibility of the market economy."
In France, where the government has long supported the creation of national champions and worked actively to protect select companies from the threat of foreign takeover, politicians were quick to point out the paradox of what is essentially the nationalization of the largest American insurance company.
"Today the actions of American policy makers illustrate the need for economic patriotism," said Bernard Carayon, a lawmaker of President Nicolas Sarkozy's center-right governing party, UMP. "I congratulate them."
For the "evangelists of the market this is a painful lesson," he added. We're entering "an era where we have much more regulation and where the public and the private sector will mix much more."
In Asia, the Washington-led bailouts have stirred bitter memories of the very different approach the U.S. government and the International Monetary Fund pushed during the economic crises there a decade ago.
When the IMF pledged $20 billion to help South Korea survive the Asian financial crisis of the late 1990s, one of the conditions it imposed was that the Korean government allow ailing banks and other companies to collapse rather than bail them out, recalls Yung Chul Park, a professor of economics at Korea University in Seoul who was deeply involved in the negotiations with the IMF.
While Park says the current crisis is different - it's global rather than restricted to one region like Asia - "Washington is following a different script this time."
"I understand why they do it," he added. "But they've lost credibility to some extent in pushing for opening up overseas markets to foreign competition and liberalizing economies."
The ramifications of the rescue of AIG will be felt for years within the United States, too, not just abroad.
U.S. rescue of giant insurer fails to stem market fears
NEW YORK: The Dow Jones industrial average fell almost 450 points on Wednesday as one of the most dramatic government rescues of an American business failed to stem the runaway fears that have engulfed the global financial system.
Investors embarked on a frenzied flight to safety and wondered which once-proud institution might be the next to fall.
Desperately seeking security in a market that has so far refused to stabilize, investors poured money on Wednesday into ultrasafe government notes, driving the yield on short-term Treasury bills to the lowest levels in 50 years.
Rushing to the oldest financial haven in uncertain times, investors also pushed up the price of gold 9 percent on Wednesday, to more than $850 an ounce.
Stocks around the world plummeted, with the Dow Jones industrial average losing 449.36 points, or 4.1 percent, to close at 10,609.66, despite the extraordinary announcement Tuesday night by the Federal Reserve, backed by the Treasury Department, that it would prop up American International Group, the ailing insurance giant, with an $85 billion loan. The move avoided a potentially devastating collapse of AIG, but investors appeared to have already shifted their attention elsewhere
"The positive impact of these government fixes, rescues, and bailouts clearly are wearing off," said Edward Yardeni, an investment strategist in New York. "There's no novelty in it any more. There's a growing sense that there's no end to this in sight."
Adding to the sense of spreading distress were a number of ominous developments elsewhere around the world. These included the decision by Russian authorities to shut down the stock market in Moscow after a series of dizzying plunges, the biggest monthly jump in the unemployment rate in Britain in 16 years, and continued efforts by AIG customers in Asia to cash out their insurance policies.
Roger Cohen: The king is dead
NEW YORK: They're listening to Coldplay down on Wall Street:
I used to rule the worldSeas would rise when I gavethe wordNow in the morning I sleepaloneSweep the streets I used to own
The leverage party's over for the masters of the universe. Shed a tear. When you trade pieces of paper for other pieces of paper instead of trading them for real things, one day someone wakes up and realizes the paper's worth nothing. And Lehman Brothers, after 158 years, has gone poof in the night.
We're witnessing the passing of more than a venerable firm. We're seeing the death of a culture.
For years, accountants, rating agencies and Wall Street executives decided to shoot craps and collect fees. Regulators, taking their cue from a distracted President Bush, took a nap. The two M's - Money and Me - became the lodestones of the zeitgeist, and damn those distant wars.
The biggest single-day market drop since 9/11 reminded me that when trading reopened on Sept. 17, 2001, and the Dow plunged 684.81 points, some executives backdated their options to re-price them at this post-attack low in order to increase their potential gains.
So that's what "financial killing" really means. No better illustration exists of a culture where private gain has eclipsed the public good, public service, even public decency, and where the cult of the individual has caused the commonwealth to wither.
That's the culture we've lived with. It's over now. Some new American beginning is needed.
When I taught a journalism course at Princeton a couple of years ago, I was captivated by the bright, curious minds in my class. But when I asked students what they wanted to do, the overwhelming answer was: "Oh, I guess I'll end up in i-banking."
It was not that they loved investment banking, or thought their purring brains would be best deployed on Wall Street poring over a balance-sheet; it was the money and the fact that everyone else was doing it.
I called one of my former students, Bianca Bosker, who graduated this summer and has taken a job with The Monitor Group, a management consultancy firm (she's also writing a book). I asked her about the mood among her peers.
"Well, I have several friends who took summer internships at Lehman that they expected to lead to full-time jobs, so this is a huge issue," she said. "You can't believe how intensely companies like Merrill would recruit at Ivy League schools. I mean, when I was a sophomore, if you could spell your name, you were guaranteed a job."
But why do freshmen bursting to change the world morph into investment bankers?
"I guess the bottom line is the money. You could be going to grad school and paying for it, or earning six figures. And knowing nothing about money, you get to move hundreds of millions around! No wonder we're in this mess: turns out the best and the brightest make the biggest and the worst."
According to the Harvard Crimson, 39 percent of workforce-bound Harvard seniors this year are heading for consulting firms and financial sector companies (or were in June). That's down from 47 percent - almost half the job-bound class - in 2007.
These numbers are the mirror of a skewed culture. The best and the brightest should think again. Barack Obama put the issue this way at Wesleyan University in May: Beware of the "poverty of ambition" in a culture of "the big house and the nice suits."
College seniors might start by reading "A New Bank to Save Our Infrastructure" in the current edition of The New York Review of Books, an impassioned plea from Felix Rohatyn (who knows something of financial rescues) and Everett Ehrlich for the creation of a National Infrastructure Bank (NIB).
Its aim, at a time when the Chinese are investing $200 billion in railways and building 97 new airports, would be to use public and private capital to give coherence to a vast program of public works. "This can improve productivity, fight unemployment and raise our standard of living," Rohatyn told me.
It's absurd that "earmarks" - essentially the self-interested budgetary foibles of senators and representatives - dictate the progressive dilapidation of America. How can the commonwealth thrive when its bridges sag and its levees cede?
So, young minds, sign up for the NIB! Before doing so, read Nick Taylor's stirring "American-Made: The Enduring Legacy of the WPA: When FDR Put the Nation to Work." It shows how the Works Progress Administration, a linchpin of Roosevelt's New Deal, put millions of unemployed to work on dams, airports and the like. It's a book about how imaginative political leadership can rally a nation in crisis.
Robert Reich, U.S. secretary of labor in the Clinton administration and an economic adviser to Barack Obama, teaches at the University of California, Berkeley. His latest book is "Supercapitalism."
U.S. Treasury Secretary Hank Paulson didn't blink, so Lehman Brothers went down the tubes. The end of socialized capitalism? Don't bet on it.
The Treasury and the Fed are scrambling to enlarge the government's authority to exchange securities of unknown value for guaranteed securities in an effort to stave off the biggest financial meltdown since the 1930s.
Ironically, a free-market-loving Republican administration is presiding over the most ambitious intrusion of government into the market in almost anyone's memory. But to what end? Bailouts, subsidies and government insurance won't help Wall Street because the Street's fundamental problem isn't lack of capital. It's lack of trust.
The sub-prime mortgage mess triggered it, but the problem lies much deeper. Financial markets trade in promises - that assets have a certain value, that numbers on a balance sheet are accurate, that a loan carries a limited risk. If investors stop trusting the promises, Wall Street can't function.
But it's turned out that many promises like these weren't worth the paper they were written on.
That's because, when the market was roaring a few years back, many financial players had no idea what they were buying or selling. Worse, they didn't care. Derivatives on derivatives, structured investment vehicles, credit default swaps (watch this one!) and, of course, securities backed by home loans.
There seemed no limit to the leverage, the off-balance sheet liabilities, and what credit rating agencies would approve.
Two years ago I asked a hedge fund manager to describe the assets in his fund. He laughed and said he had no idea. This meant almost no limit to what was promised. Regulators - Alan Greenspan in particular - looked the other way.
It worked great as long as everyone kept trusting and the market kept roaring. But all it took were a few broken promises for the whole system to break down.
What to do? Don't socialize capitalism with bailouts and subsidies that put taxpayers at risk.
If what's lacking is trust rather than capital, the most important steps policymakers can take are to rebuild trust. And the best way to rebuild trust is through regulations that require financial players to stand behind their promises and tell the truth, along with strict oversight to make sure they do.
We tell poor nations they have to make their financial markets transparent before capital will flow to them. Now it's our turn. Lacking adequate regulation or oversight, our financial markets have become a snare and a delusion. Government only has two choices now: either continue to bail them out, or regulate them in order to keep them honest. I vote for the latter.
Problems trickle down to Main Street, New York
NEW YORK: When Lehman Brothers filed for bankruptcy protection, it had debts of $613 billion. That may be too large a number to contemplate. But a few other figures - like 23 and 3 and 280,000 - illustrate just how deep and broad the effects of the crisis on Wall Street could be for New York City.
The first, 23, is an estimate of the percentage of all income earned in the city that goes to people who work in the securities industry. Although Wall Street provides only one of every 20 jobs in the city, those jobs pay so much that, as a group, they have accounted in recent years for almost one-fourth of all the wages and salaries, including bonuses, paid out in the city.
The average income of Wall Streeters last year was about $280,000, or nearly five times as high as the average of all other workers in the city. Those outsize paychecks have allowed workers on Wall Street to support many other businesses, like restaurants, luxury auto dealerships and interior decorators. Economists in the state comptroller's office estimate that each job on Wall Street creates three other jobs in the metropolitan area.
While the downturn is sure to have an impact on other financial centers like London and Hong Kong, the reverberations in the local economy are likely to be biggest in New York.
Wall Street has already shed about 25,000 jobs this year. With the collapse of Lehman Brothers and the rushed sale of Merrill Lynch to Bank of America, the number of lost jobs could rise by 10,000 in a hurry.
For AIG chief executive, triumphant final chapter is cut short
NEW YORK: When he left Citigroup in 2005, Robert Willumstad said he wanted to run a publicly traded financial services company. He got that chance, as chief executive of American International Group.
For three months.
Willumstad will lose his job at the helm of AIG in connection with the U.S. government's rescue package for the giant insurer. He will be replaced by Edward Liddy, a former chief executive of Allstate, the insurance company.
AIG received a two-year loan of as much as $85 billion Tuesday from the U.S. Federal Reserve so it could pay its bills and sell assets with what the central bank called the "least possible" disruption to the broader economy.
The U.S. government will take an equity stake of 79.9 percent in AIG, which has about $1.05 trillion worth of assets and employs 116,000 people in more than 100 countries
Over three fiscal quarters, AIG amassed $18 billion worth of losses tied to complex securities whose value plunged as the U.S. housing crisis deepened.
Willumstad had planned to announce a plan Sept. 25 for restoring AIG to health. But he was caught flat-footed by a growing panic about AIG's capital and credit ratings.
AIG's situation became bleaker after weekend talks failed to avert a bankruptcy of Lehman Brothers and leading credit rating agencies downgraded AIG. That reduction brought a potential $20 billion worth of obligations.
It was not immediately clear how much severance Willumstad might get after the bailout. He was eligible for AIG's executive severance plan, which provided benefits based on salary and bonus levels and continued vesting of some incentive awards and benefits.
When he became chief executive, Willumstad was awarded an annual salary of $1 million and annual bonus and incentive awards worth a possible $21 million. He also got restricted stock and options once valued at $36.5 million.
The bailout derailed what had been expected to be the culmination of a successful four-decade career in financial services.
After 20 years at the former Chemical Bank, Willumstad moved in 1987 to Commercial Credit, a small Baltimore lender led by Sanford Weill. He spent nearly two decades helping Weill build Commercial Credit through mergers and acquisitions into what in 1998 became Citigroup, where Willumstad would run the global consumer group. But in 2003 he lost out to Charles Prince, who became Weill's successor, and settled for the role of chief operating officer. Two years later, he left. The next year he became chairman of AIG, and in June 2008 he replaced Martin Sullivan as chief executive, after mortgage losses had already caused AIG shares to fall by half.
In an interview on June 15, Willumstad referred to himself as "a very young 62," and said he planned a long career at AIG, perhaps as long as that of his predecessor, Maurice Greenberg, who ran AIG for nearly four decades before being ousted at nearly 80 years old.
He will not get that chance.
Gold posts historic gains on flight to safety
NEW YORK/LONDON: Gold posted a record one-day gain in absolute dollar terms on Wednesday, hitting a near six-week high with investors fleeing to safety as they watched the carnage on stock markets and expected further losses.
Silver tracked gold higher to record its biggest one-day rise in percentage terms since 1995.
Losses in U.S. investment banking stocks and doubts over the government's bailout of insurer American International Group have fuelled fears over the outlook for the financial sector.
Sliding U.S. equity markets and worries about the financial outlook have sparked a flight to "safer" assets, such as bullion, analysts said.
"It's unbelievable, simply unbelievable, what is happening," said Eugen Weinberg, commodities analyst at Commerzbank.
"Investors are insecure and going into gold. There is safe-haven buying from all over the world."
Spot gold rose more than 10 percent to $866.10 an ounce at 2:55 p.m. (3:55 p.m. British time) by New York's last quote, up sharply from Tuesday's nominal U.S. market close of $777.55.
"It looks like (gold) has finally found its safe-haven bid," said Standard Chartered head of commodity research Helen Henton.
Gold prices were reacting to deepening fears over the outlook for U.S. investment banks and concerns over the government's rescue plan for AIG, which have sparked fresh buying of commodities.
Thomas Friedman: Keep it in Vegas
"We are at the end of an era - the end of 'leave it to the markets' and of the great cop-out that less government is always better government," argues David Rothkopf, a former Commerce Department official in the Clinton administration and author of a book about the world's financial leaders who brought about this crisis: "Superclass: The Global Power Elite and the World They Are Making." "I think, however, it is important to stress the difference between smart government and simply more government.
"We do not need a regulatory 'surge' on Wall Street," he added.
"We need a complete rethinking of how we make global financial markets more transparent and how we ensure that the risks within those markets - many of which are new and many of which are not well understood even by the experts - are managed and monitored properly."
In sum, government's job is to police that fine line between the necessary risk-taking that drives an innovation economy and crazy gambling with other people's savings in ways that threaten us all. We need to make sure that what happens in Vegas stays in Vegas - and doesn't come to Main Street. We need to get back to investing in our future and not just betting on it.
John McCain's version of the economic crisis
John McCain spent Monday claiming - as he had countless times before - that the economy was fundamentally
sound. Had he missed the collapse of Lehman Brothers or the sale of Merrill Lynch, which were announced the day before? Did he not notice the agonies of AIG? Was he unaware of the impending layoffs of tens of thousands of Wall Street employees on top of growing unemployment throughout the United States?
On Tuesday, he clarified his remarks. The clarification was far more worrisome than his initial comments. He said that by calling the economy fundamentally sound, what he really meant was that American workers are the best in the world. In the best Karl Rovian fashion, he implied that if you dispute his statement about the economy's firm foundation, you are, in effect, insulting American workers.
Let's get a few things straight. First, no one who is currently running for president does not "believe in American workers." More to the point, the economy is stressed to the breaking point by fundamental problems - in housing, finance, credit, employment, health care and the federal budget - that have been at best neglected, at worst exacerbated during the Bush years. And as a result, American workers have taken a beating.
In clarifying his comments, McCain lavished praise on workers, but ignored their problems. For decades, typical Americans have not been rewarded for their increasing productivity with comparably higher pay or better benefits. The disconnect between work and reward has been especially acute during the Bush years, as workers' incomes fell while corporate profits ballooned.
That is a fundamental flaw in today's economy. It is grounded in policies like a chronically inadequate minimum wage and an increasingly unprogressive tax system, for which McCain offers no alternatives.
As for Wall Street, McCain blamed the meltdown on "unbridled corruption and greed." He called for a commission to find out what happened and propose solutions. His diagnosis and his cure are misguided. The crisis on Wall Street is fundamentally a failure to do the things that temper, detect and punish corruption and greed. It was a failure to police the markets, to enforce rules, to heed and sound warnings and expose questionable products and practices.
The regulatory failure is rooted in a markets-are-good-government-is-bad ideology that has been ascendant as long as McCain has been in Washington and championed by his own party. If McCain adheres to some other belief system, we would like to hear about it.
H.D.S. Greenway: Blast from the cold past
For some on the political right, Russia's overreaction to Georgia's attempt to pull a fast one in South Ossetia is a source of satisfaction and we-told-you-so. For those steeped in nostalgia for the Cold War, Russia will always be an enemy - and that goes for China, too.
One of the best and brightest of conservative writers is Robert Kagan, whose brilliant essay "Of Paradise and Power," in which he conceived that Europeans are from Venus and Americans from Mars, has become a modern classic.
Recently he wrote in the pages of the Wall Street Journal that Russia's lunge into Georgia was "neither extraordinary nor unexpected nor aberrant but entirely normal and natural," according to Kagan, "a harbinger of what is yet to come because the behavior of nations, like human nature, is unchanging."
Today's so-called realists, Kagan says, are "supposed to be locked into some titanic struggle with neoconservatives ... but rather than talk about power, they talk about the United Nations, world opinion, and international laws." Sissy stuff. Today's namby-pamby realists, he says, are fond of quoting George Kennan, Dean Acheson, and Reinhold Niebuhr, "but those gentlemen would have found most of their prescriptions naïve."
Kagan scorns those of us who think that George H.W. Bush's ways of doing business on the world stage were better than his son's.
All this would be academic were not Kagan a foreign policy adviser to John McCain's campaign, and it is there that the struggle between realists and neoconservatives is being played out.
In Kagan's view, realists today no longer see the world as Hans Morgenthau did, as "an anarchic system in which nations consistently pursue 'interests defined by power,' but as a world of converging interests in which economics, not power, is the primary driving force. Thus Russia and China are not interested in expanding their power so much as enhancing their economic well being and security."
Although there is some truth in Kagan's thesis, written with his usual élan, human nature can be curbed and modified, and nations do change.
Vladimir Putin, for all his faults, is not Stalin or even Alexander I.
Germany is no longer the Germany of Bismarck, let alone Hitler, and France is not the France of Napoleon. The Soviet Union and Mao's China bear little resemblance to today's Russia and China. There is not the unbridgeable gap between capitalism and communism that there once was.
As for economics, there can be no power without a strong economy.
I know of no realists who believe that diplomacy is always sufficient without being backed up by potential force.
Nor is it naïve to say that it is more effective to have other nations follow your lead, and behave as you want them to behave, because they perceive it in their best interest, rather than succumbing to bullying. And if there are some converging interests, why not encourage the convergence, as the European Union has done?
Clearly China wants to be part of the world economic system and has little interest in threatening neighbors. True, China believes Taiwan should one day return to the fold, but is not bent on invading Taiwan and accepts the status quo as long as Taiwan does.
As for Russia, it cannot be excused for its lunge into Georgia, but it was the U.S.-trained Georgian Army that upset the status quo in South Ossetia.
Nations, like human beings, can feel threatened and lash out when attacked, but hostility is not an immutable trait.
It would do no harm to recognize that Russia has an interest in what happens in the countries along its southern flank as does the United States on this continent.
To view Russia and China as nothing more than villains striving to expand their power at the expense of the West is simply to fight the last war, the Cold War, over and over when the geopolitical terrain has changed. It is the dependence on military power, and the bluster of the neoconservatives, that has weakened America's ability to achieve its goals, and it would be misguided indeed if this were to continue beyond the life of the present administration.
How about a little less Mars next time around?
Mark Mellman is a New York-based Democratic pollster.
American voters express a desire for change in the coming election, but they themselves also have changed, and their shifting values are likely to alter the course of future policy debates.
For more than 25 years, three core questions have animated America's political discourse:
What should be the role of government?
Should moral absolutism or moral relativism guide our actions?
Should our foreign policy primarily pursue unilateral interest through military power or a multilateral approach grounded in diplomacy?
Almost every major policy controversy in the past quarter-century involved at least one of these fundamental values. More often than not, conservatives prevailed by convincing Americans that their positions were in sync with voters' ideals.
But it could be different in 2009 and beyond. Public commitments have shifted - most profoundly on the role of government, but also on morality and unilateralism - transforming the trajectory future policy disputes will follow.
In the mid-1990s polling that my firm conducted suggested that more than 60 percent of American voters were more concerned that "the federal government will try to do too much, not do it well and raise taxes."
This year 60 percent chose the survey's other option, expressing greater worry that "the federal government will not do enough to help ordinary people deal with the problems they face." Americans who used to be wary of government involvement are now calling for it.
We have documented a similar, if less drastic, shift in public views of morality. Only three years ago a majority of those we surveyed said that "there are absolute standards of right and wrong that apply to everyone in almost every situation." Today, however, respondents by a narrow margin say that they believe that "everyone has to decide for themselves what is right and wrong in particular situations."
Surveys by the Pew Research Center reveal a concomitant change in foreign policy values. Well before 9/11, in the mid-1980s, Americans supported the concept of peace through military strength by a 14-point margin. By 2007, despite the intervening attack on the United States, that margin had fallen to only 2 points.
In short, the values on which U.S. politics has turned for the past quarter-century have shifted. While politicians from both parties ask us to embrace change, Americans already have.
Maureen Dowd: Barbies for war
WASHINGTON: Carly Fiorina, the woman John McCain sent out to defend Sarah Palin and rip anyone who calls her a tabula rasa on foreign policy and the economy, admitted Tuesday that Palin was not capable of running Hewlett-Packard.
That's pretty damning coming from Fiorina, who also was not capable of running Hewlett-Packard.
Carly helpfully added that McCain (not to mention Obama and Biden) couldn't run a major corporation. He couldn't get his immigration bill passed either, but now he's promising to eliminate centuries of greed on Wall Street.
The Wall Street Journal reported that McCain is taking Palin to the UN General Assembly next week so she can shake hands with some heads of state. You can't contract foreign policy experience like a rhinovirus. To paraphrase the sniffly Adelaide in "Guys and Dolls," a poy-son could develop a cold war.
The latest news from Alaska is that the governor keeps a tanning bed in the Juneau mansion. As The Los Angeles Times pointed out, when Palin declared May 2007 as Skin Cancer Awareness Month in Alaska, the press release explained that skin cancer was caused by "the sun and from tanning beds."
I sauteed myself in Sarahville last week. I wandered through the Wal-Mart, which seemed almost as large as Wasilla, a town that is a soulless strip mall without sidewalks set beside a soulful mountain and lake.
Wal-Mart has all the doodads that Sarah must need in her career as a sportsman - Remingtons and "torture tested" riflescopes, game bags for caribou, machines that imitate rabbits and young deer and coyotes to draw your quarry in so you can shoot it, and machines to squish cows into beef jerky.
I talked to a Wal-Mart mom, Betty Necas, 39, wearing sweatpants and tattoos on her wrists. She said she's never voted, and was a teenage mom "like Bristol." She likes Sarah because she's "down home" but said Obama "gives me the creeps. Nothing to do with the fact that he's black. He just seems snotty, and he looks weaselly."
Ten Obama supporters in Wasilla braved taunts and drizzle to stand on a corner between McDonald's and Pizza Hut. They complained that Sarah runs government like a vengeful fiefdom and held up signs. A guy with a bullhorn yelled out of a passing red car: "Go back to the city, you liberal communists!"
At gatherings in The Last Frontier, pastors pray for reporters, drilling evokes cheers and Todd Palin is hailed as a guy who likes to burn fossil fuels.
I had many "Sarahs," as her favorite skinny white mocha is now called, at the Mocha Moose. "I've seen her at 4 a.m. with no makeup," said manager Karena Forster, "and she's just as beautiful."
I stopped by Sarah's old Pentecostal church, the Wasilla Assembly of God, and perused some books: "The Bait of Satan," "Deliverance from PMS," and "Kissed the Girls and Made them Cry: Why Women Lose When They Give In."
In Anchorage Saturday, I went by a conference conducted by James Dobson's Focus on the Family and supported by Sarah's current church, the Wasilla Bible Church, about how to help gays and lesbians "journey out" of same-sex attraction.
(As The Times reported recently, in 1995, Palin, then a city councilwoman, told colleagues she had seen "Daddy's Roommate" on the shelf of the library and did not approve. The Wasilla Assembly of God tried to ban "Pastor, I Am Gay" by Howard Bess, a liberal Christian preacher in nearby Palmer.)
Anne Heche's mother, Nancy, talked about her distress when her daughter told her she was involved with Ellen. Jeff Johnston told me he had "a struggle" with homosexuality "for a season," but is now "happily married with three boys." (Books for sale there included "Mommy, Why Are They Holding Hands?" and "You Don't Have to Be Gay.")
I covered a boisterous women against Palin rally in Anchorage, where women toted placards such as "Fess up about troopergate," "Keep your vows off my body," "Barbies for war!" "Sarah, please don't put me on your enemies list," and "McCain and Palin = McPain."
A local conservative radio personality, Eddie Burke, who had lambasted the organizers as "a bunch of socialist, baby-killing maggots," was on hand with a sign reading "Alaska is not Frisco."
"We are one Supreme Court justice away from overturning Roe v. Wade," he excitedly told me.
R.D. Levno, a retired school principal, flew in from Fairbanks. "She's a child, inexperienced and simplistic," she said of Sarah.
"It's taking us back to junior high school. She's one of the popular girls, but one of the mean girls. She is seductive."
Russia slams NATO for "Cold War" visit
MOSCOW: A visit to Georgia by senior NATO officials this week was anti-Russian and showed the alliance is driven by Cold War-style thinking, Russia's Foreign Ministry said on Wednesday.
"Decisions taken ... confirmed that in NATO, the Cold War-era reflexes of 'them and us' are at work once again," a statement said.
"We cannot view steps to intensify relations between the alliance and Georgia any other way than as encouragement for new adventures ... We believe the alliance's session in Tbilisi in the current conditions was not timely and does not help stabilisation in the region."
The statement said the visit showed an anti-Russian tendency because NATO officials only viewed war damage inside Georgia, and not in the breakaway region of South Ossetia, which Georgian troops had tried to retake.
NATO Secretary-General Jaap de Hoop Scheffer this week led a session in Tbilisi of the North Atlantic Council, the alliance's highest political decision-making body, and an inaugural session of a Georgia-NATO commission.
Russian forces kill 10 militants in Dagestan
MAKHACHKALA, Russia: Russian security services killed at least 10 militants overnight in the turbulent North Caucasus region of Dagestan, local security officials said on Wednesday.
Security forces are waging a campaign in Dagestan against armed groups driven by a combination of Islamist militancy, organised crime and clan rivalries.
Officers from Russia's internal security service, the FSB, ambushed the separatists as they transported arms and explosives along a road near the village of Tsmur, an FSB official said.
"Special services fired rocket grenades at a 'Gazelle' minibus, where the militants were located, and as a result 10 militants were destroyed," the FSB's press service in Dagestan said.
An FSB officer was wounded at the scene and died later in hospital, the spokesman added.
On September 8 three Russian policemen were killed in a gunfight with militants in the same region.
Security officials in Dagestan say some of the men killed in the latest operation are part of the same militant group which was involved in the September 8 gunfight and previous attacks.
Situated between the Caspian Sea and Chechnya, Dagestan has a population of 2.5 million people and is one of Russia's poorest regions. It is also a patchwork of dozens of different ethnic groups.
Analysts say poverty and a heavy-handed crackdown on mosques that are not officially-endorsed are driving young men into the militant movement.
MOSCOW: President Dmitri Medvedev signed treaties with the breakaway enclaves South Ossetia and Abkhazia on Wednesday that committed Moscow to defend them from any Georgian attack.
The treaties formalize military, diplomatic and economic cooperation between Moscow and the separatist regions, which Russia recognized as independent states after its brief war with Georgia last month.
In Tbilisi, a senior Georgian diplomat said that the treaties were a "masquerade" and that Russia had annexed sovereign Georgian territory.
Russia drew international condemnation after it sent its troops into Georgia last month and recognized the regions, but it said it had a moral duty to act to defend them from what it called a genocide by Georgia's military in South Ossetia.
"The documents we have signed envisage that our countries will jointly undertake the necessary measures for counteracting threats to peace," Medvedev said after a lavish signing ceremony in the Kremlin.
"We will show each other all necessary support, including military support," he said, adding that "a repeat of the Georgian aggression" would lead to "a catastrophe on a regional scale, so no one should be in doubt that we will not allow new military adventures."
Rosenberg sons come to terms with seeing parents as spies
By Sam Roberts
Wednesday, September 17, 2008
They were the most famous orphans of the Cold War, only 6 and 10 years old in 1953 when their parents were executed at Sing Sing for delivering atomic bomb secrets to the Soviet Union. Then they were whisked away from an unwanted limelight to urban anonymity and eventually to suburban obscurity.
Adopting their foster parents' surname, they staked their own claim to radical campus politics in the 1960s. Then in 1973, they emerged to reclaim their identities as the sons of Julius and Ethel Rosenberg, determined to vindicate their parents.
Now, confronted with the surprising confession last week of Morton Sobell, Julius Rosenberg's City College classmate and co-defendant, the brothers have admitted to a painful conclusion: that their father was a spy.
"I don't have any reason to doubt Morty," Michael Meeropol said after several conversations with Sobell over the weekend.
Their conclusions, in separate interviews, amount to a pivotal milestone in America's culture wars and the culmination of the brothers' own emotional and intellectual odyssey.
It began in July 1950 when FBI agents arrested Julius Rosenberg in the family's Lower East Side apartment, thrusting the boys onto a global stage as bit players in their parents' appeals, in the government's efforts to extract their parents' cooperation and in Soviet propaganda campaigns to cast the Rosenbergs as martyrs.
Their journey became public again nearly a generation later when the brothers proclaimed that their parents were framed to feed Cold War hysteria and compensate for America's counterespionage lapses. Amid the Watergate-era revelations of criminal conspiracies and cover-ups, they began a legal battle to release all the government records in the case.
While they were vested in a single outcome, they insisted all along that they would follow the facts, wherever they led.
"We believed they were innocent and we tried to prove them innocent," Michael Meeropol said on Sunday. "But I remember saying to myself in late 1975, maybe a little later, that whatever happens it doesn't change me. We really meant it, that the truth is more important than our political position."
This is how they still see things: whatever atomic bomb information their father passed to the Russians was, at best, superfluous; the case was riddled with prosecutorial and judicial misconduct; their mother was convicted on flimsy evidence to place leverage on her husband; and neither deserved the death penalty.
But after digesting Sobell's confession, in an interview last week with The New York Times, that he and Julius stole nonatomic military and industrial secrets, the Meeropols have now concluded that continuing to claim that their father was innocent of an espionage conspiracy was no longer defensible.
"I had considered that a real possibility for some time," Robert Meeropol said, "and this tips the balance."
Today, both brothers are grandfathers. Michael is 65 years old and a professor and chairman of the economics department at Western New England College in Springfield, Massachusetts. Robert, 61, is a lawyer and runs the Rosenberg Fund for Children, which advocates on behalf of young people whose parents have suffered because of their progressive politics. Both live in western Massachusetts.
Robert's daughter Rachel is a lawyer with the Center for Constitutional Rights. In 2004, Michael's daughter, Ivy, produced a documentary about the case, "Heir to an Execution." In that film, Michael recalled the other day, he said he was "perfectly happy to live with the ambiguity" about the case. But that ambiguity, as far as his father is concerned, ended last week with Sobell's confession and left Michael philosophical but, presumably, less happy.
"It's different," he said.
Ethel Rosenberg was arrested in August 1950. The boys were shuttled to shelters and from one home to another after their grandmother, Ethel's mother, said she could no longer care for them. After their parents were executed, they were adopted by Abel and Anne Meeropol. He was a Bronx schoolteacher and lyricist, who, under a pen name, wrote "Strange Fruit" and "The House I Live In."
The brothers became talismans for a lost cause. They would literally be embraced by Rosenberg defenders, dwindling in number but unflagging in their faith, as touchstones of an era when the world was reflexively defined as black or white (or red). If you believed the Rosenbergs were not guilty, you were considered a fellow traveler. If you believed the government, you were viewed as a McCarthyite.
First, the brothers sued Louis Nizer, a lawyer, for unauthorized use of their parents' death-house letters in his book about the case. They fought protracted legal battles to release FBI files and were buoyed when those raw investigative records and interrogations disgorged a minefield of inconsistencies.
They knew, and acknowledged, that their parents were committed Communists, but discovered, as Robert Meeropol once said, "it's much harder to prove someone innocent than to prove them guilty."
For more than three decades, that path to proof twisted and turned precariously. As the new revelations shrank the brothers' defensive perimeter, the Meeropols seemed to be tiptoeing toward the posture they expressed this week. Meanwhile, they raised their families and wrote a book, "We Are Your Sons."
In the 1990s, the government released decrypted wartime Soviet cables that further implicated their father. Then their uncle, David Greenglass, who was an Army machinist at Los Alamos, New Mexico, where the atomic bomb was made, and was recruited by Julius Rosenberg as a spy, admitted that he fabricated the most damning testimony against their mother, but insisted that Julius was guilty of the formal charge, conspiracy to commit espionage.
Five years ago, in a memoir, "An Execution in the Family," Robert Meeropol recalled the critique that his parents engaged in high-risk activities that could orphan their children, but he said their decisions deserved to be judged in the context of their time.
"I became more careful about my political activities when I became a parent," he wrote. "This may be because I knew from painful experience the terrible toll activist parents' decisions can take on their children, and I did not wish my childhood nightmare visited on my children."
Do the brothers feel betrayed by their parents' protestations of innocence? Did they, themselves, betray other supporters of the cause by seeking vindication?
"I don't feel that way," Robert said. "I can understand that they didn't do the thing they were being killed for. The grand jury testimony taught me more about my parents' social circle. It's a description of a whole bunch of 20-somethings, people who came out of the Depression, not only survived but went to the top of their class and they thought they could change the world. They were going to do what they could to make their mark. Until it all came crashing down.
"What Julius was asked to do was send his best friends to jail, and he could not do that. My parents would have to have made a bigger betrayal to avoid betraying me, and frankly I don't consider myself that important."
The increasingly global sweep of the credit crunch and the collapse of Lehman Brothers have punished all manner of hedge funds - secretive investment pools that rely on generous lenders and a high tolerance for risk to thrive.
But in London, where a number have already shuttered, the hedge fund retreat has a pointed resonance. Along with celebrity chefs, Russian oligarchs and Italian soccer coaches, hedge funds that established operations here in the past decade have been seen as a mark of London's hip new spirit of decadent cool - a notion reinforced by the pound's long period of strength and the boom in home prices.
Now, the failure of Lehman Brothers, which had deep financial relationships with some of the largest hedge funds in the world, has unsettled an already jittery market - sparking fears that some hedge fund assets might be frozen there and thus be unavailable for sale if investors choose to redeem them.
For GLG Partners, the largest, most scrutinized hedge fund in London - whose founding partners were originally backed by Lehman - the uncertainty added to broader concerns.
In a statement, GLG said it had pulled the bulk of its assets from Lehman last week and that any remaining exposure was not material. It declined further comment.
None of that, however, dissipates the darkening mood that has taken root within the hedge fund community here, one that is felt most acutely in the London enclave of Mayfair where GLG and most other funds are based.
"The bling is gone," said Peter Wetherell, a top real estate agent in Mayfair, whose client list includes hedge fund executives, Arab sheiks and others in search of a Mayfair mansion.
With his bonhomie, deep summer tan and a chunky silver watch that hangs heavy on his wrist, Wetherell seems a fading emblem of a more exuberant time.
Standing outside his office, just opposite Scott's, the fashionable restaurant and nightclub, he shakes his head.
"Its tough out there and the streets are quieter now," Wetherell said. "You will see people being less ostentatious about their wealth - but it hasn't been a bad party, has it?"
Indeed not. In Mayfair, however, the first signs of what many observers say could be a debilitating hangover are already evident.
According to Wetherell, the volume of deals he has handled so far this year is down sharply - 48, compared to 136 a year earlier. And during the usually busy lunch hour, many of Mayfair's high-end shops on Mount Street - from the Porsche dealership where £112,000, or $200,000, Turbo Carreras are for sale to a tobacconist selling £47 Havana cigars - were empty of customers.
The list of 2008 hedge fund implosions here is growing. It began with the precipitous fall of Peloton Partners this spring and has included others like Pentagon Capital. More recently, the troubles have extended to funds caught short when commodity prices began to spiral downward, including RAB Capital and Red Kite Capital.
"It is a particularly challenging market," said Christopher Keen, a partner at Culross Global Management, which manages a portfolio of outside hedge funds for investors. "There are more funds in forced liquidation than at any time I have seen in the last 10 years."
But it is the condition of GLG, which manages $23 billion and will celebrate the first anniversary of its listing on the New York Stock Exchange in November, that symbolizes both the headiness as well as the vulnerability of the London hedge fund boom.
Founded by a group of former Goldman Sachs private-client executives in 1995, GLG - the name represents the first letter of the last name of the three founding partners, Noam Gottesman, Pierre Lagrange and Jonathan Green - became a meritocratic melting pot of sorts by attracting aggressive, foreign-born traders and giving them room to run.
Their extraordinary asset growth swung the pendulum of influence from the City of London, as the financial district is known, and the traditional banking and insurance company arbiters of financial power to the hedge fund central in Mayfair.
As their returns soared, so did their sense of swagger. And no one was more fascinated than the London media, which paid close attention to the £150 million paydays of the leading hedge fund operators, the grand houses and their country mansions
That they are now losing a second trader, Greg Coffey, an emerging market expert from Australia who left $250 million on the table to start his own firm, has raised questions within London's hedge fund community about their ability to retain talented traders.
These worries have only compounded following Lehman's collapse as hedge fund investors try to determine GLG's exposure. The crux of the issue is this: as a dominant provider of both complex derivative assets to funds and a prominent insurer of credit default swaps, Lehman Brothers was an essential conduit for hedge funds investing in these esoteric areas. To the extent that such assets remain at Lehman, in the hands of administrators, large funds will have trouble gaining access to them in the event that investors choose to pull out their money. Lehman has an 11 percent stake in GLG.
GLG's announcement that it had been pulling its funds from Lehman for months will comfort investors and it counters a view held by some in the markets that the doors closed at Lehman before all funds could be transferred.
Barclay's purchase of Lehman's brokerage system, which includes prime brokerage and clearing, should also ease investor concerns, but it does not insure immediate access to funds.
In a presentation at a Lehman Brothers conference this month, Gottesman, GLG's co-chief executive, argued that the firm - with its diversified lineup of funds - was well placed to survive the roiling markets.
He added that GLG's recent performance had been affected by a plunge in returns from Coffey's main fund and that suitable replacements have already been hired to succeed him - including a top proprietary trader from Goldman Sachs, two senior managers from Morgan Stanley and an executive from the bond firm Pimco.
But as one hedge fund executive said: "Lehman was a counterparty to everyone - nobody really knows how it will end."
Claims for jobless benefits rose 32,500 to 904,900 from a month earlier, the Office for National Statistics said Wednesday. Economists predicted an increase of 23,000, according to the median of 25 forecasts in a Bloomberg News survey. Separately, the Bank of England said its Monetary Policy Committee voted 8-1 on Sept. 4 to keep interest rates unchanged.
Brown, who is losing the support of his own Labour Party, is struggling to avert Britain's first recession since 1991 as the slowdown erodes government coffers and record inflation makes it harder for the central bank to cut rates. At the same time, turmoil in U.S. financial markets is exacerbating a property slump and forced lender HBOS into talks to be acquired by Lloyds TSB Group to avoid a funding shortage.
"Our economy is going to experience a sharp downturn and we will see a sharp rise in unemployment to boot," said Paul Dales, an economist at Capital Economics in London. "It's not great news for Brown, who has sold himself as someone who creates economic stability. This puts quite a dent in his armor."
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